CROWLEY: I'm Candy Crowley and this is "State of the Union."

(on camera): A small but significant bit of bipartisanship imploded when word got out that Democrats want to front-burner immigration. South Carolina Senator Lindsey Graham, probably the closest to a Republican ally the president has, had been working with Democrats for months on a range of issues, including climate change.

Graham was supposed to be at a bipartisan news conference tomorrow to talk about the proposal. He's not going now. He is furious. "Moving forward on immigration in this hurried, panicked manner," Graham said, "is nothing more than a cynical, political ploy."

Senate Democratic Leader Harry Reid sniffed at that accusation, saying, "I understand the tremendous pressure he is under from members of his own party not to work with us on either measure."

Joining me now, Democratic Senator Robert Menendez of New Jersey and Republican senator Saxby Chambliss of Georgia.

Senator Menendez, let me start with you. I spoke with senators and congressmen, Democrats, last night, a couple of whom said to me, we actually don't want immigration to come up; this isn't our particular issue that is helpful to me in my district or in my state.

Are you on board with this changeover?

MENENDEZ: Well, first of all, Candy, I think what Harry Reid simply said is that we're going to get to both issues in this session. And he actually...

CROWLEY: Is that possible, Senator?

MENENDEZ: I think it is. And he actually noted that, in fact, more work had been done on climate change than on immigration. So whichever is ready to go up would likely come up after we get through Wall Street reform, which is incredibly important to this country and to the taxpayers, so that they never reach into their pockets again.

CROWLEY: Senator Chambliss, when you look and you see the pictures out of Arizona and you listen to the governor, what you do know is that this is an urgent issue. So why not go ahead and take it up now?

CHAMBLISS: Well, it's a very peculiar issue to Arizona that is not taking place in many other states. Border states have unique problems when it comes to immigration. We -- we have an illegal alien problem here in Georgia, but it pales in comparison to what's going on out there. And we have this issue called state's rights. And this is one situation where the states of Arizona has decided to take matters into their own hands. And if that's what the people of Arizona want to do, then certainly they have that right.

Now, we do have a...

(CROSSTALK)

CHAMBLISS: We have a national problem. It is a national issue that needs to be addressed. And I hope we can do it in a reasonable and cautious manner, not let the emotions of people run away with this. Because it is, just simply stated, a very, very serious issue.

CROWLEY: But you're on -- you're on to go at it now rather than put climate change up on the docket?

CHAMBLISS: Well, I'm not sure how you can really justify bringing either one of them up at this point. I mean, we've got a budget to deal with. We normally get that done before the 15th of April. That has not been done. We have not done one single appropriation bill in the Senate. We have not done a defense authorization bill.

We've got a lot of work left on our plate between now and the end of the summer. And we're starting on financial regulatory reform, I assume, this week. That's going to consume an extensive period of time. I'm not sure where you find the time to deal with these other major issues.

CROWLEY: Gentlemen, stand by for me. We will be back with both senators. More on immigration and politics.

(COMMERCIAL BREAK)

CROWLEY: We are back with Republican Senator Saxby Chambliss of Georgia and Democratic Senator Robert Menendez of New Jersey.

Senator Chambliss, just to button up how you feel about taking up immigration reform next, you don't see politics in a scheduling change?

CHAMBLISS: Oh, sure. I mean, it's pretty clear that's what this is all about. But here's the problem with trying to deal with an immigration reform bill now, Candy, from a realistic standpoint and from a legislative standpoint.

We know, because of what we tried to do back in 2007, that trying to deal with the immigration issue, particularly those that are here illegally today, is not practical because we still haven't sealed the border. And until you secure the border, trying to really have an overall reform package on immigration just simply can't be done.

CROWLEY: Senator Menendez, there had been suggestions by some Democratic members of the House, Latinos, who said, if the president didn't deal with this; if there wasn't a serious effort by the White House and by Congress to deal with immigration reform this year, that some Hispanic-American voters might be encouraged to stay home.

How much of a factor is that in this?

MENENDEZ: Well, Candy, first of all, again, Harry Reid simply said, we want to do both. And I believe that.

Secondly, as it relates to Latinos and the question of immigration, I think it's beyond Latinos. It's for everybody in this country. But there is a problem in the Latino community. They see it as a civil rights issue of their time.

When U.S. citizens and legal permanent residents of the United States are getting captured in raids simply because of they are, detained unlawfully and against their constitutional rights -- there are a couple hundred cases of this across the country -- it is fundamentally wrong to be a second-class citizen just because you have a certain accent or you look a certain way.

