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THE MCLAUGHLIN GROUP



HOST: JOHN MCLAUGHLIN



JOINED BY: LAWRENCE KUDLOW, ELEANOR CLIFT,


TONY BLANKLEY AND LAWRENCE O'DONNELL



TAPED: FRIDAY, JULY 21, 2000


BROADCAST: WEEKEND OF JULY 22-23, 2000



.STX



 


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THIS IS A RUSH TRANSCRIPT.


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MR. MCLAUGHLIN: Issue one: A day at the races. Journalists and gamblers everywhere are rejoicing. The reason? The latest presidential campaign polls point to a horse race. In a two-way contest, Bush and Gore are in a statistic dead heat. A fresh CBS News poll has G.W. at 43 percent and Gore 41 percent, well within the margin of error. In a four-way run, including the Green Party's Ralph Nader and Reform Party's Pat Buchanan, Nader and Buchanan are neck and neck at 4 percent; Gore has 37 percent; G.W. narrowly leads the pack at 42 percent. Any way you measure it, G.W.'s commanding lead of one month ago is gone.



Question: Why has this race tightened?



Lawrence Kudlow?



MR. KUDLOW: Well, John, with all due respect to your intro, I just want to mention, not all polls are accurate, and some of them suffer from some very serious flaws, namely, including the CBS poll you mentioned. Polling over the weekend heavily favors Democrats. Also, "most likely voters" is a much more accurate sample than all of "registered voters." So those are two big issues.



MR. MCLAUGHLIN: So you're contradicting the poll as your response?



MR. KUDLOW: That is one of my responses.



The second response is, better polling, done by Scott Rasmussen and Ed Goeas, for example, show that Bush is still running a good seven to nine points, or better --



MR. MCLAUGHLIN: I saw recently that Rasmussen -- is it "Rasmussen" or "Rasputin"?



MR. KUDLOW: It's Rasmussen. A very accurate pollster.



MR. MCLAUGHLIN: Rasmussen, he had Bush 12 points ahead. Did you see that poll that he put out?



MR. KUDLOW: And I talked to him about that. And he said he thinks the number is centered around seven points.



But let me make a final point. John Zogby, whose overall numbers show Bush ahead by four or five points, points to this important factor: Independents are breaking heavily for George Bush, and labor union members, almost a third of labor union members might wind up with Nader.



MR. MCLAUGHLIN: The polls don't usually tighten until after Labor Day. Do you think that Bush is in trouble? Do you think that Bush has been catering too much to the minority for his base?



MS. CLIFT: Well, I think the early summer triumphalism about Bush looking ahead to an easy victory has faded, with the exception of Lawrence "Mr. Big Tax Cut" Kudlow.



MR. KUDLOW: It's coming, Eleanor. It's coming.



MS. CLIFT: (Laughs.) And I think Al Gore made a series of mistakes; I mean, he ran a terrible campaign. He is finally getting his act together. He --



MR. MCLAUGHLIN: Are the new makeovers working?



MS. CLIFT: He got a nice populist makeover. And he is also focusing on the dismal record in Texas, which is going to be part of the campaign theme.



MR. MCLAUGHLIN: How about the Bradley endorsement? Did that help Gore?



MR. BLANKLEY: A little bit. And what's happening is his base is beginning to come back. He had a lot of base that he had lost. He was down to about 70 percent of the Democrats. He is inevitably going to get back to 85 (percent), 88 percent. So we have seen some of the base come back.



This has always been judged to be a close race because the two political parties are almost perfectly balanced in this country: Clinton got 49 percent popular vote last time. I mean, votes for Congress between Republicans and Democrats, are 51 (percent), 49 percent. This is a perfectly balanced country right now, and this presidential election is going to reflect that.



MR. MCLAUGHLIN: Let me turn to a subject that you're competent to speak about, and that is the women vote. (Laughter.) Can you account, Lawrence, for the pickup in women voters in this poll, that Al Gore got?



MR. O'DONNELL: Well first, John, about these polls, there's a lot of cheap and dirty polls being done by the news media to create news so that the CBS poll becomes the news. The CBS poll is 500 people; it's a terrible poll. If you look at the Wall Street Journal-NBC poll, which is triple that sample; they came out a month ago with a five-point gap in the four-way race, which is the only one that matters, between Bush and Gore, with a 2.5 percent margin of error. So this thing has been at this distance for a very long time.



