KING: This is the "State of Union" report from Sunday, November 1st.

We begin this Sunday with a question asked every day, not only here in Washington, but at kitchen tables across the America. Is the economy out of its rut, and will it soon start creating jobs again?

The official statistics can be pretty confusing. The government, for example, told us this past week gross domestic product -- that is the most comprehensive look at the overall economy -- grew in the third quarter of the year, and grew at a fairly robust pace. But consumer spending is still shaky, meaning many of you aren't confident you can afford to spend more. And the president's economic team believes the unemployment rate will continue to grow for a while, likely past 10 percent soon.

The Republican view in a moment from the man who hopes to be the next speaker of the House. But first, a telling glimpse at the delicate balance the administration is trying to strike. Our senior White House correspondent Ed Henry sat down for an exclusive conversation with Vice President Joe Biden. His bottom line on the economy is quite upbeat, but the vice president is also well aware millions of unemployed Americans see it differently.

(BEGIN VIDEOTAPE)

BIDEN: Well, look, there's a necessary disconnect when people are out of a job -- and a lot of people are -- that no matter what you say -- for example, the GDP grew 3.5 percent. Every expert out there has said, Ed, and you know this, is that it in large part is attributable to the stimulus package. Put another way, without the stimulus package, the economy wouldn't have grown this past quarter, number one.

Number two, this is the most transparent undertaking the government has ever engaged in. You can go on recovery.gov, pick a zip code you live in, go down to the corner of the street that you want to find out about that crosswalk being built with federal money, be able to spend -- how much was spent, who spent it, who the contractor was, how many jobs. We're going to be able today to announce that just from the one portion of the plan, 650,000 jobs were created. That is direct contracts given to -- federal money sent to the states, sent into a community.

There's another close to a million job independent verifiers have acknowledged that are a consequence of the money put in for recovery for everything from extended unemployment benefits to make sure that states are able to keep teachers hired, to policemen hired, being able to make sure that they have what they called F-MAT, fancy federal phrase for saying Medicaid in the states. So it is working.

ED HENRY, CNN CORRESPONDENT: So do you think we've hit bottom?

BIDEN: Oh, I'm confident we've hit bottom. The question -- look, we're not going to be satisfied, Ed, until we -- I'm able to sit in front of you and say, look, this month we grew jobs. The net effect is growing jobs.

It doesn't say a lot to people to say, you know, there would have been a million more, or a 1.6 million more jobs lost, but for this. My grandpop used to have an expression, Ed. We lived in Scranton, Pennsylvania. He said, when a guy in Dixon City, a suburb, is out of work, it's an economic slowdown; when your brother-in-law is out of work, it's a recession; when you're out of work, it's a depression. It's a depression for millions of people.

(END VIDEOTAPE)

KING: So has the economy hit bottom? Did the Obama stimulus plan really make the difference, and does the Republican Party really have a new comprehensive health care alternative? All questions for the House Republican leader, John Boehner, who's with us exclusively this Sunday.

Do you share the vice president's assessment? Have we hit bottom?

BOEHNER: I don't think anybody knows whether we've hit bottom. The one thing I do know is that there's no model for estimating how many jobs could have been saved or created as a result of the stimulus package. All I know are the facts. The president said that when he signed the bill that unemployment would not exceed 8 percent. Now we have unemployment nearly 10 percent. He also said that jobs would be created immediately, and the fact is, they haven't. Most of the so- called jobs that have been saved or created are government jobs, even though the president promised that 90 percent of these jobs would be private-sector jobs. Three million Americans have lost their jobs since the stimulus was signed into law. And yes, the economy grew last month. But after $1 trillion of an economic stimulus plan was spent, probably another $7 trillion or $8 trillion that the Fed has pumped into the economy, I would hope that we've seen some economic growth. But Americans all around the country continue to ask the question, where are the jobs?

KING: And so the vice president says it grew because of the stimulus. You opposed the stimulus. Your party opposed the stimulus. Stand by that vote or was it a mistake? Was that spending necessary, to do something?

BOEHNER: That spending, in the stimulus bill, did nothing more than grow government. Republicans had a better solution that would have cost half as much and created twice as many jobs, according to a model created by the president's own chairwoman of the Council of Economic Advisers. And this was about allowing the American people, families and small businesses, to keep more of what they earned. We really would have gotten the economy going.

