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State of the Union

Interview With David Axelrod; Interview With Ron Paul; Interview With Ellen David of National Retail Federation

Aired October 30, 2011 - 09:00   ET

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

CANDY CROWLEY, HOST: The economy shows a pulse and the president...

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: We can't wait for Congress to do its job. So where they won't act, I will.

(END VIDEO CLIP)

CROWLEY: Flexes some muscle.

Today, a conversation with senior Obama campaign strategist David Axelrod.

Then, Ron Paul on his 2012 bid, the Tea Party and third parties.

And a look at early primary states with a trio of veteran reporters -- Florida's Adam Smith, Iowa's Kay Henderson, South Carolina's Gina Smith.

Then, the economy through the prism of Halloween with Ellen Davis of the National Retail Federation.

(BEGIN VIDEO CLIP)

ELLEN DAVID, NATIONAL RETAIL FEDERATION: When the economy is suffering, Halloween spending soars.

(END VIDEO CLIP)

CROWLEY: I'm Candy Crowley. And this is State of the Union.

An economic trifecta Thursday boosted the administration and maybe the president's re-election chances, too. New figures show the economy grew by 2.5 percent in the third quarter, almost double the growth in the previous quarter. And European leaders struck a deal to settle Greek debt and bolster the euro. Then world markets surged in response, Wall Street ending Thursday up over 300 points.

Meanwhile, out on the campaign trail, the president tried to reconnect with voters where they are hurting. He launched a spate of initiatives he can execute without congressional approval -- helping homeowners with underwater mortgages, lowering student loan payments, training for veterans to work in the health care industry, and informational tools for small businesses.

(BEGIN VIDEOTAPE)

CROWLEY: Joining me now, senior campaign strategist for the Obama re-election campaign, David Axelrod. David, thanks for being here.

Now, before you get just too giddy about these latest economic --

DAVID AXELROD, OBAMA SR. CAMPAIGN STRATEGIST: I don't get giddy. I don't get too low, but I don't get giddy. That's one of the keys here.

CROWLEY: Well, and the fact of the matter is, that's it's a daunting task when you look at some of these economic stats that are out there. These are hard numbers for the Obama campaign: 14 million Americans still unemployed, and we all know the number is much greater than that; 86 percent of Americans describe the economy as poor, that's a right track/wrong track question which always is a problem for people looking for re-elect; only 38 percent of Americans approve of President Obama's handling of the economy.

Given those, what is your strategy?

AXELROD: Well first of all, let's talk about what's going on with the American people because their life is more than just what's going on in the political game and the fact is that it's not just about jobs. It's about wages. It's about what's happened to the middle class over a long period of time.

CROWLEY: Sure, wages are down.

AXELROD: And they've been down over the course of the last decade. And these are trend lines that we have to attack so we need to do things that will recover from the recession and create jobs in the short run, and rebuild the economic security the middle class has lost in the long run.

We have ideas -- the president's all over the country talking about what we can do immediately. He's got ideas about how we rebuild the middle class in the long run. And the other side will offer their ideas. Theirs seem to be to go back to what we were doing before the crisis.

I think we're going to have a great debate and the American people are going to decide where their interests lie and who best represents them.

CROWLEY: Some of these initiatives, you've heard a lot of economists I'm sure saying, look, anything helps, but these are kind of minor. A lot of people brought up the Clinton dress code, these tiny initiatives saying really around the margins these may help but these are not big things. There are much larger sort of political things...

AXELROD: Let me just say, there's no panacea. But if you're one of the millions of homeowners who can't refinance their homes because their home values have dropped, even though they've made their payments every month, it's not a small thing. It is a big thing.

CROWLEY: No, of course not on an individual basis.

AXELROD: It is easy to sit in Washington and make those judgments, but if you're out there in this economy these things do make a difference.

CROWLEY: Sure. But looking at the economy as a whole, this is a small dent. I understand in people's lives...

AXELROD: Well there are larger things we can do. Obviously the American Jobs Act, all economists agree would have a market effect on economic growth and would create millions of jobs. We just have to get the congress to act on it. Their strategy seems to be obstruction and delay. And people can't afford that. That's why the president is embarking on this -- he will take every action he can take under the law on his own to improve the economy, to give a little more security to the middle class. But it would be great to get some cooperation.

CROWLEY: One year ago, two years ago, now almost three years into the Obama administration, things have been lousy for a lot of people. So in his "we can't wait" campaign, isn't the question, OK, fine, if these are great initiatives for people, why did he wait almost three years?

