MR. MCLAUGHLIN: Issue One: Separation of Powers.

(Begin videotape.)

VICE PRESIDENT CHENEY: I've been around town for 34 years, Tony. I've seen a constant, steady erosion of the power and the ability of the president to do his job. We've seen the War Powers Act, an Anti-Impoundment Control Act. And time after time after time, administrations have traded away the authority of the president to do his job. We're not going to do that in this administration.

(End videotape.)

MR. MCLAUGHLIN: The vice president refers to efforts by congressional Democrats to gain access to minutes of meetings last year of his energy task force. Major energy firms, including Enron, attended the meetings. So far, the administration has refused to yield to the request. Democrats want to gain politically by harping on contacts between the tarnished Enron and the White House. So, Hill Democratic House members, notably the liberal Henry Waxman and the House's senior member and old bull, John Dingell, have enlisted the service of the General Accounting Office.

This week the GAO's head, David Walker, announced the GAO will sue to obtain the information, a first such suit in GAO's 81-year history. But what is the General Accounting Office, and what is its mission?

Eighty One Years Old. Established by Congress with the Budget and Accounting Act of 1921 in response to widespread budget deficits after World War One.

Mission: to audit federal spending and advise Congress on spending limits, et cetera.

Mission Creep: Notwithstanding the parameters of its charter, the GAO moved from numbers to policy.

Workforce: GAO employs 3,275 accountants, lawyers, and economists in 12 cities, with Washington as its hub.

GAO Budget: a cool $387 million per year.

The question arises, why is the GAO suing? Why doesn't Congress issue a subpoena, which has more power than a GAO suit?

1. House chairmen are Republicans. They won't subpoena the Cheney documents.

2. Senate chairmen are all Democrats. They won't subpoena either. They don't want look obstructionist and vulgarly partisan.

Can GAO legally sue? The vice president says no. He believes that the three branches of the U.S. government -- executive, legislative and judicial -- should remain as they were in 1787, separated.

(Begin videotape.)

VICE PRESIDENT CHENEY: The GAO is a creature of the Congress, created by statute. Their jurisdiction extends to agencies created by statute. That's not me. I'm a constitutional officer. And the authority of the GAO does not extend in that case to my office. What's really at stake here is the ability of the president and the vice president to solicit advice from anybody they want in confidence, get good, solid unvarnished advice without having to make it available to a member of Congress."

(End videotape.)

MR. MCLAUGHLIN: Question: Is this Cheney-GAO standoff a situation that Cheney loses by winning? Pat Buchanan.

MR. BUCHANAN: John, speaking as one who had his White House files subpoenaed by the Watergate Committee and special prosecutor, put me down for the imperial presidency. Mr. Cheney is exactly right on this. He is a constitutional officer. The GAO should not be doing this. If the Congress of the United States wants to make a confrontation with the White House, they should take it on up to the Supreme Court.

I think Cheney is right to defy them. This is voyeurism. I think that Cheney also is going to win this battle, and I think he should, John.

MR. MCLAUGHLIN: Is Cheney's stand principled?

MR. BUCHANAN: It -- that's exactly why he's going to win it. He has elevated it to a point of principle. And unless something comes out to show that something was really terribly awry in this little group, I think he's not only going to win it in court, he's going to win it in the court of public opinion.

MR. MCLAUGHLIN: Eleanor Clift?

MS. CLIFT: Cheney can't possibly win. Somebody's going to get the records of who he met with in crafting the country's energy policy.

MR. MCLAUGHLIN: Namely the Congress. They're going to have hearings, and they'll call those guys forward.

MS. CLIFT: Right, and the GAO is the investigative arm of Congress. It is not some demonized agency, the way you describe it. It's got a long and rather proud history. And a GAO report actually triggered the House bank scandal that a led to mass defeats of mainly Democrats and paved the way for Newt Gingrich and the Republican Revolution.

Mr. Walker, who heads the GAO, is a Reagan Republican. He was a delegate to the Republican convention. This is an issue that he feels strongly about. He's got good lawyers. He thinks he's on good ground. And if Mr. Cheney wants to keep insisting that he can meet with all the titans of the oil industry without letting the American people know who he met with and what the topics were that were discussed, that's not a winning argument, especially not against the backdrop of the collapse of Enron.

