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MR. MCLAUGHLIN: Issue one: Labastida Out-Foxed.

VICENTE FOX (president-elect of Mexico): (From videotape.) I like challenges. I want to be the best president this country has ever had, and that's my next challenge.

MR. MCLAUGHLIN: That's Mexico's president-elect, Vicente Fox, the man who upended the world's longest-ruling political party and promises to bring plurality to a nation dominated by one-party rule.

For 71 years the Institutional Revolutionary Party, the PRI, maintained power by fraud and intimidation. That ended last week, when voters swept Fox and his National Action Party, PAN, into power, beating the PRI's Francisco Labastida, 43 to 36 percent.

Question: How important is this Fox-PAN victory, Michael Barone, our man on the spot down there last week for the election?

MR. BARONE: Well, muy importante, John. I mean, I was in that crowd at the Angel of Independence, where Vicente Fox was speaking on election night. And when the crowd was jumping up and down in unison, you could feel the earth move in unison. I mean, part of that is because Mexico City is built on a spongy lake bed. (Laughter.) But the fact is that it's the -- its metaphor is good. It's an earthquake in Mexican politics and in Mexican government and so forth. We've got a president in there now who is not tied, as the previous presidents have been, to the more corrupt parts of the PRI, the ruling party. He's got a mandate to change things around.

And it's especially important to the younger generation in Mexico, the people who weren't voting 20 years ago. Only one-third of them -- or less than one-third voted for the PRI this time.

There's a new Mexico that's going on, that's not transfixed by the myths of the 1930s, that fully accepts the NAFTA and the market reforms that have been made under President Salinas and Zedillo of the PRI. And it's been set free by the Electoral Commission, the free voting system, independent of the government, that President Zedillo set up and for which he should get great credit.

MR. MCLAUGHLIN: Zedillo deserves a lot of credit, right?

MR. BARONE: Oh, absolutely. He set up this independent system so that the people could vote. There was minimal vote fraud. And really, it's in many ways the tightest voter ID system in the world.

MR. MCLAUGHLIN: Start us off on this -- since he was elected, within the past week, he has created world news -- this is Vicente Fox -- on the massive structural reforms that he wants to undertake and create in Mexico. One, he wants to get rid of the attorney general. Two, he wants to change around and reform the judicial system. Three, he wants to have the police there report to a different administrative authority.

You -- did you see this coming? And what's your reaction to that?

MR. BARONE: Well, he was talking about it during the campaign. The fact is that everybody, including higher-ups in the PRI Party, will admit that Mexico's justice system doesn't work right, that too many of the police are corrupt. And Zedillo set up a different police force for kidnappings, for example; you can't trust the old one. And too often the courts can be bought off. And obviously, if you're going to be a successful commercial and industrial democracy, you've got to have courts that work honestly and fairly, and law enforcement. He has less to stop him from doing that than even an honest and competent PRI president would.

MR. MCLAUGHLIN: Eleanor, what are your impressions?

MS. CLIFT: Well, it's clear that he wants to do a lot. Whether he's going to be able to is the question. And he is a man of the right, and he got elected by appealing to the downtrodden. And so he has opened up rising expectations to an extent that this country has never seen. They've always looked north and seen the enormous success of this country and wondered why it wasn't happening there.

Now he's got all their expectations on his very broad shoulders. And he looks terrific so far. And the message he sends -- this is not an ideological election; it isn't a swing, I don't think, from left to right. But the message is that with the immediacy of today's communications, if you have the right message and the right messenger, you can have, in effect, a political earthquake take place at the polls. And that's what we've seen.


MR. KUDLOW: One of the important structural reforms he's talking about is making the Mexican Central Bank completely independent and giving it sole responsibility for the conduct of the Mexican peso exchange rate, which historically has been the Achilles' heel of the Mexican economy, because it gets devalued every presidential election and so forth, causing living standards and savings to collapse and really damaging those who have not. So that's an important point.