AXELROD: Well, he's embarked on a lot of initiatives. This -- look. The problems we got into, Candy, were years in the making. They are deep, they are complicated and they're going to require sustained perseverance and lots of ideas. There's no silver bullet for them, so you have to keep chipping away at this problem and that is what he's doing.

What we shouldn't do is go back to doing what we have heard from these Republican candidates from the congress, let's just deregulate Wall Street, let them go back to writing their own rules, let's cut taxes for the -- cut taxes at the very top. It is the same strategy that has failed this country and they want to go back to it.

So there is a very big difference between what the president is trying to do and what the Republicans are offering.

CROWLEY: Let me ask you about a story that appeared recently, I believe in the New York Times, about lobbyists. You have raising money for the president -- and people called bundlers, which is they give what they can, the maximum allowed -- all of this is perfectly legal, let me say that.

And so you have people who really are, by any stretch of the imagination, lobbying congress, lobbying the White House. They are lobbyists and they are bundlers, that is they ask other people to give money.

And The New York Times pointed out a number of individuals who didn't ask for this so let's not go through the individuals. But just in general, are you guilty of going by the letter of the president's promise and not the spirit?

AXELROD: Well, it's interesting that you talk about the president's promise ...

CROWLEY: His promise, by the way not to have...

AXELROD: Everyone should understand the reason why The New York Times can write that story is because the president is disclosing everyone who raises money for him. None of the Republican candidates are willing to do that.

The president has imposed on himself a ban on taking contributions from federal lobbyists. He has imposed on himself a ban from taking money from political action committees. But more importantly as president, he has ended the resolving door between industry and the government so he doesn't hire lobbyists to come in -- the last administration you saw lobbyists come in, write the rules, write the laws, then go back to their jobs in industry. That is not going on right now. This is a profound change.

So we can quibble about issues like this, but when you look at the substance of what he's done, he's gone so much farther than anybody has ever gone before. Is it perfect? Its not perfect, Candy. We are not in a perfect political system.

We are raising money because we have to. There are people who are promising to spend, you know, hundreds of millions of dollars against us who don't have to disclose anything. So we have to be prepared to ward that off.

So it is not a perfect system. But is he better than anybody has ever been before on this? Has he made a real difference on this? Absolutely.

CROWLEY: Without taking away anything he's done in this score, would you concede that you have people who are bundlers and who are raising money for President Obama that, by the definition of the word lobbyist, are in fact federal lobbyists?

AXELROD: Well, I don't -- I mean I'd have to run through the list of people who were there and i don't know the answer. But what I do know is..

CROWLEY: It's possible though.

AXELROD: ...this administration has been more scrupulous and more transparent than any administration in history.

CROWLEY: And also promised not have federal lobbyists raise money for them. That's why we're having this conversation.

AXELROD: We promised not take conversations from federal lobbyists and we don't take contributions from federal lobbyists.

CROWLEY: That are registered. AXELROD: But the point here is, do lobbyists leverage the kind of influence in this administration that they have in past administrations? There isn't a person in Washington who could argue the answer to that is yes.

CROWLEY: Let me move you on to something the president said at a fundraiser Wednesday, which it was reported in one of the San Francisco papers, in which he said to fundraisers at a fundraisers, "we used to have the best stuff. Anybody been to Beijing airport lately or driven on high-speed rail in Asia or Europe? What's changed? We have lost our ambition, our imagination, and our willingness to do the things that built the Golden Gate Bridge and Hoover Dam and unleashed all the potential in this country."

I tell you, I read that and I thought Jimmy Carter malaise. It's sounds like the president blaming...

AXELROD: What he was commenting on was the Republican notion that we can just -- in the 21st century that we can withdraw, that we don't have to build the high-speed rails, that we don't have to make the kinds of investments that other countries are making in research and development, that we don't have to educate our kids and make sure they're the most competitive in the world and he is challenging our government and our politics to respond to these long-term challenges. That's a lot of what this election is going to be about.

The president's commitments are very clear. He wants to lead the world in all these areas because that's how we're going to rebuild the middle class, that's how we're going to create jobs on which people can earn a living.

CROWLEY: We've lost our ambition, we've lost our imagination, we've lost our willingness...

AXELROD: That's his commentary on the approach that's being advocated by almost the entire Republican ticket.

