The McLaughlin Group
Host: John McLaughlin
Panel: Pat Buchanan, Author and Columnist; Eleanor Clift, The Daily Beast; Guy Taylor, Washington Times; Mort Zuckerman, U.S. News & World Report
Broadcast: Weekend of July 5-6, 2014

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JOHN MCLAUGHLIN: Issue One: High Tech Fireworks.

It's the Fourth of July weekend, and millions of Americans are headed to the beach. So are droves of privately owned drones, remotely piloted aircraft like the quadcopter Austin Haughwout used last month to fly over -- (inaudible) -- Andrea Mears.

(Begin videotaped segment.)


AUSTIN HAUGHWOUT: Is this your property?

MS. MEARS: Stop. This guy is taking pictures and trying to upload them from a -- from a camera. Can you guys get here? Hammonasset, that (little ?) beach. He's taking pictures of people on the beach with a helicopter (plane ?). Yeah. Can you guys hurry?

(End videotaped segment.)

MR. MCLAUGHLIN: To hobbyists, drones are a harmless diversion. But to others, they are peeping eyes in the sky, high-tech voyeurs. When Haughwout used his drone to make four passes up and down a Connecticut beach, Ms. Mears became uncomfortable. She confronted him and called the police, and a physical altercation ensued. And Mears, who called the cops, was arrested for assault and breach of peace.

On July 9, a judge will rule on whether to dismiss charges against her. That will settle the physical-assault matter. But the drone matter goes forward. In June, the National Park Service banned the use of drones in more than 400 sites, spanning some 84 million acres, including federal parks and waterways. The ban takes effect August 20.

Drones have been used to harass wildlife like bears and bighorn sheep. The Park Service disapproves of such harassment, and also fields noise complaints and safety concerns, with good reason. Since 2001, military drones operated by highly trained personnel have had more than 400 accidents. And 194 of those 400 accidents caused $2 million in damage in each of these.

This alarming drone accident rate could be a forecast of coming havoc next year, when commercial drone use will be allowed under a new federal law.

Question: Should drones be banned on beaches, in parks, over wilderness areas, at crime scenes or emergencies where first responders are working, at funerals? Who should decide, Pat?

PAT BUCHANAN: Well, John, it depends on the particular area and incident. But what these are are fundamentally instruments of surveillance. They can do tremendous good in watching our border, watching the seas against threats, helping police in people speeding and things like that. But at the same time, they can also be instruments of harassment and invasion of privacy. And so what we're going to have to consider is state by state, locality by locality, and even the federal government. This is a public common, the airspace, in how we regulate it and control it, I think.

But I'll tell you what's going to happen one of these days, John, is something really grave is going to happen when one of these things runs into an airliner or something and you have a monstrous tragedy. And it'll be at that point that we really focus on what we have to do with them.


ELEANOR CLIFT: Well, I think it's going to be sorted out through the courts, and various levels of government will impose bans, and they'll fight it out. And it'll eventually get to the Supreme Court, because we are entering the age of drones. At some point in the very near future, one in five people are going to have one of these things. You want to send a flash drive to a friend of yours; you put it in your little drone and send it out. You want to check the traffic; instead of using the app on your phone, you send your drone out there.

The average drone that's used for these -- that will be used for these kinds of uses, they're about two pounds. They're not weaponized. I mean, this is a communications future that we're looking at. And I think if you want to tell people what area of the law they should specialize in, drone legal work is going to be very promising. These things are going to be very common.

MR. MCLAUGHLIN: The FAA has documented 15 near-collisions with aircraft over the past 24 months. Two separate airliners descending into Los Angeles International Airport respond to close calls with a drone the size of a trash can, flying at 6,500 feet.

What are your views on this, Guy?

GUY TAYLOR: I think the big question -- I mean, honestly, there are going to be issues with commercial airlines and the possibility of crashes. But I don't necessarily agree with Eleanor that we're moving quickly towards this space where the masses are going to have miniaturized drones. I think where we're at right now is a place where this is still very much a hobby type of thing. It's a little bit of a weird hobby.

