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CNN NEWSROOM

Stocks Slammed; Election Results; Obama Returning to Washington; Examining Mitt Romney's Loss; Balance of Congress; GOP Losses and Future of Tea Party; Florida Race Too Close to Call; Obama Won Despite Losing White Vote; Changing Face of U.S. Electorate; Colorado, Washington State Votes to Legalize Pot; Sandy Victims Brace for Nor'Easter; Lessons of 2012

Aired November 7, 2012 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


BROOKE BALDWIN, CNN ANCHOR: What a night for this family. With victory in hand, four more years in the White House locked in, President Obama prepares to head back to Washington, where a hard fought campaign pales in comparison to the challenges that lie ahead. The nation is drawing closer and closer to the fiscal cliff.

Hello and good to see you here on this day after Election Day. I'm Brooke Baldwin at the CNN world headquarters in Atlanta.

JOHN KING, CNN ANCHOR: And I'm celebrating the day after. John King in Washington. Hey there, Brooke.

BALDWIN: Good to see you.

KING: Talk on Capitol Hill -- it is good to see you. Talk on Capitol Hill is turning to compromise immediately after the election. Listen here, the Senate majority leader, Democrat Harry Reid.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: It's better to dance than to fight. It's better to work together. Everything doesn't have to --

(END VIDEO CLIP)

KING: See what the House speaker, John Boehner, has to say. He speaks live next hour.

Meantime, the biggest battleground still hangs in the balance. The election's not yet over in Florida. The nation's largest swing state too close to call. Oh, yes, Brooke, they're still counting the absentee ballots.

BALDWIN: We're going to go there.

Also happening right now, the market. We have to look at this. Plunging down 264 points right now. Investors turning their attention from the election to the challenges ahead, including, we're going to be talking about this pretty much until the end of the year, the fiscal cliff.

And speaking of, let's go to Alison Kosik live from the New York Stock Exchange.

Alison, the Dow down triple digits. Why the sell-off?

ALISON KOSIK, CNN CORRESPONDENT: OK, well, first of all, I know the number is eye popping, but you are seeing stocks off their lows of the session. You know what, even though Wall Street didn't necessarily want to see President Obama win again, the losses you're seeing aren't because of the election. They're because of the European debt crisis. ECB president, that's the European Central Bank president, Mario Draghi, said that Germany's economy is slowing. So that's really what's spooking investors.

Also what you mentioned, the fiscal cliff. The realities of the fiscal cliff are coming front and center again because Congress and the president have about two months to go before they need to get a deal going on that situation.

Brooke.

BALDWIN: Alison Kosik, we'll keep a look at the numbers there and we'll check back in with you throughout the next two hours.

But, John King, my magic wall friend, I want to begin with you and the election itself. I don't know if you slept a wink last night. I think much of the nation probably went to bed watching you. Through everything last night, what was the biggest surprise in your opinion?

KING: The biggest surprise, Brooke, let's go over to the magic wall and take a look. The biggest surprise is, we're going to talk more about this in the hour ahead, is that we're waiting to see who gets Florida's 29 electoral votes. A lot of the talk heading into the election is that if we were waiting on the morning after, it would be Ohio. And Ohio's 18 went to the president.

Another surprise for me, if you look at this map and you go back to 2008 -- and I'll switch maps in a minute -- but these are the two takeaways for Mitt Romney. Look, it was a closer election in terms of the popular vote. A very close election in terms of the popular vote. From an electoral college perspective, the president getting 303 right now. If he gets these 29, he cracks 330. That doesn't want to move because I have the telestrator on at the moment. But Governor Romney at 206. We'll see how Florida goes out.

The president had 365 last time. So he's going to come in below 2008. But what was surprising, 7 percent unemployment throughout the term, no president in history of being re-elected since Franklin Roosevelt with that, and yet Governor Romney was able to change only two states and the two most reliably Republican states that President Obama picked up last time, Indiana and North Carolina. That was the most surprising thing to me if you look at the electoral map.

And I'll bring the national map up just now to look at the latest. He eeked this out because of California, 50-48. Trust me, at the White House, this is a narrow victory. But winning the popular vote and the electoral college will help them. We have a very difficult governing challenge ahead. Had Governor Romney won the popular vote, and President Obama won the electoral college, then you'd have a lot more, shall we say, grumpy people this morning.

BALDWIN: Grumpy people this morning. You know, people were perhaps grumpy watching a little bit last night, depending on your political perspective. And I was watching you. I feel like sort of the turning point was when you start doing the math, almost impossible for Romney to hit that 270 mark once, you know, Nevada went Obama. And then I think it was Missouri and it was, right, the final projection because of Ohio, right?

