MR. MCLAUGHLIN: Issue one: Clemency or bribery?

SEN. CHARLES SCHUMER (D-NY): (From videotape.) To my mind, there can be no justification for pardoning a fugitive from justice. It does not matter if -- that the fugitive believed the case against him was flawed or weak. It does not matter that the fugitive was enormously philanthropic. Pardoning a fugitive stands our justice system on its head and makes a mockery of it.

MR. MCLAUGHLIN: That's the senior senator from New York, Charles Schumer, colleague of New York's junior senator, Hillary Clinton, speaking at the U.S. Senate Judiciary hearing Wednesday on the pardons given by President Clinton to Marc Rich and his partner, Pincus Green.

Justice Department pardon attorney Roger Adams described what happened on Inaugural Day morning about 11 hours before Bill Clinton would cease being president.

(Begin videotape segments.)

ROGER ADAMS (pardon attorney, the Department of Justice): None of our -- the regular procedures that I've just described were followed.

The first time that I learned the White House was considering these two persons for pardon was shortly after midnight on the morning of Saturday, January 20th, 2001.

I was told by the White House counsel staff the only two people on the list for whom I needed to obtain record checks were Marc Rich and Pincus Green, and that it was expected that there would be little information about the two men because, to quote the words of the White House counsel's office, they had been living abroad for several years.

At that point, a member of staff began to conduct a quick Internet search for information about the two men.

SEN. ARLEN SPECTER (R-PA): But when you were told they were living abroad, you were not told that they were under indictment --

MR. ADAMS: No, sir, I was not.

SEN. SPECTER: -- or that they were fugitives?

MR. ADAMS: The first -- I was not told they were fugitives. I learned that from the FBI.

(End videotape segments.)

MR. MCLAUGHLIN: Question: Why did the president wait until early morning of Inaugural Day, January the 20th, to grant a pardon to Marc Rich, Lawrence Kudlow?

MR. KUDLOW: Well, probably because everybody he talked to inside his administration was against it, no one even signed off on it, so he had to go it alone; probably because he wanted to wait until the last second, lest it leaked out, because he knew it was going to be a disaster.

MR. MCLAUGHLIN: You mean opposed by the prosecutors?

MR. KUDLOW: Well, sure, and everybody else. I mean, you know, I look at this thing -- this is the continuing stench and, you know, moral deficit from the Clinton administration. But I think the politics here are really playing out against the Democratic Party, because I think they were going to somehow rely on Clinton to raise money. His man Terry McAuliffe himself, who may have been implicated in this, running the Democratic National Committee -- Mrs. Clinton's polls are down to 39 percent in New York state. George Bush was elected because of this. He swore to uphold the honesty and integrity of the White House. And this thing is just a killer for Democrats.

MS. CLIFT: Well --

MR. MCLAUGHLIN: Do you think that the president delayed this action because he wanted to keep FBI Director Freeh in the dark?

MS. CLIFT: The number two person at the Justice Department, Eric Holder, was aware that this pardon was in the works, so the FBI could have been alerted. Look, there are no Democrats defending the pardon, but defending -- not defending the pardon -- defending Clinton's motives are two different things. I mean, the president says that he was persuaded by the legal case that the initial indictment was flawed and if you got him back in this country, you could prosecute him civilly and recover the $48 million that he owes in taxes. And secondly, Ehud Barak, the prime minister of Israel, made several phone calls pleading for this. He really wanted Jonathan Pollard; the president wasn't going to do that; so this was kind of a consolation prize. So there are mitigating factors here.


MR. BLANKLEY: The sincerity of Clinton's statement that he thought there were compelling legal arguments is belied by his conduct, that he waited until a few hours before the end of his presidency to announce his decision. If he had had confidence in the analysis which he claims to have confidence in, he would have put it through the normal process. He would have put it out early, let all the prosecutors comment on it. Obviously, he was lying when he said that he was relying on the brilliance of the legal analysis. And he knew he was doing something wrong, and that's why he waited to do it at the last moment.

MR. MCLAUGHLIN: Do we know pretty conclusively that, well before Inauguration Day, that the president was fully familiar with the details of this case and was, in fact, arguing it?

MR. BLANKLEY: Well, yes, because we saw from one of the documents that was introduced at the House hearing --

MR. MCLAUGHLIN: What date was that? The date of the document was January the 10th.