AXELROD: This notion that we can just withdraw, pull up the drawbridge, don't do anything about education, don't do anything about research and development, don't do anything about rebuilding our roads and bridges and airports and railways, and expect to be competitive. That is not a winning strategy for the 21st Century.

CROWLEY: Let me also read you something that the new White House chief of staff -- well, not so new anymore actually, William Daley has been around there for a while now, when he was talking to Politico on Friday and he said: "On the domestic side, both Democrats and Republicans have really made it very difficult for the president to be anything like a chief executive. This has led to a kind of frustration."

So, together with those things, it certainly sounds as though, well, we'd like him to be a chief executive but the Republicans and the Democrats have stopped him from doing that. Does the president bear any responsibility for the current state of the economy and for the current what's perceived as lack of action on Capitol Hill? AXELROD: Well, let me just review a few things. First of all, when he got to -- we were in a free fall when he got to office. And the last quarter in the last administration was the worst since 1930. Minus 9 our economy was shrinking, losing 750,000 jobs the month that he took over.

He to steps that were as unpopular...

CROWLEY: It was bad. I think everyone could see that.

AXELROD: He took decisive steps that were as unpopular as they were necessary. That's why we have an American auto industry today, why, instead of losing a million jobs there, they're now gaining jobs.

That's why the economy has been growing, albeit at too slow a pace. We've got a lot of work to do but the fact is he took steps, those steps made a difference. And now we have to take more steps to get back what the middle class has lost, which is their economic security.

That is a long-term project. It took years for us to get into this problem, it is going to take longer than anybody would like to get out of this.

CROWLEY: Should it be surprising though that a president has a hard time with Congress? (INAUDIBLE) oh, we're so frustrated here at the White House.

AXELROD: Well, look, I think this is something -- something different going on right now. When you have the leader -- the Republican leader of the Senate say, our number one goal -- in the midst of this economy, our number one goal is to defeat the president, and they're acting like it.

They don't want to cooperate. They don't want to help. Even on measures to help the economy that they traditionally have supported before, like a payroll tax cut, like infrastructure, rebuilding our roads and bridges and surface transport. These -- so you have to ask you a question, are they willing to tear down the economy in order to tear down the president or are they going to cooperate?

And, listen, there's a reason why the Congress is at 9 percent in some polls, approval, lowest in history. Because this is different than we've ever seen before.

CROWLEY: But, again, he's blaming Democrats in here. But I've got to ask you a final question. And that is, you're beginning to take friendly fire as well from Democrats saying, you know, the latest was Dennis Cardoza, the retiring -- from California, saying the housing policy has been rotten, et cetera, et cetera.

And we're now seeing stories that it's sort of the every man for himself story that tends to come maybe a little later in the election cycle. What is your advice to Democrats in conservative places in terms of how they embrace President Obama, who, at this point doesn't have very high approval ratings? AXELROD: Well, first of all, let me say, you said at the front end, don't be too giddy. And I said I never get too giddy and I never get to low because we've been through ups and downs, even in the last campaign where the same people who were very downbeat before, the same folks who said, I'm not sure about this, were writing us off, and then they came back when we came back.

I believe we're going to win this campaign and we're going to win this campaign because on the fundamental issue, which is, who's going to stand up for an economy in which the middle class can grow and not shrink, people can -- where hard work is rewarded, responsibility is rewarded, and we stick to the values that made our economy strong, we are on the right side of that fight.

This president is working every day in that regard and I think all Democrats are going to be able to line up behind him. By the way, if you look at polls, his support among Democrats is higher than previous Democratic presidents were at this point.

It's very robust. I'm not worried about Democrats supporting the president. I think Democrats will support the president. Ultimately I think independents will as well.

CROWLEY: Come back and we'll talk a little more about independents at some point.

AXELROD: Thank you. OK.

CROWLEY: David Axelrod, chief strategist for the re-elect campaign, thanks so much for being here.

AXELROD: Thanks, Candy. Great to be here.

CROWLEY: After the break, Ron Paul on his plan to restore the economy.

(COMMERCIAL BREAK)

CROWLEY: Joining me from his home state of Texas, Republican presidential candidate Congressman Ron Paul.

Thank you so much, Congressman, for being here.

REP. RON PAUL (R), TEXAS: Good morning.

CROWLEY: I want to talk a little bit about your economic plan in which you call for shuttering, basically closing up the departments of Energy, Education, Housing and Urban Development, Commerce, and Interior. And you're proposing about $1 trillion in budget cuts.