But we do have this question, as you showed with the clip, of are these drones with cameras on them? And if they are drones with cameras, I can tell you, I certainly don't want my neighbor flying a drone over my property to take pictures of my own children without my permission, just like the woman in the video didn't want to be taken -- photographed trying to relax on a beach somewhere. It opens up a kind of Pandora's box of privacy issues very quickly.

As far as protecting the skies and commercial space, it's an issue for the FAA. And I think that they should be very heavily regulated.

MR. MCLAUGHLIN: But leering at the beach is nothing new.

MR. TAYLOR: No, it's not. But, you know, we're talking about --

MR. MCLAUGHLIN: (Inaudible.)

MR. TAYLOR: -- now the opportunity to go up with a remote- control helicopter and high-definition camera and possibly even stream the video live onto some website somewhere. Do we really need -- this is kind of a commonsense issue. Is that something we really want as Americans, as human beings, to do that to each other?

MS. CLIFT: It's going to be litigated and regulated.

MORT ZUCKERMAN: It's going to be the new version of model aircraft, you know, which we used to do in unbelievable numbers when we were growing up. I don't know how you're going to be able to stop it. It's going to be a very, very difficult, very challenging thing to do. And we're going to have to get used to a different kind of privacy than what we were accustomed to. I just don't see how we get that.

MR. BUCHANAN: This is the ultimate weapon of the peeping Tom. People can put these things right up to people's windows and things like that.

MS. CLIFT: Yeah, but there are going to be laws against that.

MR. BUCHANAN: Well, exactly.

MS. CLIFT: If someone is doing that, then the person who's being spied on reports it to the police.

MR. BUCHANAN: (Inaudible.)

MS. CLIFT: I mean, you know, we do have some laws --

MR. BUCHANAN: (Laughs.)

MS. CLIFT: We have some laws in place, and there will be many more laws and regulations. And conservatives will be screaming for regulation. Bring in the government. (Laughs.)

MR. ZUCKERMAN: (Inaudible.)

MR. MCLAUGHLIN: How about identifying -- go ahead.

MR. ZUCKERMAN: No, I was going to say the technology is going to be such that you're going to be able to have cameras from little model airplanes that are going to be fairly far away, and you won't even be aware of them on some level. So it's going to change everything simply because of the absolute explosion of technology.

MR. MCLAUGHLIN: Let's talk about the identification of the drone manipulator. We now have ways -- you remember the taser? We can now trace the taser. Are we going to be able to put tracers on the drones?

MR. ZUCKERMAN: I don't know yet. I mean, it all depends what it is that we're going to be tracing. If it's going to be an issue of whether you're tracing cameras, I think that's going to be very, very difficult. If they're going to be communicating some kind of message, you know, whether it's --

MR. MCLAUGHLIN: Yeah, I'm talking about identification technology.

MR. ZUCKERMAN: I don't know.

MR. MCLAUGHLIN: You might want to look into that.


MR. MCLAUGHLIN: There might be a buck to be made there.

MR. BUCHANAN: John, the problem here is --

MR. ZUCKERMAN: Well, thank you. I'm doing very well. Thank you very much.


MR. BUCHANAN: -- you're going to have immense social conflict out of this, with people running around and spying on people and looking in windows and flying over beaches; just sort of delinquent activity with these drones. It's going to be a real problem.

MR. TAYLOR: The backlash right now is sort of similar to what you're seeing with Google Glass. There are people that have pushed back against it, both in social commentary but also with fighting and what not. They're very upset if somebody wears a computer on their eyeglasses --


MR. TAYLOR: -- into, say, a bar or something.

MR. BUCHANAN: You're going to see some of those drones shot down, John.

MR. TAYLOR: They don't like it.

MR. MCLAUGHLIN: Of course not.


MR. MCLAUGHLIN: Do you think the FAA should require licenses for droners, that is, users of drones?

MS. CLIFT: I'm for licensing drones. I'm for licensing guns. In fact, if you're going to talk about weaponizing drones, how is the NRA going to feel about that?

MR. BUCHANAN: They'll shoot down the drones with --

MS. CLIFT: Do they see this as the next frontier?

MR. BUCHANAN: -- their shotguns. Have you been skeet shooting? The drones are very easy.

