months. >> it's another hammer blow to the struggling middle class families in america. >> what the numbers say about business with bet founder bob johnson and former hewlett-packard ceo carly fiorina. i'm candy crowley, and this is "state of the union." first today, mitt romney. gloria borger caught up with the nominee yesterday in indiana and he hit back on president obama's proposal to raise tax rates for people making over $250,000 a year. >> i think it would be an enormous mistake for us to raise taxes on anyone right now with the economy in the trouble it's in. i also hope people understand that when they talk about raising taxes on the wealthy, as the president does, he's also talking about the same tax rate that applies to small business. >> more of that romney interview in just a few minutes. but i wanted to bring in republican senator lindsey graham of south carolina. thank you for joining us, senator. >> glad to be with you. >> let me ask you first about the president's plan or his wish to raise taxes essentially on those making $250,000 and above. we now have some democrats saying, you know what? if republicans are going to dig in, let all these taxes expire on the middle class, on everybody. are you willing to go that far? >> well, i think you've got a lot of the democrats saying it would be a bad idea to raise taxes on a million small businesses. here's the point. two years ago, president obama said now is not the time to raise tax rates because the economy is weak. 40 democrats, less than two years ago, voted to extend the tax cuts. i'm dying to hear how our economy is better today than it was two years ago. how it's better policy today right before this election given the 42 months of 8% unemployment, 316,000 people have left the job force since the stimulus passed. this is all politics. this is not economics. this is all politics, good for governor romney not buying into this construct. >> it is true that since that time when the president agreed to go ahead and let all of the tax cuts stay in place that we have had many, many months of job creation. not enough job creation, the president would say, but nonetheless the recession has ended. >> no. >> and we're now looking at a huge debt as you know. >> so the democratic party has said our economy is in good shape enough to raise taxes on job creators? everything is worse since he's taken office. the debt has gone up by 49%. the unemployment rate has gone up by over 6%. gas prices are 50% higher. your home values are going down. the stimulus promised a 6% unemployment. but now it's at 8.3%. none of his policies are working. obama care. you were not supposed to lose your health care. millions of people are losing their health care because it costs too much. premiums were supposed to go down. they're going up. so the idea that now the economy is better than two years ago when president obama said don't raise taxes, it would be bad for the economy, is all politics. it's not based on economics. >> so just quickly, yes or no, if the democrats stay where they are and if the president stays where he is, would you be willing to say, fine, if we can't reach a deal, taxes go up on anyone? >> i'm willing to do the bowles-simpson plan. not one person who has looked at this in a bipartisan way says raise the taxes. bowles-simpson is let's fix the tax code, take the money to pay down rates, and pay off debt. >> but long-term. that's sort of a long-term thing. these cuts will expire on the 31st. >> i'm not going to do a short-term thing that's stupid. it would be stupid in an economy this weak to raise tax rates on a million small businesses at a time they can't hire people now. if you're looking for a job, this election is not about romney's tax returns. it's about your tareturns. look how many millions of people are underemployed or have lost their jobs. the last thing i'm going to do is play politics with their future. what we should all be doing is fixing sequestration in a bipartisan manner. both candidates should pledge, if i get to be president of the united states, we're going to do bowles-simpson. that's what america is yearning for. and i want both candidates to step up to the plate and lead here and stop this political stuff. >> and neither one of them has to your satisfaction. >> i think governor romney has said he would embrace bowles-simpson. and the fact that he rejecting raising taxes at a time that our economy is so weak is a good sign of leadership. what president obama is doing is 180 degrees from what he did two years ago when they had large democratic majorities. >> let me talk to you about sequestration, which is basically come the end of this year, automatic spending cuts will get into place that will cut over 10 years more than $1 trillion out of the economy. >> right. >> you have raised the red flag about that. you have been talking with some democrats. can you tell me if there's any hope out of the group you're talking with that you can keep this from happening? because everyone sort thinks this would be disastrous. >> here's what secretary panetta said. the failure is to take $600 billion out of the defense budget on top of the $478 we're already cutting. it also hurts special education. it hurts a lot of nondefense programs like the national cancer institute. here's what it would be for the defense department. the smallest navy since 1914. you'd go from 285 ships to 232. the smallest army since 1940. the smallest air force in history. we're working with carl levyn and some other democrats to find a way to avoid this for four months from january to may, using the bowles-simpson formula. no one is talking about -- >> bowles-simpson for those who don't know was a deficit reduction plan. >> that's right. it rejects raising tax rates. but what we'd do is go into the tax code and generate revenue taking whaling deductions away from whaling captains, suspend a corporate jet deduction for a time to buy fighter jets. we'd have other cuts in the budget, mandatory spending cuts, a balanced approach to offset sequestration for four months. here's what sequestration -- >> are there enough -- can i just ask you, are there enough of those loophole -- whatever you want to call them, these tax increases or tax loopholes that you want to -- >> special deals. >> special deals for people. are there enough of those to balance out the cuts that would have to take place to bring democrats on board? >> in four months, there are plenty of them. there's $1.2 