Now I want to show something to our audience that gives you an idea of Americans who are receiving government benefits, 48.5 percent of Americans live in households where someone receives a federal benefit, 34 percent of Americans live in households that receives means-tested benefits: things like Medicaid, aid to dependent children, that kind of thing. Do you, in a Paul administration, foresee that those numbers would come down? Because you're talking basically about...

PAUL: Well, that have to...

(CROSSTALK)

CROWLEY: I'm sorry, go ahead.

PAUL: Well, yes, they have to come down because the numbers you quote are obviously unsustainable. And if we don't do anything, none of that's going to work because it is all going to be eaten up with inflation.

So it isn't the choice of looking toward my program or having the status quo of 48 percent of the people still getting checks, because it won't last. We're not producing. We don't have jobs. We're in debt. We're on the verge of another downgrade of our credit.

So we face dire consequences. So if we want to save some of these programs, which I make an attempt to do, save Social Security and medical care for the indigent, and some of even the educational programs, we have to do something.

And we got into this mess by spending and borrowing and printing money, so we can't get out of it that way. So we have to cut spending. And this is something nobody else wants to talk about, none of the other candidates are talking about cutting next year's budget. Everybody's talking in Washington and the other candidates talk about cutting the baseline increases five and ten years out. And this is why there is no reassurance gone to the economy. Nobody believes it is going to do any good.

So I obviously believe obviously very sincerely that you can't get out after debt problem by accumulating more debt. It just doesn't work.

CROWLEY: One of the things that you have proposed there have been some controversy about is to begin to phase out, as you explain it, federal student loans to folks who want to go to college, federally backed student loans, that you want to phase out over time.

At some point then you would have people who really don't qualify for private loans, who couldn't walk into a bank and say my son needs to go to college and I need a loan. They simply won't qualify. Are there just some people who won't be able to go to college that want to in a Paul administration?

PAUL: No, I don't think so. Anybody who's ambitious enough will get to go to college. The problem is college costs to much. And with the good intentions of giving people houses at discount, you know, it ends up with a house bubble and the people who are supposed to be helped lose their house, same way with the education. The attempt to help people in education, all you do is you don't get better education, you end up actually pushing the price of education up. So we've delivered now hundreds of thousands of students graduating with a trillion dollars worth of debt? And no jobs? So it is a totally failed policy.

Only a generation ago we didn't have government programs and people worked their way through college. And I was able to get through medical school and college. But it wasn't so expensive.

So it's the inflation, the problems with the government. As soon as the government gets involved for good intentions, there's always unintended consequences and almost inevitably it back fires.

And besides, let's say it did sort of work -- and it does work for some people. Some people get an education at the expense of others. But why should people who are laborers who never get to go to college, why should they be taxed to send some of us through college? So it not even a fair system when it works.

But obviously it doesn't work. And that's why it is coming to an end. And now they have to talk about, well, we're going to have to bail out everybody, bail out housing and now bail out the student loans. But that's not the answer. The answer is looking toward the cause and the cause is spending, debt, printing money, inflation, too much government, loss of confidence in the free market, loss of confidence in liberty is what it is. And where is the responsibility? The responsibility is on the individual and family to take care of their needs, not federal bureaucracy. It just doesn't work. CROWLEY: But would you admit that there are people who need federal help, be it an education or be it in housing, or food stamps, I mean that kind of thing.

PAUL: Yeah, there's always some needs. The market isn't perfect. But instead of having a trillion dollars worth of debt in a medical care system that's totally broke down, you would always have some needs.

But that was in existence before 1965 but there was nobody out in the streets without medical care, nobody out in the streets that -- there were more people under bridges now than there were back then.

And also, there were loans. People do loan. But even if they have difficulty, you know, sometimes it takes people six years to go through college and sometimes it takes people four years. But back then, there were jobs available. The whole thing was the cost was so much lower.

So, yes, it will not be perfect but what we have now is this catastrophic mistake where people have a pseudo education and no jobs and all debt. I mean we've indentured them for a long, long time to come. So we have to challenge the status quo on how we run our economy and run this country.

CROWLEY: Let me turn you to politics here. You've raised a bit of a stir because you have refused to flatly rule out a third party bid. Now I know the minute you say I might do a third party bid, that kind of dooms a Republican bid. But nonetheless, if there were a third party bid, let's just say as a hypothetical, wouldn't you see a third party bid from the Republican side of the equation as something that would doom Republican chances?