If he'd turned this all over last year, it would have been on page A-23, and everybody would -- said, "Okay, he's close to industry, but that's it."


Tony, do you think I vilified the GAO?

MR. BLANKLEY: No, not --

MR. MCLAUGHLIN: I simply said that their original charter was financial activities of the government, and then, in true bureaucratic fashion, they were able to bloat themselves out into policy, where they do not properly, I think, belong.

MR. BLANKLEY: Yeah, I don't think you demonized them quite enough. They --

MR. MCLAUGHLIN: There's more demonic work to do.

MR. BLANKLEY: Yes. I mean, their reputation -- and I had firsthand experience with it -- was that they were overstaffed with Democrat and liberal-leaning folk. And we talked about that publicly back in the mid-90s. So there's no question that traditionally that's been a liberal organization.

I think Mr. Walker is overplaying rhetorically his hand, if not legally. He said some very harsh language. Even the Washington Post editorially suggested that GAO was overplaying their hand. Now they also think that the vice president is overplaying his hand.


MR. BLANKLEY: I think ultimately it'll probably get settled. I think Cheney's absolutely right to defend his position.

MR. MCLAUGHLIN: Did Eleanor leave something out of the Walker biography? He worked for Andersen Accounting.

MR. BLANKLEY: (Laughing. ) Well, a lot of --

MR. MCLAUGHLIN: And he worked for them for --

(Cross talk, laughter.)

MR. BLANKLEY: No, wait, wait. Wait a second.

MR. MCLAUGHLIN: -- Arthur Andersen.

MR. BLANKLEY: Having nothing to do with Andersen -- there are an awful lot of good men and women who work there -- that by itself it is not an indictment.

MR. MCLAUGHLIN: Well, I think he worked there for 20 years. It's unclear from published biography, but it looks to me like 20 years.

MR. CARNEY: The other --

MR. MCLAUGHLIN: Now you don't think --


MR. MCLAUGHLIN: -- that it's going to be a special mission of his to look, especially under these circumstances, like "Mr. Clean" --

MR. BLANKLEY: No. I think some of the --

MR. MCLAUGHLIN: -- and therefore do anything that will --

MR. BLANKLEY: No, I think that -- I think some of the best accountants in the world work for Arthur Andersen.

MR. MCLAUGHLIN: Well now, just think about it. We had John McCain, and he was one of the Keating 5?. And lo and behold, he becomes the missionary of campaign finance reform. So it's the old slogan of when the prostitute gets religion.

MR. CARNEY: Well, I don't think that Walker worked on the Enron account, first of all. Second of all -

MS. CLIFT: You may hear from Mr. Walker's attorney. You have made some pretty strong allegations there.

MR. CARNEY: The most important thing about John --

MR. MCLAUGHLIN: That's only an analogous metaphor.

MR. CARNEY: The most important part of his biography that you left out, or AN important part, was the fact that he was appointed by Bill Clinton. Yes, he's a Reagan Republican. He worked, I think, for both Reagan and Bush I, but he's certainly not, you know, a member of the conservative movement. This is only to protect this White House. I think -- Cheney's not acting on behalf of some lofty principle, but they are being smart here. He was being honest when he said in that interview that they don't want to see the continued erosion of presidential privacy and authority. But they're doing this not for some protection of this institution, which is obviously already quite strong, but in order to avoid what happened to Bill Clinton, so that if George W. Bush serves two terms, the next seven years won't be dominated by investigation after investigation. The fact that he talked to senior White House officials afterwards, that's the --

MR. MCLAUGHLIN: I want to know -- I want to know this. The chairman of the committee in the House did not request this suit. It was requested by two non-chairmen, Democrats.

MR. BLANKLEY: Right. Ranking Democrats.

MR. MCLAUGHLIN: Waxman and Dingell.


MR. MCLAUGHLIN: Now, why does he respond to them when no chairmen are indicating their interest in pursuing the suit?

MR. CARNEY: Well, he says it's because there's a long history of accepting requests from both.

