STEPHANOPOULOS: Good morning and welcome to New Hampshire, the site of last night's debate, for a special edition of "This Week: Granite State Showdown."
FORMER REP. NEWT GINGRICH, R-GA., PRESIDENTIAL CANDIDATE: Dr. Paul has a long history of saying things that are inaccurate and false.
FORMER SEN. RICK SANTORUM, R-PA., PRESIDENTIAL CANDIDATE: I wasn't for the big bank of Wall Street bailout, as Governor Romney was.
FORMER GOV. JON HUNTSMAN JR., R-UTAH, PRESIDENTIAL CANDIDATE: A lot of insider gobbledygook.
STEPHANOPOULOS: Can anyone stop Mitt Romney?
FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: People who spend their life in Washington don't understand what happens out in the real economy.
STEPHANOPOULOS: Will the conservatives close ranks behind Rick Santorum? And what does the Republican fight mean for their ultimate battle with President Obama? Questions for our headliners, the president's chief campaign strategist David Axelrod and the winner of the Iowa's caucuses four years ago, former governor and Fox News contributor Mike Huckabee.
Plus, our powerhouse roundtable. George Will, Jake Tapper, Donna Brazile, Matthew Dowd, and Mary Matalin.
STEPHANOPOULOS: Good morning, everyone. Great to be back with you on Sunday mornings. Great to be here with this live audience here in St. Anselm College right here in Manchester. And we have got a terrific lineup this morning, right here on the same stage where all the candidates debated last night. And closing in on this first primary, the stakes were high. Mitt Romney, as you know, way ahead in this state, so he did take some early heat from his rivals, zeroing in on Romney's corporate background as CEO at investment firm Bain Capital.
(BEGIN VIDEO CLIP)
SANTORUM: This experience doesn't necessarily match up with being the commander in chief of this country. The commander in chief of this country isn't a CEO. You got to lead and inspire.
GINGRICH: I'm not nearly as enamored of a Wall Street model where you can flip companies, you can go in and have leveraged buyouts. You can basically take out all the money, leaving behind the workers.
(END VIDEO CLIP)
STEPHANOPOULOS: But no one mounted a sustained, effective attack. Romney stuck to his script, swatting away most of the challenges with a smile. In fact, it was the battle for second place here in New Hampshire that sparked the night's most tense moments, including this one between Ron Paul and the man he's called a chicken hawk, Newt Gingrich.
(BEGIN VIDEO CLIP)
REP. RON PAUL, R-TEXAS, PRESIDENTIAL CANDIDATE: I think people who don't serve when they could and they get three or four or even five deferments, aren't -- they have no right to send our kids off to war.
GINGRICH: The fact is, I never asked for deferment. I was married with a child, and I personally resent the kind of comments and aspersions he routinely makes without accurate information and then just slurs people with.
PAUL: I need one quick follow-up. When I was drafting, I was married and had two kids, and I went.
(END VIDEO CLIP)
STEPHANOPOULOS: Paul targeted Rick Santorum, too, trying to stop any momentum from Santorum's near-win in Iowa. That left Romney mostly free to focus on his prime target.
(BEGIN VIDEO CLIP)
ROMNEY: The president is going to try and take responsibility for things getting better. You know, it's like the rooster taking responsibility for the sunrise. He didn't do it. In fact, what he did was made things harder for America to get going.
(END VIDEO CLIP)
STEPHANOPOULOS: And with that, let me bring in the president's top strategist, David Axelrod. Great to have you here in New Hampshire.
AXELROD: George, welcome back.
STEPHANOPOULOS: It is good to be back. Boy, you saw right of the box, Mitt Romney last night walking that tightrope on the economy, welcoming the good news, but saying President Obama doesn't deserve any credit for it. He's made things worse. That's going to be the key debate of this campaign.
AXELROD: He ought to ask 1.5 million auto workers and people who work in the auto industry who are working today because the president intervened when Mitt Romney said we should let Detroit go bankrupt.
He said something worse than that, George. And more preposterous, which is that the president's policies have made the recession worse. The fact is--
STEPHANOPOULOS: That's his argument.
AXELROD: The facts -- he has a lot of arguments, none of them are supported by facts. If you look at the history of this, the president came to office. The quarter before he got to office, the country, the economy shrunk by 9 percent. The first month he was there, the country lost 750,000 jobs. We have had 22 months of private-sector job growth now. It's been a climb up. And there are a series of -- manufacturing up for the first time in decades.
I mean, we have plenty of work to do. We have got big problems that took a long time in the making, they're going to take some time -- more time than we'd like to solve. But to say that his policies made the recession worse -- and here's the thing, George -- he had -- when he was running in president in 2007, in 2008, he had not one unkind word, one critique of the economic policies of the last administration that led up to and through (ph) the worst of this recession. He thinks that the policies that were in place then were the right policies, and now he wants to go back to them.
STEPHANOPOULOS: But unemployment is still not as low as you all predicted it would be when President Obama first came in, and according to most projections, it's likely to be the highest for any incumbent president in modern times.
AXELROD: Well, we'll see where those statistics lack. I think the direction is important here. Governor Romney may be rooting for slips and falls here. We're concentrating on moving this economy forward.
But there's a larger issue, George, which is what kind of economy are we aiming for? We have to get people back to work, but we also have to make sure that work pays.
STEPHANOPOULOS: You know, governor--
AXELROD: That's a big distinction between us and Governor Romney. He doesn't understand that that's a fundamental issue that is facing this country.
STEPHANOPOULOS: He also started to take some fire last night on his tenure at Bain Capital. And something you, Democrats, the Democratic National Committee, have really been hitting hard all through this campaign so far. He's not backing down at all. You saw him last night, Governor Romney saying his team at Bain Capital is responsible for creating 100,000 jobs. Do you have any qualm with that number?