That's what Arizona is pursuing. That's why we need comprehensive immigration reform to secure our borders. And by the way, the legislation that I've seen Senator -- the efforts being worked by Senator Schumer and Senator Graham are actually pretty tough on the whole question of border enforcement and also on how you find a pathway for earned permanent residency in the United States.

But I'd rather know who is here to pursue the American dream versus who might be here to harm it. I'd rather make all of those undocumented individuals pay taxes to our country. I'd want them to learn English. I want them to go through a criminal background check, so we know who is, in fact, overall, obeying the law.

And those things cannot happen unless we have comprehensive immigration reform. I also don't want to see wages depressed for all American workers by having a sub-class of workers who can be exploited.

MENENDEZ: So this is about economic interests, it's about security interests. But this will come after we do Wall Street reform, because that is pressing to the country. We can never have the taxpayers reach into their pockets again because big businesses on Wall Street make risky gambles. When it paid off for them, they kept the money. When it didn't pay off for them, we had to pay.

CROWLEY: We want -- Senator Menendez, we're going to get to financial reform here in a minute. I want to turn you both to politics though first. And Senator Chambliss, I want to draw your attention to a statement, written statement from former vice president, Dick Cheney, talking about the Florida race. Charlie Crist, as you know, the governor, running against Marco Rubio in a Senate primary for Republicans.

And Dick Cheney in backing Marco Rubio said this of a fellow Republican, "Charlie Crist has shown time and again that he cannot be trusted in Washington to take on the Obama agenda because on issue after issue, he actually supports that agenda. Lately," the vice president said, "It seems Charlie Crist cannot be trusted even to remain a Republican."

I checked the figures before coming on air -- 28 percent of Americans now self-identify themselves as Republicans. Is this sort of attack on a registered Republican-sitting governor, as it is not really a real Republican, is that helpful to the kind of outreach Republicans need to do?

CHAMBLISS: Well, probably not. But obviously, in politics, everybody is entitled to their own opinion. I know Charlie Crist very well. Lived very close to the Florida line, follow Florida politics, encouraged Governor Crist to run for the Senate when Senator Martinez decided he was not going to run again.

And he is involved in a very heated primary with a very good man in Marco Rubio. And you jump on one side or the other occasionally in these races and that's obviously what has happened. And it has stepped up the rhetoric a little bit because it's very, very high-profile race.

CROWLEY: What do you expect the governor to do? Do you think he will run as an Independent?

CHAMBLISS: You know, I don't know. That's obviously an interesting question. I have not talked to Governor Crist in about a month. And last time I did talk to him, I brought the issue up. He told me then that he intended to pursue the Republican primary.

CROWLEY: It doesn't look like that now, though, does it?

CHAMBLISS: There is a lot of conversation about it, certainly.

CROWLEY: Thanks. Senator Menendez, I want to play for you, the president was out in California helping raise money for Senator Boxer's campaign this year. He said something that caught my ear. I want to play it for you.

(BEGIN VIDEO CLIP)

OBAMA: These mid-year races are the ones where historically, it has always been hardest to get folks activated, particularly the party in power. You remember, 2008, that was fun, right?

(END VIDEO CLIP)

CROWLEY: This sounds to me like a president worried that his base isn't excited enough to get out there and the numbers that you need. How much do you worry about that?

MENENDEZ: Well, certainly, mid-term election history of the president's party is always challenging. And so I think the president recognizes that and we recognize that. But we see our base increasingly enthused when we pass landmark health care reform legislation, the loss of that no citizen goes to sleep at night worried they don't have health care. We can control cost and make sure no one gets denied because of a pre-existing condition.

CROWLEY: But your base hasn't been all that excited, has it?

MENENDEZ: No, it has. I can see it as chairman of the Democratic Senatorial Campaign Committee. I saw it on our direct line fundraising where in fact people said good, it did something incredibly important. I think that Wall Street reform is going to engender our base. And the average taxpayer and the Independents who felt they got ripped off, and so that's why Democrats are leading the way on this. We hope our Republican friends will join us. There will be a vote tomorrow. I hope they will join us and just simply go ahead and let us have a debate on it.

CROWLEY: We are going to move up to Wall Street reform right after this next break.

(COMMERCIAL BREAK)

CROWLEY: This deal made on financial reform may be traced to this. Both parties see their arguments validated in recent polls. Republicans see success in November by arguing that more government may not be the answer. And the number of people who say they trust the government to do the right thing has fallen from 40 percent in 2000 to 22 percent today. So when people were asked whether there should be more government control over the economy, 51 percent said, bad idea. But Democrats argue Wall Street is one place where the public wants more regulation. When asked about stricter regulation of major financial companies, 61 percent said, good idea. We'll talk about all that with Senators Chambliss and Menendez in just a moment.