And the problem we're having is that small businesses and large businesses are sitting on their hands. Why? They're seeing a government here in Washington with spending that's out of control, a national energy tax, a nationalization of our health care delivery system, and higher taxes on the horizon. And so business people are afraid to invest in their business, afraid to grow their business, because they don't know what's going to happen next.

KING: Let me ask you -- I want to move on to health care, but let me ask you one question about that. One of the things that has people nervous out there is increasing federal deficits. And there's a story in the New York Times today that the administration might be warming to an idea that for 10 months, it has flatly resisted, and that is some sort of a bipartisan commission, get together, look at how to reduce the deficit. You would have to deal with entitlement reforms there. And one proposal on the table from Senator Kent Conrad , a Democrat, and Republican Senator Judd Gregg , is have one of these commissions, they come up with recommendations. Congress would have to vote up or down, no amendments. Would you sign on to something like that, knowing that one recommendation would likely be some higher taxes?

BOEHNER: I've co-sponsored a bill by Representative Frank Wolf from Northern Virginia that would create such a commission. I am concerned that the answer is going to be we're going to raise taxes. But I do agree that we have to get our arms around this deficit. We've got to get our arms around growing entitlement programs.

But before we get to creating this commission, why don't we do something about the spending that's going on right now? It's out of control. You can have $1 trillion deficits for as far as the eye can see, and that's what the budget is that's been passed by the liberals here in Washington.

KING: You would accept that commission, if it was structured in a way you were comfortable with, to try to take the politics out of that debate going forward? I (inaudible)... BOEHNER: Absolutely. Because these entitlement programs are not sustainable. The American people know they're not sustainable. Baby boomers have made promises to each other that our kids and grandkids can't afford. And it's time to do something about it.

KING: Let's move on to health care. I know you brought something with you, and it's more than 1,900 pages, and that is the House Democratic health care bill. Before we get to that, I want to hold up something else. This is the text of your radio address. It's two pages. Now, this was an effort by the Republican Party to say we have alternatives. It's not a bill, I want to be fair to you, but it lays out a number of things you would like to do in the Republican Party.

What it does not do, and what that does, even though you don't like it, in 1,900 pages, it lays out what they would do. It says how much it would cost. The Congressional Budget Office has said in the end what percentage of people would be covered.

Where is the Republican proposal where you can say to the American people, we'll spend this much over 10 years, it will do this to the deficit, and when we're done, X percent of the American people will have health insurance?

BOEHNER: You can go to healthcare.gop.gov and see our eight or nine ideas about how to make our current health care system work better.

KING: But they're separate pieces of legislation right now...

BOEHNER: There are separate pieces...

KING: But will you have something to stack next to that?

BOEHNER: What I'm hopeful for is to take these eight or nine ideas and put them together in a bill that's being scored right now by the Congressional Budget Office and present it on the House floor during this debate. And I'm hopeful that Speaker Pelosi will allow us to offer an alternative.

But what we do is we try to make the current system work better. We take a step-by-step approach, by allowing people to buy insurance across state lines, allowing small businesses and other groups of individuals to group together for the purpose of buying health insurance at lower costs, like big businesses and unions can. We need to do something about junk lawsuits. I think that one of our proposals is to give grants to states who have innovative programs to help bring down the cost of health insurance. And 34 states today have high-risk pools for those with pre-existing conditions. We want to encourage all states to have these. And we put more money into these high-risk pools so that we can bring down the cost of health insurance. And at the end of the day, what we're doing with our proposal is lowering health care insurance premiums, lowering cost and expanding access.

KING: But the perception out there is, and the Democrats have fed this -- and I understand that, and I have read some of the separate proposals Republicans have, that you don't have a comprehensive plan.

KING: Here's a question we had on Twitter. "Where's the magical Republican plan?" Mario asked. "Where is the magical Republican health care bill? I've looked on Google and nothing."

How do you deal with the perception out there fed by the Democrats that do not have -- you have several proposals, but you don't have one where you can say, let's go through all of the issues right here.