MR. BLANKLEY: Yeah. He --

MR. MCLAUGHLIN: And then he communicated to Beth Dozoretz in Aspen, who was then with Denise Rich, that things were going well except he had a problem doing what?

MR. BLANKLEY: He still had to persuade the White House counsel to go along with the decision.

MR. MCLAUGHLIN: Who was the deputy White House counsel?

MR. BLANKLEY: The White House counsel was Beth Nolan. The deputy is Bruce Lindsey.

MR. MCLAUGHLIN: Is Bruce Lindsey. And who is he?

MR. BLANKLEY: Well, Bruce Lindsey is not really a deputy. He has been Clinton's closest guy, his hatchet man, his adviser, his consigliere, for years. So the fact that he has polled the deputy is --

MR. MCLAUGHLIN: And finally, a question for you. Who is dealing with the head of the SEC, Arthur Levitt, who opposed, once he discovered that --

MR. BLANKLEY: Levitt got it at the last moment, the information.

MR. MCLAUGHLIN: Was Lindsey dealing with Levitt?

MR. BLANKLEY: Well, there were news reports to that effect. We haven't got that out of a hearing yet.

MR. PAGE: Hi, John.

MR. MCLAUGHLIN: Do you think you're going to -- hi, Clarence. How are you?

MR. PAGE: Well, I'm doing just dandy; how about you? (Laughter.)

MR. MCLAUGHLIN: (Inaudible) -- wonderful, although your threads are not as good as Tony's. (Laughter.)

MR. PAGE: (Laughs.) Well, I'll try. It's hard to beat Tony.

MR. MCLAUGHLIN: What's the answer to my question? Why did he wait until, what, the last part of the morning?

MR. PAGE: The last minute. The answer to your question, John, is we don't know. But -

MR. MCLAUGHLIN: What do you think of the case we're building here?

MR. PAGE: -- everybody is kind of gathering around the side that they want to believe, and it was either he waited till the last minute so it would slide through with as little scrutiny as possible, or he waited till the last minute because he, himself, didn't think this out as well as he might. This is an extraordinarily clumsy snafu for Clinton to be involved in. But the real question, John, is, was there a quid pro quo? And nothing that we've got right now points directly to that. All we have is some circumstantial evidence. This is just one more piece of evidence.

MS. CLIFT: There was a manic quality to the last weeks and days of the Clinton presidency. He was negotiating his own deal with the special prosecutor. He's ramming through these midnight regulations. A lot of those pardons were done at the last minute and a lot of them did not go through the normal processes. And that is not unprecedented. But three phone calls would have killed this thing, and so it's unconscionable that they avoided the process.

MR. MCLAUGHLIN: Don't you think that because of the total abnormality of this situation, that the president would have said to Bruce Lindsey, "You better get on the phone right now and go right to the FBI director and have this matter checked out"? Instead of that, he stalled on it.

MS. CLIFT: Clinton wouldn't go to the FBI director to check anything out, John. (Laughter.) Where have you been the last several years? There's real bad blood between those --

MR. BLANKLEY: (Laughs.) Right. Not Louis Freeh. Boy, that's -- that is --

(Cross talk.)

MR. MCLAUGHLIN: Well, if he --

MS. CLIFT: -- and you'll notice that Roger Clinton got a widespread pardon as well out of Clinton.

MR. MCLAUGHLIN: Okay. From the Congress to the court. Mary Jo White, the top federal prosecutor from New York City and a Clinton appointee, launched a criminal investigation this week. New York is where Rich was indicted 17 years ago for the then-biggest case of tax fraud in U.S. history. White will likely subpoena bank records, phone records and other documents, including those of ex-wife Denise Rich, who gave over $1 million to the Democratic Party; reportedly $450,000, that we know of, to the Clinton Library; $10,000 to the Clinton Legal Defense Fund; $7,300 to the Clinton furniture and flatware fund; and over $100,000, an AP figure, to Hillary's Senate campaign. Denise took the 5th Amendment last week to escape questions from Congress, but she faces an immunity grant later on when White's investigation is secure.

What are the investigators trying to find here, do you think?

MR. PAGE: Well, the real question, as I said before, was, Is there a quid pro quo? And that's very hard to prove without having wire transfers or somebody's personal statement or having a lot of circumstantial evidence, which we do see gathering now.