KING: Right, because of Ohio. Missouri went for Governor Romney.

BALDWIN: Right.

KING: But what you see, as you watched early on, you knew coming in that Governor Romney had a harder path to 270. You knew he needed this. Now, we haven't called that yet. The president's leading right now. It's blue on this map because that's the vote total. But you knew he need this. You knew he needed Virginia. And you knew he needed Ohio. And then he had to go somewhere else. And so as we watched the vote results come in, and we could start here in Ohio, a point early on, if you look at this, you look at the map, you're saying, look at all that red, the Republican had to win, right? But you started to look up here and you asked me a bit earlier about surprises.

BALDWIN: Yes.

KING: One of the surprises was -- and it came in -- this is where it came into play, was the Obama campaign did exactly what it said it would do. Without a primary challenge, it spent months and millions saying, let's find all these African-American voters in Cuyahoga County, a key place in Cleveland. Let's make sure we have their names. Let's make sure we have their contacts. Let's make sure we turn them out. And they did. Sixty-nine to 30. When you're running for re- election as an incumbent in a bad economy, it's hard to do this. You don't have the excitement of a primary challenge to get people in. It's hard to do this. And they did it. So the Ohio math, even though Governor Romney kept it very close, closer than John McCain, it got pretty obvious as the vote results came in.

And then there was Virginia, where Romney was leading for a lot of the early count. But, Brooke, you have to, you know, if you study these states and you go, Romney's running it up here in all these rural counties, but up here, again, not by as big a margin as he did four years ago, but part of President Obama's coalition is the suburbs where you find college educated women, and in the case of northern Virginia, also a growing Latino population. If you looked at the demographics of the electorate and you studied these states early on, it looked like Romney might make it -- make a run for it. No. Ohio, Virginia, Florida told us it wasn't going to happen.

BALDWIN: Based on my Twitter feed, people love watching you and those counties and that map. I'm just curious, do you dream with your hands moving and pointing toward counties or in the country?

KING: I'm told I talk with my hands now more than I used to.

BALDWIN: Thought so.

KING: But, you know, it's like anything. When a mechanic leaves the garage, I hope he stops thinking about the engine. When a mailman goes home, I hope he's not thinking about the mail. And when we say good night, I just say, see you later.

BALDWIN: John King, don't go too far, we're coming back -- right back to you here in just a minute.

But President Obama has very little time today to really savor that victory of his because he's scheduled to head back to Washington in the next hour. Jill Dougherty is at the White House for us right now.

And, Jill, what's on tap for the president once he returns right there?

JILL DOUGHERTY, CNN CORRESPONDENT: Yes, he comes back, what, in just about three hours, three and a half hours. And, you know, Brooke, he's still got that desk, still got the same desk, and it's filled with many of the same things that he had before he went away to Chicago to watch the election. And that is, of course, I mean you'd have to say, number one, bring the country together, and that is just, you know, huge. Whether that can happen is one giant question.

And it's tied, you know, to the second issue, which is the fiscal cliff that we keep referring to. You know, $7 trillion worth of potential tax cuts. I should say tax increases and spending cuts that could have to mandatorily have to come into play in January.

He's also talking about tax reform, immigration reform and then finally oil independence. So those are just the domestic things. And then don't forget about, you know, huge, like right now, almost as we're speaking, the Chinese government is having -- its party congress and they're going to be choosing a new leader. That will be a big challenge for the president and the issue of how you manage the rise of China. Then in -- you've got Iran, et cetera. So it's a lot on the desk.

BALDWIN: Jill Dougherty, thank you, at the White House.

John, to you.

KING: It's not always the case, but the Romney campaign actually thought it was going to win the election, which makes this quite a stinging loss for the Republican nominee and it leaves the Republican Party with a lot of soul searching to do. Our national political correspondent Jim Acosta is our man following the Romney campaign.

Jim, what are you hearing from the inside?

JIM ACOSTA, CNN NATIONAL POLITICAL CORRESPONDENT: John, a former campaign advisers tells CNN Mitt Romney's expected to get some rest and spend some time with his family in the days after this hard fought election. As for what happened last night, that adviser tells me that the campaign really thought they were going to win this election right up until the very end. That is consistent with what we heard from Mitt Romney on his campaign charter heading into Boston last night. He thought he was going to win too. He said he had no regrets and was proud of his campaign. But as for why this campaign went down in defeat, that adviser tells me that they are pointing to what the Obama campaign was predicting, that they were going to have a good turnout, and in the word of this adviser, the Obama campaign was right.

