KING: John Kasich made some of this year's biggest political headlines. In the bellwether state of Ohio he took on and defeated an incumbent Democratic governor. Now comes the hard part, doing something about Ohio's 10 percent unemployment rate. Governor-elect Kasich joins us now from the Republican Governors Conference out in San Diego. First congratulations, good to see you. Here is something --

JOHN KASICH (R), OHIO GOVERNOR-ELECT: Thanks, John.

KING: Here is something you said during a panel discussion out at that meeting. "I am not a huge believer in you just go out and cut. Cut is not attractive to me; it's reform."

You are going to have to deal with this issue on the state government level and you are also going to be asked at the state level and your colleagues, your friends, Republicans nationally when it comes to the Obama health care plan. Do you believe it should just be tweaked or should it be cut, repealed like some of your friends say?

KASICH: Well I think it ought to be repealed and replaced, John, but that's not really going to be my focus right now. My focus is on creating an environment where we can create jobs in our state.

KING: Well then let me ask you to that point, one of your -- well he's a current Republican governor -- soon-to-be one of your colleagues -- I guess he will be leaving office when you take office -- Tim Pawlenty, the governor of Minnesota who may have another job in mind. He wrote this in an op-ed piece in the "San Diego Union Tribune".

"While Congress takes important steps towards eventual repeal, governors can use their authority to stop or delay implementation of Obama care. It must be fought not only in Washington but in state Capitols."

So do you disagree? Do you think if they do it in Washington, fine, but I'm not doing down that road?

KASICH: No, no, no, I don't -- I don't disagree with that John. Look let me make it clear. I'm for repealing and replacing it. I think the Republicans missed a golden opportunity to fix health care, and I think the states are the best place to begin to fix it. But look I have -- we have a situation where the patient is in a ditch right now in a bad car accident. And so I have to get the patient out of the ditch, in the ambulance, to the hospital, stabilize them and teach them to walk.

If I -- and we've got an attorney general that's going to file that lawsuit against Obama care, but for me as the governor-elect, all of my energy is in removing barriers that businesses have felt so we can retain jobs and begin to set the stage for getting more in.

KING: One of the things the president says is essential. He says yes we need to deal with starting to some fiscal sanity in Washington. Yes, he wants to work with the new Republican House, he says, in trying to reach agreement on reducing the budget deficit. But he believes it is critical even as you do that because of U.S. competitiveness in this global economy to still have Washington take the lead and spending some money on what he calls critical infrastructure projects around the country. I assume some of that money would come to your state of Ohio. There's no more stimulus money, but when it comes to infrastructure --

KASICH: Yes.

KING: -- is the president right or should the Republican Congress block that spending?

KASICH: Well, I don't know if they're talking about that. Is he talking about another stimulus package, I don't think that works. They tried to give us $400 billion to build a high-speed train that goes 39 miles an hour. That would not only not make any sense, it would put Ohio in a hole. I don't know what Obama is talking about. If he says that he wants to streamline the process, if he wants to help Ohio too go from a donor state to where we can get our money back and fix infrastructure I'm all for it, but I don't want another stimulus package because it sends the wrong message to the market, and if the markets go south, unemployment goes up.

Look what they need to do -- Joe Biden called me after the election and we quibbled about the politics, and I said let me suggest to you. We need to make the tax cuts permanent and cannot raise taxes on capital gains or dividends. John, they're playing with fire if they don't provide certainty to business. Rather than thinking about more spending, what they need to think about is stabling the economics and giving companies an opportunity to plan for the future. If they do it, we'll be better. I want them to succeed. I need the revenue and I need the jobs.

KING: The last time the government of the United States of America had a balanced budget a guy named John Kasich was chairman of the House budget committee. Give your friends here in Washington some advice as they try to get down this path again. I ask in the context of the president's deficit reduction commission puts out their report and the left immediately says no way, dead on arrival because it would touch social security and Medicare. Much of the right says no way, dead on arrival, because it would include some revenue increases meaning some tax increases, net tax increases to Washington, D.C. Can we get on a sustainable, fiscal sane path if both default extremes immediately default to their ideological bunker or do they need to at least come to the table and say we're willing to begin the conversation with everything on the table? KASICH: We have a problem now, because politicians will not make decisions about running programs without politics. You see, what has infected Washington is I got to take care of myself rather than thinking about our kids and our country. The team of people I built said, hey, damn the torpedoes, full steam ahead. We're looking out for our kids' future. So if you're asking me do we need more taxes, I'll tell you what Washington will do. They will raise taxes and spend the money. Right now they have to control spending and Republicans have to step up to the plate and come up with creative and imaginative and innovative ways to make things work and take on the hard issues.

KING: You are at a meeting in San Diego with Republican governors and governors elect, at least a half dozen people at the meeting would like to be the president of the United States. First the Republican nominee. I'm assuming that will not be you that you won't run for that office, but if I'm the Republican nominee in 2012 and I'm looking at the electoral map and I'm trying to put together the right states, one of the places I look is Ohio. Obama carried it and he was the president. George W. Bush carried it. He was the president. It's pretty simple if you go through our recent political history, you win Ohio you have a good chance of winning the white house. If Governor John Kasich gets a phone call from the Republican nominee a couple years down the road saying would you be my number two, the answer would be?

KASICH: Are you crazy? I got a job food to do in Ohio, John. I mean come on. Listen, I have to tell you. I got out for ten years, and I thought I had a good career and had a lot of great people I work with. I did this because I am dedicated to lifting Ohio. I have no political interests. You know the coolest thing about this? I don't owe anybody anything, John. Ohio is going to be such a fun place to watch. We're moving in many different directions right now. If I can lift the doom and the gloom and the burden of the people off the state of Ohio, that's going to be so fantastic. That's all I care about, John, honestly, and then maybe you and I could have a talk show. How would that be?

KING: That might work out. You had one before on another network. It was entertaining television. We might get there down the road. But first, I'll check back in 18 months and see if the phone has rung. Sir, we wish you the best.

KASICH: Thank you, John. Always a pleasure.