AXELROD: Absolutely. Not me, forget about me -- every independent fact checker who's looked at it, including the Associated Press last night, after the debate, said he can't back up that number, and his campaign has conceded --
STEPHANOPOULOS: He says that net-net--
AXELROD: I know he says it's a net-net number, and he said I'm a numbers guy. The problem is that neither he nor his campaign can furnish any evidence to support that.
But let's talk about Bain and let's talk about what it was and what he did. His partner said in The L.A. Times, our job was not to create jobs, our job was to create wealth for our partners. And here's what they did. They closed down more than 1,000 plant stores and offices. They outsourced tens of thousands of jobs, and they took 12 companies to bankruptcy. And on those bankruptcies, he and his partners made hundreds of millions of dollars. He says this is the real economy, this is the model for the country. I don't think those are the values that people want to animate our economy. He's not a job creator, he's a corporate raider. Those aren't the values that we want to lead our economy.
STEPHANOPOULOS: It's clear you think that's going to be a vulnerability for Governor Romney. But coming out of Iowa, coming out of the debate last night, going into this primary here in New Hampshire, are you more convinced than ever that he's going to be the nominee?
AXELROD: Well, I don't know what the answer is to that. I mean, it's clear there are a majority of Republicans who are resistant to him. He only got a quarter of the vote in Iowa. This is essentially his home state. He has one of his homes here, and he was the governor of the neighboring state. So we'll see how this process goes.
But his fundamental problem is one of trust. I don't think conservatives trust him and I don't think moderates trust him. And you saw last night him shifting on a whole range of positions from abortion to China to taxes.
STEPHANOPOULOS: But he's getting the support of Republicans who think he's best able to beat President Obama. Is he the strongest candidate?
AXELROD: Well we'll see, George. I don't think that, frankly, bringing a Bain mentality to this economy, to running this economy makes him a strong candidate. I don't think shifting and moving around on positions, fundamental positions is one that people are going to embrace.
Trust is a big issue in the presidency. I think there's a big trust question when it comes to Governor Romney.
STEPHANOPOULOS: And the economy is going to be a big issue as well. But others last night started to take aim at President Obama on the issue of national security and defense. Coming off the announcement this week from the president and Secretary Panetta that the military is going to be downsized, no longer poised to fight two full wars. And Governor Perry was tough on that last night.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY, R-TEXAS, PRESIDENTIAL CANDIDATE: You cannot cut $1 trillion from the Department of Defense budget and expect that America's freedoms are not going to be jeopardized. That to me is the biggest problem that America faces, is a president that doesn't understand the military and a president who is allowing the reduction of the DOD budget so that he can spend money in other places, and it will put America's freedom in jeopardy.
(END VIDEO CLIP)
STEPHANOPOULOS: Worried they can make that soft-on-defense argument work?
AXELROD: Governor Perry has had a problem with counting before. The fact is that--
AXELROD: -- the trillion-dollar figure he cites includes a trigger that's in place, but we expect that we're going to deal with that trigger during the course of this year. So that he's using an inflated number.
The point here is, though, is less about numbers and whether we're going to have the kind of military that can face the challenges we face in the 21st century. Warfare has changed. The nature of our opponents have changed. High-tech warfare is much more important. We have to be agile, we have to be quick, and we need to develop that kind of military.
But I must say, I don't think the president needs to justify his national security bona fides to the crowd that was on that podium last night. And I think, when you look at the record -- ending the war in Iraq, bringing Osama bin Laden to justice, destroying the leadership of Al Qaida -- I think Americans know that this president -- and he has made some very tough calls.
I know Governor Romney said, well, any president would have given the order on Osama bin Laden. Bob Gates said it was the most courageous decision he has seen a president make in his 30 years in Washington. So I'm not sure Mitt Romney would have made that decision, that was a very courageous decision.
STEPHANOPOULOS: Also this morning a new book out about the White House by Jodi Kantor of the New York Times about the president and Mrs. Obama. It's called "The Obamas." I want to read a little bit of an excerpt from Ms. Kantor's piece in The New York Times about it. It's talking about the first lady and says, "new to the ways of Washington, but impassioned about what he husband had been elected to do, she saw herself as a guardian of values. She was sometimes hard on her husband's team than he was, eventually urging him to replace them, and the tensions grew so severe that one top adviser erupted in a meeting in 2010, curing the absent first lady."
Jodi Kantor talked to 33 people inside and around the White House. It does paint a portrait of a very tense White House, and fights between the East Wing and the West Wing. Is it an accurate portrayal?
AXELROD: No, it's not. You know -- you can take any one incident and exaggerate...
STEPHANOPOULOS: That incident is true, though, isn't it?
AXELROD: Yeah, and the context of it is important. We don't have time to rehearse it here. But George, you were in a White House, you understand that that's very -- every day is a very tense working environment and you have great collegiality and that doesn't mean that people have exchanges and words.
I think the first lady and her staff worked very well when I was there with the West Wing. She's a sensational person and highly regarded by everybody who works there.
STEPHANOPOULOS: The book suggested that at times she was reluctant to go out on the campaign trial. Will she be a full partner in this year's election?
AXELROD: Well, she has been reluctant because her first priority is looking after her kids. And I appreciate that. But she's been out quite a bit. She'll be out more. She believes deeply in the president and more than that she believes deeply in this country and what we need to do to create an environment in which people can work hard, get ahead, feel like their children are going to do better. That's what this election is all about.
And so, yes, she'll be out there.
STEPHANOPOULOS: David Axelrod, thanks very much.
AXELROD: All right, George, good to be with you.
STEPHANOPOULOS: Good to be with you.
STEPHANOPOULOS: Now for more on the debate and where the Republicans go from here, we go turn to the man who four years ago was surging out of Iowa.
(BEGIN VIDEO CLIP)
HUCKABEE: A new day is needed in American politics just like a new day is needed in American government. And tonight, it starts here in Iowa. But it doesn't end here it goes all of the way through the other states and ends at 1600 Pennsylvania Avenue, one year from now.