Now, as for the future of the Republican Party, I talked to a top conservative leader, a Hispanic leader inside the Republican Party who said that the GOP is going to have to do a better job talking about immigration reform with Latinos if they have any hopes of winning a presidential election in the near future.

John.

ANNOUNCER: This is CNN breaking news.

KING: The presidential race is settled, but we're still looking at some key races to determine the final numbers for the balance of power in the United States Senate and the House of Representatives. Our chief congressional correspondent Dana Bash is here with some breaking news on a race in North Dakota.

Dana.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: With the remaining race that we weren't able to call. And CNN can project that the Democratic candidate for Senate, Heidi Heitkamp, in North Dakota, has won that seat. So she has kept that seat -- it was an open seat -- in Democratic hands.

So look at this. This is now the balance of power. And, you know, Democrats argue it's not status quo because they have actually gained seats in the Senate. And if you look at this, they actually have -- 53 Democratic seats, 45 Republican seats. There are two independents here. You see one over here. That stands for Bernie Sanders, who is the independent senator from Vermont. He caucuses with the Democrats. This represents Angus King, the newly elected senator from Maine, who is an independent and says that he will decide who he caucuses with when he gets here.

But there are now no longer any of those white seats which we were not able to call in here. It is completely filled out. We now know what the exact balance of power is going to be in the next Congress. And what it is, is, again, 53 Democrats, plus two independents, 45 Republicans. This, in North Dakota, is another surprise for Republicans because it is a red state, and they thought if there's a retiring Democrat, this would be a no brainer to pick up for them. But Democrats ran a pretty conservative Democrat in Heidi Heitkamp. She, in many issues, in fact most issues, ran against the president and she was able to pull it off against a pretty solid Republican candidate as far as Republicans were concerned, Rick Berg.

So, there you have it. We have the full picture of the United States Senate now, John.

KING: So, Dana, maybe smart candidate selection by the Democrats there. But what is the word? It's certainly embarrassing, and particularly in that seat, which most Republicans thought was a gimme when a Democrat retired in such a red state. Embarrassing, humiliating. What is the talk inside the Senate Republicans -- among Senate Republicans on, wow, we thought we could actually get over 50?

BASH: I think depressing is probably the best word. You know, you -- we saw a very blunt public statement from John Cornyn, who's the senator in charge of the National Republican Senatorial Committee. They put this out last night saying that effectively the Republicans have to rethink and do some soul searching about how they elect candidates because, look, Mitch McConnell, who is now the minority lead, will remain the minority leader. He was already upset about what happened two years ago, that some of their candidates that Republicans elected in the primary season simply couldn't beat Democrats who they thought were very beatable. The same thing happened here.

Not necessarily in this case, but in several of these races. They just had some unforced errors and they're very depressed. And it's just, look, I mean we talk about it all the time, this is the way our system works. And particularly for Republicans, they have genuine primaries in many of these states. And it's the people in these states that elect their candidates to go up against the Democrats. And it hasn't worked for them in many -- at least it hasn't allowed them to get the majority over the last two cycles.

KING: A lot of soul searching in the Republican Party, not just at the presidential level. And, broke, $6 billion spent on this campaign. The Democratic president stays. The Senate stays in Democratic hands. The House stays in Republican hands. Some people are going to wonder, why did we spend all that money?

BALDWIN: It's quite a chunk of change, isn't it, John King. It's a chunk of change. And Dana mentioned one senator elect-Angus King, now making two independent senators in this next Congress. Just a heads up, you and I will be speaking with that independent live from Maine about who he plans to caucus with. He may not tell us. But we're going to ask.

Also coming up next, one of the big reasons Republicans didn't have a shot at winning the Senate. Losses by Tea Party candidates. We will speak live with the chairwoman of the Tea Party Express about who's to blame.

(COMMERCIAL BREAK)

KING: Already cliche, this was a status quo election. Democrats control the Senate. Republicans keep the House. Democrats in the White House. One of the big reasons the GOP couldn't win the Senate, losses by Tea Party candidates in Missouri, Ohio, Indiana and North Dakota. In the House, Tea Party favorite and former presidential hopeful Michele Bachmann kept her Minnesota seat, but a margin of less than 5,000 votes. And no winner declared yet in Florida's 18th congressional district, although Tea Party backed incumbent Allen West trails his Democratic challenger Patrick Murphy.

Joining me now is the Tea Party Express Chairwoman Amy Kremer. Amy, the Tea Party was the big buzz out of the 2010 elections. You have a lot of Republicans now the morning after 2012 saying the Tea Party is to blame. Fair criticism?