MR. MCLAUGHLIN: The drone needs a pilot, right?

MR. BUCHANAN: They need some operator on the ground, yeah.

MR. MCLAUGHLIN: Right. Pilots have to get licenses. Therefore, the manipulators of drones need --

MR. BUCHANAN: (Inaudible) -- when we were kids. All these guys had these model airplanes. They'd send them up. And now it's got a camera.

MR. MCLAUGHLIN: Exit question: If you are at the beach or the swimming pool this weekend and a drone buzzes you, are you going to consider it, A, harmless, a harmless diversion; B, a minor annoyance; C, a major invasion of privacy; D, a safety hazard; or E, a compliment? Pat Buchanan.

MR. BUCHANAN: Let me tell you, if they're over my swimming pool and I've got a shotgun, I think you'd just shoot the thing right down.


MS. CLIFT: All right. Then you've probably got a suit against you for damaging property. (Laughs.) So, again, the lawyers will --

MR. BUCHANAN: (Inaudible) -- privacy.

MS. CLIFT: I'm between A and B -- harmless diversion or annoying diversion.

MR. MCLAUGHLIN: What do you think, Guy?

MR. TAYLOR: Annoying, pesty thing that I wouldn't know what -- how to make -- I would want to find out who was operating it and ask them what the heck they were doing.

MR. MCLAUGHLIN: Well, is it a threat to your peace of mind?

MR. TAYLOR: I think it's a threat to my peace of mind. I mean, it makes me think that -- what is the point of this? I mean, if you want to know what's going on in my swimming pool, come over and introduce yourself and I'll pour you a glass of lemonade and we can go for a swim, you know. Why do you need to take video of it from above?

MR. MCLAUGHLIN: What have you got in mind for that?

MR. ZUCKERMAN: (Laughs.)

MR. MCLAUGHLIN: Hmm? Is this a gender question?

MR. BUCHANAN: (Laughs.)


MR. ZUCKERMAN: Look, I think it's -- in the first place, I think it's inevitable. So we're going to have to figure out some way to cope with it. And I don't think we're going to have massive legislation to deal with every bit of it. But we're going to have to find some way to get some of it under control, because it can be really disruptive and intrusive.

MR. MCLAUGHLIN: The answer is it's D and E. It's a compliment, but it's also a hazard.

Issue Two: Four Months From Now.

Charlie Cook, veteran political campaign analyst and publisher of the Cook Political Report, says that prospects are dimming for the Democrats to prevent Republicans from taking over the Senate in the 2014 midterm elections four months from now.

Cook cites three factors that have soured voters on Democratic incumbents. Quote: "This 'three steps forward, two steps back' recovery means few voters are in the mood to hand Obama or the Democrats trophies. Attitudes toward the Affordable Care Act have not significantly changed and are unlikely to between now and November. Obamacare overshadows any other specific issue. Still another problem that seems to be growing for Democrats is the general perception -- whether someone agrees or disagrees with this administration on policy -- that Obama officials lack competence," unquote.
This predicted unfavorable zeitgeist is reflected already in President Obama's anemic approval rating, now harboring around 41 percent in the latest Wall Street Journal/NBC poll, showing that 54 percent of the public do not think Mr. Obama is up to the challenges of the next two years.

OK, more data -- the latest tally of vulnerable Senate incumbents. Note the party affiliation: Mark Begich, Democrat; Mark Pryor, Democrat; Mark Udall, Democrat; Bruce Braley, Democrat; Mary Landrieu, Democrat; Kay Hagan, Democrat; Mitch McConnell, Republican -- all vulnerable.

There are also five states where there are open Senate seats, and two long-shot races with vulnerable Democrats. That makes 14 potentially competitive races, with Democrats on the defensive in most of them.

Compounding Democrats' problem is this, says diagnostician Barack Obama. Quote: "Democrats have a congenital defect when it comes to our politics, and that is we like voting during presidential years, and during midterms we don't vote. And so you already have lower voting totals during the midterms. And it's our folks that stay at home."

Question: Is a GOP Senate takeover inevitable? Guy.