MR. BLANKLEY: But they're also going to look for money-laundering, to see if any foreign money from her former husband was laundered into her assets and then transferred illegally into the Clinton ---


(Cross talk.)

MR. MCLAUGHLIN: Excuse me --

MS. CLIFT: But that doesn't get Clinton. That doesn't get at Clinton --

(Cross talk.)

MR. MCLAUGHLIN: Excuse me!

MS. CLIFT: -- and that's going to be hard to get to. (Laughs.)

MR. MCLAUGHLIN: Let me just clarify what's at stake here. Investigators are now concentrating on two points. One, did anyone violate the federal bribery law by making an agreement to give a public official something of value in return for an official act?

Two, did anyone violate federal election law? It's illegal to give money to someone else and then make a political contribution, hiding the true source of the money. What potential crimes are -- besides these -- are at the top of the prosecutor's agenda?

MR. KUDLOW: The potential -- the potential -- and this local U.S. attorney is going to deal with it, is for a criminal conspiracy with respect to money. There may be other angles, John. There may be a sexual angle. Denise Rich apparently was in the White House 100 times. I mean, that's like a twice-a-week addiction. (Laughter.)

MS. CLIFT: Oh, what would be the -- wait a second! What would the grounds be? What would be the criminality of this, Larry? What exactly would you be charging here?

MR. KUDLOW: You know, sometimes, Eleanor, bribery takes many strange and unpalatable forms.

MS. CLIFT: As I understand the law, if you want to prove bribery, you're going to have to have a telephone conversation or an e-mail or something like that --

MR. KUDLOW: You may discover -- you may discover --

MS. CLIFT: There are some -- you can throw out all the innuendo you want, but we have laws in place to protect --

(Cross talk.)

MR. KUDLOW: You may discover wire -- you may discover wire transfers and --

MR. MCLAUGHLIN: Excuse me. Lawrence. Lawrence, excuse me -- excuse me --

MR. BLANKLEY: And why is it that whenever we talk about Bill Clinton, his defendants always talk about "there may not be quite enough evidence to prove a felony"? (Laughter.)

MR. PAGE: Because there may not be, and that's how Clinton has gotten away so far.

MR. MCLAUGHLIN: Okay. Here is -- here is film -- now -- now, look at --

MS. CLIFT: Well, that's why we have laws in this country. There are levels of evidence. You can chatter away all you want, but in the end you've got to prove something.

(Cross talk.)

MR. PAGE: That's a mistake -- that's a mistake Republicans are just going be making, overreaching --

MR. MCLAUGHLIN: Here is former President Clinton's statement on this matter. Kindly look at the screen and study the words closely. Every word counts. "Any suggestion" -- singular -- "that improper factors, including fund-raising for the DNC or my library had nothing to do with the decision are absolutely false" -- "had anything to do with the decision are absolutely false. I look forward to cooperating with any appropriate inquiry." Now, in Clintonian exegesis, you will note that "suggestion" is singular and the verb is plural. Does that grammatical error void the entire thought and sentence? (Laughter.)

MR. KUDLOW: It could. I mean, is, is. It could. (Laughter.) But I'm just waiting for this -- look, all the Clinton defenders tell us what his motives were not. Just tell me what the good, positive merits of this case are. Someone -- including Clinton.

MS. CLIFT: Now, he --

MR. PAGE: He doesn't have to prove the merits of the case.

MS. CLIFT: Right.

MR. PAGE: (Inaudible) --

MR. MCLAUGHLIN: Just a moment.

MR. KUDLOW: This guy -- this guy Rich is not being pardoned because he served 12 years in prison and he's getting time off for good behavior. This guy broke national security laws. He broke energy laws. He broke tax laws. What is the positive --

(Cross talk.)

MR. MCLAUGHLIN: Well, first of all -- the first thing --

MR. PAGE: Beat him up for it. Beat him up for it. Nobody's defending this except Clinton.

MR. KUDLOW: But I want the president --

MR. PAGE: So what, Larry? That's the point, you know. This is just more fodder for the Clinton-haters to beat him up.

MR. KUDLOW: If Clinton is saying what he didn't mean to do, then what is it exactly that he did mean to do?

MR. PAGE: He said he didn't break the law.

MS. CLIFT: You know, he's explained that, Larry. You just don't like the answer.

MR. KUDLOW: I don't accept the answer.

MS. CLIFT: But the point is, I'm letting --

MR. BLANKLEY: Neither do any of the Democratic senators.

