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things of which he didn't agree. >> and a holiday special. the best of our "getting to know" series. >> i didn't want to be a nun and i didn't want to be a congress wam. >> i'm candy crowley. and this is "state of the union." the politician of the battle over the extension of the payroll tax goes something like this -- the president, one, republicans lost. >> may not have been politically the smartest thing in the world, but let me tell you what, i think our members waged a good fight. we were able to come to an agreement. >> some democrats suggest the payroll tax cut battle was a turning point for the president they feared had lost his magic and his chance for re-election. republicans worry their tea party win, which wanted to fight this one out, has become a weight. earlier, i spoke to one of the longest serving republicans in the senate, dick lugar of indiana, who faces a tea party challenge in his re-election bid. let me talk a little bit about this new deal that has been made for a two-month extension of the payroll tax cut. here's something that kevin brady, who is a congressman from texas, had to say. "in the end, house republicans felt like they were re-enacting the alamo with no reinforcements and our friends shooting at us." you were among the friends shooting saying pass this two-month team. we need it done. do you feel as though you undercat particularly house tea party members who wanted to have this fight? >> no, i don't think so. i think that mitch mcconnell, our senate leader, offered an avenue approach that said this is a serious business. we ought to talk about a year of solution. but this is not likely to be resolved in the next few days. in the meanwhile, wage earns all over america will see the tax holiday go apart from chose unemployed or on unemployment consideration or the doctors and medicare or the implications of this. so why don't we, as a matter of fact, talk for a period of time but do so after the 1st of january? >> most people look and say, good heavens, you've been talking about this for months. and nothing got resolved. in fact, it was apps a three-or four-week discussion where nobody could come together on anything other than a two-month temporary fix. what makes you think about the end of february you can get some kind of deal going? i think it will be very difficult. just as the committee of 12 found it very difficult, even if the objective was to reduce the deficits and the problems of your balance of payments. we just simply find this difficult to do in this context. but not impossible. one factor that led the senate to come to a conclusion was the keystone pipeline. i offered legislation -- >> which is, just for our viewers, the pipeline from canada down to texas that would be built through indiana among other places, should create some jobs as they build it. >> at least 20,000 new jobs, $6.5 billion in investment by the canadians, and much more oil independence for the united states, a real winner, but president obama, because of environmentalists surrounding the white house apparently had literally said we won't do anything until 2013. and i said that's unsatisfactory. you've got to make a decision in the next 60 days. and we attached that then to this holiday, tax holiday. well, that did light up some republicans who said by golly we do need to do this. and as a matter of fact, democrats said we need it, too. in other words, there are ways sometimes where the thing that's incitable but you inject other elements and they're good for the country. >> let me ask you, though, about the pipeline. just a quick question. there is concern that a lot of this oil, though it sounds great, oh, good, we'd be more oil independent, but a lot of it will get shipped overseas. is there a legislative fix for that? do you worry about that? >> no, i don't worry about it. as a matter of fact, we're already sending refined oil overseas, and we are getting a balance -- >> one of the selling points is is independence. >> yes. >> seems counterproductive to send it overseas. >> well, not exactly because we still have the canadian oil. in other words, that's our option as to whether we need it in the united states or whether we can make a sale in terms of our balance of payments. the other option is that canadians will ship it to china. we won't have that option. we're back into the stew again. >> you have -- let me switch you a little bit to politics here. you have, among other challengers, tea party candidate who would like to go into the primary and to be the u.s. senator from indiana. what do you think in general of the tea party and its effect first on legislation and then its effect on politics? >> well, the tea party groups have been very effective. in indiana, they are separate groups usually by communities as opposed to one large situation. they're very conservative republicans. they believe in less government spending, less government, period, and they are hopeful of finding candidates who are going to be on that ticket. >> i think that's not you. >> well, i would say to them respectfully it is me, that i have a very conservative voting record over the course of time i've served. i'm certainly unique in the senate of having been a farmer, a small business man, a naval officer, a mayor, a school board member. these are grassroots functions in -- >> but this is something you should have to be selling to republicans in indiana at this point? >> it's not my option. >> right. i know it's probably not your preference, but, i mean, you've been in congress more than 30 years. >> yeah. >> and something has changed in the atmospherics i think of politics that makes you -- i think it was the "washington times" called you one of the most vulnerable republicans. how did that happen? >> well, i'm not certain i'm most vulnerable and i'm not certain it's happened. in other words, i would say that our campaign has already enlisted hundreds of volunteers from all the backgrounds that i've talked