MR. TAYLOR: I don't think it's inevitable. I think it looks like it's a very real possibility at this point, John. But what we have to remember is that, as bad as things look for the Democrats and as easy as it has become to criticize the Democratic leadership and the executive, the Republicans nationally have not really rallied around together, I mean, in a specific direction.

So this is going to come down to local races, local races in places. And this divide between the sort of extreme tea party and the more moderate side to the party continues to be there. I think it's a mixed bag, and we're not -- I don't know how it's going to come out.


MS. CLIFT: And in the dozen states with the competitive Senate races, Obama's popularity is even lower than it is nationally. It's at 38 percent. But the pollsters find that Democrats are really energized in those states. And normally in a midterm, the Republicans have the edge. So that alters the landscape a little bit.

And you look at the red-state senators. You pictured some of them -- Landrieu, Begich, Pryor. They're all leading in the polls right now. So it's not as though they've all collapsed; at least not yet. And you have a couple of -- two opportunities where Democratic women could pull off some real upsets. And that's in Kentucky, with Alison Grimes. And in Georgia, Sam Nunn's daughter, Michelle Nunn, is doing very well.

So I think it's -- you know, the Republicans certainly have a better-than-even chance of taking control, but it's not inevitable by any means.


MR. ZUCKERMAN: No, it's not inevitable. But the underlying issue, it seems to me -- two underlying issues. I don't think there's any great deal of confidence in the administration, and that sort of pervades and spreads all over the Democratic Party because nobody has that much confidence in Obama. And he is the symbol of the Democratic Party.

But the other side of it, which nobody has yet mentioned, it seems to me, is how weak the economy is. I mean, we have a huge number of people who are either underemployed or unemployed, and it's not getting better. And people just know it out there, and they sense it in terms of the lives they're living, the problems they're having in terms of their jobs. And they know that the economy is weak. And they, of course, hold the Democrats responsible.

MR. BUCHANAN: That's exactly right. I mean, we had --3 percent growth the first quarter, John.

MR. ZUCKERMAN: The first quarter.

MR. BUCHANAN: And you've got people -- there's sort of a malaise on the economy. Secondly, you've got these scandals breaking -- the IRS and the VA and the Obama -- I mean, the "Obamacare" issue of competence. You've got -- the president's polls are sinking like a stone, and especially on foreign policy. And it looks like this mess in Iraq and Syria is going to get worse.
What does a Democrat -- why would he go to the polls and say I really want to go out and vote, except to say I just don't want the Republicans to control the Senate.

MS. CLIFT: Well, and not --

MR. BUCHANAN: And that's not good enough.

MS. CLIFT: No. And not wanting the Republicans is big in the minds of a lot of Democrats. When you look at the Republican side, the way the Senate race was settled -- in Mississippi was settled has a lot of conservative Republicans angry. You've got Sarah Palin talking about a third party. You've got the popularity of Republicans and tea party kind of equated --

MR. BUCHANAN: But (both sides ?) --

MS. CLIFT: -- much lower than Obama's.

MR. BUCHANAN: -- vote Republican.

MS. CLIFT: So you can't -- well, you can't beat --

MR. BUCHANAN: (Inaudible.)

MS. CLIFT: You can't beat someone with no one.

MR. ZUCKERMAN: Yeah, but you're not running the presidency now. You're running state elections, statewide elections. And on that basis, you know, you are beating somebody, OK, with somebody.

MS. CLIFT: Yeah, but the Republicans want to nationalize it and make it sound like you're really voting against Obama.

MR. BUCHANAN: Well, sure.

MS. CLIFT: But I agree with you.

MR. MCLAUGHLIN: Who wants to --

MS. CLIFT: It is individuals. And Democrats are not doing as badly as you would think when you look race by race.

MR. MCLAUGHLIN: Guy, I'll call on you. Give me the names of the Democrat senators who have problems.

MR. BUCHANAN: (Laughs.)

MR. ZUCKERMAN: Take your time.

MR. TAYLOR: I think --

MR. MCLAUGHLIN: I'm showing here Landrieu is in trouble in Louisiana.