He's also going to improve relations with the United States across the board, including the horrible drug problem that we suffer. But I think you're going to see Mexico tilt to a pro-U.S.A. foreign policy.

And let me make this last point: I think there's a North American political tide at work here.


MR. KUDLOW: Tide. The themes that he emphasized, which attracted young people and business people -- ownership, investment, entrepreneurialism --

MR. MCLAUGHLIN: Common market.

MR. KUDLOW: -- common market, trade freedom, economic freedom, tapping into world globalization in the new technology age.

Now lookit, in Canada, the same themes are being articulated by a man named Stockwell Day, of the New Conservative Alliance. In the United States, similar things are being articulated by one George W. Bush.

MR. MCLAUGHLIN: You mean you can see a common market emerging between these three giants in the hemisphere?

MR. KUDLOW: I can see it, and they're going to have a lot of political familiarity. We're talking about center-right victories in U.S., Canada, and Mexico. It will influence South America, John. This whole area is going to be dollarized.

MR. MCLAUGHLIN: Look, Fox is predicting a 7 -- and hoping for -- a 7 percent growth rate annually --

MR. KUDLOW: Right.

MR. MCLAUGHLIN: -- and 1.35 million new jobs annually. Isn't there a giant sea of unreality floating all around this leader?

MR. KUDLOW: It's already growing --

MR. O'DONNELL: Well --

MR. KUDLOW: -- it's already growing at 7 to 8 percent. In fact --

MR. MCLAUGHLIN: But is he going to be able to maintain that?

MR. KUDLOW: Yes, he can, if he continues to liberalize the economy.

MR. MCLAUGHLIN: Well, we've got a new leader in Costa Rica, and he had similar high ambitions, and what happened? He met problems with the labor unions.

So you see some unrealism here in Fox?

MR. O'DONNELL: Well, there's a very high degree of optimism, and that's understandable.

This is, as Michael has said, an incredibly important achievement. There is no more important test of a mature democracy than the peaceful transition of power. We have seen that for the first time in Mexican history. The world has stood in awe of us for a couple of hundred years, changing party power repeatedly. Now Mexico is on the verge of entering the rest of the world on this. And going straight at the corruption is the most important thing, because it is corruption that has prevented peaceful transitions of power in Mexico.

MR. MCLAUGHLIN: Michael, do you want to add something before we go to the exit question?

MR. BARONE: Well, the fact is that this -- Mexico has proved that it's a small-d democracy now. Now the question is whether it can be -- prove it's small-r republican, in the sense of governing with the different groups, with the fact that the PAN Party, Fox's party --

MR. MCLAUGHLIN: That goes to my exit question. Will Fox find enough support in Mexico's congress to forge a ruling coalition, as Reagan did in 1981, in finding his boll weevils in the House of Representatives? He's got to get support from the congress down there. Will he get it?

MR. BARONE: I think he'll be able to horse-trade and figure out how to do it. They've got to invent this kind of politics there. They've had some practice the last three years, under a divided control. I think Fox will do it.

MS. CLIFT: He won a commanding mandate. I think people are going to get aboard that train for fear of being left behind if they don't. So yes.

MR. KUDLOW: Absolutely, just as Reagan did. And this political tide is going to rip through the U.S. and Canada, and we're looking at center-right economic-growth cooperation. It's a heck of a story.

MR. MCLAUGHLIN: Quite exciting.

MR. O'DONNELL: Let's hope he does --

MR. KUDLOW: Buy the stock market, John.


MR. KUDLOW: Buy the stock market.


MR. O'DONNELL: Let's hope he does much better than Ronald Reagan, who politically managed to elect a Republican Senate and two years later lost it, and then got one thing through, a big tax cut, which bankrupt the federal government for the coming decade.

MR. KUDLOW: Which is still to this day the backbone of our prosperity, if I might --

MR. MCLAUGHLIN: I think he's going to get their support because a lot of the members of congress down there are PAN members, and they're going to be wanting to stay in play. So he'll get his support.