PAUL: Well, I don't think it would doom it. It would cause a little bit of a problem.

CROWLEY: Cause a lot of a problem.

PAUL: Remember, Reagan did quite well. Yeah, but Ronald Reagan did well with Anderson in it and he still won rather easily.

CROWLEY: George H.W. Bush didn't do so well with Perot.

PAUL: Yeah -- but -- oh, OK, that's true, that's another example.

But anyway, I have no intention of doing it. Nobody's particularly asked me to do it. And they know what I'm doing. And I have no plans whatsoever to do it.

CROWLEY: Let me ask you about something that a man named Matt Robbins, executive director of the American Majority, which is a Tea Party faction, which has some sway -- it is not a small group, it is a fairly good size group -- who said this of Michele Bachmann, "let's face it she's a back-bencher and has been a back-bencher congress person for years. This is not a serious presidential campaign."

Do you agree with that?

PAUL: Well, I think she's very serious. And I think she did quite well. We were essentially tied for the Ames straw vote. So no, to say she's not serious or for somebody to all of a sudden make a declaration on TV or make some challenges that's repeated on TV means that a person's campaign is wiped out. I don't think that's fair.

CROWLEY: And finally, George Will, a well known conservative columnist, wrote this about Mitt Romney, "Romney, supposedly the Republican most electable next November, is a recidivist reviser of his principles who is not only becoming less electable, he might damage GOP chances of capturing the senate. Republicans may have found their Michael Dukakis."

What's your reaction to that?

PAUL: Well, time will tell. There's obviously times when Mitt has changed his position, you know. And he's had to answer to it. But he's pretty smooth in answering this. But, no, I've seen ads and comments where he's changed his position on a lot of things.

CROWLEY: Does that make him unelectable?

PAUL: No, I don't think so, not in this age. It gives him a challenge but they have challenged all the candidates. They haven't challenged me for flip-flopping so I'm very proud of that.

CROWLEY: All right, thank you so much Congressman Ron Paul for joining us this Sunday, I appreciate it.

Coming up -- national polls are important, but you can learn a lot more from primary polling in critical states. We give you the breakdown next.

(COMMERCIAL BREAK)

CROWLEY: With just over two months before the first votes of the primary season, former Massachusetts governor Mitt Romney is well positioned, though not yet comfortably positioned, to be the next Republican nominee.

In New Hampshire, a CNN/ORC poll finds Romney blows out the competition with 40 percent of the vote.

In Florida, 30 percent of Republican voters give Romney the nod, considerably more than Cain's 18 percent.

In Iowa and South Carolina, Romney's edge is a bit smaller but notable because he is doing well in two states with a conservative Tea Party-esque Republican electorate.

In both states Romney is basically tied for the top spot with businessman Herman Cain.

But before you go declaring game over, note that only about a third of those polls say they've made up their minds.

Up next, three veteran reporters from early voting states.

(COMMERCIAL BREAK)

CROWLEY: Joining me now to talk primary politics, Adam Smith, political editor of the St. Petersburg Times in Florida, Kay Henderson news director of Radio Iowa, and Gina Smith, lead political reporter of The State newspaper in South Carolina.

I am excited to have all of you on. Let me just start with actually the primary I think that's the furthest away and that's in Florida.

Adam, it is one thing to look at these polls, it is another thing to be on the ground and feel it. So tell me what you're picking up there insofar as the Republican field is concerned.

ADAM SMITH, ST. PETERSBURG TIMES: I think Romney has been campaigning in Florida for basically six years, but I think this is still a wide-open race. Florida will be the first closed primary where only Republicans can vote. And I think Rick Perry's still in it. I think there is a lot of enthusiasm for Herman Cain. So a lot can happen in Florida.

CROWLEY: And a lot can happen between now and the end of January, that's for sure.

Gina, let me ask you about The State which you all are always so interesting down there because of course there's no party affiliation so it is a little hard to kind of figure it out.

But what do you think accounts for the fact that Romney does seem to be doing pretty well in a state where everyone thought, oh, these evangelical Christians won't like a Mormon, and yet he pretty much is tied for the lead with Cain.

