Democrats set sights on O'Donnell, Tea Party

HOLT: we're joined by CNBC 's chief Washington correspondent, John Harwood . He's at the Newseum in Washington , where he'll moderate a special town hall event with President Obama tomorrow. John , following up on Mike 's report, the Democratic Senatorial Committee is out with a TV ad tonight that accuses Christine O'Donnell of not paying her staff or her taxes and essentially labeling her financially irresponsible. Does this foreshadow a Democratic strategy of trying to bring tea party candidates back down to earth?

JOHN HARWOOD reporting: Absolutely. Tea party candidates and all Republicans . Democrats are overloaded with problems as the party in power at the time of a weak economy. And one of the few advantages, the few advantages they get from the tea party movement is that some of their nominees have controversies in their past that'll make it difficult for them to get elected in places like Kentucky , Nevada and now Delaware . You can expect to see this all the way through Election Day .

HOLT: But there might be a larger issue at work here. There are a couple new polls out that have found the majority of the country thinks it's a time for a third party. Does this show that Americans are simply fed up with Republicans and Democrats ?

HARWOOD: There's no question they're fed up with both parties. We see that in polls. They don't think that either the Republicans or the Democrats have a plan to fix the economy. The challenge is, how does that energy get translated into a new political movement? Ross Perot tried to do that in 1992 . He had a lot of advantages at that time, was only able to get somewhat less than 20 percent of the vote in a general election. So it's always a practical problem. Right now, most of that disaffection benefits the Republicans .

HOLT: We mentioned you're going to sit down with the president tomorrow. He's been facing a lot of mounting criticism on the sheer number of programs he's pushed for this year. We heard from Colin Powell , one of his supporters, today suggest the President needs to shift his approach with voters who feel overloaded by the expansion of government. Any signs the White House is sensing that, too?

HARWOOD: Yes. When you talk to people in the administration, they're talking about a transition from government-led stimulus to trying to get that private sector money, all that cash on corporate balance sheet, off the sidelines and begun to be invested to generate the next phase of economic growth in this economy. But it's a balancing act, and the president's got some populist sentiments. He's got to restore confidence in the business community, but also convince average Americans he's on their side. Those are a couple of things we'll talk with him about tomorrow.

HOLT: John Harwood . John , thanks very much. We're going to let folks know they can watch that town hall event, "Investing in America " with President Obama tomorrow at noon Eastern on