(END VIDEO CLIP)
STEPHANOPOULOS: A high point for Mike Huckabee four years ago. And the former candidate and Fox News contributor joins us from Little Rock, Arkansas.
Now of course he served as governor there. And thank you so much for coming out this morning, governor.
Four years ago, right after the Iowa caucuses, right before the New Hampshire primary you were on This Week. It's great to have you back again.
HUCKABEE: Well, it's nice to be back. It doesn't seem like four years ago, but I know it was. So thank you for having me today, George.
STEPHANOPOULOS: Well, thanks coming on. Did you see anything last night to slow Mitt Romney down?
HUCKABEE: No, if last night was a NASCAR race, Mitt Romney had a couple of laps on everybody, and all he had to do was keep from hitting the wall. And I would say this, when his car came off the track last night there was no dents in it.
And it was one of those kind of unexpected debates, because I think everybody thought that it was going to be a pile-up and that Mitt Romney's car would be right in middle of it, but it appeared that everybody was a little hesitant, if not timid, in going after him directly. And I think everyone who watched the debate was surprised by that.
STEPHANOPOULOS: How do you explain that?
HUCKABEE: You know, I don't explain it. It's inexplicable to me that a person who is clearly the front-runner who has leads not only in New Hampshire but surprisingly in South Carolina, who could well be on his way to running the tables in the first several states and if that happens, it's going to be very difficult to catch up to him, because it will create an imbalance in not only the financial contributions, but a sense of the momentum.
And the media has lot to do with driving the sense of the inevitable. And whether we like that or not -- believe me, I've been on the receiving end of that and I know what that can mean. And so as a result, it was almost, just critical that the other candidates did what they could do to dent up his car a little bit and stay close to his fender. They just didn't do it. And I don't have any explanation for that.
STEPHANOPOULOS: There was some critique from Newt Gingrich on Mr. Romney's tenure at Bain Capital. Forgive me if I misquote you, but I think wasn't it four years ago when you were running against Mitt Romney, you said he reminded a lot of people of the guy who fired your dad or something along those lines.
You just heard David Axelrod right here talk about Bain Capital. Is that going to be a problem for Governor Romney going forward?
HUCKABEE: Well, let me give you the quote exactly. I never attributed it to Mitt Romney, but I think a lot of people made the attribution and went there with it. But my comment, it was on the Jay Leno show, I said, you know people are looking to elect a president who reminds you of the guy you worked with, not the guy that laid you off. You know, I never said Mitt Romney, a lot of people thought that that's where I was headed with it.
STEPHANOPOULOS: It was, wasn't it?
HUCKABEE: While it was an attempt to go after him for -- well, I will never tell you that, George. I will let you make that conclusion.
But, you know, I think here's the point, if Mitt Romney really wants to defend Bain Capital, the way that he should do it, is to say did some jobs get lost in the process of what we did? Of course. But if we go to Washington, we know that there's some down siding that needs to be done with the bloated federal government that for the first time in our history now has a debt that's bigger than the entire GDP of the country for the first time in our entire history. And that may require some serious budget cutting in the government.
I have experienced it in the private sector. I'm prepared to do it in the public sector. That's the answer that I think he could give, not that I'm trying to give him political advice, because he seems to be doing very well without me.
STEPHANOPOULOS: Let's talk about Rick Santorum for a little bit. He's trying to strike some of the same populist blue collar chords that you talked about four years ago. But he ran into a real buzz saw last night from Ron Paul. Take a look.
(BEGIN VIDEO CLIP)
PAUL: So, you're a big spender. That's all there is to it. You're a big government conservative. And you don't vote, you know, right to work and these very important things. And that's what weakens the economy. So to say you're a conservative I think is a stretch. But you have convinced a lot of people of it, so somebody has to point out your record.
(END VIDEO CLIP)
STEPHANOPOULOS: You know, talking to some campaign strategists last night, they think that Rick Santorum may have miscalculated by coming here to New Hampshire. They point to your experience saying that last time around it might have been better for you to skip New Hampshire, go straight to South Carolina, which is much more fertile ground for a conservative. Do you buy that?
HUCKABEE: No, I don't, George. And part of the reason is because everybody political writer that's on the A team of the political realm is in New Hampshire right now. And if Rick Santorum had bypassed New Hampshire and gone to South Carolina, people would have said, well, he just couldn't compete.
Four years ago, the decision that we made to go ahead and compete in New Hampshire even though we came in the third, knowing that we probably would not do better than that, given that you had Mitt Romney and John McCain both superstars in that state, we knew that if we didn't do that, people would say, oh, well he's a regional candidate. He can only compete in the south. Or he's a demographic candidate, he can only compete with evangelicals.
So we knew that even though it was somewhat risky, we had to show that we were prepared to campaign in every state.
Rick Santorum is doing the same thing. He has to -- he cannot somehow be pegged as the guy who can only campaign where there are value voters who will vote for him. That would be disastrous more so than competing.
STEPHANOPOULOS: A lot of conservatives concerned that now the conservative vote will be split. Newt Gingrich going to South Carolina, Rick Perry going to South Carolina, Rick Santorum going to South Carolina, do you think that there will be some kind of closing of ranks before South Carolina or is this the field?
HUCKABEE: I don' think there will be, because you have people heavily invested in each of these candidates. You've got a lot of people who have given a lot of money to Rick Perry. I think that's one of the reasons he's still in this thing. You've got people who are very excited about Rick Santorum. You got people who are very committed to Newt Gingrich.
You know, who gets to say, all right, I'm the king, the other guys are princes. Nobody's going to work this hard to get this far and suddenly just exit the stage because someone suggested they ought to. In fact, four years ago, George, I had people every week tell me, why don't you get out of the way? Why don't you quit? Why don't you just leave, you can't win? That just made me more determined. That makes you mad when you've put your life on the line.