Incidentally, the Vicente Fox victory should come as no shock to our regular viewers, who enjoy, among the many benefits of their McLaughlin Group allegiance, a surprise-free existence. Let's go to the videotape from seven weeks before last Sunday's election.

JOHN MCLAUGHLIN: (From videotape.) I predict an astounding election win. For some seven decades, Mexico has been ruled by one political party, the PRI. I predict that his year, on July 2nd, the winning party will be PAN, the National Action Party, led by Vicente Fox.

MR. MCLAUGHLIN: When we come back: The economy; what's ahead, a soft landing or a painful recession?


MR. MCLAUGHLIN: Issue two: Hail Mary in the Holy Land.

PRESIDENT BILL CLINTON: (From videotape.) In coming here and accepting this challenge, Prime Minister Barak and Chairman Arafat have shown they are ready to take risks to pursue peace.

MR. MCLAUGHLIN: Camp David II faces long odds, almost a Hail Mary pass, at least going in. The thorniest issues still remain: Jerusalem, refugees, borders, vital West Bank water. The gulf between the Israelis and the Palestinians on these issues seems virtually unbridgeable. Just eight weeks remain before September the 13th, the latest deadline for a final Middle East peace settlement set by the 1993 Oslo Accords. If there is no final deal, the Palestinians will unilaterally declare statehood, they say. East Jerusalem will be the Palestinian capital in this scenario. The Israelis will never go along with this, experts agree. In fact, a wave of violence will almost certainly ensue.

For the three protagonists in this drama -- Barak, Arafat and Clinton -- gigantic political stakes loom. Question: What is the minimum objective of the three summiteers this coming week, the minimum objective?

MR. O'DONNELL: John, the minimum objective is a real peace deal. And we are very, very close. In effect, the particulars that Barak is willing to agree to have been leaked to the press, which was an attempt to undermine his negotiating position in Israel. But Arafat absolutely needs a deal. He wants to be a head of state. This is his last best chance to do that. Barak needs a deal. Absolutely he politically will collapse in Israel without one. He can't go back without one. It may take right up to September 13th to get one.

MR. MCLAUGHLIN: The likelihood of getting a deal is remote. These problems are totally intractable, several of them, certainly Jerusalem, certainly the refugee situation. The thing that they have to hope for is they can avoid a disaster. And the way they do that is the way the two Kims did it in Korea, and that is, they agree on the general outline and they say we'll fill in the details later. What do you think of that?

MR. BARONE: Well, that was the Oslo agreement in 1992. It's the same thing. And I think, John, my guess is that that's going to be the outcome of these negotiations. I mean the fact is, Barak, as he goes over to Camp David, has only got 59 votes in the Knesset out of 120. That's not a majority. He's lost --

MR. MCLAUGHLIN: Do you think that Clinton, Eleanor -- this is an easy question for you; easy question -- do you think that Bill Clinton in making this move and permitting this Camp David meeting, do you think this is an act of recklessness -- (laughter) -- or do you think this is an act of courage?

MS. CLIFT: With -- wait a second!

MR. MCLAUGHLIN: That's a tough question.

MS. CLIFT: With Arafat saying that he was unilaterally going to declare an independent Palestinian state in September, with the inevitability of an Israeli response that could lead to violence reacting to that, this country, and the president, had no choice but to get involved. And like it or not, an American president is still the best nudge when it comes to getting peace in the Middle East.

MR. O'DONNELL: It would be reckless of him to do anything else.

MR. MCLAUGHLIN: Do you think, Eleanor, that Al Gore played a role in this and said, "Look, on September the 13th there's going to be a Palestinian intifada over there. This is not going to help my election. You've got to get into the act. You've got to get some kind of a resolution of this, Mr. President."

MS. CLIFT: I doubt that Al Gore pushed Bill Clinton into this. Bill Clinton knows what is the right thing to do and he's doing the right thing.