MR. MCLAUGHLIN: But allowing for all of that, Gore has picked up more of the women vote. Is that because Bush is spending so much time in a overheated discussion about his running mate, which brings to the fore the question of whether he is going to be pro-life or pro-choice --



MR. BLANKLEY: No, no, no. That's -- (not the ?) -- reason, John.



MS. CLIFT: Well --



MR. MCLAUGHLIN: -- and that doesn't play well with women --



MR. BLANKLEY: No.



MR. MCLAUGHLIN: -- and he should make his decision now and get it done with because that's hurting that's hurting Gore -- or it's hurting Bush?



MR. O'DONNELL: The kind of movement you are seeing right now in the so-called women's vote in these polls is meaningless. It's a little bit of creepage in one direction or the other, over the course of a month.



MR. BLANKLEY: It's single women, which are part of the Democratic base. So it's really the Democratic base --



MR. MCLAUGHLIN: All right. Let's talk "veepstakes."



MS. CLIFT: Well, single women --



MR. MCLAUGHLIN: Can we talk -- can we talk "veepstakes"?



MS. CLIFT: -- single women are women, too. And frankly, I think women are beginning to pay attention. And, John, you pointed out. There is some focus on the abortion issue in the choice of the vice presidential --



MR. MCLAUGHLIN: Yes.



MS. CLIFT: -- running mate.



MR. MCLAUGHLIN: This is hurting Bush.



MS. CLIFT: And it is hurting Bush.



MR. MCLAUGHLIN: A question on the "veepstakes" since we're into that momentarily. There is now a little bit of a ground swell or there is some reportage that John McCain has expressed a basic willingness to run. And then there's been some recanting of that, allegedly. What is that all about?



MR. KUDLOW: I don't think right now Governor Bush and his campaign looks great over this veep selection process. There's just too many names floating around, too much indecision, and too many different reasons of qualification.



MR. MCLAUGHLIN: Where is he drifting? You keep abreast of that campaign closely.



MR. KUDLOW: You know, I think he is drifting back towards Governor Frank Keating of Oklahoma. But I acknowledge that there is a new McCain movement.



MR. MCLAUGHLIN: What about Cheney?



MR. BLANKLEY: Wait, wait, wait



MR. KUDLOW: Let me just finish this point. If the polls are -- (close ?) -- if your analysis is right, John, and these polls are any good, which I think they're not, and if it's really a neck and neck race, which I don't think it is, then Bush may have to go to McCain because McCain does unify the party.



MR. MCLAUGHLIN: Well, he could go to Hagel. And Hagel who has supported McCain, one of the few senators who did, could bring some of those McCainites with him.



MR. KUDLOW: Well, why not go for the real McCoy?



MR. MCLAUGHLIN: Wait a minute. Hagel, I understand, is on the top-three list. Now what about --



MS. CLIFT: Let Tony speak. (Laughs.)



MR. MCLAUGHLIN: -- and so is Keating.



MR. BLANKLEY: (Inaudible.)



MR. MCLAUGHLIN: What about Pataki in New York? What are you hearing on that front? (Laughter.)



MR. BLANKLEY: Well, his name mentioned. Look, I want to go --



MR. MCLAUGHLIN: He had a long talk and a long meeting.



MR. BLANKLEY: Yeah, I know. I want to go back to Lawrence.



Bush has not been indecisive; he has been very careful to say nothing. And it's all of us speculating that create the illusion of indecisiveness.



MR. MCLAUGHLIN: He hasn't been indecisive. But he has been using dilatory tactics, and they are working against him.



MR. BLANKLEY: No, that's not true. I've never seen --



MR. MCLAUGHLIN: It brings all this abortion stuff to the fore.



MR. BLANKLEY: I've never seen a vice presidential process where at this time everyone isn't talking.



MR. KUDLOW: No, but let me make this point. If --



MS. CLIFT: Well, first of all, we're not all going to shut up, and we're going to look at the names under contention and wonder why he doesn't pick a Governor Ridge, who would bring him Pennsylvania. And without --



MR. BLANKLEY: You could do all --



MS. CLIFT: Let me finish now, please.



MR. BLANKLEY: -- (inaudible) -- the Democratic Convention.



MS. CLIFT: Excuse me. Excuse me. Without Pennsylvania, Al Gore can't win the presidency.



MR. MCLAUGHLIN: Okay.



MS. CLIFT: Ridge is a fantastic choice. If it weren't for the abortion issue, he'd be at the top of the list.



MR. MCLAUGHLIN: Okay. The Clintons "tres fatigues."