about. we've made a 517,000 calls already just to the spectrum of people who might vote in the republican primary. they've put about $4 million in the bank for me through very good fund raising at the grassroots level. i have visited with many tea party groups. they have not pledged my support, but they understand my position and some are even going to be voting for me. the point i'm trying to make is i think it's useful to understand a republican majority in the senate is very important. and republicans who are running for re-election ought to be supported by people who want to see that majority. and so i think the majority of tea party people understand that, too. what they're hopeful is -- >> just so i know what you mean, you think that you have the best chance of keeping this seat republican. >> yes. >> and that's what you're arguing. >> no doubt from all of our polling and understanding that that is the case and that, as a matter of fact, if i was not the nominee, it might be lost. that, i think, is important, whether it's tea party or anybody else to understand, because republicans lost the seats before in nevada and new jerse jersey, for example, and colorado. there were people who claimed they wanted somebody who was more of their tea party aspect, but in doing so, they killed off the republican chances for a majority. this is one reason why we have a minority in the senate right now. >> senator lugar, i want to ask you to stand by here. coming up, the future of north korea. has the death of kim jong-il changed anything? 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[yawning] homeowner's discount. safe driver discount. chipmunk family reunion. someone stole the nuts. squirrel jail. justice! countless discounts. now that's progressive. call or click today. we are back with republican senator dick lugar. senator, i want to play you something from congressman ron paul, who, as you know, is is member of the republican party and is kurptdly leading in the polls in iowa. this is specifically on foreign policy. >> i think we concentrate too much on -- on the borders between afghanistan and pakistan than we do on our own borders. i think it's time we worried about our own borders and not so much overseas. every year we spend more and more money overseas. we spend it on foreign aid, intervention, propping up dictators, fighting wars that we don't need to be fighting, and they drain these reserve funds. there's no authority in the constitution to be the policeman of the world and no nation building. >> is that a republican party message? >> well, it's one republican's message. >> is that the bulk of the republican party message, do you think? >> no, of course not, and it's not a message which really a president of the united states could ever afford to extend. in other words, we're a party and a president of leadership, leadership in the world. we have a fleet that covers all the seas. as a matter of fact, this makes foreign trade possible, trade of all sorts. we're the only country that can go everywhere, all over the world and therefore indispensable to our lives as well as to our own interests. these are very, very important parts of our national strength. and they involve foreign policy. they involve armed forces and a combination of these. now, some are more skillful than others in utilizing these. some congresses may be more skillful in determines which conflicts or what kind of aid we ought to have. but still, to roundly condemn foreign aid for the fact that we are concerned about borders in afghanistan, pakistan, and what have you seems to me is really uncalled for. >> before we leave politics, are you a romney guy? >> i've not made a commitment to any of the candidates. >> are you leaning one or the other? >> i favor mitch daniels, governor of indiana. >> he says no. i understand, but nevertheless, i think he would have been a great president. >> let me move you on, because so much has happened. first of all, the death of kim jong-il, president of north korea. what does that mean for the u.s.? make that important to a viewer. >> it means that we're going to have a different relationship, probably weather china -- >> worse or -- >> it all depends. and the chinese will have to make a determination whether they are going to treat north korea as a province of china or whether, as a matter of fact, they're going to be concerned about the drain upon oir ththei sources, potential really of north koreans passing the border. and the same with the south koreans. the chinese policy has been to keep two koreas. but at the same time this doesn't work out for them, we may have a difference in which north koreans want to come into south korea. in any event, north korea is a dramatically difficult state because of the deficit to the economy, quite apart from the transition of leadership. >> what worries you about this transitional period? what do you fear most while we try to figure out and they try to figure out really what's going on in north korea? >> that something might happen to their nuclear material or their nuclear weapons, the loose nuke problem. some in the country might try to sell this to others because of the economic crisis that they have. >> anything new about that? >> there better be, and that would certainly be one of the missions i would be most concerned about, tracking as best we can precisely what happens with regard to the nuclear element while we're trying to negotiate with them to get rid of all of it. but now you ask me the thing that could occur, it's in the chaos of anarchy in north korea. it's the same thing on a smaller level. we're trying to track down missiles in libya with -- >> not doing very well. right. >> well, we better do better because all of us are in jeopardy. everybody who flies an aircraft anywhere in the world with a man pad situation. >> and finally, let me just ask you quickly about iraq. since the u.s. left, there have been numerous bomb blasts, particularly in the baghdad area. do you think al maliki is capable of