MR. BUCHANAN: But she's not lost it at all. Neither has Pryor lost it in Arkansas.

MR. TAYLOR: The more important piece here is that --

MR. MCLAUGHLIN: I'm saying that they could go Republican.

MR. TAYLOR: Republicans --

MR. MCLAUGHLIN: These are the ones that are exhibiting some weakness. Hold on.

MR. TAYLOR: Put the money --

MR. MCLAUGHLIN: Kay Hagan is in trouble in North Carolina, and Mark Pryor is in trouble in Arkansas. That adds up to a six-point -- --seat gain --

MR. BUCHANAN: Right. But, John, they're all close.

MR. MCLAUGHLIN: -- for the GOP.

MR. BUCHANAN: They're all close. If you --

MR. MCLAUGHLIN: And there are open seats.

MR. BUCHANAN: If you --

MR. MCLAUGHLIN: Where are the open seats now?

MR. BUCHANAN: The open seats -- one of them, I guess, is in Georgia.

MS. CLIFT: Georgia.

MR. BUCHANAN: One of them's in Georgia.

MR. MCLAUGHLIN: I don't think Georgia is open.

MR. BUCHANAN: One of them is Oklahoma.

MR. MCLAUGHLIN: South Dakota, West Virginia and Montana.

MS. CLIFT: Michigan and Iowa.

MR. BUCHANAN: I think Oklahoma. But, John, they're all very close. If you get a wave, a six-year wave that rolls over them, they will all go under. If there's no wave, I think then you could get splits up and down, and maybe you don't get the --

MR. MCLAUGHLIN: That means that the GOP takes over the Senate.

MR. BUCHANAN: I think they're going to win it.



MS. CLIFT: Yeah, but the wave hasn't materialized yet.

MR. MCLAUGHLIN: How about Al Franken?

MS. CLIFT: (Inaudible.)

MR. MCLAUGHLIN: Has Al Franken shown any weakness --

MS. CLIFT: Al Franken is going to win.

MR. MCLAUGHLIN: -- or Ron Wyden in Oregon?

MS. CLIFT: Ron Wyden's going to win. He's got an interesting competitor, Monica Wehby. She's a pediatric neurologist, and she looked really powerful coming out of the gate.


MS. CLIFT: But she's had some difficulties, and I think Wyden will win.

MR. MCLAUGHLIN: How about Franken? He works hard at the job.

MR. BUCHANAN: Did you see -- how about that gal in Iowa --

MS. CLIFT: (Inaudible.)

MR. BUCHANAN: -- who said that she used to castrate hogs? And she's perfectly positioned to come to Washington and deal with the pork barrelers. In Iowa -- she could win in Iowa.

MS. CLIFT: Her name is Joni Ernst.

MR. BUCHANAN: But she could win.

MS. CLIFT: And -- yeah, it's a competitive race in Iowa. It's a competitive --

MR. BUCHANAN: It's an open seat.

MS. CLIFT: We've had -- we have a lot of competitive races here. You're right. If there is a wave --

MR. MCLAUGHLIN: OK, there's no -- the House --

MR. BUCHANAN: If there's a wave, it's all over.

MR. MCLAUGHLIN: Can we talk about the House for a minute?


MR. MCLAUGHLIN: The House is dominantly Republican, and it's --

MR. BUCHANAN: No one --

MR. MCLAUGHLIN: -- (possibly ?) inconceivable that it could go Democrat.

MR. BUCHANAN: No one thinks it's going to go Democratic.


MR. BUCHANAN: And they could pick up some seats.

MR. MCLAUGHLIN: But will --

MS. CLIFT: Because of gerrymandering.

MR. MCLAUGHLIN: Will it lose its -- will it enlarge its majority when 63 Democrats -- let's see. What am I showing here? The GOP may not enlarge its majority as much as it did in 2010, when 63 Democrats lost their House seats.


MR. MCLAUGHLIN: This is because most of the vulnerable Democrats in competitive districts have already been booted from office.

MR. MCLAUGHLIN: Most of the seats that are Republican, the Republicans already have the potential -- the upside potential of the Republicans is fairly
small, but there's some potential.