And so, no, there's not going to be some magic moment at which three, or four of these people sit around a campfire toasting marshmallows, singing Kumbaya and giving the nod to one of their competitors. That just isn't going to happen. And anybody who thinks it is has never run for public office.
STEPHANOPOULOS: How long does this fight go?
HUCKABEE: I think depending on whether Romney wins New Hampshire and South Carolina, if he should win those two, go to Florida and win there, there may be some folks who limp along for a while since the delegate process will go well into the first part of March. I don't see how they catch up with him if he runs the table in those early states.
STEPHANOPOULOS: When you see all this, any regrets at all you didn't get into the race this time around?
HUCKABEE: None whatsoever.
I mean, I watch this -- and sometimes I watch it and I say, oh, my. Here's what I would have said on that stage. But, you know, you don't regret decisions that in your heart that you believe were right. If you start regretting those decisions, you made the wrong one. And I think one of the reasons that I have complete peace about the decision that I made was that it was made not from what would have been a good political moment, because I think I might have had one, but it was a deeply personal one and I'm at peace with it.
And I think we've got good candidates. I disagree with people who say, oh, it's the weakest field we've ever had. Every four years that's what people say. And then we end up with a candidate who's formidable.
I think the biggest issue is that the Democrats have to worry about a weak field. They have only got one candidate and he doesn't have that great a record to run on. And with all due respect to David Axelrod, you know, who's trying to tell us what a great job he's doing, there are a lot of Americans who don't have jobs.
There are a lot of people who, when they go to the gas pump and squeeze, they can barely put five bucks in the tank because prices are much higher than they ought to be in this country.
So, I think any Republican who gets the nomination is going to be in a very good position to take the game to a president who hasn't exactly had a stellar performance because he not ready for this incredible job that he has inherited.
STEPHANOPOULOS: And it's likely to be a tight race. Governor Huckabee, thanks very much for coming on this morning.
HUCKABEE: Always a pleasure, George, thank you.
STEPHANOPOULOS: Take care.
And when we come back, a lot of analysis on this week's powerhouse "Roundtable." George Will, Jake Tapper, Donna Brazile, Matthew Dowd, and Mary Matalin.
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STEPHEN COLBERT, HOST, "THE COLBERT REPORT": The Santorum surge just got real, ladies and gentlemen, because he has caught the notice of the most influential voice of the 19th Century, George Will...
COLBERT: ... who published a pro-Santorum op-ed entitled, "Suddenly, a Fun Candidate."
COLBERT: Fun! And if anybody knows fun, it's George Will. After all, a bow tie is just a necktie that's doing this.
(END VIDEO CLIP)
STEPHANOPOULOS: A new fan for George Will, Stephen Colbert.
STEPHANOPOULOS: It's great to be back with you, George. Also here with Jake Tapper, Mary Matalin, Matthew Dowd, and Donna Brazile.
Well, George, you just heard Mike Huckabee right there. No one laid a glove on Mitt Romney, said it was a NASCAR race, he was two laps ahead of the rest of the field.
GEORGE WILL, ABC CONTRIBUTOR: He was. Part of the problem is the man who was supposed to wage the fight -- well, first it was Gingrich who left Iowa incandescent with rage about Romney, but somehow lost his fire by the time he got here.
But Rick Santorum, standing next to him, he had finally earned his place up here, had to face the fact that there's not that much he differs with Romney on, except the social issues he doesn't really want to talk about.
He's for No Child Left Behind. He was for the prescription drug entitlement. He is a protectionist. He is for industrial policy in that he wants special tax treatment for the 11 percent of the economy that's manufacturing.
What he doesn't want to talk about is his involvement in the Terry Schiavo case, for example, the end of life tragedy that the federal government plunged into, and all the other issues that may have propelled him in Iowa but will not propel him beyond Iowa.
STEPHANOPOULOS: Mary Matalin, did Rick Santorum miss an opportunity last night?
MARY MATALIN, REPUBLICAN POLITICAL STRATEGIST: I don't think so. That's one part of his record. The other part of his record that you wrote so well about the "Fun Candidate," he has got a lot of attributes. He's blue collar, he's ethnic, he's Catholic, that's 38 percent of the voters here are Catholic.
He is the one candidate in this field that's connecting the cultural and the economic erosion to government expansion. And he's getting -- he's a full-spectrum conservative. He showed that one side in Iowa. He pivoted here. He's not getting out of this race. And I think he's going to -- he might even beat Paul in the state, I think.
STEPHANOPOULOS: That would be a big move for Rick Santorum, if he did. But Matt, take a shot at the question I asked Mike Huckabee. He said he couldn't explain why the candidates didn't bring more fight to Mitt Romney last night, any kind of sustained attack.
MATTHEW DOWD, ABC CONTRIBUTOR: Well, all of us expected that they were going to do that because Mitt Romney is the front-runner. And even Mitt Romney and his folks expected them to take a lot more heat. I think it has a lot to do with this process of this race, which is unexpected people arriving on center stage when they really did not expect to be there.
You started with Michele Bachmann who arrived on center stage then faded quickly. Rick Perry arrives on center stage, fades quickly. Herman Cain arrives on stage, fades quickly. Newt Gingrich arrives on stage, fades quickly. And now, Rick Santorum, this is the first time Rick Santorum was in the middle of the fight and I think he fanned, as you say, or as a lot of people have said.
I think he may get his feet back under him as the days go on and think this is what I've got to do. But I think it's because this race has been so topsy-turvy, they have to sit, they've got to sit still, and then they have to like move on. And nobody has been able to sort of move that forward.
STEPHANOPOULOS: And, Jake Tapper, I want to talk about Jon Huntsman for a little bit. He has really staked his entire campaign on New Hampshire, spent more time here than anyone else. But his -- perhaps his most memorable attack last night against Mitt Romney actually was in Chinese.
(BEGIN VIDEO CLIP)
HUNTSMAN: I think it's important to note, as they would say in China, Mitt (speaking in Mandarin), he doesn't quite understand the situation.