(COMMERCIAL BREAK)

CROWLEY: We are back with Republican Senator Saxby Chambliss and Democrat Robert Menendez. Senator Chambliss, first to you. Financial reform, Senator Shelby, who has been working on trying to figure out a deal, says that Democrats are not going to get closure. They can't get to the magic 60. They haven't found a deal that will bring over any Republicans. Is this ever going to happen?

CHAMBLISS: Well first of all, Candy, there is not a member of the United States Senate that doesn't understand very well that we have got to eliminate this too big to fail. What we saw in the financial collapse has happened over the last couple of years, is that not just Wall Street got hurt but Main Street got hurt. And we need to put in place tougher regulations and tougher sanctions on Wall Street that don't have the same impact on community banks in rural America.

CROWLEY: By approving this bill that's there now, senator, do you think the Republicans run a risk of looking like they are the friends of Wall Street versus Main Street? CHAMBLISS: Absolutely not. That's simply untrue. Republicans have been very clear that we want tougher regulations and stronger sanctions against Wall Street and against the type of things that happened.

CHAMBLISS: We need to put more regulations in place and we need to give our regulators the right kind of tools.

But bigger government, Candy, does not translate into better government. So we don't need to overreach so that we have unintended consequences of costing consumers higher prices for energy prices, higher prices for consumer products by what we do in the regulatory process of banks.

Make no mistake about it. We have got to have tougher regulations on Wall Street. We have got to have tougher sanctions. And we hope we can get together in a bipartisan way to do that. It's been pretty difficult as of late to have much in the way of substantive bipartisan conversations like this. We are still hoping.

CROWLEY: I think Senator Menendez would probably agree with you on that. Senator, let me turn to a slightly different part of the financial reform. And that is we heard this week as a result of a government investigation that we have had members of the SEC has over 3,000 employees, this involved less than 1 percent of them. But that they were spending an inordinate amount of work time watching porn on their commuters. We are talking about people -- senior people making $100,000 up to $200,000 a year.

Now, let me put up on our screen some of the things that over time the financial crimes that were missed by government financial regulators. AIG, Enron, WorldCom, Bernie Madoff, Allen Sanford. All of those things missed by regulators across the board. And yet we have in this new bill that you all are proposing, new regulatory agencies. So where does your faith come from that two new regulatory agencies are going to do any better than the other regulatory agencies that missed all of this?

MENENDEZ: Well, Candy, first of all, those people should be fired if that's what they were doing, number one. Number two is, we need a cop who is on the beat, not asleep at the switch. And I have said that at banking hearings time and time again for over the past year and pushed the new chair lady to move much more aggressively. And we have seen that aggressive action in the recent Goldman case that was bought which I think is incredibly -- if true, it reveals what's going on in the industry.

Secondly, the Consumer Financial Protection Agency, that basically is to empower consumers to give them plain English language opportunities for them to understand and be part of a system that protects themselves. At the end of the day, I just think that the abuses of some who were not spending their time doing what they should be doing as regulars doesn't undermine the fact that if we just let Wall Street run wild, they will run wild.

So the bottom line is this is about stopping banks and financial institutions from making risky bets that we all have to pay for. This is about making sure that they are better collateralized, less debt. This is about taking leverage out of the system. This is about ensuring that in fact we don't have taxpayers pay for them again. And that will not happen by just sitting back and saying the Wall Street crowd will take care of making sure they don't have excesses again.

CROWLEY: Senators, I have less than two minutes left. I want to do a 180 here and ask you about a story that came up this week. Reverend Franklin Graham, son of Billy Graham, was disinvited to be part of a group that was going to hold a prayer day for the Pentagon. He was disinvited because Franklin Graham has called Islam an evil religion. He has said he doesn't like the way that -- he loves Muslims but he doesn't like the way the religion treats women. He doesn't like the way it has encouraged violence.

Was it right or wrong? I need quick answers from both you. I just want to know if you think it was right or wrong that he was disinvited. Senator Chambliss?

CHAMBLISS: Candy, I think it is very unfortunate that he was disinvited. There is not a more spiritual family in America than the family of Billy Graham. For this instant to happen because of a statement that was made years ago as well as months ago, I think is truly unfortunate.

CROWLEY: Senator Menendez, he never backed away from that. He in fact still believes that. Should he have been disinvited?

MENENDEZ: Well, I just simply think that when we invite people to pray, we should invite all faiths to be able to join in that prayer. We are one country and ultimately I would hope that when they make choices like that, they make choices that let everybody know that we are all praying collectively to one god and we need his protection.

CROWLEY: Senator Robert Menendez, Senator Saxby Chambliss, thank you both very much for joining us. We appreciate it.