the prism of halloween. with ellen davis of the national retail federation. >> when the economy is suffering, halloween spending soars. >> 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% 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. joining me now, senior campaign strategist for the obama re-election campaign, david axelrod. david, thanks for being here. before you get just too giddy about these latest economic -- >> i don't get giddy. i don't get too low but i don't get giddy. that's one of the keys here. >> the fact of the matter is it is 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. we all know the number is much greater than that. 86% 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% of americans approve of president obama's handling of the economy. given those, what is your strategy? >> 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. >> sure, wages are down. >> 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'll have a great debate and the american people will decide where their interests lie and who best represents them. >> some of these initiatives, you've heard a lot of economists 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 -- >> 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. >> no, of course -- >> 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. >> sure. but looking at the economy as a whole, this is a small dent. i understand in people's lives -- >> well there are larger things we can do. obviously the american jobs act, all economists agree with having 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. >> 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 president, okay, fine, if these are great initiatives for people, why did he wait almost three years? >> he's embarked on a lot of initiatives. this -- look. the problems we got into, candy, were years in themakering. they are deep, complicated and they'll 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. >> 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. that is they give what they can, the max allowed -- all of this is perfectly legal, let me say that. but 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? >> it's interesting that you talk about the president's promise -- >> his promise, by the way -- >> 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 a he not perfect, candy. we are not in a perfect political system. we are raising money because we have to. people 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. >> 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? >> well, i meanvy to run through the list of people who were there and i don't know the answer. what i do know -- >> it's possible though. >> -- this administration has been more scrupulous and more transparent than any administration in history. >> and also promised not have federal lobbyists raise money for them. that's why we're having this conversation. >> we promised not take conversations from federal lobbyists and we don't take contributions from federal lobbyists. >> that are registered. >> 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. >> let me move you on to something the president said at a fund-raiser wednesday, which it was reported in one of the san francisco papers, in which he said at a fund-raiser, "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. >> he was commenting on 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. >> we've lost our ambition, we've lost our imagination, we've lost our willingness -- >> that's his commentary on the approach that's being advocated by almost the entire republican ticket. this notion that we can just withdraw, pull up the draw bridge, 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. >> let me also read you something that the new white house chief of staff -- not so new anymore actually -- he's been around 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? >> 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. last quarter in the last administration was the worst since 1930. minus nine or economy was shrinking, losing 750,000 jobs the month he took over. he too steps that were -- he took decisive steps that were as unpopular as they were newsary. that's why instead of losing a million jobs in the auto industry, they're now gaining jobs. that's why the economy's 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. took years for us to get into this problem, it is going to take longer than anybody would like to get out of this. >> should it be surprising though that a president has such a hard time with congress? >> there's 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 an bridges and surface spa transport. are they willing to tear down the economy in order to tear down the president or are they going to cooperate? listen, there's a reason why the congress is at 9% in some polls approval, lowest in history. because this is different than we've ever seen before. >> but again he's blaming democrats in here. but i've got to ask you a final question. you're beginning to take friendly fire as well from democrats saying the latest was the housing policy has been rotten, et cetera, et cetera. and we're now seeing stories that 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? >> first of all, you said at the front end don't be too giddy. i said i never get too giddy and i never get too 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. 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 -- where hard work is rewarded, responsibility is rewarded an we stick to the values that made our economy strong, we are on the right side of that fight. this president's working every day in that regard and i think all democrats are going to be able to line up behind him. 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. umt m ultimately i think independents will as well. >> come back and we'll talk more about independents at some point. david axelrod, thanks so much. after the break -- ron paul on his plan to restore the economy. and a choice. take advil now and maybe up to four in a day. or choose aleve and two pills for a day free of pain. way to go, coach. ♪ it's good. honey, i love you... oh my gosh, oh my gosh.. look at these big pieces of potato. ♪ what's that? 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[♪...] >> announcer: now get a $250 airfare credit, plus save up to 65%. call 1-800-sandals. certain restrictions apply. joining me from his home state of texas, republican presidential candidate congressman ron paul. thank you so much, congressman, for being here. i want to talk a little bit about your economic plan in which you call for basically closing up the departments of energy, education, housing and urban development, commerce and interior. 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% of americans live in households where someone receives a federal benefit. 34% 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? >> well, 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% 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. 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. i obviously believe very sincerely that you can't get out after debt problem by accumulating more debt. just doesn't work. >> one of the things you have proposed -- and 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? >> is no, i don't think so. anybody who's ambitious enough will get to go to college. the problem is college costs too much and with the good intentions of giving people houses at discount, 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 intengsz, there's always unintended consequences and almost inevitably it back fires. besides, let's say it did sort of work -- and it does work for some people. some people get into 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. >> 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. >> 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 medica