MR. MCLAUGHLIN: Don't you think that every time that Bill Clinton does something that puts him in the limelight, that is dramatic, such as this, it really hurts Gore because it takes the limelight off him, and it reminds everybody that Clinton and Gore are a team?

MR. KUDLOW: Or not a team. I mean, this is Clinton's ego run amuck, it seems to me.

MR. MCLAUGHLIN: You think it's reckless?

MR. KUDLOW: I do. He's in no position to crunch out a deal where there's no support to give up the West Bank among Israelis --

MR. O'DONNELL: Would you really have him sit on his hands --

MR. MCLAUGHLIN: Hold on --

MR. KUDLOW: Let me just go on.


MR. KUDLOW: Furthermore, Barak is in no position to cut a deal because his government is imploding. In fact, he may not even have the votes to be prime minister when he goes into the meetings on Tuesday.

MR. MCLAUGHLIN: But Barak is the one who has been pushing Clinton for a deal.

MR. KUDLOW: Because Barak is trying to hit a grand slam home run to stay in office. His tax plan in Israel has folded. There's a general strike amongst unions. He's in a heap of trouble. Netanyahu is having a comeback in Israeli politics, and Barak knows that.

MR. O'DONNELL: Sitting here and advocating doing nothing is the most reckless possible advice you could give. September 13th approaches. The Palestinians have said we will -- now, they've threatened this before and failed to do it, but it is a very dangerous threat for them to say we will establish our Palestinian state on that day if you do nothing. And to sit here and advocate doing nothing --

MR. KUDLOW: What's more dangerous --

MR. O'DONNELL: -- saying the president is --

MR. KUDLOW: What's more dangerous to the Israelis?

MR. MCLAUGHLIN: Also, your point can be supported by the fact that Arafat is under the gun for a deal, too.

MR. O'DONNELL: Absolutely under the gun.

MR. MCLAUGHLIN: His health is failing.

MR. O'DONNELL: He's a dying man.

MR. MCLAUGHLIN: And he doesn't want to face any kind of uprising over there now.


MS. CLIFT: Well, and --

MR. MCLAUGHLIN: I have one thought I want to share with you, and that is -- and with all of you; you, too, Eleanor. I'm not excluding you, Eleanor. I'm very much given to having women participate in discussion.

But my question is this. Don't you think it was really a disaster that Assad died, because what -- where progress could have been made, if the Israelis had given ground on the water question --

MR. BARONE: John, that guy --

MR. MCLAUGHLIN: Just a moment!

MR. BARONE: John, that guy was never going to give anything to Israel --

MR. MCLAUGHLIN: If he had gotten a Syrian deal, if they got Assad in the act, the older Assad who just died, they got him in the act, then that could have changed everything. Assad could have pulled a deal together --

MR. BARONE: Oh, John --

MS. CLIFT: Well, frankly -- frankly --

MR. MCLAUGHLIN: -- and all he needed was that water, that 100 yards from the Sea of Galilee, and that would have opened up the whole thing. Now where do we go?

MR. BARONE: Assad was taking up a different -- Assad was realigning the goal posts at very turn. The guy was interested in staying in power in Syria above all else. And he realized that if he made any accommodation with Israel finally and gave up anything at all, that he would be threatened in that position. His demise is good news.

MR. KUDLOW: I don't think --

MR. MCLAUGHLIN: No, I think it was a lost opportunity that we had no control over because biology took over.

Exit question: What are the odds of Clinton getting his "legacy deal"?

Michael Barone?

MR. BARONE: Oh, I'd say about two to one against.

MS. CLIFT: It depends on the definition of "deal." And if they get more talking through September, we're all better off. I'd say 60 percent.

MR. KUDLOW: Oh, Lord, I'd say no better than 20 percent.

MR. O'DONNELL: To not recognize that we are closer to a peace deal in the Middle East than we have ever been in history is ridiculous. I think we're close, and we can only hope.

MR. MCLAUGHLIN: I think that this "Hail Mary" pass is going to work sufficiently well. I'll give him better than 50-50 to save face for all parties and to preserve the peace after the 13th.