trillion we give away in reductions. but if politicians fail to do their job in the supercommittee, the penalty was to destroy the military. we got this wrong. we should fire the politicians, keep the soldiers. so i believe the american people are going to be outraged when they hear what comes the military's way because we couldn't get our act together in cutting $1.2 trillion in over a decade. >> so you're talking about a four-month deal. do you have any reason to believe that the white house would be onboard with it? i know you've talked about the vice president recently. >> if they watch cnn, and i'm sure they do, join us. send a representative from the president's office to engage the senators who are trying to find a way forward. i'm willing to put revenue on the table. but not by raising tax rates. carl levyn is willing to cut mandatory spending in a responsible way. i cannot tell you how important it is for our economy. if we let sequestration go forward, we destroy the military. 1.1 million jobs lost in the industrial complex on the civilian side. 4% gdp affected if sequestration goes forward. we do dumb things in congress. this sequestration idea was the dumbest thing. >> what is the reality in tax on the revenue side you think you could get this four-month deal? >> i think about $22 billion. 1/3 from revenue, no tax increases, close the loopholes, and we can find them, 1/3 spending cuts to other parts of the government, 1/3 mandatory. get it done. mr. president, we need your help. you're the commander in chief. your secretary of defense says this is a navy without ships. a brigade without bullets. an air force without trained pilots. don't send a signal to iran and syria and the rest of the world that we're going to disarm. don't use the tax cuts. here's what omb director ziesz said. the only reason we don't have a deal so sequestration is because republicans won't ask the 2% to give their fair share. this idea of holding the defense department hostage to the tax debate makes me sick to my stomach. knock it off. find a way to avoid sequestration. let the next congress and the new president fix this, give them a little breathing room. >> i need a two-word answer from you, and that is what vice presidential pick would best help mitt romney? >> you know, i think pawlenty and portman are in the hunt. one last thing. you didn't ask me about harry reid. i've been around this town for a while. i actually like harry. but what he did on the floor of the senate is so out of bounds. i think he's lying about his statement of knowing something about romney. this is what's wrong with -- >> that's pretty stiff. you think the leader of the senate is lying? >> i really do. i think he has created an issue here. i think he's making things up. and at a time when the country is just about to fall apart. cyber security. there's a bipartisan desire to do this. there's plenty of blame to go around. but, candy, we're running out of time as a nation. let's start talking about the real issues that matter to real people and i just can't let that pass. i just cannot believe that the majority leader of the united states senate would take the floor twice, make accusations that are absolutely unfounded, in my view, and quite frankly making things up to divert the ca campaign away from the real issues. >> lindsey graham, thank you so much. mitt romney says that president obama's jobs plan is all wrong. >> the idea of doing the same thing again and expecting a different result is famously said the definition of insanity. >> more of the interview with mitt romney. and later, we'll get reaction from obama campaign senior adviser robert gibbs. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways. on once empty fields. everyday you see all the ways all of us at us bank are helping grow our economy. lending more so companies and communities can expand, grow stronger and get back to work. everyday you see all of us serving you, around the country, around the corner. us bank. [ feedback ] attention, well, everyone. you can now try snapshot from progressive free for 30 days. just plug this into your car, and your good driving can save you up to 30%. you could even try it without switching your insurance. why not givet a shot? carry on. now you can test-drive snapshot before you switch. visit progressive.com today. the calcium they take because they don't take it with food. switch to citracal maximum plus d. it's the only calcium supplement that can be taken with or without food. that's why my doctor recommends citracal maximum. it's all about absorption. ♪ ( whirring and crackling sounds ) man: assembly lines that fix themselves. the most innovative companies are doing things they never could before, by building on the cisco intelligent network. do you have any idea where you're going ? wherever the wind takes me. this is so off course. nature can surprise you sometimes... next time, you drive. next time, signal your turn. ...that's why we got a subaru. love wherever the road takes you. more now of our gloria borger interview with mitt romney, the republican presidential candidate who was asked if his promise to create 12 million jobs in his first term if elected is realistic. >> i can absolutely make the case that now is the time for something dramatic. and it is not the time to grow government. it's the time to create the incentives and opportunities for entrepreneurs and businesses big and small to hire more people. and that's going to happen. you're going to see that happen in this country, but not under this president. his answer is always can't we grow government some more. and the problem with growing government, among other things, is that it stays long after these little stimulus years, and people have to be paid, and their retirement benefits, and it becomes a burden on the real job creators which are small businesses in this country. the burdens on small business in america are just crushing small business. we're at a 30-year low in business startups in this country. we need to get people back into business, starting at various employers and putting people to work. >> so you say that you're going to add 12 million jobs. >> yeah. >> in your first four years. why should voters think that that's realistic? i mean, that's 250,000 jobs a month. >> yeah, yeah. >> that's a lot of jobs. >> that's what happens in a normal process. when you come out of a kind of recession we've had, you should see this kind of job creation. we should