(END VIDEO CLIP)
STEPHANOPOULOS: I don't know if we got the translation there. He doesn't understand the situation. But Huntsman has to jump ahead of Paul and or Rick Santorum to really have any kind of an argument coming out of New Hampshire.
JAKE TAPPER, ABC CHIEF WHITE HOUSE CORRESPONDENT: First of all, everybody knows that the voters in New Hampshire speak Cantonese.
TAPPER: So to go with Mandarin is a big mistake, big mistake tactically. Huntsman's campaign, he did not bring it either. And as you say, he has staked everything here. And it was very -- it was an odd performance by him, because you opened the door for him to talk about some key differences.
And it was very bizarre to me to see the candidates pass up this opportunity to distinguish themselves, to draw the contrasts that they need to do. Now a lot of the campaigns were spinning after the debate. We did draw these distinctions. We did talk about it. And it's true, if you go through the transcript, you can find little bits here and there.
There wasn't a coherent, I'm Rick Santorum, I'm the conservative, Mitt Romney is a nice guy, he's a moderate, and he should not be the nominee of the party. Same thing with Rick Perry, Newt Gingrich. It was a mistake, it was a tactical mistake and they're going to -- you're going to see them trying to rectify that in the coming days.
STEPHANOPOULOS: And you still have Mitt Romney facing a divided conservative opposition, Donna.
DONNA BRAZILE, ABC CONTRIBUTORS: There's no passion, George. Look, I have been to enough of these debates to know what passion feels like, what it sounds like, and what it must ultimately be like for Republicans to beat President Obama in 2012.
Mitt Romney is the perfect candidate on paper, if you like to see something written on white paper with a couple of exclamation points. But when it comes to revving up the base, getting people excited, bringing more people into the party, Mitt Romney is not going to bring anybody to the dance unless they're already wearing boots.
STEPHANOPOULOS: Taking up on Donna's point, George, you look back at the Iowa Caucuses this week, a few thousands more voters than voted in the Republican caucuses four years ago, but not an astronomical jump even though there wasn't anything on the Democratic side.
WILL: That's right. Because Iowa is on everyone's list of 12 to 14 swing states that you have to carry to win the presidency, the Republicans should be alarmed at the -- I want to call it depression, but the absence of passion.
Donna, we all know that the passion and the Republican Party is in the tea party, the tea party just isn't an important part of the Republican base, it is the base at this point. And there is no one on the stage -- here I have to make my weekly politics-makes-agreeable-bedfellows statement that Mrs. Will is working for Mr. Perry, the fact is, someone has to find the voice of the tea party.
And the way you start that is by saying, what got us into trouble isn't Barack Obama, what got the tea party enkindled, so dry and flammable in February 2009 was the policies of the Bush administration. What you have to have now is an argument against big-government conservatism and Tea Party limited-government, 10th amendment conservatism.
DOWD: To me -- to me, I think the Obama folks are setting this race up like this. They have an expectation that it's going to be Mitt Romney. And they want to turn Mitt Romney into John Kerry 2004. They want to take a president that they view themselves as incredibly vulnerable, like George Bush was in many Democrats' minds, and try to turn Mitt Romney into the flip-flopper, John Kerry-like candidate from -- interestingly enough, from Massachusetts.
The problem that the Obama administration and the Democrats have is this. While they always saw George Bush was vulnerable, here's the situation Barack Obama faces in this election result. He is seven points on job approval than George Bush was at this same time. He has a 30-point lower consumer confidence rating than George Bush had in 2004, in January 2004. And the wrong direction of this country is 40 points higher than it was in 2004.
And so the -- the Obama campaign understands this. If this is about Barack Obama, they lose. They absolutely know they lose. They cannot run a re-election campaign based on their own successes. If it's about Mitt Romney or the other Republican, they know they have a fighting chance.
STEPHANOPOULOS: And that's why -- most of the reason Mitt Romney did as well as he did in Iowa is among those voters who think he is best positioned to beat President Obama.
But, Mary, go at this question. There does seem to be this struggle inside the Republican Party between hearts and minds, purity and pragmatism, whatever you want to call it, this belief that Mitt Romney could be the strongest candidate but no real love for him.
MATALIN: There will be love for him. There will be passion, even in Iowa, which we were there and it was, kind of, humdrum. But the -- if you look beyond the 100,000, which the voting population is 3 million, the registration for Republicans has gone up and the registration for Democrats has gone down in that pivotal state.
When we get a nominee -- as the late, great Lee Atwater said, when you win, you're in the winner's circle, there will be plenty of passion. There has been intense and unrelenting passion against Obama since the spring of '09. I know just being against isn't enough. You have to be for. But they're all essentially for the same thing. And there's -- the being against is, kind of, the for, almost, in this case.
There will be passion. A generic Republican has been beating Obama for months now.
DOWD: But I think part of the process, George -- part of the process that I think is hurting Mitt Romney is he has not been fully tested. He has not exercised the muscles he needs to exercise to win a general election against a tremendous candidate.
STEPHANOPOULOS: He had a very -- a string of solid debates...
DOWD: ... basically prove his passion, prove that against somebody like Rick Santorum.
BRAZILE: And you know, with self-inflicted wounds. Because the Republicans won't, you know, debate him; they won't touch him.
I mean, in fact, last night, I sat down and said, OK, Ron Paul, secretary of defense; Jon Huntsman, send him back to China; Newt, good party chair, but Michele Bachmann also; Rick Santorum, ambassador to the Vatican...
... and -- and Rick Perry, OK, Energy Department because he can eliminate his own job.
(UNKNOWN): If he remembers.
BRAZILE: If he -- that's right.
STEPHANOPOULOS: Jake, at the White House, they've been planning on Mitt Romney the entire year. They did the early ads against him. You know, Matt says they're going to try to make him John Kerry, but it's clear, also, they are going to make his business career front and center.