MS. CLIFT: The answer is that you can criminally -- that you can prosecute him civilly and get the $48 million, and that Barak, the prime minister of Israel, who risked his life in Clinton's mind for peace, was asking for this. Those are the answers. You may not like them --

MR. KUDLOW: Barak -- so what are we going to have -- so, we've pardoned Marc Rich to save Jerusalem, or to create peace in the Middle East?

MR. MCLAUGHLIN: Excuse me -- excuse me --

MS. CLIFT: You may not like it.

MR. KUDLOW: It just doesn't add up, Eleanor.

MR. MCLAUGHLIN: Excuse me, are you going to be --

MS. CLIFT: It adds up for him, and he's the one who made the decision.

MR. MCLAUGHLIN: Please, I'm going to ask you both to be -- to relinquish faster.

MS. CLIFT: Happily. (Laughter.)

MR. MCLAUGHLIN: On the matter of Barak, this has not been substantiated, namely that Barak implored Clinton; it has not been substantiated.

MS. CLIFT: I haven't noticed Barak denying it.

MR. MCLAUGHLIN: This is a story that could be put out by Bruce Lindsey.

MS. CLIFT: I think if it were a false story, we'd hear about it, John.

MR. MCLAUGHLIN: Okay, here's the former President Clinton, at week's end, phoning the host of a television talk show; it's on the screen. "There is not a single, solitary shred of evidence that I did anything wrong. There certainly is no evidence that I took any money." And he said this -- he went on to say this: "I just wanted to go out there and do what past president's have done, but the Republicans" -- a vast right-wing conspiracy here, don't you think? -- "the Republicans had other ideas for me" -- you saw what Schumer said at the start --


MR. MCLAUGHLIN: -- one of the most liberal senators in the country.

MR. KUDLOW: A Democrat.


MR. KUDLOW: I mean --

MR. MCLAUGHLIN: Okay, now what do we think of Clinton's emphasis on typically Hillary language, "There's no evidence. You've got to catch me first. You get the evidence and I'm in." Is that what he's saying?

MR. BLANKLEY: Well look, first of all, you know, he said "I didn't take it." Well, maybe the money was given to him. I mean, you have to look at the verbs carefully. (Laughter.)

MS. CLIFT: Clinton will bedevil you guys to the grave.

MR. BLANKLEY: Look, it's not our --

(Cross talk.)

MR. BLANKLEY: As you well know, the Democrats are the ones who are bedeviled right now. They're the ones who are complaining they can't --

MS. CLIFT: (Inaudible.)

MR. BLANKLEY: They're the ones who are complaining they can't get their message through.

MS. CLIFT: Oh, I don't --

MR. BLANKLEY: They're the ones who are hateful --

MS. CLIFT: On this show, Tony, you said --

MR. BLANKLEY: And we're just saying, "I told you so."

MS. CLIFT: On this show, Tony, you said it's President Bush who can't get his message through. President Bush is the one who's been driven off the air.

MR. MCLAUGHLIN: Exit Question --

MR. BLANKLEY: But another week now --

MR. KUDLOW: The Democrats are the ones who are complaining.

MR. MCLAUGHLIN: This panel is very unruly. Thank God I haven't lost control of the situation, right? (Laughter.)

MR. PAGE: You're a good teacher, John. (Laughs.)

MR. MCLAUGHLIN: Exit: At week's end, Clinton said he was, "bewildered" by all of this. (Laughter.) Do you get that? He's bewildered. He doesn't know what's going on. He insists that there is no evidence of his wrongdoing. Is this the equivalent of "I did not have sexual relations with that woman," Ms. Lewinsky. Is it the equivalent of that?

MR. KUDLOW: Well, Eleanor won't let me bring any sexual innuendoes in here. All I know is this: It really helps the standing of President George W. Bush because, as I've said earlier, this is one of the crucial reasons why he was elected in the first place, despite peace and prosperity.

MR. MCLAUGHLIN: Eleanor, is he right, is he right? Is Clinton giving Bush a honeymoon because of the character contrast?

MS. CLIFT: I think the character contrast benefits Bush. But the honeymoon will come to an end when people figure out that the numbers in his tax plan -- (groans from others) -- his Pentagon plan, and everything else --

(Cross talk.)

MR. MCLAUGHLIN: What do you say?