GINA SMITH, THE STATE NEWSPAPER: You're so right, Candy. Back in 2008, he finished a disappointing fourth, but this time around in every poll that you see he's pretty much at the top or in second place every time. The most recent polling numbers he's behind Herman Cain but still within the margin of error and there has been a lot of question in a state where you have so many evangelical Christians whether or not the fact that he's a Mormon will be a problem. But it seems that this is not the Republican Party of your grandfather in South Carolina anymore.

CROWLEY; So something has changed since -- in the last four years or maybe eight years so far as that's concerned, you think.

G. SMITH: Absolutely. I think things are changing in South Carolina. Take, for example, our governor, Nikki Haley. She's the daughter of immigrant parents. She was raised a Sikh, but converted to Christianity. So that becomes less and less of an issue in South Carolina which surprises a lot of people.

CROWLEY: And Kay, in Iowa -- I love Iowa, because basically we give poll numbers and it shows Romney in the lead and you think, well, that's great, except for polls mean absolutely nothing when it comes to a caucus.

So to you, the question I think is the same as to Adam -- what is the feel you're getting in terms of the campaign best suited to turn out on caucus night enough folks to stick with them?

KAY HENDERSON, RADIO IOWA: Well, The Des Moines Register issued its Iowa poll this morning and I think it highlights what Romney is doing here. He has held on to the people who supported him last time around pretty credibly through this campaign and what you see in Herman Cain, who has a 23 percent compared to 22 percent for Romney in today's Iowa poll, is that Herman Cain has that likability factor. He has the tea party factor. And those are weaknesses in the Romney campaign.

So I think what you see here is that the other candidates -- and there are plenty of them -- sort of highlight the weaknesses in the Romney candidacy.

CROWLEY: So -- and I want to show our viewers that new Des Moines Register poll, because it is new today showing Cain and Romney at the top. And obviously organization is just almost everything in the state of Iowa when it comes to caucuses, but what do you make of the fact that the top two people in Iowa right now, according to this Register poll and our earlier poll, are folks that haven't really spent any time in Iowa? Doesn't that run counter to everything we've heard about these early states, that you've got to be there early and often and none of these guys really are? HENDERSON: Well, I would point back to the October 2007 Iowa poll which showed Mike Huckabee at back of the pack with 12 percent in October before his finish. It also showed that Fred Thompson who was a relatively recent entrant into the race was in the number two position, and Rudy Giuliani was essentially tied for third.

So I think still at this point, the race is very fluid and that's being reflected in this poll today.

CROWLEY: Adam, let me go back to you, because we -- I think since the very beginning of this race we have talked about Mitt Romney, the weak front-runner, and I think we are still today talking about Mitt Romney, the weak front-runner.

What changes that in Florida for him? How does he seal this deal? What's the Republican electorate looking for?

A. SMITH: Well, I think it's not that much dissimilar from what we are seeing in other states. The Republican electorate is looking for someone they're comfortable is going to beat Barack Obama. And electability really does matter. It may matter just as much as trusting the core principles of a candidate. So he's got that going for him. And he also has -- he's been here a lot, Mitt Romney. He has camped out in northeast Florida where there's a lot of Republican votes. He's got a lot of people that know him and trust him and the rest of the field is sort of dividing up that anti-Romney vote.

CROWLEY: Adam, Gina, Kay, I want you three to stick with me. We're going to have more with our panel after this break.

(COMMERCIAL BREAK)

CROWLEY: We are back with Adam Smith, Kay Henderson and Gina Smith -- no relation, we should add, and states apart.

Kay, let me start with you about the dynamic of the Democrat versus Republican in the state of Iowa. We tend to think of it as a swing state, but it is not really. It tends to presidentially vote Democratic. Can the president count on this one or do you see trouble ahead?

HENDERSON: I think Obama will face what he faces in every state in the country -- questions about the economy, questions about the state of affairs worldwide. And I think the Obama campaign knows that. They have offices -- not just an office, but they have spread out across the state with campaign offices already in Iowa.

The Democratic Party is already trying to make the argument that a Mitt Romney versus Obama match-up here in Iowa would be problematic for Romney because he hasn't spent much time here. He's only been physically in Iowa three times in this calendar year.

CROWLEY: And so when you look at the dynamic right now, I know that Iowa also has sort of a large pacifist streak to it. I used to live in Iowa and there is very much an anti-war vote. Do you think the president has...

HENDERSON: Which Ron Paul is really capitalizing on.

CROWLEY: Exactly.