AMY KREMER, TEA PARTY EXPRESS CHAIRWOMAN: You know, John, I don't buy it. I mean, look, you have moderate candidates that lost as well. Eric Erickson was talking about it earlier this morning with, you know, when the Republican Party continues to put up the same candidates, as in George Allen and Tommy Thompson and Rehberg in Montana. So, you know, there's a lot of blame to go around. But I think at the end of the day, what this shows is that conservatives and the Republican Party have a big challenge ahead of us.

Before the election, the polls showed that the people were concerned about the economy and jobs. Coming out of the election, the exit polling showed people are still concerned about the economy and jobs. And they're not happy with the direction the country's headed. So what that tells you is that people voted on personality, the candidate that they liked the best, and not policy. And we have to do a better job on educating people how policy in Washington affects our lives out here in the homeland.

KING: We've talked about this in the past. When many of the new Tea Party candidates came to Washington after 2010, a lot of people criticized them because they wouldn't compromise right out of the gate. And I said, you know, even if you don't like their policies, they're doing what they promised to do in their campaigns. They run ads saying they wouldn't accept new spending.

But what now? What about now? With the fiscal cliff approaching and the president our White House unit saying he reached out to congressional leaders today. Speaker Boehner will be back. The president will be back. Leader Reid will be back. If a fiscal cliff proposal comes up that has a decent amount of spending cuts, but the Republicans have to give some revenue increases, would the Tea Party give that its blessing?

KREMER: Well, this is the thing, John. And no offense to you, but the media has created this hot topic buzzword that's a dirty word, compromise. And everybody wants to place the Republicans and the Democrats in a boxing ring and who comes -- see who comes out on top. Well, the fact of the matter is, party politics got us into this mess. What we need to do is find some common ground to get this country back on track so that America wins. So we're back on that path to prosperity.

But right now, just under President Obama's term, for every one job created, 75 people went on food stamps. That's not sustainable. One job can't cover 75 people on food stamps. We cannot continue down this path. You can go and tax as much as you want, but eventually you're going to run out of people's money. At some point we've got to cut the spending and they have to do what's best for the people across this country and not what is best for their party and their job there in Washington.

KING: If you look at the exit polls last night, nationally, a large majority of Americans agreed with the president's position that those making $250,000 a year or more should pay a bit more in income taxes. Again, I won't use the word compromise. Let me set it aside. If they are all in a room, in good faith, trying to reach a deal, and if Speaker Boehner can get the president, for example, to say, we're going to cut more for Medicare, we're going to make some spending cuts here, and the president says, we'll I'll go to my guys with that deal, but only if you give me the expiration of those Bush tax cuts, maybe some higher taxes on the wealthy. Again, if a Tea Party lawmaker called you and said, Amy, if I vote yes, are you guys going to pull the rug out from under me, what would the answer be?

KREMER: John, I want them to do what is right for America so that we live within our means. Where Washington lives within their means. We cannot, like I said, continue down this path.

KING: And so if there -- if there were a lot of spending cuts, I'm trying to cut through --

KREMER: So how --

KING: I'm trying to cut through what we're talking about here. I get your point about living within their means, and I know you believe it in your heart. I've spoken to you many times.

KREMER: Right.

KING: But if you get cuts on the table, cuts on the table that make you think, thank God, here we go, we're making progress, but the only way to get them is to give some in revenues, are you willing to do that?

KREMER: It just -- I mean, you know, I'm not an economist, but I -- what I said is that I think everybody has to find some common ground and figure out what's going to work here. This is not sustainable.

And people -- I mean, America realizes it. We cannot continue down this path we're going down. And the thing is, the president, I mean, if nothing else, what happened last night shows that this country is deeply divided.

Now, if the president will do what he said in his speech last night, and be willing to work across the aisle, then, you know, I think that there are people that are willing to do that. But if he continues to go down the path that he's done, the past three and a half, almost four years now, he's been the most divisive president we've ever had. And he's not willing to work. It's Harry Reid, who under his failed leadership, has not passed a budget in three -- over three years. The Senate hasn't. And the president, every budget he's put up, has gotten zero votes, zero votes, not even one vote for his own -- from his own party.

So, you know, it has to go both ways. We have to figure it out. It's going to be a tough job. It's not going to be easy. But this is what these people are hired to do. And we expect them to do it.

KING: Amy Kremer, appreciate your time today. We'll keep in touch as this plays out. The drama will continue after the election.

KREMER: Thank you for having me.

KING: And, Brooke, you can see there, still a lot of energy, a lot of passion on the morning after.

BALDWIN: Wow.

KING: The people who had a lot at stake in this election, even though the people have spoken, they're still going to have some people who are, you know, defending their positions. And we're going to see how this one goes forward. The governing part of this now for me gets fascinating.