BOEHNER: Well, the Democrats don't have one either. I mean, we just saw this first bill, this is the first real bill, one bill, that we've seen from the Democrats in the House, 1,990 pages. That ought to tell you all that we need to know, that we're going to have 1,990 pages of legislation. The word "shall" exists in this bill 3,345 times. Shall, that means, you must do. The Republican proposals have been on healthcare.gop.gov since June. We've talked about them and we talked about them and we're going to continue to talk about them. But it's a common sense approach to make the current system work better. We do not attempt to cover 46 million more Americans.

KING: How many?

BOEHNER: We will cover millions more Americans, but we don't attempt to do this.

KING: But how many more? The American people want to know how many more.

BOEHNER: This is not -- what this is going to do is bankrupt America. It's going to cost millions of Americans their jobs and cut benefits for seniors. This is not what the American people want.

KING: Where do you --

BOEHNER: They want a more gradual approach to fixing our current system.

KING: Where do you draw the line? You are a key player negotiating with the late Senator Edward Kennedy on No Child Left Behind when you had the Education Committee in the House. And that bill has some shalls in it too. It has some federal mandates. So the government does have a role. You've acknowledged that in past legislation. Where is your line in health care in the sense that the Republican Party is the party of states' rights. You believe Washington is too strong, let the states make the decisions. If you could get an opt-in public option, it's a little confusing, I want to explain it to our viewers. But not a public option where states have to make a decision to get out, but a national health care bill that says if states wanted to create a public option, they could do so on their own. Would you vote for that?

BOEHNER: They already can. You know many states, Massachusetts has a plan that they've enacted. Tennessee has enacted their own plan.

KING: There's no public plan in Massachusetts.

BOEHNER: There are a lot of innovative programs out there in the states. And I, frankly, think that we could help those programs work better.

KING: So you will have a proposal? I just want to clear this --

BOEHNER: We are going to have a proposal.

KING: You will have a proposal --

BOEHNER: And I would hope that the speaker would allow us to have a debate and a vote on our proposal.

KING: And it will be a bill? I'll be able to stack the two up side by side?

BOEHNER: Go to healthcare.gop.gov and look at the eight or nine proposals that we have that we expect to make part of -- as a part, together, our substitute.

KING: And so by the end of this week, will people be able to look at one proposal that says, we'll spend this much over 10 years, this is what the CBO says it will cost and this is what the CBO says will end up the percent of Americans who will have health insurance.

BOEHNER: We do not increase taxes, we do not cut Medicaid or Medicare, and do not have mandates on individuals or businesses.

KING: Republican Leader John Boehner. We're going to take a quick break. When we come back, we'll ask him about Afghanistan and the evolving political situation there. We'll also ask him about Tuesday's big elections here in the United States. Stay with us. (COMMERCIAL BREAK)

KING: We're back with the House Republican leader, John Boehner. I want to spend some time on politics, but a couple quick questions first. The administration announced Friday night that it is going to make the H1N1 vaccine available to detainees at the Guantanamo Bay terror detention facility. There are shortages here in the United States for families who are trying to get them. I wonder if you think that's a good idea.

BOEHNER: I don't think it's a good idea. The administration probably didn't think it would be very popular either, that's why they announced it on Friday night. We have prisoners in my own home county who are going to get H1N1 shots while there are vulnerable populations who want the shots who can't get them. I just think that's wrong.

KING: Let me ask you about the Afghan elections. The challenger, Abdullah Abdullah, has said he will not participate now because he doesn't trust the election process. As you know, the administration has said we want to see who we have and what kind of partner we have in Afghanistan before the president makes this momentous decision about troop levels. What does this political uncertainty in your mind do to the situation there and the president's decision?

BOEHNER: Well I think President Karzai did the right thing by agreeing to the runoff and accepting the decision of the commission. But I think everyone expected that President Karzai was going to be re-elected. So Dr. Abdullah's exit from this race, I think, really says more about the fact that he knew he wasn't going to win.

But that should not hamper our decision with regard to Afghanistan. The president made clear that we are not going to withdraw from Afghanistan. But I have looked for every reason in the world to put off a decision, and the longer this decision hangs, the more jeopardy and the more danger our troops on the ground there are in the middle of. We've had the highest casualty totals in years over the last month or two. Why? Because all of the uncertainty around what the president's going to decide. I'm concerned about this delay. I would hope that the president would make a decision and make it soon.

KING: I want to talk to you about politics. You would like to be the next speaker of the House of Representatives. And while much of the attention on this year's elections are on the governor's races in New Jersey and Virginia, there's a special election in New York state. I'm going to hold up the newspaper. This is the Syracuse newspaper. You see "One out, two left in battle for 23rd."