And do you think the president can capitalize on the withdrawal of our troops in Iraq, the withdrawal -- or beginning of the withdrawal of our troops from Afghanistan? Is that something they're starting to sell?

HENDERSON: I think they will be able to sell that, and I think republican candidates show right now that they know that. You have Michele Bachmann out making the point about foreign policy and pointing to the lack of credentials on the part of Herman Cain, because I think they all understand that when it comes down to a voting decision, that voters do want some degree of competence in the person who will be their commander in chief.

CROWLEY: And Gina, you know, there haven't been many presidential elections that have been surprising out of South Carolina. It is not exactly Ronald Reagan territory, so let me ask you this. For those who are down ballot, for Democrats who do get elected statewide in South Carolina, do you think the president is a drag on that ticket?

G. SMITH: Well, you're right, Candy. We're so solidly red in South Carolina. You know, last time that a Democrat won this state in a presidential race was in 1976. So I don't think that Obama has much of a chance in South Carolina at all.

Just talking this morning about the most recent poll numbers we've seen on Obama where, in South Carolina, you have 40 percent of Republicans who don't think he was born in the country and another 30 percent who think he's a Muslim. So, yeah, Democrats have a hard time in South Carolina at the state level and at the national level, too.

CROWLEY: A hard sell in South Carolina, that's for sure.

G. SMITH: Yes.

CROWLEY: Adam, but, boy, do we love Florida. It is always exciting during an election year.

What are you picking up there in terms of the trends, Democratic or Republican?

A. SMITH: Well, there's a myth that Obama won Florida last time with this great turnout from Democratic voters and really turning out the base. He won Florida because of the independent vote where he beat McCain significantly. He showered the state in ads talking about middle class tax cuts. so he's got a lot of work to do. It is very early. They're starting way earlier than they did last time but he's got a lot of work to regain those independent voters in Florida.

CROWLEY: Well, I was going to say so he's having the same problem, and is it economic based? I guess that's almost a redundant question because it is almost always economic based fatigue when it comes to voters these days.

A. SMITH: It's absolutely economic based. I mean we've got a 9- plus percent unemployment. We've got virtually -- almost half of the houses here are underwater in their mortgages. So you can't overstate the amount of anxiety there is about the economy here.

CROWLEY: And as pollsters like to say, everything is just a snapshot of today, but if you had to give me a snapshot of where Florida is trending, Republican or Democrat, what would that snapshot show?

A. SMITH: Boy, I'd be scared to do it. But he won after mounting the biggest grassroots campaign in all history and he won in a year when Indiana and North Carolina went Republican. So at this point I think the -- he's got a lot of work to do. CROWLEY: And let me ask you, Adam, just a totally different subject and it is Florida centric. Senator Marco Rubio recently revealed that parts of his biography -- to say they were untrue is a bit much, but he had some timing off that made it look as though his family fled Fidel Castro's Cuba when in fact they fled before that. Is that having any resonance down in Florida or does he remain a pretty popular guy?

A. SMITH: He remains a pretty popular guy. You can talk to people down in Miami who are really quietly discussing this. There is a significant difference between leaving during Batista and leaving during Castro. There is some buzz about his parents going back post- Castro and some questions about that.

I think the more significant thing it did was to the kind of national media that's viewed Rubio as sort of a flawless rock star, we have known him a little better in Florida that this kind of puts a chink in that and raises some questions about how thoroughly has this potential vice president been vetted.

CROWLEY: Listen, thank you all so much, Adam Smith, the St. Petersburg Times, Gina Smith, The State radio in South Carolina, Kay Henderson, Radio Iowa. Thank you, thank you, thank you.

Up next -- a check of the top stories and later, is Halloween recession proof? We asked an expert.

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CROWLEY: Time for a check of today's top stories. NATO officials confirm that a suicide bomber killed at least 17 people in Afghanistan's capital of Kabul. Five NATO troops and eight civilian workers were among those killed in the attack on a military convoy Saturday. It was the deadliest attack since 31 Americans were shot down in their helicopter this summer.

A freak snowstorm barrelled up the East Coast overnight, cutting off power to more than 2 million households and causing at least three deaths. The unseasonably early snow caused heavy damage to trees and power lines. Four states declared weather emergencies and major delays were reported at a number of Northeast airports. Tens of thousands of air travelers around the world are stranded as Quantas Airlines is grounded for a second day. A labor dispute led the Australian airline to cancel all flights. The grounding will continue at least until noon Monday.