keeping this country together? you fear that it falls apart under iranian influence? >> i don't think it will fall apart, but i fear that there will be continued clashes between shiites and sunnis and that the kurds, the northern parts, will be less and less affiliated with the other two. that is not good news for iraq. it's not good news for the whole neighborhood. we don't know what the ties might be with iran, for example. if i depart from other fallout that might come from this. so for the moment, we're hopeful that the maliki government will hold together. they were duly elected, free and fair elections, but democracy doesn't always bring about a situation where people know how to govern the country or giving up of old wars between the shiites and the sunnis. >> in fact, the shiites and sunnis in conflict is kind of where we started in this war. >> going on for decades. >> that's one thing that hasn't changed. senator richard liu gar, we wish you a merry christmas. >> merry christmas, candy. thank you. >> thanks for joining us. after the break, our political panel. and i toog nyguil bud i'm stild stubbed up. 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[♪...] >> male announcer: book now, save up to 65%. call 1-800-sandals. here to prepare us for the upcoming campaign here, a.b. stoddard, columnist for "the hill" newspaper, and ron brownstein, cnn political analyst and editorial director of the "national journal" group. i'm getting excited now because the polls are so -- a little bit everywhere in iowa, so much so that i want to play you something newt gingrich said a little earlier in the week. >> hi goal is to be in the top three or four. i'd love to win, but to be in the top three or four. >> is the top three or four good enough for newt gingrich? >> i don't think so, candy. i think newt gingrich has to make a very strong showing in iowa to build momentum to get the money behind him, to get the bodies on the ground for the fibl fights in the early states that follow. he needs the boost from iowa. right now if ron paul were to win and gingrich were to come in second, he could call that a n win, write off ron paul. but he needs to consolidate the anti-romney vote. he needs -- every vote he loses to the others is a vote lost and slows him down for the long run. >> i agree. in politics things are true until they're no longer true. having said that, since south carolina moved up its primary in 1980, every contested republican race has followed the same pattern. one won iowa, a different won new hampshire, two win south carolina and a different one wins the nomination. >> a fire wall. >> a fire wall. if gingrich or michele bachmann or rick perry, someone with the potential to grow beyond what ron paul has, if one doesn't win iowa, given romney's strength in new hampshire, anybody else in the field could be looking at an uphill climb. that has been the pattern. you need one of those two to get the launch to carry you forward. >> i was going to say, i've seen a lot of columnists and articles, people saying this could be a really long campaign for the gop. it could be like the democrats last time, they'll be in june still deciding. i think boy, if mitt romney comes in, pulls off a surprise in iowa and new hampshire, isn't it kind of done? >> it probably is. ron is probably right. he could probably win south carolina and move on and be done. but he is prepared for the long race, not only organizationally, but he has the money. he also knows that the rules changes that provided for a longer campaign this time by the end of february, fewer than 20% of the delegates would have been allotted. this is going to be a long fight. if gingrich has a great january, romney can still hang on in this fight. >> you know, no one has won the republican race iowa and new hampshire in the same year since gerald ford in '76, and the reason is they're myriad constituents. iowa is socially conservative, new hampshire more libertarian and upscale. if iowa does not provide a boost to someone who has a broader po ten rl than paul, as i said, it's a very difficult situation for anyone to overcome romney. iron ix, romney only won 20% of iowa evangelicals in 2008. he's probably not going to do that much bet they are time. if they don't coalesce behind a candidate with a capacity to stop him, they may in effect give him the pathway to the nomination if they continue to fragment. >> you know, it seems to me that one of the strange things about this then is what you're saying in a nutshell is a ron paul win in iowa is great for romney. >> i think it is, because ron paul has a floor and he has a ceiling. and the two look very much alike. there's a little space between them, but there is a limit on how much he can grow. and i think unless iowa propels forward one or the other candidates with the potential to build a broader coalition, and what we saw with newt gingrich when he was doing well, he was attracting from both sides. if one like that can't get a launch, it becomes more difficult. you'd have to go into south carolina without winning iowa and new hampshire and make a stand there and beat romney at that point. >> if a candidate coming out of iowa is not in the top three, which of those candidates are done? santorum? >> oh, yes. i think so. and i think michele bachmann probably as well. i don't think rick perry is going to do well in iowa. i think it is his final curtain call. he has to come in and do well. i think it's really going to come down to a gingrich/romney race. but i think, you know, ron's right, it's so muddled that any strong showing by ron paul weakens gingrich and helps mitt romney. >> we should add polls don't necessarily tell us what's going to happen on caucus sites. it's hard to translate a poll into a caucus. >> given the presence of evangelicals in south carolina, 68% of the electorate in '08, same as iowa, likely perry, bachmann, santorum even if they lose poorly in iowa, will try to struggle on to south carolina. the history is those candidates don't have