BALDWIN: You just hear the anger and the frustration and the passion in her voice. And it's, pretty much, when you look at the 113th Congress, very similar to the one we currently have. And it's sort of like, are we going to have the same back and forth, back and forth as we have this last year? We shall see. We shall see, John King.

KING: Yes, we shall.

BALDWIN: It is not hanging chads this time, but Florida, once again, trails the nation in getting its presidential vote counted. Find out the reason for the holdup and what this means for future elections.

(COMMERCIAL BREAK)

BALDWIN: In the hours after the polls closed, while results were coming in all across the country, in Florida, thousands and thousands of voters still lined up waiting to cast their ballots. And today, the results for Miami-Dade were finalized. Let's see how Florida stands right now. Barack Obama, look with me, 50 percent. Mitt Romney, 49 percent. Just fewer than 50,000 votes between them. But a call can't be made in Florida just yet as the ballot counting continues. John Zarrella following the story for us today.

John, tell me about the results in Miami-Dade.

JOHN ZARRELLA, CNN CORRESPONDENT: Brooke, you know, we've been waiting for some final numbers out of Miami-Dade County to come in. And they did send all the election workers home last night because it had been such a grueling, long day. Well, they finally now this morning have results from all 829 precincts. The largest county in the state of Florida.

Now, remember, there's still absentee ballots. May have all of those done by this afternoon. And there are still provisional ballots that will be Thursday or Friday before they're completed. But in the 829 precincts, all in now, interesting numbers. The president, 521,329 votes. Mitt Romney, 317,382 votes. The president with big numbers there. And compared to four years ago, he did better this time than he did four years ago when he got 499,000. Mitt Romney did not do as well as John McCain did four years ago, when John McCain had 360,000 votes as opposed to Mitt Romney's 317,000. So those numbers will help the president to pad his lead in Florida in a state that remained too close to call.

Brooke.

BALDWIN: Still counting. John Zarrella, thank you.

John King, back to you in Washington.

KING: Still counting, Florida.

BALDWIN: Still counting.

KING: Shocking.

One of the night's major revelations, though, Republican campaign strategies, look, they're going to have to change in the future as the demographics of the country change and change dramatically. So, how does the GOP adapt and will there be resistance? That's next.

(COMMERCIAL BREAK)

KING: Here is something the GOP is going to have to ponder long and hard. President Obama won re-election while losing the white vote by 20 points. The president's victory speaks volumes about how the demographics in this county are changing and rapidly.

Let's bring in CNN contributors, John Avlon and Margaret Hoover. John is a senior political columnist for "Newsweek" and "The Daily Beast." Margaret is a Republican consultant.

If you look at this, it's stunning. One of the questions going in was could the president in a tough year, bad economy, actually keep his coalition together?

Young voters, about the same. African-Americans, the same. Latinos, cracked 10 percent nationally for the first time. What is the biggest lesson for the Republican Party?

MARGARET HOOVER, CNN POLITICAL CONTRIBUTOR: You know, I think, you know, formally Republicans are saying going into this, we have got to go back and reinvest in our infrastructure when it comes to Hispanics.

I was on the Bush/Cheney re-election campaign in '04. We got 44 percent of the vote. It's not that we haven't done this before. It's not that we don't have a track record of actually reaching out to Hispanics and involving them in a coalition.

We just didn't do it this time. So I think that that's the top one. Clear numbers with youth and clear numbers of women that we also have to revisit.

KING: She mentions the Latino vote, as you travel the country and you talk -- you even find conservatives who say, I agree we shouldn't have -- you know, we should give status to anyone who is here illegally.

But the way they talk to us, the tone, and it is 2010, George W. Bush said path to citizenship, then path to status, and change their policies or tone or both when it comes to Hispanics?

JOHN AVLON, CNN CONTRIBUTOR: Well, this is directly a result of policies. Mitt Romney tried to tack to the right during the Republican primaries on the issue of illegal immigration and he paid a price for it in the general election, full stop.

We know from George W. Bush that Republicans can play competitively with Hispanics. His brother, Jeb Bush, invested heavily in that philosophy as governor of Florida. Mitt Romney didn't and he paid the price.

Republicans are going to need to reach beyond their base. One thing this election starkly shows is that they cannot depend on simply getting a larger percentage of the white vote. That is a long term loser.

KING: Let's look to the Democratic side for a minute. Is this an Obama coalition or is it a Democratic coalition? When he's not on the ballot in four years, will the youth vote stay like that?

Will he get -- will the Democratic candidate get that chunk of the Latino vote, will African-American turnout stay up at 16 percent range, but 13 percent range, but the 97 percent for him?