MR. MCLAUGHLIN: Issue three: Economic slowdown.

(Music: "The 59th Street Bridge Song" performed by Simon and Garfunkel.)

The numbers say it all. The once racing U.S. economy is decelerating. The index of leading economic indicators down a tenth of a percent in May, the lowest level since November. Manufacturing activity down 2.6 percent in June, the lowest level in 17 months. And consumer spending up only .2 percent in May.

What's putting the brakes on the economy? The Fed -- intentionally. Since last June, the Federal Reserve Board has raised interest rates six times -- that's 1.75 percentage points -- in the hopes of bringing about a soft landing; i.e., cooling down forces just enough to stave off inflation without crash landing into a recession.

The effects of the interest rate hikes have rippled out with 30-year mortgage rates up to 7.9 percent this month from 7.0 percent in April of '99. And Wall Street Internet and biotechnology stocks have felt the bite, pulling the market down 1.4 percent overall in the first half of the year.

Despite these numbers, the current slowdown is seen as an encouraging sign that the Fed is successfully navigating the soft landing.

SAUL HYMANS (Professor, University of Michigan Economics Department): (From videotape.) This is very good news, because if the economy were not slowing down to what we'd consider a sustainable pace, it could take this more than nine years that we've been growing and just end it and turn it into a recession.

MR. MCLAUGHLIN: Question: Is this the soft landing everybody hoped for, or did Greenspan put on the brakes too hard?

I ask you, Lawrence Kudlow.

MR. KUDLOW: Well, it's too early to know what kind of landing it's going to be. But I think Greenspan has put on the brakes too hard. He and some of the Clinton appointees to the Fed, including Laurence Meyer, keep arguing that low unemployment and rapid economic growth -- namely, prosperity -- is a bad thing, and it's going to cause the inflation rate to go up. So the 50 basis point or half a percentage point hike in May was outrageously radical and unnecessary. The employment figures that came out this week, John, showed a measly 11,000 job increase. That is a slowdown.

MR. MCLAUGHLIN: Let me pull you forward, though. You know, I appreciate your criticism against Greenspan, but I want to hear more about the future, all right?

MR. KUDLOW: Listen, it takes a solid year for monetary policy and tightening to work its way through the economy.

MR. MCLAUGHLIN: Is he going to tighten again?

MR. KUDLOW: Well, I certainly hope not. Cease and desist.

MR. MCLAUGHLIN: There's talk about another quarter of a point out there.

MR. KUDLOW: It would be insane, given -- the economy is going to slow less than 3 percent.

MS. CLIFT: You're not --

MR. O'DONNELL: This is the same criticism Greenspan faced in '95.

MR. MCLAUGHLIN: Do you think that Greenspan is George W. Bush's secret agent? You get the point?

MR. KUDLOW: I get the point. And there's no question that this slowdown takes the bloom off of the prosperity argument that Gore has been making.

MR. O'DONNELL: It's the work of gradualism. Greenspan has perfected gradualism in economic policy. This is exactly the same criticism he got in '95 when he was ticking the rates up -- higher, by the way, than they are now. He has kept this thing going perfectly. Who wants to argue with his record?

MR. MCLAUGHLIN: Hey, fuel prices are up. Gasoline is still about a $1.65 a gallon --

MR. O'DONNELL: And what do you think the Federal Reserve has to do with that?

MR. MCLAUGHLIN: Well, I am getting to another point here. And the other point is that this is Al Gore's lost dream, right in front of his eyes, because the economy was the way he wanted to skid into the White House. And now he has, not only a slowdown in the economy, he has fuel prices, gasoline and oil --

MS. CLIFT: (Inaudible.)

MR. MCLAUGHLIN: -- oil increased already 35 cents a gallon --

MS. CLIFT: But this --

MR. O'DONNELL: It's not a slowdown.

MR. MCLAUGHLIN: And natural gas per unit --

MR. O'DONNELL: It's not a slowdown.