Fox News also has a new poll out. Have the Clintons, quote, "embarrassed our country and disgraced their powerful post?" unquote? Sixty-four percent, yes; 34 percent, no.



Question: Given these poll numbers, will Gore be able to stay in the horse race if the Clintons dominate the Democratic Convention three weeks from Monday? I ask you, Lawrence O'Donnell.



MR. O'DONNELL: The Clintons will not dominate that convention. The president --



MR. MCLAUGHLIN: How many nights are they going to speak?



MR. O'DONNELL: The president will be there Monday night, which is appropriate. He will get the thing launched.



MR. MCLAUGHLIN: And Hillary?



MR. O'DONNELLL: And you've got to remember, he's speaking to an audience that loves him.



MR. MCLAUGHLIN: And Hillary on Tuesday?



MR. O'DONNELL: Hillary will have her chance there, as she should.



MR. MCLAUGHLIN: Which day?



MR. O'DONNELL: Probably Tuesday.



MR. MCLAUGHLIN: There you go. Clinton on Monday on Hillary on Tuesday.



MR. O'DONNELL: But look, it's the Wednesday and Thursday, and Gore goes Thursday, and Gore is going to have his night, and it's going to be his convention.



MR. MCLAUGHLIN: Well actually, these conventions cater to the baptized, to the washed, to the spear carriers.



MR. O'DONNELL: Well, they do --



MR. MCLAUGHLIN: That being the case, the Clintons go over beautifully with that crowd.



MR. KUDLOW: Absolutely. John --



MR. MCLAUGHLIN: Therefore, it's not a bad idea.



MR. KUDLOW: John. John, you are --



MR. MCLAUGHLIN: Let's have more Clintons at the Gore convention.



MR. BLANKLEY: No. No.



MR. KUDLOW: The most important thing at that convention is Bill Clinton's Monday night speech. If he can't unify the party, a third of which is thinking about voting for Nader, if he can't rally the troops, then Al Gore has to prove he can.



MR. MCLAUGHLIN: Let me get into this point. Conversely, at the Republican Convention, which starts a week from Monday, we have an entirely different tonality. There we have Governor Bush playing not to his base, but to the opposite of his base. Since the conventions, particularly today, where they're falling off on their listenership, and they should be playing to their base, is he not missing the boat in that strategy?



MR. BLANKLEY: No. No. No. He's doing -- he's in exactly the right position. You want to be reaching out, and this is an opportunity where --



MR. MCLAUGHLIN: But he can also disenchant his base.



MR. BLANKLEY: No, he can't disenchant his base. His base is so hungry to beat Clinton, it's going to come to the --



MR. MCLAUGHLIN: Bush has got a rainbow coalition, so to speak, a rainbow crowd out there. Bush is decorating his convention.



MR. BLANKLEY: The coverage is going to reach well beyond the base, even though it's going to be mostly cable.



MR. MCLAUGHLIN: Exit.



MR. BLANKLEY: It's going to be a big story.



MS. CLIFT: The question is, how real is it, for a party that's opposed to affirmative action and quotas, to have three co-chairmen, coincidentally a woman, a black and a Hispanic? You know, how much of this is window dressing and how real is it? That's the question that's going to be asked.



MR. MCLAUGHLIN: By the way, the Group will telecast from both election cities, the great coliseums, the quadrennial coliseums, the conventions of the Democratic and Republican Party.



Exit. On Labor Day, six weeks from now, what will the Bush and Gore poll numbers be? I ask you, Lawrence.



MR. KUDLOW: George Bush will still be ahead by seven percentage points, providing he gets back to the issues that he's been winning on. Whenever he leaves the issues, he starts to slump.



MR. MCLAUGHLIN: You're talking about tax cuts.



MR. KUDLOW: I'm talking about tax cuts, Social Security reform, foreign policy, education and health care. He beats Gore across the board. Whenever he mumbles away from that, he loses ground.



MS. CLIFT: When he has to defend his positions on those issues, he loses ground.



MR. MCLAUGHLIN: What's the poll going to be?



MS. CLIFT: Gore will be ahead, but within the margin of error. Very tight.



MR. BLANKLEY: This is two weeks after the Democratic Convention. There will be a spike for Gore. It will be coming down rapidly two weeks out. My guess is it will be within a few points.



MR. MCLAUGHLIN: Three?



MR. BLANKLEY: A few. Can't predict.



MR. MCLAUGHLIN: Favoring Bush?