HOOVER: The thing about the president, he's the leader of the party now and has four years to solidify this coalition and leave the party stronger for the next -- for his predecessor.

Frankly, the thing we know about millennials and any age group they come of age in terms of their partisan identity, if they vote for one party three times in a row in a presidential election, it is party identity, it gets harder over time.

AVLON: Yes, and look, the Democrats start with an edge. They made a risky demographic bet this election and it worked out because of their intense targeting, their intense ground game. They really were able to make up for some of the deficiencies that they gambled.

I think this is President Obama's coalition, seen with perspective. This is a unique historic political figure, someone more inspiring, especially to the African-American community.

It will be iconic for probably our nation's history. So that impact is dramatic. Republicans are going to have to start reaching out beyond their base, but Democrats investment will pay off more in 16 minute did in 12 and more than 20 than it did this year.

KING: Let me circle back to the Republicans as we close, where does that breakthrough come from, the outreach to Latinos and the proper policy and the proper tone.

The policy proposal, college educated women, look back at us, does it come from Washington, whether the Republicans are still essentially the same House of Representatives or will it come from out in the country where you have the president winning re-election, but 30 Republican governors out there. HOOVER: It is going to have to come from both. It has to be a meeting of grass tops and grassroots. The reality is the writing is on the wall. We all know as Republicans we have to go back and think through where did we lose votes, where are we losing and how will we make up ground.

The thing stunning about women, even though we're a pro-life party, 78 percent of Republicans believe the choice for women's health care is between a woman, her doctor, her family and her bond.

So something just isn't quite looking right. We, frankly, without having an elected leader of the Republican Party to stir through the next four years, you're going to see a little a bit of war (inaudible) again.

KING: If Republicans don't get better fast, will it be the independent the next presidential election?

AVLON: There very well could. Look, Angus King got elected to Senate today. He is an independent. He was an independent governor before. At some point, something got to give.

Either the Republican Party needs to find a way to build a big tent again or the social conservatives will increasingly find themselves at odds with the libertarians who represent a rising demographic in the party.

The Republicans have a great argument with swing voters and independents on deficits and debt where they losing very often is with social issues. And so they are going to have find a way to build that big tent again.

Otherwise, those fishers will erupt at some point if the party remains polarized and pandering their special interests.

KING: John and Margaret, thank you. And Brooke, as you come back in the conversation, ready to join me on something?

BROOKE BALDWIN, CNN ANCHOR: Go for it.

KING: Ready, two words.

BALDWIN: Yes.

KING: Happy anniversary.

BALDWIN: Did they get any sleep? I feel like Margaret Hoover was up way, way late. Margaret Hoover and John Avlon --

AVLON: Not so much, but it's -- yes.

BALDWIN: Guys, happy anniversary. Thanks to you both and I know as you all are talking demographics, we've been talking races. Coming up next, we have to talk about something else. We have to talk about pots, marijuana. Voters choosing to legalize it and not just one, but two states and no, no, not just for medical purposes, but for recreational use. Lives could become one hot mess.

Plus, shall we say it, snow. Can you tell? This is Columbus Circle live pictures in New York City. Folks, another storm getting ready to hit people there across the region. A live report on where and when this nor'easter hits next.

(COMMERCIAL BREAK)

BALDWIN: Here is a piece of history unfolding before our very eyes. Voters in two states, Washington State and Colorado voted yesterday to legalize marijuana for recreational use.

They're not talking about now medicinal use. They're talking about getting high, period. Here's reaction from the legalization camp in Colorado.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'm feeling amazing, the best day I've seen in my life.

UNIDENTIFIED MALE: Obviously it is always nice to be right, so, but you know, we're really happy and most importantly it is wonderful we're not going to see another 10,000 Coloradans arrested and made criminals in this coming year.

(END VIDEO CLIP)

BALDWIN: OK, here's the statement from normal, the long time pro-pot lobbying organization. The significance of these events cannot be understated. Tonight, for the first time in history, two states have legalized and regulated the use and sale of cannabis, marijuana legalized and regulated here.

So what we're talking on here is the potential birth in these two states of a multibillion dollar industry, legitimate therefore taxed and a whole lot of regulations to set up first. There is the matter of federal law, under which marijuana is illegal.

Keep that in mind, this is against the law, federally. The Department of Justice released a statement within this past hour reminding folks of that.

Joining me now on the phone from London, Jonathan Caulkins, professor of Public Policy at Carnegie Mellon University and author of the book "Marijuana Legalization: What Everyone Needs To Know." Jon Caulkins, is this the milestone that pot smokers say it is?