MR. MCLAUGHLIN: -- is going up two dollars and five cents a gallon.

MR. O'DONNELL: It's a summer cooling of the economy, not a slowdown. It won't hurt Gore.

MR. MCLAUGHLIN: Issue four: "Veep du jour."

GOV. GEORGE W. BUSH (R-TX): (From videotape.) You know, the list kind of grows and shrinks.

Some of whom you'll know about and some of whom you won't know about.

I haven't made up my mind if it's going to be -- the announcement will be made at the convention or sometime prior to the convention.

MR. MCLAUGHLIN: When it comes to naming his running mate, Bush has beaten around the bush. He spent Fourth of July at his ranch near Waco, Texas. There he reviewed many potential VPs with adviser and former Defense secretary Dick Cheney.

One of the people consistently on the short list, maybe know veep "du jour": Nebraska Senator Chuck Hagel. Fifty-three years of age; wife, Lilibet; two children; Republican, Episcopalian; University of Nebraska at Omaha, B.A.; United States Army, Vietnam, one year, rising to the rank of sergeant, earning two Purple Hearts and other decorations; Reagan administration, Veterans Affairs, deputy administrator, one year; Vanguard Cellular Systems, co-founder and executive vice president, three years, yielding Hagel multimillion-dollar assets; World United Service Organization, the USO, president and CEO, three years; McCarthy and Company, on Omaha investment bank, president, three years; U.S. Senate, Nebraska, three years and currently; committees -- Aging, Banking, and Health, and Foreign Relations; McCain Campaign, spokesperson and supporter of his fellow senator's presidential run.

Exit: On a probability scale of zero to 10, "zero" meaning "zero probability," "10" meaning "metaphysical certitude," what's the probability that Bush will choose Hagel?

MR. BARONE: I think it's about a two-out-of-10, which is a pretty good probability for any single candidate. This guy has got a lot of foreign-policy experience, which is an interesting thing from a guy from Nebraska.

MR. MCLAUGHLIN: He's got business experience, too.


MR. MCLAUGHLIN: He's a successful businessman.

MR. BARONE: He's an attractive candidate.

MR. MCLAUGHLIN: Yeah. He's also got a military history too, doesn't he?

MS. CLIFT: Oh, I think he's a real contender. I think the only problem in George W. Bush's eyes is -- his flirtation with John McCain. The Bushes are known to carry grudges --

MR. MCLAUGHLIN: Right, but --

MR. MCLAUGHLIN: -- and that may get in the way.

MR. MCLAUGHLIN: You're absolutely right. But the converse of that is he can bring the "McCainites" maybe with him; that is, Hagel.

MR. KUDLOW: I think Bush knows he has got the "McCainites." I don't think Hagel is a Bush kind of guy; I think Keating is still the front-runner.

MR. MCLAUGHLIN: Why is Hagel not "a Bush kind of guy"?

MR. KUDLOW: Too independent, too much of a loner. (Chuckles.) Bush likes to feel very comfy with his candidates, and that's why I think Keating is still the front-runner.

MR. O'DONNELL: He is the only guy on the short list with less experience in government than George W. Bush. Three years in elective office, John; come on. This guy is a rookie -- (laughs) -- he's not ready.

MR. MCLAUGHLIN: I think he's a natural on all registers: professional -- that is, his business experience and his military experience; and I think it would be a great match. We'll be right back with predictions.


MR. MCLAUGHLIN: The House has voted to repeal the estate tax, sometimes called "the death tax." Will the Senate do the same?



MS. CLIFT: And Clinton vetoes! (Chuckles.)

MR. KUDLOW: Yes, with a gas tax cut.

MR. O'DONNELL: No, it'll be filibustered.

MR. MCLAUGHLIN: The answer is yes, it will.

Next week, the Camp David summit -- Barak, Arafat, and Clinton. Will there be a breakthrough? Bye-bye!





MR. MCLAUGHLIN: Issue five: No place like home.