MR. BLANKLEY: Either way. I can't foresee.



MR. MCLAUGHLIN: Either way.



MR. O'DONNELL: If each convention works the way the nominees want them to -- and by the way, I think the Los Angeles convention might not work that way for Gore, for reasons having nothing to do with the Clintons, but having all to do with it being possibly the most protested convention since 1968 -- but if the conventions work correctly, then we will have exactly the same race we have now and have had for months, which is four- or five-point gap, and it could go either way, with one of them being ahead of the other.



MR. MCLAUGHLIN: Four- or five-point margin favoring George Bush, and the reason why Gore is ahead today has nothing to do with the content of the conversation that has transpired on this set. The reason why Gore is ahead today is he has been plunging in early into television, particularly in the Midwest, and Bush has not. When Bush gets in, Bush will again enjoy not the kind of commanding lead you're talking about, but a substantial lead.



Okay, mclaughlin.com. Last week we asked, What is your opinion about the actions of the Philadelphia policemen in apprehending Thomas Jones? "Police did only what they had to do," 48 percent; "Police used excessive force," 31 percent; "Too early to tell," 22 percent.



When we come back, is Hillary an anti-Semite?



(Announcements.)



MR. MCLAUGHLIN: Issue two: "First Lady Fray."



HILLARY CLINTON: (From videotape.) You're darn right it's not true. It's absolutely false, and I'm just tired of this kind of politics.



MR. MCLAUGHLIN: An angry denial this week from Hillary Clinton, New York Senate candidate, to allegations that she uttered an ugly ethnic slur 26 years ago.



PAUL FRAY (former campaign manager for Bill Clinton): I asked her, and she said, "Look, you (expletive deleted). I don't appreciate you putting us in this position."



MR. MCLAUGHLIN: To be more exact, "(expletive deleted) Jew bastard" is what Paul Fray, Bill Clinton's former campaign manager, says Hillary, then Bill's girlfriend, called Fray in a heated exchange. That was back in 1974 in Arkansas, the night Bill lost a bid for the U.S. Congress.



The Fray-Clinton battle is detailed in a new biography on the Clinton marriage by reporter Jerry Oppenheimer. Fray's wife, Mary Lee,was also in the room. She concurs, by the way, with her husband, as does campaign worker Neil MacDonald (sp), who listened outside the door during the altercation.



Also present in that 1974 fracas was Bill Clinton. This week, the president interrupted the Mid-East peace summit to rush to his wife's defense. "She might have called him a bastard. I wouldn't rule that out. But in 29 years, my wife has never, ever uttered an ethnic or racial slur against anybody, ever. She's so straight on this she squeaks."



Well, Fray insists he's straight, too.



MR. FRAY: (From videotape.) If I'm telling a lie, I'd be glad to take a lie detector exam. That's the bottom line right there in a nutshell. And if that doesn't satisfy the question, then let me take truth serum.



MR. MCLAUGHLIN: Hillary's Senate campaign rival, Representative Rick Lazio, had this to say:



RICK LAZIO (R-NY) (New York Senate candidate): (From videotape.) I don't know who to believe. I don't think New Yorkers know who to believe, and therein lies a good deal of the problem.



MR. MCLAUGHLIN: Please note that President Clinton said this: "She might have called him a bastard, I wouldn't rule that out, but in 29 years, MY WIFE has never uttered an ethnic or a racial slur against anybody." Well, he wasn't married --



MS. CLIFT: Come on, John.



MR. KUDLOW: Oh, John.



MR. MCLAUGHLIN: Hey, we're being Clintonian about this.



MR. KUDLOW: Right.



MR. MCLAUGHLIN: What do you think? Do you think that's really --



MR. O'DONNELL: This is not -- this is not one of --



MR. MCLAUGHLIN: Do you think he was sweepingly exonerating her in that regard?



MR. O'DONNELL: This is not one of those situations. And look, I don't like to -- I don't play this card often or maybe ever, but I know Hillary Clinton. Hillary Clinton did not say that. This is preposterous. That's -- you've seen an unprecedented defense, actually, in journalism on this, the New York Times coming out with an editorial saying, "We believe Hillary Clinton," because they have reason to.



And you might notice, by the way that this couldn't have happened -- (inaudible).



(Cross talk.)



MR. MCLAUGHLIN: Did she -- did she use the three words, that's one question --



MR. O'DONNELL: No.



MR. MCLAUGHLIN: -- quite distinct from whether Hillary is an anti-Semite.



