KING: One of this year's most fascinating political stories is playing out in South Carolina, where State Legislator Nikki Haley picked up Sarah Palin's endorsement, survived a nasty four-way primary and yesterday won the runoff to become the Republican nominee for governor. She would be the first woman ever elected South Carolina governor, but as she reminded her supporters last night quote "don't get too excited. We're not there yet."

Nikki Haley joins me now to go "One-on-One". First let me start with a congratulations to you for surviving to become the nominee. If you are victorious in November, you would become the governor of South Carolina, and the commander in chief of the South Carolina National Guard. That National Guard currently has several hundred troops serving in Afghanistan. The president of the United States today replaced the general in charge. Did the president do the right thing?

NIKKI HALEY (R), SOUTH CAROLINA GOV. CANDIDATE: Yes, I think the one thing that we have to look at is everybody has to be accountable. I think there were issues on what happened with the interview. We need to turn around and make sure that loyalty matters but more than anything we need to make sure that we're keeping our troops safe and we're keeping our country safe and we're doing everything we're supposed to do. I think the governor did -- I think the president did what he needed to do. KING: And are you confident for the men and women serving in your National Guard that he has a clear strategy and do you support the idea that they should start coming home in 2011, next summer or do you agree with Senator Graham from your state, Senator McCain saying wait a minute. Let's do this based on conditions on the ground. Don't circle a date on the calendar.

HALEY: Well listen I have a brother that is a "Desert Storm" veteran. I also have my husband is in the National Guard, he also works for the Department of the Army. The one thing we have to understand is that we have to keep our soil safe. We have to make sure that we are keeping America safe and we have to make sure that we're doing everything we can.

We need a strong strategy but I think putting deadlines in place and assuming we're going to get out a certain timeline is something that we need to look at but we don't need to be set on that. Our goal is to keep us safe and make sure we're doing everything we can to protect our people and I think right now that the situation being as volatile as it is we need to be very careful.

KING: Another big debate happening here in Washington that would affect every governor around the country is the debate over spending and whether the federal government should step in and try to help the states more. As you know, there was a big stimulus program early in the Obama administration. The administration now wants something it's quite smaller in terms of the price tag but still says that states are in this recession, states have the budget crunch and they need billions of dollars to help keep teachers on the payroll, maybe to keep police and firefighters on the payroll. If the Congress comes together and gives the president that money, would you take it as the governor of South Carolina?

HALEY: Absolutely not. You know that's the problem that we've had right now is governments trying to be all things to all people. What we need to understand is this is not about losing teachers. This is not about losing law enforcement. This is not about what you spend. It's about how you spend.

KING: Critics might go back and look at two votes you cast in the legislature that essentially took federal stimulus money the first time around and made it part of the South Carolina state budget. Now you say those were procedural votes but answer someone who would say come on, you should have known better, Nikki Haley is a hypocrite.

HALEY: Yes, the interesting thing is we didn't know. It was the first time we had ever been required or even been pushed to take money from the federal government and then mandate it on how we did it, so when the stimulus money came down the first thing I did was I called Governor Sanford, I called Senator DeMint, and I said do we have to take the money? And their answer was we don't know and so what I and a group of reformers did were try and clean up what we could in terms of the budget until we could figure that out. By the time it got to the Senate we realized that all it was going to do was run up our debt. It was mandating programs that didn't necessarily apply to South Carolina or that we needed and so when it came down to the final vote, when it came to the vote that it really affected the voters of this state, I voted against the stimulus.

It was the right thing to do then. I'd do it again today if we needed to.

KING: What about the issue of immigration? It is, as you have said, a federal issue in terms of securing the border. But many states saying the federal government has failed in its mission for taking matters into their own hands including the state of Arizona which passed a pretty tough law that gives police new powers if they pulled people over or come into contact with them in some other way, that if they have reasonable suspicion to check papers and the like.

Does South Carolina need a law like that?

HALEY: You know, South Carolina passed a law that was strong on illegal immigration a couple of years ago but the key with Arizona is they did what they had to because the federal government failed to react. They failed to act on something that they should have.

They need to be looking at securing our borders. What we saw Arizona do is say we can't wait on the federal government anymore. We're going to go ahead and turn around and protect our state.

I applaud what Arizona did. I applaud the governor, and I think that every state in the country is going to turn around and start looking at what they need to do to take care of themselves. I think that's part of state's rights.

KING: As we track politics here on the show our staff keeps a running tally of who's endorsing whom and how that all works out. But here's one little footnote we think is an interesting statistic. Maybe you won't. But we've looked at endorsements so far that we call the battle between Vice President Cheney and Governor Sarah Palin.

And so far, Governor Palin has three victories to zero for Vice President Chaney including in your race. Does that mean anything?

HALEY: You know, I mean, I think she has been a national figure that has taught people the power of their voice. I think she is pushing for conservative reform. I think she is trying to remind elected officials that they are not the ones in charge but the people are.

Certainly I can tell you that while we were creeping up in the polls when she came to South Carolina it was a great boost. We welcomed here. The people in South Carolina loved her and they felt energized at getting the power of their voice back and it carried on with our Join the Movement message so we were thrilled to have her.

KING: Nikki Haley, we appreciate your time today and we will check in between now and November.

HALEY: Thank you very much. It was my pleasure.

KING: Thank you.