It's the 23rd district and the Republican Party's endorsed candidate, Dede Scozzafava yesterday withdrew from the race. You endorsed her. She was the party's nominee. But she withdrew from the race after Sarah Palin , Tim Pawlenty , the former governor of Alaska, the current governor of Minnesota, two people who might want to run for president some day, and other conservatives jumped in and said she's not good enough, she's not pure enough to be a Republican.

Can you be the speaker of the House, can your party survive in this part of the country if things like this happen?

BOEHNER: Well this is a pretty unusual situation. You had seven county chairmen who chose Dede to be our nominee. And clearly, she would be on the left side of our party, a conservative decided to leave the Republican Party and sign up on the conservative party ticket, which is allowed in New York.

And what's happened over the last several weeks is her numbers have continued to slide. Hoffman, Doug Hoffman, the conservative party candidate, his numbers continue to grow. And so Dede yesterday decided to withdraw from the race.

BOEHNER: This is a pretty unusual circumstance, that we see in New York.

KING: But does it not send a signal? Your friend and former House speaker Republican Newt Gingrich said, if this happened, it would be a purge of the Republican Party.

This is what Chris Van Hollen -- obviously, he's a Democrat and your colleague in the House. He's chairman of the Democratic Congressional Campaign Committee. He says, "The far-right tea-bag party is leading the Republican Party around by the nose."

BOEHNER: Now, listen, we accept moderates in our party and we want moderates in our party. We cover a wide range of Americans. I've -- I was at the tea party in Bakersfield, California on April 15th.

I answered questions in front of 18,000 tea-party people Labor Day weekend in West Chester, Ohio. I've worked with these people. And what they're concerned about is the growing size of government. They want someone who's really going to actively reduce spending and reduce control here in Washington. They're scared to death.

And in this particular case, they think that Mr. Hoffman was a better candidate than the Republican.

KING: If you were a pro-choice Republican, say in the Northeast part of the country -- maybe you support same-sex marriage as well, but you're a fiscal conservative and you think you're a New England moderate Republican, Northeast moderate Republican -- would you enter a race, now, for Congress next year, seek the Republican nomination, knowing that something like this might happen?

BOEHNER: I -- I would hope so. I would hope so. Because what we need is we need a broad group of people in our party.

KING: Doesn't this send a pretty stern signal to those people...

BOEHNER: No, this is a very unusual circumstance.

KING: You don't think the people who went after Dede are going to think, "We can go after other Republicans now," now that they've succeed here?

BOEHNER: Well, I think that going after Republicans is one thing. Having a party standing on fiscal responsibility, like we have all year; standing on principle against the crazy policies that we see out of Speaker Pelosi and Majority Leader Reid -- the American people want to see us take these principled stands. And they want to see us continue to offer what we think are better solutions. If we can continue to do that, we'll have a broad cross-section of people in our party.

KING: As the House Republican leader and the man who would like to be speaker, how do you -- looking at what happened here, you think it's isolated; you hope it's isolated. What do you do when you're in a room with a Sarah Palin , a Governor Pawlenty, the Club for Growth, the people who attacked your party's nominee there?

What message do you send to them about -- I assume you'd want them to pick and choose future battles pretty carefully. You don't have much room for error in next year's elections if you want to get your ultimate goal.

BOEHNER: Well, we're in the middle of, I think, of a political rebellion going on in America. And this rebellion are by people who really have not been actively involved in the political process. And they don't really care whether you're a Democrat or a Republican. They want to see people who are going to stand up and protect the future for our kids and grandkids.

And so it's going to be a difficult road to walk, to work with relatively new entrants into the political system and to work with them to show them that, by and large, we are the party who represents their interests.

KING: Let me ask you, lastly, thought, but sometimes does the party need to draw a line?

What's the point of having a party if people in your party will attack your own nominees? I mean, where do you draw that line?

BOEHNER: Listen, I'm a big believer in Ronald Reagan's 11 commandment -- 11th commandment. Never talk ill about another Republican.

KING: That was not followed in this race.

BOEHNER: I know.

KING: John Boehner, the House Republican leader, the man who hopes to be speaker, we appreciate your coming in here today.