MR. KUDLOW: Right.



MR. MCLAUGHLIN: -- about which, by the way --



MR. O'DONNELL: She's not an anti-Semite. She never said that stuff.



MR. MCLAUGHLIN: About, by the way, Mr. Fray said this.



MR. FRAY: (From videotape.) No, I do not think that. It was a spur-of-the-moment thing. And you've got to understand, in the heat of the battle, she may say a lot of things that she would be sorry for later.



MR. MCLAUGHLIN: The question put to Fray was: Is she an anti-Semite? And he said, "No, I don't believe that." You heard that.



MR. O'DONNELL: Oh, thanks a lot!



MR. MCLAUGHLIN: Okay. Well, you've got two questions there. You've got two questions.



MS. CLIFT: Well, this is a sticky --



MR. KUDLOW: Well, I don't think there's any evidence that she's an anti-Semite. I think that's just off the charts.



Whether or not she said it in the heat of battle -- I frankly think she might have, but it's not very important.



MS. CLIFT: Well --



MR. KUDLOW: Here's what more important politically: In New York and New York City, Hillary has a Jewish voters' problem. She's polling around 50 to 60 percent. That is a death poll rate for her. Any Democrat needs much more than that in order to win. That's her real problem.



MS. CLIFT: Right, and this is the sticky mud theory. You throw enough mud, whether it's true or not; some of it sticks. And this is more about capitalism than it is about anti-Semitism, about alleged journalism --



MR. KUDLOW: Capitalism? It's more about the PLO embrace.



MS. CLIFT: Excuse me. Let me finish. It's about alleged journalists using thinly sourced information to try to hype book sales.



MR. MCLAUGHLIN: Well!



MS. CLIFT: Mr. Fray, that -- why don't we talk about what that fight was about? The fight was about his desire to do ballot-stuffing and vote-stealing the night of that election.



Second, his Jewish relative is a paternal great-grandfather he sometimes confuses --



MR. MCLAUGHLIN: He's not Jewish?



MS. CLIFT: He's a Baptist. And to have recovered memory 26 years later?



MR. BLANKLEY: Look --



MS. CLIFT: I mean, are you so eager to find something against Hillary that you're going to glom onto this?



MR. MCLAUGHLIN: We know and it has been said -- not we know, but it has been said that both Clintons are skillful liars. Bill Safire said it very well in one of his columns early on, right? So --



MR. BLANKLEY: Absolutely.



MR. MCLAUGHLIN: So who are we sure to believe? Oppenheimer or the two Clintons, who -- you remember when they appeared on "60 Minutes" --



MR. BLANKLEY: Yes, absolutely.



MR. MCLAUGHLIN: -- when there was talk about whether or not he was unfaithful to her. And you remember, too, Hillary's talking about it's a monstrous conservative --



MR. BLANKLEY: Yeah, I think it's --



MR. MCLAUGHLIN: What did she say?



MR. KUDLOW: Right-wing conspiracy.



MR. BLANKLEY: Right-wing conspiracy. That and --



MR. MCLAUGHLIN: Right-wing conspiracy. And Bill points his finger and says, "Now let me tell you again, I did not" -- blah, blah, blah, you know?



MR. BLANKLEY: Yeah, I think --



MR. MCLAUGHLIN: So, you know, they're not exactly examples of truthfulness, are they?



MR. BLANKLEY: And the sad thing is, neither the president nor the first lady can be believed.



But interestingly, how this story is playing out, it's not going to be the anti-Semitism; it's going to be the lying about calling the reporters thereafter. Her campaign put out a memo telling people to call to -- but don't tell them it's coming from the campaign.



MS. CLIFT: That's not lying.



MR. MCLAUGHLIN: Yeah, we have that on the screen. I'll read it for you now.



MS. CLIFT: That's not volunteering information. There's a difference. (Laughs.)



MR. MCLAUGHLIN: Let's look at the exact language in the memorandum that was put out by her campaign. These are the names and numbers of the two reporters from the Jewish papers that are covering the Hillary story. "I would appreciate it if you would call these people as concerned citizens. It is important that you do not say that you are calling because the campaign asked you to, but because you are outraged with what was said about her. The most important thing is to let them know that you know Hillary, and you know that she would never make these kinds of anti-Semitic or racist statements."



Now it's interesting to note that --



MR. BLANKLEY: They then blamed their staffer and initially characterizing Mrs. Adler --



MR. O'DONNELL: Tell me what political campaign would not have done exactly the same thing.