And those are today's top stories. Coming up, if you thought Halloween was just about costumes and sugar rushes, you're half right. The economics of Halloween, plus popular political costumes, next.

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CROWLEY: I'm tempted to begin this segment with a "boo," but instead I'll just tell you that, according to our next guest, a record 161 million Americans plan on celebrating Halloween tomorrow. Ellen Davis is vice president and spokesperson for the National Retail Federation, an organization that, for the last nine years, has released an extensive survey on Halloween spending trends, $6.8 billion being spent on Halloween decorations, Halloween costumes.

What does that -- look at the economy through the prism of Halloween. What do we know about the economy based on Halloween sales?

DAVIS: What's interesting is that, in the last four or five years, when the economy is suffering, Halloween spending soars. People love, in an economy like this one, to just get out, let loose, have a little bit of fun.

For example, in 2008, when everything was in the tank, Halloween spending rose. This year, Halloween spending is up again, and part of that is because people are just looking for an opportunity to have a little bit of fun.

CROWLEY: And so it's a recession-proof holiday. It's almost the opposite of Christmas.

DAVIS: Almost. Halloween is a no-strings-attached holiday, which is why people like it. You don't need to buy gifts. You don't need to get together with your family. You don't need to spend a lot of money if you don't want to, but you can still participate and celebrate.

And that is what Halloween has transcended from, a holiday that was set aside for kids to a holiday that really has become a month- long celebration for just about anybody.

CROWLEY: So there's no way to look at Halloween retail sales and say anything useful about Christmas, which is, as we know, so important in the retail sales and to the economy in general?

DAVIS: There are some trends we can take from Halloween for looking ahead to the holiday season, but for the most part, Halloween is relatively isolated. Not only is it isolated in terms of trends because it almost is recession-proof, but it's also isolated in the types of merchandise. Halloween is really about costumes, candy and decorations; and Christmas, as we know, is so much more than that. CROWLEY: It's about everything.

DAVIS: It's about everything, yes.

(LAUGHTER)

CROWLEY: So when you look at the things that people are buying, what are they spending the most money on at this point?

DAVIS: This year people are spending about $20 on costumes and candy. They're also spending about $15 or $16 on decorations.

CROWLEY: So it's per family or per person? DAVIS: That's per family. Many people are really trying to be careful with their spending. Of course, they might be making their own costume or using last year's costume, but people like the idea of spending a little bit on Halloween.

We also have those residual expenses like trips to a pumpkin patch or an amusement park or, you know, a corn maze that all comes along with the Halloween season as well.

CROWLEY: So your figures are also showing us that only about 1 percent of adults surveyed said that they would use -- they were going to wear a political costume. Is that high? Is that low? How does that compare to previous years?

DAVIS: What's interesting is that Halloween costumes generally follow pop culture. Zombies, for example, are big this year because of some of the TV shows and video games. But a lot of the political commentary tends to make people a little bit jaded when it comes to Halloween.

For example, when the health care bill was being passed and debated, the number of people who were dressing up as nurses and doctors fell off of our top 10 list. This year, because some people are just, you know, not really happy with what's going on in Washington, the number of people who want to deal with conversations about what politician they dressed up for Halloween might be down this year, as well.

CROWLEY: Because people just don't want to talk about politics. It was interesting, you -- this is from our friends at SortPrice.com, who looked at the most searched-for costumes. And in those -- we're looking at political costumes -- Sarah Palin was number one, which I find fascinating. I imagine she has been up there in previous years...

DAVIS: Yeah.

CROWLEY: ... and beats out, by the way, President Obama. We did bring one of the masks out there, so they really -- whether you think this looks like him or not, nonetheless, he's the number two. And then it falls off to Lincoln, which I find really, sort of, interesting. DAVIS: I think a lot of people dress as politicians for Halloween because it's a conversation-starter. Regardless of which side of the aisle you're on, you know, dressing up as Sarah Palin or Barack Obama is certainly one way to get people talking at a Halloween party. And that's what a lot of costumes are designed to do.

CROWLEY: Listen, thank you so much for stopping by. We appreciate it.

DAVIS: Thanks for having me.

CROWLEY: We appreciate it. Happy Halloween.

DAVIS: You, too.

CROWLEY: Thank you so much for watching "State of the Union." I'm Candy Crowley in Washington. And you can find today's interviews, as well as analysis, web exclusives, and much more at our web site, CNN.com/sotu.