be seeing 200, 3,000, 40,000 jobs a month to regain what's lost. that's what normally happens after a recession. but under this president, we have not seen that pattern. we have been bumping along with barely enough jobs to hold the upemployment rate about the same, 42 months like that. giving more money to government will not get our economy going. you have to have the steve jobs of the world. beginning businesses, making products that want to be purchased around the world. that gets americans back to work. it allows to us create more jobs. more jobs creates demand for workers. that raises wages. good things happen when you have a private sector that's thriving. >> well, polls show that a majority of the public believes right now that you should not allow for the extension of the tax cuts for the wealthy. and today's "wall street journal" said that not extending the tax cuts for the wealthy would be reckless. in this economy. that -- and they say that the economy is in a desperate state. so therefore, you cannot take away the tax cuts for people at the top end of the scale. do you agree with the characterization that it would be reckless to remove those tax cuts? >> the great majority of small businesses pay taxes at the individual rate. so it raises these taxes, quote, on the wealthy, he's raising taxes on small business. that kills jobs. if your priority in this country is to punish success, vote for president obama. if your priority is to create more success and more jobs, vote for me. look, i know the very wealthy are going to do just fine, whoever is elected. the middle class is the people -- that's the group of people that i'm most concerned about. they need our help. and the poor. they need our help. they need our help with good jobs. that's going to only come if we encourage this economy by keeping the burdens on small business down. >> well, but the president said if the republicans in congress had gone along with passed his jobs bill, that there would be more jobs in the pipeline right now. than there are. how do you respond to that? >> well, the republicans in congress watched the democrats in congress four years ago pass the president's jobs bill. his stimulus bill. $787 billion of new borrowing. and they saw the results. they were told unemployment would stay below 8%. that's not been below 8% since. his approach, just spending money on government programs, did not create the jobs that america was looking for. so the idea of doing the same thing again, and expecting a different result, is famously said, the definition of insanity. >> should the fed intervene at some point? >> well, i think the feds' first action in quantitative easing was effective to a certain degree. but i believe that the qe 2, the second round of easing, i don't think it had the impact they were hoping for. and i'm sure the fed is watching. will try and encourage the economy. but i don't think a massive new qe3 is going to help this economy. i have laid out what my course is. there are five things you have to do to get this economy going. take advantage of our resource energies, fix our schools and training programs, make sure we open up trade with foreign nations and latin america, and crack down on china when they cheat. number four, finally get ourselves on track to have a balanced budget. and finally, champion small business. we've got to help small business. keep their taxes competitive. get regulators to encourage them. keep health care costs from driving them out of business. >> ok, governor. i know you're not going to tell me who your running mate is. but can you tell me if you've decided or not? >> i have nothing for you on the vice presidential front. >> nothing? >> i give you nothing on that. but i can assure you that by the third day of the republican convention we will nominate a republican vp. senate majority leader harry reid's barrage at mitt romney. >> the word's out that he hasn't paid any taxes for 10 years. >> team romney says that obama's team is behind the attack. robert gibbs is here when we come back. it took a mighty machine, and plain old ingenuity to go where no fifth grader had gone before. ♪ and she flew and she flew, into the sky and beyond. my name is annie and i'm the girl who dreamed she could fly. powered by intel core processors. ♪ spending the day with my niece. i don't use super poligrip for hold because my dentures fit well. before those little pieces would get in between my dentures and my gum and it was uncomfortable. even well-fitting dentures let in food particles. super poligrip is zinc free. with just a few dabs, it's clinically proven to seal out more food particles so you're more comfortable and confident while you eat. so it's not about keeping my dentures in, it's about keeping the food particles out. [ charlie ] try zinc free super poligrip. by what's getting done. measure commitment the twenty billion dollars bp committed has helped fund economic and environmental recovery. long-term, bp's made a five hundred million dollar commitment to support scientists studying the environment. and the gulf is open for business - the beaches are beautiful, the seafood is delicious. last year, many areas even reported record tourism seasons. the progress continues... but that doesn't mean our job is done. we're still committed to seeing this through. joining me now, obama senior campaign adviser robert gibbs. thank you for being here. >> thank you for having me. >> you heard senator lindsey graham saying that he thinks harry reid is lying, that he is making this up when he gets on the senate floor, and senator reid says, i've been told that mitt romney has not paid taxes for 10 years. i spoke to a democrat yesterday who's in touch with the obama re-elect in chicago who said, if chicago wanted reid to stop, he would stop. but chicago doesn't want him to. are you just as happy to have him out here saying these things? >> look, i think it's important that we know the financial backgrounds of candidates. you say lindsey graham. i think appropriately talking about the role that tax loopholes play in our tax code and how much it costs average taxpayers. we're going to have a pretty big debate about tax reform in the next coming months. and we have to know what's in people's tax returns and what they are getting the benefit for. >> but mitt romney didn't make the loopholes. and no one is saying he did anything wrong. >> well, we don't know that, candy. >> you know that -- let's go back to the ques