MR. MCLAUGHLIN: Tell me whether this is right or wrong. The big picture on the Republican primaries this year -- national tea party- backed candidates lost to Main Street Republicans. GOP House and Senate candidates in Mississippi, Oklahoma, Colorado, Kentucky, South Carolina, Texas, Georgia, Montana, North Carolina and West Virginia beat challengers backed by the national tea party groups. What do you conclude from that?

MR. BUCHANAN: Well, that's true. The tea party has not had a good year overall, but they --

MR. MCLAUGHLIN: Is the tea party in decline?

MR. BUCHANAN: I don't know if -- it's certainly not dominant. But take a look at the 7th district of Virginia and Eric Cantor.

MS. CLIFT: Right. Exactly. And the tea party still has the rest of the Republican Party terrorized.

MR. TAYLOR: (Inaudible) -- fundraising in --

MS. CLIFT: And people are terrified to do anything that -- (inaudible).

MR. MCLAUGHLIN: Quick question to you. Is the tea party --

MR. TAYLOR: (Inaudible.)

MR. MCLAUGHLIN: Just a moment. Is the tea party monolithic? Is it monolithic?

MR. TAYLOR: It's spread out at the top about who decides where --

MR. MCLAUGHLIN: It's not monolithic.

MR. TAYLOR: -- where the money goes. And that's been a problem that (I ?) was bringing up to begin with is that the leadership of the Republican Party needs to decide where to put the money in these races. And it's very hard because there are so many different races with different issues at the very local level to decide where to put the money.

MS. CLIFT: They have a ton of money thanks to the Koch brothers and --
(Cross talk.)

MR. MCLAUGHLIN: Let Mort in.

Mort, go ahead.

MR. ZUCKERMAN: I'm going to go back to the --

MR. TAYLOR: (Inaudible.)

MR. ZUCKERMAN: I'm going to go back to the point I made before. There are so many districts where the unemployment rates are very, very high relative to where they used to be, where the sense of economic optimism has virtually evaporated. And this is going to affect family after family after family, and it's going to affect the voting pattern.

MR. BUCHANAN: Mort, why does the African-American vote come out, as high as employment is and as unhappy as they feel, and Obama's not at the top of the ticket?

MR. MCLAUGHLIN: Let me get in with this. Exit question: If the midterm elections were held today, which way would the Senate go -- Democratic, Republican, or is it still a coin toss? Pat Buchanan.

MR. BUCHANAN: Republicans would win the United States Senate barely.


MS. CLIFT: If it were held today, I think Democrats would hold on.


MS. CLIFT: Yes, if it were held today. And a lot of Democrats came out in Mississippi for a Republican.


MS. CLIFT: If they come out, if they see their self-interest, then it's up to the Democrats to --

MR. MCLAUGHLIN: We've got to get in here.

MS. CLIFT: -- show them they're --

MR. TAYLOR: An exact 50-50 split, but the Democrats take it because Biden has the deciding vote.

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: Oh, I think the Republicans are going to take the Senate by probably larger margins than you all think, because there are so many states that are really hurting economically. This is still going to drive the voters. They're going to blame the existing -- the incumbents, and they're going to blame the Democratic administration.

MR. MCLAUGHLIN: OK, 18 weeks to go before that date -- narrowly Republican.

Issue Three: Gross Criminal Product.

JOE GRICE (U.K. Office of National Statistics): (From videotape.) It's about 10 billion (pounds) (in total ?) -- (inaudible); five and a half of that, prostitution; four and a half, illegal drugs dealing. So that's how we get to the 10 billion (pounds). Just put that in context. That's about three-quarters percent of the size of the rest of the economy -- about three-quarters percent of existing gross domestic product.

MR. MCLAUGHLIN: Crime counts, at least in the European Union. Starting in September, EU governments will begin adding the tally of consensual criminal transactions, like drug dealing and prostitution, to official government statistics on gross domestic product.

Britain estimates a three-quarter-of-1-percent boost to its GDP, amounting to 10 billion pounds -- $16.8 billion. Italy calculates that 10.9 percent of its total GDP stems from illicit sex and drugs. So a preliminary estimate of the total for the 28-member European Union is 18.6 percent of the EU's $17 trillion GDP.