And it's a bit of a Rorschach test. There's no question that Romney sees this as a real strength. It's going to be his major selling point. The White House sees it as his major weakness.
TAPPER: They see Mitt Romney as the 1 percent in the 99 percent versus 1 percent, they see him. And, actually, you know, I've even heard Republicans say to me that they don't understand.
I mean, and I'm not -- I don't just mean like some liberal Republican, I mean, on the street, like deep-thinking, ultra-conservative Republicans, big strategists in Washington, say they don't understand why Romney -- why Romney isn't even trying to outflank Obama on some of the economic populism when it comes to corporate America, that corporate America does not necessarily need a tax break at this point. Why would he stake out that position? He's setting himself up for a fall.
But, look, the fundamental point is that Obama is going to be the referendum. It's -- that's what the election is next year. Should he -- does he deserve a re-election or not?
If you look at 2008, Barack Obama had everything going for him. His opponent did not run a great campaign, picked a running mate that alienated some key voters; you had an economic crisis as opposed to a national security crisis, everything going for him. You had the media perhaps tilting on the scales a little bit. And...
... and still...
STEPHANOPOULOS: I think George agrees with that.
TAPPER: And still, 47 percent of the country voted against him. All that Mitt Romney or whoever the nominee is needs to do is convince about 4 million or 5 million Americans...
STEPHANOPOULOS: And there's no question it will be a closer race this time.
WILL: Just a historical footnote: Barack Obama, with all his advantages, got 53 percent of the vote. The Democrat Party is the oldest political party in the world. Only three Democrats have ever gotten more than 53 percent of the vote, Andrew Jackson, Franklin Roosevelt and Lyndon Johnson. There's something about your party that limits them to smaller landslides.
DOWD: Let's get -- well, I'll give you another historical fact, just to -- not just to, sort of, defend the Obama administration on this. Only one Democrat who sought re-election as president of the United States has lost in the last 100-something-plus years, Jimmy Carter, because it's very difficult, one, not only to beat a incumbent president; it seems very difficult to beat a Democrat incumbent president, especially in an environment where people want some sort of economic populism, where, if the Republicans have a nominee that doesn't seem to represent that, it's a more difficult process.
STEPHANOPOULOS: As long as things are moving in the right direction on the economy, that's the point that David Axelrod is actually banking on, that even if the absolute numbers -- and you pointed all of them out -- are pretty dismal on unemployment, as long as the trend is moving in the right direction, that will help him.
WILL: Yeah, Ronald Reagan -- under Ronald Reagan, unemployment went to 10.8 percent. He carried 49 states in 1984 because it was down to 7.4 percent. Now, take the unemployment rate today. If it improves one-tenth of 1 percent -- one-tenth of 1 percent between now and September, it will be at 7.6 percent and in the right direction. And you could have Obama in very good shape.
BRAZILE: Yeah, you want Mitt Romney to campaign in suburban Philadelphia, saying that, you know, as CEO of Bain Capital, you know, I fired people; I closed down factories; and I shipped jobs overseas. I mean, President Obama...
TAPPER: I don't think he's actually going to say that.
TAPPER: I'm just saying. I mean...
BRAZILE: ... putting words in his mouth...
TAPPER: I'm pretty sure that's not...
BRAZILE: ... putting words in his mouth. But, look, I think President Obama's biggest challenge, of course, is to get voting enthusiasm up on the Democratic side. I mean, he can't bank on 53 percent of the people coming back out. You've got to work that. You've got to go out there and convince people that he's been able to turn things around; he's making progress, you know, despite all of the opposition.
And also, I think this is a very volatile electorate, Matt. So while the 2004 numbers -- and George Bush is an interesting comparison -- I don't think this is 2004.
DOWD: One thing before we -- I think that -- we all think and the Obama administration think it's going to be Mitt Romney. But I think Mitt Romney's going to face, as these processes go -- every single person in a campaign faces -- they have to -- they get -- they lose somewhere and they have to recover from that loss in order to get the nomination. I think Mitt Romney is still...
MATALIN: We need to get a grip. As you just opined, this is the playoff. Bachmann is Detroit, I'm sorry to have to say, OK?
Huntsman's going to effectively eliminate himself, although...
STEPHANOPOULOS: You think he gets out?
MATALIN: His campaign's in...
MATALIN: ... staying in it for the -- I don't -- I don't know where he goes.
But we have a ways to go. And to the point -- this is what Santorum and Newt and all of them are trying to say in different ways, it's more than "This is the economy, stupid"; it is cultural. The Tea Party -- the Tea Party is that we are at a tipping point. There's a cultural degradation that is tied to an expanding government that's limiting our liberties. So it's more than just whatever is the economic number, unemployment number...
STEPHANOPOULOS: And on those cultural issues, you know, Mitt Romney had some fun at my expense last night. But what role will they play, the issues of gay marriage, abortion? Because clearly, Democrats want to paint whoever gets the nomination as an extremist on this.
MATALIN: I don't mean -- that's what tends to be the conventional wisdom of what the social issues are, but it's bigger than that. It's the number of people on food stamps, the way in which our education system, which we have the last per people expenditure in the next 34 industrialized countries, is flatlining our education. Our poverty programs are impoverishing families. It's all those kinds of issues that stem from social welfare policies. I'm not talking about...
BRAZILE: That stems from a recession that people are still feeling, that they're trying to dig out.
MATALIN: Well, we're talking about 40 years of these programs, Donna, and they're aren't working. And they're just wasteful but counterproductive, when 40 percent of kids are now born out of wedlock versus 40 years ago, when these poverty programs were put in place. It's just bigger. It's not about gay rights and abortion.
TAPPER: Right. And I think what Mary is touching on, which I have heard from Newt Gingrich and Rick Santorum on the trail, and Rick Perry as well, is the idea that this needs to be -- the candidate needs to be, the Republican nominee, a bold difference from Barack Obama. And that's their selling point. That's what Rick Santorum -- he didn't effectively make the case last night, I didn't think, but I have heard him on the stump do it -- this needs to be a candidate of -- of bold colors, not pale pastels.