JONATHAN CAULKINS, CARNEGIE MELLON UNIVERSITY (via telephone): It absolutely is. And it is more than the beginning of marijuana legalized for recreational use. It is also legalizing, which affects state law for profit large scale commercial production to supply that use.

BALDWIN: So when we say marijuana industry, tell me what 2014 will look like in Colorado. CAULKINS: And it is very hard to figure out because it depends what the federal government does. If the federal government goes hands off, then you will see as you pointed out a legitimate industry, legitimate producers. Manufacturers producing a range of products including candies with marijuana in them and then sold in stores.

BALDWIN: You know, in terms of dollars and cents, there is a lot of money put into backing the legalization of marijuana. Who in Colorado, who in Washington State provided the big money what was it small time smokers, growers, someone else?

CAULKINS: No, in Washington State, there was one major donor, Rick Steves. But other than that, the major donors were people from outside of the state.

BALDWIN: What about -- let me read this first and then we'll get to the Department of Justice. Let me read a quote. This is from the governor of Colorado, John Hickenlooper.

He said this, quote, "The voters have spoken and we will respect their will. That said, federal law still says marijuana is an illegal drug so don't break out the Cheetos or goldfish too quickly."

I don't know what he's talking about there, Jon. But how is all of this going to shake out between the states and the feds who say this is illegal?

CAULKINS: It is a nightmare for the governor and for the president because the best possible circumstance would be that they reached some sort of negotiated circumstance.

Like the federal government says if you make good faith efforts to prevent diversion to other states, then we won't interfere with your efforts to regulate the industry.

But there is going to have to be dialogue and compromise because the laws just absolutely conflicting now.

BALDWIN: Have you been in touch? What are you hearing from the Department of Justice as far as taking the time and the money to prosecute?

CAULKINS: Traditionally, the federal agents have gone after high level people, 200 pounds and up, or at the border. And they have the right to go after people who have smaller quantities, and the big question is whether they stay only at those very high quantities or if they do start to fill in for some of the lower level enforcement that in the past has been done entirely by state and local.

BALDWIN: Jonathan Caulkins, professor at Carnegie Mellon University, thanks for happening on the phone with me from London. John King, marijuana, recreationally legal in two states now. How about that?

KING: Watch how that one unfolds. A lot of tension between the states and the feds on that issue as you just noted. We'll watch as it plays out. Brooke, thousands of people still suffering, of course, from the impact of Sandy. They may soon be hit by another storm, this time a nor'easter. Rob Marciano joins us next with the details.

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BALDWIN: Victims of superstorm Sandy are bracing for another powerful storm, a nor'easter now, moving up the east coast, threatening areas still very much recovering from last week's storm.

I want to go straight to Rob Marciano. Rob Marciano in Staten Island where I know many, many people were hit very, very hard just last week and here they go again.

ROB MARCIANO, AMS METEOROLOGIST: Yes, and then this. It is even beyond another storm that has rain and wind and surge. We have got temperatures that obviously are close to the freezing mark. They have been below freezing the last couple of nights and now the rain turned to snow.

This is just not a good situation. You go that way, a quarter mile, half mile, just past the trees, that is lower harbor of New York, the Atlantic Ocean. That's where the storm surge came over a week ago, five, six and in some cases seven feet high.

Pouring down these streets, wiping out everything in their path, any car that was on this street was completely washed back further inland and that's where damage goes for several more blocks. Up and down the blocks, outside of these homes, you see this sort of debris.

Anything that people have been able to somewhat save since this storm. We have been talking with the family that lives in this house and they have been kind enough to show us around, see what kind of damage they have endured.

Since a week has gone by, they have ripped all the flooring out, ripped all of the side walls out as well, just trying to get that damaged stuff out of here so that it doesn't mold, sleeping upstairs in the cold with absolutely no power. Here is what Nick had to say to our viewers last hour.

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NICK CAMERADA, HOMEOWNER: Everything that I own is here and I'm trying to save it. My wife, my kids, my best friend Mike, and I'm just going to lose everything. I mean, my body is shutting down. There are no words to explain or express the stress, the pain, the suffering.

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MARCIANO: Heart breaking stuff. You're looking at an actual weather instrument inside of Nick's home. Temperature around 40 degrees, relative humidity 80 percent, not exactly livable conditions, but they're going to stick it out, Brooke. They had some looting the first night of the storm. And they're afraid if they evacuate tonight that that's going to happen as well. So they're trying to get a space heater cranked up because obviously temperatures continue to drop as this nor'easter rakes up the coast line.