School is out for the summer, and students go home. But for some students in America, they're already at home -- home schooling. It's on the rise in America and is now legal in all 50 states.

Critics dismiss home schooling, for four principal reasons:

Lack of social interaction. The kids have no classmates.

Lack of facilities.

Lack of regulation.

A narrow focus on subject matter.

Objections or not, home schooling is thriving. Item: Number of home schoolers in America -- risen in the last 12 years from a base of 200(,000) or 300,000 to an estimated 1.5 million. Total: approximately 3 percent of all schoolchildren.

Item: National Geography Bee, two months ago, in which home schoolers took four of the top 10 spots.

Item: National Spelling Bee, last month, in which home schoolers finished one, two, three -- a clean sweep.

Item: No college stigma. Home school students are now routinely admitted to America's top universities, often at higher acceptance rates than normal applicants.

"We admire home schoolers. We think they're often very bright and independent thinkers," says one Stanford admissions dean.

Item: Home schooling nothing new, with President Woodrow Wilson and Thomas Edison among famous Americans taught at home.

Question: Is home schooling the answer to the American school crisis, Eleanor Clift? (Laughter.)

MS. CLIFT: Absolutely not. For the minuscule number of parents who have the luxury to be able to stay home and to do this, and who are willing to put in the time and make the commitment, fine; let them go ahead. But you've got better than 90 percent of our schoolchildren being educated in public schools.

MR. KUDLOW: Poorly. Poorly.

MS. CLIFT: Public schools are the backbone of this country and will continue to be.

MR. KUDLOW: Poorly!

MR. O'DONNELL: You would need --

MR. MCLAUGHLIN: I want to hear from Lawrence.

MR. KUDLOW: And actually, that reminds me -- if we could cut taxes, we'd have more stay-at-home parents, for better home schooling, which is going to be one of the hidden issues in this presidential campaign, which George Bush favors and Al Gore --

MR. O'DONNELL: Home schooling is going to be an issue in the presidential campaign?

MR. KUDLOW: Absolutely. It shows up --

MR. O'DONNELL: John -- (inaudible) --

MR. KUDLOW: -- it shows up in all the education polls.

MR. MCLAUGHLIN: Let him finish. Then I'll talk with --

MR. KUDLOW: And it's a cutting-edge issue. Gore's on the wrong side, and Bush is on the right side.

MR. O'DONNELL: There's no edge to cut there. The fact of the matter is that Mrs. Gorman (sp) at the Canyon School in Santa Monica, who just got my daughter through kindergarten, did a far better job than I could have if I had stayed home all year. This is -- this is something that some extraordinary children, with even more extraordinary parents, can do, and no one else.

(Cross talk.)

MR. MCLAUGHLIN: Why does home schooling yield higher academic results?

MR. O'DONNELL: Because you're dealing with an extraordinary pool to begin with, John, the people who are doing this.

MR. MCLAUGHLIN: You mean one-to-one? Parent to child?

MR. O'DONNELL: Yes. I think --

(Cross talk.)

MR. MCLAUGHLIN: No. You know what the secret is, according to the research? It's the parental involvement and interest in the child's education.

MR. BARONE: Right.

MR. KUDLOW: Well, of course.

MR. MCLAUGHLIN: And when parents do it in home schooling --

MR. O'DONNELL: If I quit all of my jobs and did nothing but try to educate my daughter, I would fail. I doesn't matter how interested I am beyond a certain level.

MR. KUDLOW: John, it's obvious that home schooling is not for everyone and never will be, but it does show some of the weaknesses that we see from our public schools that are fed by these schools of education that come out with one bad theory after another. For 10 years they imposed on the State of California "whole language," which turned out to be total guff. All these theories that come out, or many of them, from the ed schools are theories where, "Well, kids will sort of learn about this. They won't have to memorize anything. They won't have to do this." Home schoolers know better, it appears. They're doing better than I thought they would do when this movement first got noticed about a dozen years ago.