DOWD: The problem is their -- one of the problems with that argument, which is what they're facing, is their biography doesn't match up with that -- with that language, because they're creatures of Washington at a time when voters don't want a creature of Washington.
STEPHANOPOULOS: Mike Huckabee could have -- could have delivered that argument.
DOWD: And that's why so many people gave props to Rick Perry before he entered and before he stumbled this, which is why his candidacy was a highlight of many people before he stumbled.
STEPHANOPOULOS: Let me talk about one of the other X factors here, Ron Paul, on the stage last night, did pretty well in Iowa, has a strong following here, did not fully rule out, although it doesn't look like he's going to run a third-party candidate, but you still have that group Americans Elect out there looking to put a third-party candidate on the ticket. What impact does that have? In past elections, 1968, 1992, the third-party candidate tends to hurt the incumbent.
WILL: Absolutely. It gets people who are dissatisfied with the status quo. So they will be taking 70, 80 percent away of potential Republican votes against Obama. But, the successful third-party candidates have a regional base, a vivid personality and a burning issue -- George Wallace for example, Eugene Debs when he was a....
UNIDENTIFIED MALE: Define successful. They didn't win.
WILL: That's the point. And the winner take all allocation of electoral votes, you can win 19 percent of the popular vote as Perot did, get nothing. But you make your point.
We have had candidates who said, vote for me I'll send a message. And some people want to send a message not a president.
STEPHANOPOULOS: Do you see it this time around, Donna?
BRAZILE: 300,000 undeclared voters in this state, same-day registration, let's see if they go out like they did in Iowa and vote for Ron Paul.
Ron Paul has energy. He has enthusiasm. You go to his rallies, you come away with not just a bumper sticker and a button, but you come away with a drive and passion that you want to go out there and really work hard for this guy.
STEPHANOPOULOS: Mary, how do the Democrats handle him?
MATALIN: I make just a point on this third-party where he -- where Paul is going to hurt Obama, he who is enthusiastic, are in young people. The drop off vote for Obama has been greatest among young people who are not just voters, they got their parents to vote. They got everybody excited. That's who is -- that's how -- what Paul is doing to Obama. I don't think it's going to hurt the Republican Party, I don't think it is.
TAPPER: The big decision the Paul family is going to have to make at some point when they come to grip with the fact -- and he knows he's not going to be the nominee, but the big decision is if Ron Paul goes third party, he is going to be messing up his son Rand Paul's political future. He is a Republican senator from Kentucky. He is...
STEPHANOPOULOS: He was up here last night.
TAPPER: He was up here last night. He's with his dad all over the place. And he actually could be a Republican presidential nominee, unlike his father, if Ron -- if dad leaves the party, he's ruining a lot of ground work...
STEPHANOPOULOS: Look, you got Mary Matalin nodding her head here.
MATALIN: No, because if you -- he's the best cleanup crew. If anybody's zany in this it isn't Newt. So Rand's following Ron around cleaning up saying "what he meant, what he meant, what he meant." He's been the best surrogate. And he's very effective.
DOWD: I don't think the third party -- if there's a third party in this, it's likely to be Ron Paul. I think when answer to many of your questions last night, George, he basically said I'm going to support the Republican nominee. He sort of -- he didn't want to promise it, but he basic -- it's somebody else.
But I that window for a third party only opens if Mitt Romney isn't the nominee. If it's somebody that looks much more polarizing -- Mitt Romney is going, as soon as he can clinch the nomination, he's going to turn and become the Massachusetts moderate again. That's what he's going to do. And I think the opening only becomes if Rick Santorum or somebody like that is polarizing, then a third party.
STEPHANOPOULOS: You got just a bit of time left.
I want to go quickly around the table, when does this nomination fight end?
BRAZILE: March. mid-March.
WILL: They're going to Florida now. You can spend $4 million a week easily campaigning in Florida. They're already voting in Florida by absentee ballots. That will be the test of anyone's staying power. It's Grant against Lee. Romney is grant, Lee was dashing, glamorous, nimble, courageous, and he went to Appomattox.
DOWD: I think we'll know by Florida too.
TAPPER: I'm waiting to find out who's Lee? That's the problem right now. If Rick Santorum is -- I think any one of these conservative alternatives, these non-Romneys or Nomneys if you want to call them that, they -- I think any one of them could actually beat Mitt Romney, but there needs to be one and he needs to be a force. And I have not met him yet.
STEPHANOPOULOS: Only got 10 seconds left, guys.
MATALIN: It's going to go on longer. And that's good for us.
DOWD: February 1st, we'll know if the process ends that day or the process goes to June.
STEPHANOPOULOS: Thank you all very much. Terrific roundtable.
When we come back, two new brand new features from our powerhouse political team. Jon Karl with the surprising political stories you were talking about online this week.
And later, Mitt Romney and John McCain, Demi Moore and Ashton Kutcher, what do these two pairs have in common? John Berman explains.
STEPHANOPOULOS: It wasn't too long ago that we needed polls to track political races, but that is so 20th Century. This time around, all of the reaction comes in real-time on Facebook, Twitter, the rest of social media telling us all about who's up who's down, what's hot and what's not.
During our debate last night, our colleagues at Blue Fin Labs were able to tell us which moments lit up the social media universe. The top moment, Congressman Paul talking about his military service in his controversial newsletters.
Then Governor Huntsman speaking Chinese. And Governor Perry saying he would send troops back into Iraq.
So with help from our partners at Yahoo here's Jon Karl with a look at your voice this week.
JON KARL, ABC NEWS CORRESPONDENT: We wanted to see what you were looking for and discussing this week about the 2012 race. On Yahoo! former senator Rick Santorum was searched for twice as often as his nearest competitor. On Twitter, Ron Paul was the hot topic, mentioned in almost three times as many tweets as Santorum and about four times as many as Obama and Romney.