MS. CLIFT: Right.



MR. BLANKLEY: Well --



(Cross talk.)



MR. O'DONNELL: Now maybe you don't put the memo in writing, but there isn't a campaign in America that wouldn't --



(Cross talk.)



MR. MCLAUGHLIN: What do you think of Lazio's spokesman, who said this -- what do you think of --



MR. O'DONNELL: Lazio's crazy. Lazio's nuts to be saying a word about this. He should jump in there and --



MR. MCLAUGHLIN: He's not saying anything; his spokesmen are saying --



MR. O'DONNELL: He did. He said, "I don't know who to believe." He should say, "No comment." (Cross talk.)



MR. KUDLOW: John --



MS. CLIFT: The other scoundrel --



MR. MCLAUGHLIN: What about Lazio's spokesman? He said, "I think it's very sad that Mrs. Clinton would ask her supporters to lie for her."



MS. CLIFT: That's not lying. That's not lying.



(Cross talk.)



MR. KUDLOW: Hang on a second. Rudy Giuliani -- Rudy Giuliani --



MS. CLIFT: She's asking them not to volunteer that.



MR. MCLAUGHLIN: Wait a minute. I want to --



MR. KUDLOW: Eleanor, I'm actually going to help you on this.



MS. CLIFT: No, I get a turn, too.



MR. KUDLOW: Rudy Giuliani actually --



(Laughter.)



MS. CLIFT: When Republicans put out talking points, it's the same deal.



MR. KUDLOW: Rudy Giuliani actually --



MS. CLIFT: And Rudy Giuliani defended her. Good for him!



MR. KUDLOW: I was going to help you on that one. Rudy Giuliani defended her.



MR. BLANKLEY: The political --



MR. KUDLOW: The sin -- Rick Lazio's major political sin right now is, he's not taking advantage of this because he's not running a good campaign. Lazio has no issues. He has no tax cut position, no budget position --



MS. CLIFT: Well, this is not an issue.



MR. KUDLOW: He has no knowledge of anything --



MR. O'DONNELL: There's no advantage -- (inaudible). It's no way to play this --



MR. MCLAUGHLIN: All he has to do is keep his head below the bunker level, and she'll lose it for him.



MR. KUDLOW: I don't -



MR. MCLAUGHLIN: I got a question. I want to --



MR. KUDLOW: John, I don't know if that's going to work for Lazio. I don't know that'll work for Lazio.



MR. MCLAUGHLIN: This is what Rudy had to say, by the way. This is what Rudy had to say:



"I am basically willing to accept her at her word, and I basically say it is irrelevant what she said or did 26 years ago. I am familiar with all the false, exaggerated, and misused statements in books, and I sympathize with the Clintons."



Do you think that he's a little concerned, perhaps, about what Donna might be going to say about him -- (chuckles) -- and he --



(Laughter.)



MS. CLIFT: No.



MR. MCLAUGHLIN: -- and that's partially motivated his great show of generosity?



MR. O'DONNELL: He is saying what every New Yorker is thinking.



MR. MCLAUGHLIN: What? That she's not an anti-Semite?



MR. O'DONNELL: That it's not -- she's not an anti-Semite, but 26 years ago doesn't mean anything, and we don't believe this accusation anyway.



MR. MCLAUGHLIN: All right. Let me -- let me ask you this.



MR. O'DONNELL: It will not change a single vote.

MS. CLIFT: It's a smarmy accusation that's designed to keep the cable stations' ratings up. (Laughs.)



MR. MCLAUGHLIN: Let me assign -- let me ask you this exit question. Assuming that Hillary did utter these three words, combined with the fact that -- which I think she could have uttered, and it says nothing about her being an anti-Semite -- I agree with Fray; it was uttered in the heat of battle. And I think the odds are that she did probably say it, in view of the fact that these three people say they would take lie detector tests. He took one, I think.



MR. O'DONNELL: Because you know these people so well --



MS. CLIFT: Well --



MR. MCLAUGHLIN: But anyway -- no, there are two distinct questions. A, I don't think she's an anti-Semite at all. And B, I think she uttered those words. But after Suha Arafat, before a public audience, declared that Israelis are gassing Palestinian children, Hillary publicly embraced Suha. On these two bases, is labeling her an anti-Semite a bum rap or a fair rap then? I ask you.