MR. BLANKLEY: Yeah, this is helping Bush a lot right now because the Democrats are proving to be unable to come together while they're still having to defend Clinton and be embarrassed by him.

MR. MCLAUGHLIN: The question is, is he playing with the truth the way he did with the Monica Lewinsky statement? That's the question.

MR. PAGE: And again, the answer is, we don't know. But the fact is that -- your other question was, does this benefit Bush or not? It does in the short term, but I wouldn't be overconfident about that if I were George W. Bush because the reason why Clinton is competing with him for page one attention is because Clinton is simply more interesting that Bush is.


MR. PAGE: Bush is pretty easy to read. As Eleanor said, Clinton is fun to watch.

MR. MCLAUGHLIN: Do you hear anything --

MR. PAGE: Yeah, but do you notice how Clinton's base of support hasn't really shaken over this thing?

MR. MCLAUGHLIN: Do you hear anything to the effect of since the United States Democratic senators rue the day when they voted against impeachment; that they could have cut their losses?

MR. BLANKLEY: No, I actually --

MR. MCLAUGHLIN: You have not heard that?

MR. BLANKLEY: I have not heard -- I mean, I've heard one senator mention that. But basically, they did that decision because they were living in the moment then; they're living in the moment now, and no one ever thinks they had.

MR. MCLAUGHLIN: Don't you think they think that Al Gore would be president today if they had acted with conviction and courage?

MR. BLANKLEY: No. No. No, if they had impeached and convicted Clinton, there would have been such chaos in the Democratic Party that I think Republicans would have reaped the benefit anyway.

MR. MCLAUGHLIN: When we come back, what was Greenspan really saying about the economy this week?


MR. MCLAUGHLIN: Issue two: Rosy scenario? You be the judge.

ALAN GREENSPAN (chairman of the Federal Reserve): (From videotape.) If the forces contributing to long-term productivity growth remain intact, the degree of retrenchment will presumably be limited.

MR. MCLAUGHLIN: Federal Reserve Board Chairman Alan Greenspan told the Congress this week that the economy virtually screeched to a halt in January. Only unprecedented intervention by -- guess who -- Greenspan's Fed -- two rate cuts in a single month -- kept consumer confidence, the motor of growth, from sputtering out.

MR. GREENSPAN: (From videotape.) Although consumer confidence has fallen, at least for now it remains at a level that in the past was consistent with economic growth.

MR. MCLAUGHLIN: This small ray of hope was brightened by news this week that retail sales rose seven-tenths of a percent last month, the best gains since September, and far above December's puny one-tenth of a percent.

More good news: Greenspan sees no sign that record energy prices are injecting inflation into the economy.

But despite the bright spots, Greenspan's annual forecast is not exactly rosy scenario. The Fed chair predicts a sustainable 2 to 2.75 percent growth range for the rest of the year, down from the 3.5 percent forecast he gave Congress in his semiannual report last July, seven months ago.

So, Mr. Chairman, what do you think now about President Bush's tax cut?

MR. GREENSPAN: (From videotape.) I'm not going to comment on anybody's particular tax cut.

Marginal tax rate reductions have always, in my mind, been the most effective way to enhance economic activity.

MR. MCLAUGHLIN: Question: What do you think of the drop in the growth rate from -- what was it? Three-point-seven-five percent to 2 -- up to 2.75 percent, as a projection for this year?

MR. KUDLOW: Well, the Fed --

MR. MCLAUGHLIN: Isn't 2 percent pretty -- it's very -- it's paltry, but it's modest, and it's sustainable, right?

MR. KUDLOW: You know, if the Fed could get that soft landing, they would be satisfied. But you know, John, Greenspan still has yet to 'fess up, since we're talking about moral turpitude and the like --

MR. MCLAUGHLIN: Oh, my God! Not Alan!

MR. KUDLOW: -- that the Federal Reserve is one of the principal reasons why the economy is slumping. And at the end of the week, there was a devastating drop in consumer confidence, and the stock market fell alongside it.

If you look carefully, lower interest rates across the board -- not Fed interest rates, but market rates -- and a lower gold price are telling the Fed that they're acting too slowly and they need to move more aggressively.

MR. MCLAUGHLIN: Well, what are you saying? Are we going to come out with a 2 to a 2.75 (percent)?