People were also searching like mad for doggie sunglasses. What do they have to do with politics? They were part of Michele Bachmann's Iowa concession speech and her husband's shopping list.
MICHELE BACHMANN, FRM. PRESIDENTIAL CANDIDATE: Yesterday when we were on main street in Des Moines, he was buying doggie sunglasses for our dog Boomer.
KARL: While there was in interest in Santorum's family life and his political views, there was also a heck of a lot of discussion about his sweater vests.
PHOEBE CONNELLY, YAHOO! NEWS SENIOR EDITOR: I think that's a good sign that you're sort of being accepted by the Internet community when they're not willing to just look at your hard issues, but also to incorporate you into their jokes.
KARL: Santorum's campaign manager tweeted @ricksantorum is such a fiscal conservative he doesn't buy sleeves.
@fearricksvest attracted almost as much attention as his policy positions. One Iowa mom sent in a picture of her son in a Santorum sweater vest. But the fashion conscious in California weren't buying. Fresh Brother's Pizza Shop in L.A. declared the vests poor taste.
When Rick Perry left Iowa for Texas even his own campaign staff assumed that was it.
RICK PERRY, REPUBLICAN PRESIDENTIAL CANDIDATE: I decided to return to Texas, determine whether there is a path forward for myself in this race.
KARL: So how did his staff learn he was staying in the race? He went for a jog and sent this tweet -- here we come, South Carolina.
Best part was this picture, get it, he's running.
Finally trending at ABC's Otusnews.com stock market, the ratings measure online sentiment combined with the ratings of our own super delegates ABC's political experts. This Week's biggest mover Rick Santorum, up 45 percent. Romney is still on top, valued way more than any other Republican. But no bounce out of Iowa, up less than 1 percent.
Ron Paul holding steady.
But Gingrich, down 4 percent and Perry down 10 percent on the OTUS stock market.
KARL: Now that Otus stock market, George, measures not only the quantity of conversation on the Internet about the candidates, but also they can actually look and see whether the conversation is positive or negative.
STEPHANOPOULOS: And this online conversation is going continue all week.
KARL: Absolutely. And we want our viewers to come in, talk -- join the conversation. Two ways to do it. One is on Twitter @thisweekabc. And of course on Facebook, facebook.com/thisweekabc.
STEPHANOPOULOS: And Karl, thanks, we want to hear your voice.
And we're going to be right back with John Berman's take on the tricky romance in politics.
But first a moment to honor those who serve and sacrifice.
STEPHANOPOULOS: Finally this week, what a jam packed start to this election year. So much to cover coming out of that photo finish in Iowa and plenty of material for John Berman's tongue-in-cheek take on the political news you may have missed. Closeup This Week.
JOHN BERMAN, ABC NEWS CORRESPONDENT: Sure Hollywood has its share of complicated romances, but who needs Brad, Jen, Gwen, Ben, and Angelina when you have Mitt, John, Rick, and Rick. Yes in relationships you might say there's love, hate and then there's politics.
Just look at that happy couple.
ROMNEY: I'm proud to introduce a friend, an American hero, a giant among men, Senator John McCain.
BERMAN: According to Mitt Romney, John McCain is a friend, a giant, a hero, and also...
ROMNEY: He's simply wrong. Now he's consistent, but he's wrong.
BERMAN: Of course, that was 2008 Mitt Romney, understandable based on what 2008 John McCain was saying about him.
SEN. JOHN MCCAIN, (R) ARIZONA; I understand why he's talking about the future, since he spent most of his time running away from his past.
BERMAN: So according to John McCain, Mitt Romney is a flip-flopper running away from his past, and also...
MCCAIN: An honest, straight-talking person of experience.
BERMAN: About the only person who seems to love Mitt Romney as John McCain is Rick Santorum
SANTORUM: If you want a conservative you must vote for Mitt Romney.
BERMAN: 2008, Rick Santorum.
SANTORUM: Our mission here is to show that we're the conservative alternative to Mitt Romney.
BERMAN: That's nothing.
A little more than a year ago, Rick Perry was grateful Newt Gingrich agreed to write the foreword of his book. How grateful? Well, nothing says thank you like all but calling someone a philanderer.
PERRY: If you will cheat on your wife, then why wouldn't you cheat on your business partner.
BERMAN: But is there such a thing as reverse cheating? Remember these foes?
HILLARY CLINTON, SECRETARY OF STATE: Shame on you, Barack Obama.
BERMAN: Shame on you until I work for you.
CLINTON: Well, Mr. President-elect I am proud to join you.
BERMAN: And then of course, everyone's favorite political Oscar and Felix.
GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Being attacked by Governor Clinton on character is like being called ugly by a frog.
BERMAN: That was until George H.W. Bush kissed the frog. And now he and Bill Clinton are best of friends.
BILL CLINTON, FRM. PRESIDENT OF THE UNITED STATE: It got so ridiculous our odd-couple partnership that Barbara began to refer to me as her black sheep son.
BERMAN: Is there nothing sacred in politics? Hollywood has nothing on these guys. In fact, if Hollywood would like to campaign next week, Demi Moore would endorse Ashton Kutcher.
That's a closeup on This Week. I'm John Berman in Manchester.
STEPHANOPOULOS: And that would be a big story.
We'll be right back.
STEPHANOPOULOS: That is all for us today. I want to thank you everyone here from St. Anselm College in Manchester. Thanks for coming out early this morning. Hope you had a great breakfast.
And tonight -- thank you -- World News with David Muir broadcasting here in New Hampshire tonight.
On Tuesday night, Diane Sawyer and I will be at election headquarters in New York with all the primary results as soon as they come in followed by a full recap on a special addition of Nightline.
And throughout the week, check out otusnews.com for the very latest from our entire political team.
Thanks for sharing part of your Sunday with us. I'll see you tomorrow on GMA.