Not everyone is pleased by the EU's GDP change. Quote: "Prostitution is not a voluntary commercial activity," unquote, French Minister for Women's Rights Najat Vallaud-Belkacem wrote in protest to the European Commission, calling the change, quote, "an insult to the millions of victims of sexual exploitation worldwide," unquote.

Others see accounting shenanigans. With Eurozone growth flat, the change will give an overnight boost to GDP. That makes it easier for member states to meet the EU's spending caps of 3 percent of GDP, thus easing pressure on governments to control spending. If adopted in the United States, the accounting changes could boost our GDP by as much as 3 percent overnight.

What do you think of those stats, Mort? Is it a good idea or a bad idea to include illicit activity in counting the size of gross domestic product?

MR. ZUCKERMAN: I think it's nonsense, to be honest with you. If you think that there is a product that comes out of what we used to call prostitution -- I don't know what it's going to be called by in the government categories -- or in gambling, where there's nothing and there's no product, OK, of that kind -- there's nothing that comes out of it other than what that activity is. And frankly, it gives credibility to both of those activities that I don't think should be a part of a government --

MR. MCLAUGHLIN: Well, gambling is legal in certain places --

MR. ZUCKERMAN: I don't think disagree with that.

MR. MCLAUGHLIN: -- and prostitution is legal in certain places.

MR. ZUCKERMAN: I don't disagree with that. I don't think -- my -- (inaudible) -- is not to expand its reach and spread, if you know what I mean.

MR. MCLAUGHLIN: What about Vegas? Are you happy that Vegas is taxed?

MR. ZUCKERMAN: You're taxing earnings, but you're not taxing gambling winnings. That's the difference.

MR. BUCHANAN: Yes, you do. You tax gambling winnings. You deduct losses against -- gambling losses against gambling winnings. I hope you're paying yours, Mort. (Laughter.)

MR. ZUCKERMAN: No, my advantage is I've only lost. I've never had the problem with winning.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Well, you know, if you're going to say you have to produce a worthy product in order to be included in the gross domestic product, what about all the people that put together those derivatives based on packaging phony securities? They -- it seems to me they fueled our economy for a big long time. Then there was a big crash.

So I'm not really moralistic about this. I think economic activity is economic activity. It counts in Nevada. Prostitution is part of their industry there. In Colorado, where marijuana is now legal, it's part of the tax base. So --

MR. BUCHANAN: I agree with the mathematics here on --

MS. CLIFT: -- I think this is a legitimate exercise.

MR. BUCHANAN: I agree with the mathematics, but that lady's got a good point on the morality. When you start considering prostitution and drugs and things like that as sort of legitimate commercial enterprises, it tells you about the decline of your culture and your economy and your country.

MR. TAYLOR: This is not about legitimizing these enterprises or taxing them. This is about creating a loophole for bureaucracies in Europe to try and make up fake numbers to hide their debt-to-GDP ratio. How are you --

MS. CLIFT: Well --

MR. MCLAUGHLIN: Let him finish.

MR. TAYLOR: How are you going to prove how much gray economy or black-market economy is actually going on other than having a group of bespectacled academics sit around and claim they know how many hookers and drug dealers there are?

MS. CLIFT: Yeah, but it's --

MR. ZUCKERMAN: There's no national product. There's no product.

(Cross talk.)

MR. ZUCKERMAN: There's no product whatever, OK?

MR. MCLAUGHLIN: Mort says there's no product.

MR. TAYLOR: It's a totally made-up number.

MR. BUCHANAN: It's a service industry.

MR. ZUCKERMAN: I would agree it's a service industry.

MR. MCLAUGHLIN: Forced prediction: The economy will snap back in the second quarter. True or false?

MR. BUCHANAN: Modestly.


MR. BUCHANAN: Modestly.

MS. CLIFT: Yes, 4 to 5 percent.

MR. TAYLOR: False, because of gas prices.

MR. ZUCKERMAN: Yeah. False, false, for sure.

MR. MCLAUGHLIN: The answer is yes.

Happy July 4th weekend. Bye-bye.

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