MR. KUDLOW: Oh, labeling her an anti-Semite is a bum rap --



MR. MCLAUGHLIN: No matter what her position is on Palestine?



MR. KUDLOW: I'm just going to assume that. That's going to be my benefit of giving her the doubt.



But I want to make one point. Where is Senator Pat Moynihan now that we need him? We miss him, looking at this goofy race. And Moynihan's the guy who wants to --



MR. MCLAUGHLIN: What do you want Moynihan to do?



MR. KUDLOW: Private investment accounts to reform Social Security is a Moynihan issue.



MR. O'DONNELL: He wants him to run again! (Laughter.)



MR. KUDLOW: And I wish Rick Lazio and Hillary Clinton would debate the issues and get Moynihan that kind of Senate --



(Laughter.)



MR. MCLAUGHLIN: Eleanor?



MS. CLIFT: It's a total bum rap. It's a total bum rap against Hillary. And frankly --



MR. MCLAUGHLIN: On both counts?



MS. CLIFT: Yes. And Mr. Fray had his law license lifted at one point for providing fraudulent testimony as a prosecutor. So --



MR. MCLAUGHLIN: Well, that could happen to your friend Bill before long. (Laughter.)



MS. CLIFT: Well, 26 years ago -- please --



MR. MCLAUGHLIN: Quickly.



MR. BLANKLEY: Look, look, the fact that she has a pro-Palestinian policy doesn't make her anti-Semitic. So I think you can have -- just like Pat Buchanan may have a policy that's not pro-Israel doesn't mean he's anti-Semitic. It's a foreign policy judgment she made.



MR. MCLAUGHLIN: Quick --



MR. BLANKLEY: But the fact is that an awful lot of New Yorkers care about that policy, and they oppose her for the policy reason, not for the alleged bigotry.



MR. O'DONNELL: Well, I don't accept the frame of the question, because I don't assume she said it. I KNOW she would never have said it. The whole thing is preposterous. It won't turn a single vote and not a single Jewish vote in New York state.



MR. MCLAUGHLIN: The answer is, she is not an anti-Semite, and you can form your own opinion about whether or not she actually uttered those three words.



Issue three: Show me the money!



(Music: "We're in the Money.")



Washington is "in the money." Congressional estimates released this week put the budget surplus at $2.2 trillion over the next 10 years. That's about $300 billion more than the White House estimated last month and does not include dollars raised from Social Security.



It could also be one reason congressional Republicans managed to pass two overdue tax cuts in the past two weeks.



The marriage tax: The Senate voted 61 to 38 this week to eliminate the marriage penalty tax -- a large majority, but not enough to override a Clinton veto. At present, married couples are allowed to claim just one deduction. That means when both husband and wife work, they end up paying taxes on two sets of earnings with only one deduction.



The House passed a smaller repeal earlier this month. The House and Senate have agreed on a compromise giving married couples the same tax deductions as two single people.



The death tax. The Senate voted 59 to 39, late last, week to repeal the so-called death tax -- technically the inheritance tax -- over the next 10 years. Currently, the tax kicks in on estates of deceased worth over $675,000. These estates are taxed as much as 60 percent. Repeat: 60 percent goes to the government. While the tax affects only about 2 percent of the population, a recent poll shows 86 percent of Americans say it is not fair. Why? A Boston College study tells us why. It says that from 1998 to 2017, the parents of baby boomers will leave estates worth $12 trillion to $18 trillion -- the largest generational transfer in history.



Question -- exit question -- be very fast. Is tax cutting in America today becoming a popular groundswell? Exit question.



MR. KUDLOW: Popular and hot. And Democrats want to cut taxes. And the German government had a Reagan-style tax cut too.



MS. CLIFT: (Giggles.)



MR. KUDLOW: Only Bill Clinton and Al Gore have missed this point.



MS. CLIFT: Not to the excess of Larry Kudlow and the German government! (Laughs.)



MR. BLANKLEY: Yeah, 51 Democrats voted for it. They know the groundswell is coming.



MR. O'DONNELL: The tax cuts aren't popular -- (snickers from the Group) -- because what Republicans don't know is that most Americans pay more in Social Security taxes than they do income taxes --



MR. MCLAUGHLIN: The answer is --



MR. O'DONNELL: -- and no Republican is going to cut those.



MR. MCLAUGHLIN: The answer is the groundswell is rolling in.



Bye-bye!



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MR. MCLAUGHLIN: Issue four: Sayonara -- Not! Since World War II, the U.S. has occupied the island of Okinawa, the setting for this week's meeting of industrial powers. The island still holds 39 bases with 26,000 U.S. troops -- an unwanted military presence.