MR. KUDLOW: John, I think it's possible. I'm still in the soft landing camp. But I think we need another dose of easier money, and I think we need lower tax rates to supplement it. And by the way, Greenspan himself continues to argue that lower marginal tax rates are the best way to cut taxes for economic growth purposes.

MS. CLIFT: Well, but two weeks ago Greenspan was God to the supply-siders because he had blessed the tax cut. Now he's taken away --

MR. KUDLOW: But he did have -- he had a conversion.

MS. CLIFT: -- now he --

MR. KUDLOW: He had an important conversion. (Laughter.)

MS. CLIFT: Well, yeah, now he's had a conversion back, and he's taken away --

MR. KUDLOW: He's been slipping --

MR. MCLAUGHLIN: Wait. Let her talk.

MS. CLIFT: He's taken away the latest rationale for the Bush tax cut. And I think he feels a little guilty about setting off the feeding frenzy that he did a couple of weeks ago, and he's emboldened a few of those moderate Republican senators to come forward and say they're a little queasy about the Bush tax cut. So it may not be so easy to feed at the trough as you were hoping.


MR. MCLAUGHLIN: Well, Eleanor, he gave Bush the boost that Bush needed at a critical point. Then you've got the upward January sales --

MS. CLIFT: Right.

MR. MCLAUGHLIN: -- which kind of fixed what Greenspan was saying.


MS. CLIFT: Now he's letting air out of the balloon.

MR. BLANKLEY: Let me --

MR. MCLAUGHLIN: So now he's returned to a, quote, unquote, "objective neutrality" that becomes his status. So what?

MR. BLANKLEY: Look, I think Delphic Oracles shouldn't be too chatty -- (laughter) -- and Greenspan back and forth, I think, begins to lose a little bit of his cache as he sends two strong signals in different directions within a few weeks. So --

MR. KUDLOW: (Inaudible.)

MR. MCLAUGHLIN: Well, what was the strong signal he sent this week? Do you think he was backpedaling?

MR. BLANKLEY: Yes. I think he was backpedaling, I think he took some of the --

MR. MCLAUGHLIN: You heard him talk about marginal tax rate as his (virtual ?) frame of mind -- (inaudible) -- reductions, that helps.

MR. KUDLOW: (Off mike.)

MR. BLANKLEY: No, no, I understand. That's his default position at any point, and he's correct. But the positive sign he had about the economy was suggestive that we didn't need as much of a stimulus fiscally, and that hurts the tax cut move a little bit.

MR. MCLAUGHLIN: What's he telling Congress recently?

MR. PAGE: He's still consistently conservative about making a drastic move as far as lowering interest rates. Larry, maybe you're right. Greenspan would argue that there's still a fear of inflation, et cetera, but there are no signs of inflation right now, it's very true. And a marginal tax cut is something that he would like to see.

MR. MCLAUGHLIN: I want to tie this down. I want a one-word answer, and that's all. We're out of time. Taken in their entirety, do Greenspan's comments this week help or hurt the prospects of Bush's tax plan? I ask you.

MR. KUDLOW: Continue to help.

MS. CLIFT: Hurt.


MR. PAGE: It's in trouble.

MR. MCLAUGHLIN: Neutral to help. (Laughter.) We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions, fast. Lawrence?

MR. KUDLOW: Supply-sider Aldonna Robbins is the leading choice to be the chief economist of the Treasury Department.


MS. CLIFT: A deal on estate taxes will not eliminate estate taxes; will still make 11,000 wealthiest individuals in the country pay the tax.

MR. MCLAUGHLIN: Well, I hope you're right. I hope it's not the elimination. Yes?

MR. BLANKLEY: There's a building argument as to whether Bush should go forward with a fast-track initiative in trade this year or put it off because he already has too much on the table.

MR. MCLAUGHLIN: He should go forward! He should go for another WTO round. Yes?

MR. PAGE: Yeah, Jesse Jackson will return to his previous stature within six months.

MR. MCLAUGHLIN: I predict Terry McAuliffe, the new head of the DNC, will be under extreme pressure to resign, and he will. Democrats are refusing to write checks to the DNC. They see McAuliffe as Clinton's surrogate and they are disgusted, scornful and impatient with the Clintons. Democrats want them off the stage and new faces on the stage, like Tom Daschle, John Edwards, John Kerry, Bob Kerrey.

Happy Presidents Day! Bye bye!





MR. MCLAUGHLIN: Issue three: There goes the neighborhood. (Music plays: "Harlem Shuffle" by the Rolling Stones.)