BALDWIN: Heart breaking and the fact that Nick's story is one of so many in both New York and in New Jersey. Rob Marciano, thank you very much. We're thinking of him and so many others. John King, just awful, first the storm surge and now a lot of snow.

KING: A lot of snow, cold, hardship, families displaced. It is horrible. Good that Rob and our other correspondents are keeping track of the story.

Brooke, as President Obama gets ready to head back to Washington, one immediate task at hand, yes, filling a second term cabinet. Secretary of State Hillary Clinton, the Treasury Secretary Tim Geithner, both planning to leave.

Up next, a short list of possible replacements. Plus, breaking down Mitt Romney's place in history.

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KING: We got some perspective now about the election results, about the challenges facing the president's second term in office and Mitt Romney's place in history.

Joining me for that is my colleague here and the anchor of "THE SITUATION ROOM," Wolf Blitzer, a presidential historian, Julian Zelizer of Princeton University. Mr. Zelizer, let me start with you. How will history remember Mitt Romney?

JULIAN ZELIZER, PRESIDENTIAL HISTORIAN, PRINCETON UNIVERSITY: Well, I think they'll remember him in part for his family. In part it will be a negative memory, meaning the kind of campaign he ran was almost the last of an era, appealing to white male voters, to older voters.

And people will remember the Latinos, the women, whose vote he couldn't capture. I think a lot of Republicans will be scratching their heads and thinking about how to run a different kind of campaign four years from now.

KING: And, Wolf, the recriminations are immediate. People saying it was Romney's fault, it was Romney's fault. Interesting, you know, Paul Ryan issued a statement saying, polite saying thank you for the opportunity.

We don't know what happens to him. But in terms of Governor Romney, the party is not going to spend a lot of time fretting over him, I think.

WOLF BLITZER, HOST, CNN'S "THE SITUATION ROOM": You know, he ran a strong campaign. The problem he had was the Democrats, especially the campaign, the Obama campaign, the super PACs, over the summer, after he got the nomination. They painted him in such a negative way.

That strategy of hammering away at Bain Capital, the Swiss bank accounts, the Cayman Islands and then when that 47 percent tape came out, that controversial tape, it really hurt him. He did well in the first debate. He almost recovered.

He got it close, got to give him some credit, but that negative attack on him, it really was successful when all -- negative politics sometimes works.

KING: Sure does. And in some ways it has to be harder for him today than it was for John McCain four years ago because he did come so close in some of these states.

But let's turn our attention, Mr. Zelizer, to you first on the governing challenge. The most popular member of the Obama cabinet is the Secretary of State Hillary Clinton. She has given hints she might stay on a little longer.

Everybody thought she would leave right after the election. If you're the president of the United States, and both from a global perspective and a domestic perspective, she brings you value, what do you do now?

ZELIZER: Yes, she's incredibly useful both for what she can do abroad and also for her relations here in the United States, with the media, with members of Congress.

John Kerry is one person who has been mentioned, who has both the foreign policy experience and some of those legislative connections, which are actually quite important to the job.

Susan Rice is another person who has been mentioned who has less kind of gravitas on Capitol Hill, compared to John Kerry. My guess is President Obama will try to find someone relatively comparable who can shine in the media, who can do well with members of Capitol Hill as they deal with the challenges abroad.

KING: The Democrats kept control of the Senate, Wolf. So it is slightly easier when he's talking about confirmees. However, the Benghazi dustup has put a little bit of tarnish on Susan Rice, if you will. Has that, the potential of a more bruising confirmation fight? Does that hurt her chances?

BLITZER: Yes, I think it does. I think she was -- she was very -- she and Kerry, I think were the two frontrunners, but that television appearance, five Sunday talk shows in which she said what she said.

And given how angry the Republicans are on this whole Benghazi thing, the accusations they're making and they're going after her directly, I don't know if the president wants to start of a second term with a bruising confirmation battle for Susan Rice.

So from her perspective, I think it has hurt her. John Kerry, he did a pretty good job helping in the debates. I think he's got a good shot at it. We'll see if anybody else emerges as a candidate. KING: Even Republican senators tend to be kind to one of their rivals. We'll see how that plays out. Wolf Blitzer, Julian Zelizer, thanks so much. Brooke, want to be a candidate for the second term cabinet?

BALDWIN: I'll pass. Thank you, though. Good luck to those who would like to try. That's quite a daunting job. John King, thank you.

We have been watching these races, pontificating over who might be in the cabinet. Got to tell you, there were a number of other important victory speeches last night, in addition to that of the president. Ahead, the highlights you missed.

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UNIDENTIFIED MALE: They said it couldn't be done when the -- but when the people stand together, nothing is impossible.

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