This month there have been three incidents alone involving U.S. military personnel, with accusations of rape, assault and a hit-and-run, forcing a hasty apology by the U.S. military to the Japanese government. The longer the Marines stay, the greater the chance for a truly nasty incident that could permanently damage U.S.-Japan relations.



Question: Is Okinawa's strategic importance growing or waning?



I ask you, Eleanor Clift.



MS. CLIFT: Well, I think with the peace gestures coming out of North Korea, that it seems that our presence there could certainly be reduced. But I think it is the only staging area in Asia, and I wouldn't be for pulling all the troops out. But we don't need 26,000 over tens of thousands of acres.



MR. MCLAUGHLIN: If the defense of Asia is in our interests, then we need that staging area as it is. So that's what this question turns on, does it not?



MR. BLANKLEY: Yes. And it's going to be a strategic area for us for the indefinite future. We don't know what China's policy is going to be in the next 10, 20, 50 years. Okinawa is the key to maintaining a viable military presence there, and it's as important today, and it will be as important 10 years from now as it was 20 years ago.



MR. MCLAUGHLIN: You're thinking of containment of China, China vis-a-vis Taiwan, and also, you don't like to see Japan possibly falling under China's thumb?



MR. BLANKLEY: Well, absolutely. The long-term danger is that Japan will start trimming its sails to the Chinese monolith across the --



MR. O'DONNELL: The fact is the world has become calmer every day --



MR. BLANKLEY: No --



MR. O'DONNELL: -- since the Berlin Wall fell, every single day. And every single strategic outpost we have becomes less important every day.



MR. BLANKLEY: That's not what our Asian allies believe.



MR. KUDLOW: Well, I actually agree with Lawrence on this, because I don't know, 26,000 troops is neither here nor there, frankly. If there were a war footing situation, we could ship a whole bunch more over there.



I also think that we should take a better look at SDI in terms of our defense umbrella.



And a final point, in Okinawa, John, you know, there's a G-7 or G-8 meeting going on on economics, and let me make this point. Bill Clinton is the only head of state in the G-8 that does not have a significant tax cut plan -- (laughter) -- and that's very important.



MS. CLIFT: (Laughing) Oh, no!



MR. O'DONNELL: He must be very embarrassed about that, Larry!



MR. KUDLOW: Well, you know --



MR. MCLAUGHLIN: What's the biggest economic issue on the table in Okinawa?



MR. KUDLOW: Right now all these other countries are becoming more competitive, creating more incentives and more investment in their own countries, and the U.S. cannot afford to rest on its laurels.



MS. CLIFT: John, the biggest issue is the difference between the rich and the poor, as it is always at these summits, and exacerbated by technology.



MR. KUDLOW: Eleanor, supply-side tax cuts will narrow that distance.



MS. CLIFT: I don't think so! (Laughs.)



MR. KUDLOW: Supply-side tax cuts will narrow that distance, not exacerbate it.



MR. MCLAUGHLIN: Did you take note of what Alan Greenspan said this week in the United States Congress?



MR. KUDLOW: Fortunately, Greenspan says the Fed is going to cease and desist their tightening policies, which opens the door for a little more prosperity here.



MR. MCLAUGHLIN: How do you account for this lapse into enlightenment on Greenspan's reading of -- (laughs) -- (laughter).



I've got a question with regard to Okinawa. If we want to pull out our troops, what's the best way to do it and preserve the equilibrium of the area?



Shall I help you on this? I notice that there is --



MS. CLIFT: You mean by plane or by boat? Is that what you mean? (Laughs.)



MR. MCLAUGHLIN: I will lead you. What about letting and encouraging a further rearmament on the part of Japan? What would you think of that?



MS. CLIFT: No.



MR. KUDLOW: Well, if the Japanese want to rearm, they should take matters into their hands and rearm. We don't run Japan -- (inaudible) -- runs Japan.



MS. CLIFT: We don't want Japan and Germany to get to rearm.



MR. BLANKLEY: No, no, no. That's not the point.



MS. CLIFT: That is the point.



MR. BLANKLEY: There already is an arms race going on in Asia. American military presence is the stabilizing factor, and that's why there's no substitute for our presence.



MR. MCLAUGHLIN: But what about regional burden-sharing on the part of the Japan?



MR. BLANKLEY: Yes, to a certain extent.



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