FORMER PRESIDENT BILL CLINTON: (From videotape.) Well, I asked myself down in Florida, if I could go anyplace in New York to have an office, starting today, where would I go? And immediately, I thought of the empowerment zone in Harlem, because one of the major initiatives of our economic renewal package in 1993 was the empowerment zones.

MR. MCLAUGHLIN: Former President Clinton was greeted with rock-star frenzy in Harlem this week when he arrived to rent office space at a renovated building on 125th Street between Lenox and Fifth Avenues. Harlem rents at $26 a square foot versus $98 a square foot for the swanky, pricey 57th Street Carnegie Hall Tower that Clinton was contracting for when a firestorm of media and public scorn struck.

Charlie Rangel to the rescue. The legendary Harlem, New York, congressman led Clinton to the empowerment zone and, at the same time, some think, saved Clinton's fundament.

REP. CHARLES RANGEL (D-NY): (From videotape.) We are really, I think, able to give him a better offer than they gave him downtown.

MR. MCLAUGHLIN: Question: Does former President Clinton deserve kudos for his decision set up office space in Harlem? I ask you, Clarence Page.

MR. PAGE: Well, it's a very clever move. I was amused to see him say the way he immediately thought of it, to go up there in Harlem. You know, I was talking to Charlie Rangel this week and I asked him, "Whose idea was it, yours or his?" He said, "Well, we both came up with it about the same time." (Laughter.) You know? It was a great tactical move.

MR. MCLAUGHLIN: Do you think because he was more or less shamed into it and it was a defensive move kills the kudos, or does he still deserve kudos?

MR. PAGE: Oh, you know, this was a great headline for Clinton. He had been getting beat up, deservedly so, to a large degree, for a couple of weeks, but here he appeared to be doing something positive for the inner city.

MR. MCLAUGHLIN: Even if it was a defensive move, it was not a bad move by any means. What do you think, Eleanor?

MS. CLIFT: This is step one on the comeback trail from the pardon. (Laughs.) Yeah, I only wish he had done it initially and avoided all the high-priced Manhattan real estate.

MR. MCLAUGHLIN: Will Clinton feel at home in Harlem, do you think?

MR. KUDLOW: I think he can be made to feel at home, sure. I think there are two unresolved issues.

MR. MCLAUGHLIN: Will he be America's first black president?

MR. PAGE: He already is.

MS. CLIFT: He already is.

MR. KUDLOW: Yeah, in some ways he already is. But lookit, two points. Number one, is he, in fact, going to steadily and consistently use that office as his office? We don't really know that yet. Point number two: What Harlem needs is more and more capital to develop it. It has had a prosperity. And I wish Charlie Rangel would be in favor of a lower capital gains tax, because it would help Harlem.

MR. MCLAUGHLIN: Will Clinton attract more tenants?

MR. KUDLOW: Well, Bill Clinton --

MR. BLANKLEY: Yeah, because it will --

MR. KUDLOW: He has to throw himself into the cause of helping the neighborhood associations and businesses to attract capital.

MR. MCLAUGHLIN: Will Clinton spark a renaissance in Harlem?

MS. BLANKLEY: Look. By definition, it's going to increase the gentrification, which is good for the landowners. It may not be so good for some of the people as the rents go up if the area gets improved because more money comes in. Then a lot of the locals are going to have to move further out.

MS. CLIFT: It should be pointed out Harlem's already been coming back. Tourists go up there.

MR. MCLAUGHLIN: Who is empowered the more by this move; Harlem or Clinton? I ask you.

MR. KUDLOW: I think in the short run, Clinton.

MS. CLIFT: In the long run, Harlem.

MR. BLANKLEY: Short and long run, Harlem. They benefit, obviously.

MR. PAGE: Charlie Rangel, short and long run. (Laughter.)

MR. MCLAUGHLIN: A huge empowerment for Harlem. A terrific move for them.

MR. KUDLOW: But I noticed when he talked about it, he said, "I called Charlie Rangel, I called Vernon Jordan." He did not say he also called Jesse Jackson, whose own problems have dropped him from the "A list."

MS. CLIFT: Well, how many people does he have to get permission from, for goodness sake?

MR. KUDLOW: Well, good point. None of them, really --

MR. MCLAUGHLIN: Do you think Jesse should move to Harlem?