MR. MCLAUGHLIN: Ah. I thought --


MR. MCLAUGHLIN: Wait a minute. Let Tony go.

MR. BLANKLEY: I know something about this. That's laughable. For years Republicans were making requests, when they were in the minority, to have GAO reports, and it was always the last one in line, never quite got around --

MR. CARNEY: Look, Tony. The idea that this guy Walker, who is a Republican, is being pushed to do this by the liberal masses at the GAO is ridiculous.

MR. BUCHANAN: Look. You know, there's no evidence --

MS. CLIFT: Remember --

MR. MCLAUGHLIN: I want to hear from Pat. Hold on, Eleanor.

MR. BUCHANAN: There's no evidence of anything done wrong here. This is pure voyeurism. These people want to drag this out and say: Oh, look who he met with. Look who he met with here. Isn't this terrible. Cheney's done the right thing.

But your point is valid. They're going to try to do this for seven years. And Cheney and the president are saying: Okay, we're going to have it out right now. He's on the high ground, and he ought to hold it.

MR. MCLAUGHLIN: Let me ask you a question. Do you think the Democrats really care whether or not the GAO has standing to bring this suit? In other words, aren't the -- particularly the Senate chairmen, Democratic chairmen, they don't want -- they don't want to challenge --

MR. BUCHANAN: Exactly.

MR. MCLAUGHLIN: -- the president. So what they do is, they let this man be their cat's paw.

MR. BUCHANAN: Exactly. They don't have the guts to do it, so they sent their wife out to fight the guy in the street rather than do it themselves.

MR. MCLAUGHLIN: As Enron's Kenneth Lay did this very week.

MS. CLIFT: Republicans on Capitol Hill have now joined in asking for these documents to be turned over. And if you look at this White House, if they want to make this stand so that they can be --

MR. BUCHANAN: But Eleanor --

MS. CLIFT: -- free of scrutiny for the next seven years --

MR. BUCHANAN: Forget it, Eleanor.

MS. CLIFT: -- they are losing a great deal. Polls show that (58 ?) percent of the American public --

MR. BUCHANAN: Oh, forget the polls.

MS. CLIFT: Forget the polls? It's pretty important --

MR. BUCHANAN: If you win it --

MS. CLIFT: (Inaudible) -- Americans think they're hiding something, and --

MR. BUCHANAN: If you win it, it will be over --

MS. CLIFT: -- if not, why don't we just see who --

MR. BUCHANAN: If you win it, it will be over. And why don't the Congress stand up and challenge the president themselves? Because they don't feel they've got a strong hand -- either party.

MS. CLIFT: They're challenging him through the GAO.


MS. CLIFT: It's a legal process and it will --

MR. MCLAUGHLIN: Eleanor may be right; the only court that matters is the court of public opinion. And 74 percent of the public want more information before they assess blame in the Enron case.

MR. BUCHANAN: Let me tell you --

MR. MCLAUGHLIN: But 70 percent already believe the Bush White House is hiding something. So where do we come out?

MR. BUCHANAN: If you win the --

MS. CLIFT: The fact is they are!

MR. MCLAUGHLIN: Let him finish! Let him finish!

MR. BUCHANAN: Let me finish.

If you win this battle in court and it goes down, it will go away. If you don't, they'll come at him again and again and again.

MS. CLIFT: Pat, is that the same argument you made in the early days of the Nixon administration? If you win this argument, it will go away? (Laughs.)

MR. BUCHANAN: Well no, we made it in the final days of the Nixon administration! (Laughs.)

MR. MCLAUGHLIN: I want to hear from you.

MR. CARNEY: The fact is, the Bush White House, also -- this is their Achilles' heel. The fact that the public still has lingering perceptions of both President Bush and Dick Cheney as Texas oilmen. You've got Don Evans over at Commerce as an oilman. There's a problematic perception they are too aligned with big business. And they don't yet --

MR. MCLAUGHLIN: I want -- I think --

MR. CARNEY: Wait! Wait a minute!

MR. MCLAUGHLIN: I think the force of personality and the force of visible integrity in Cheney comes through with such force --

MS. CLIFT: Well --

MR. MCLAUGHLIN: -- that it counters what you're saying.

MS. CLIFT: And so does --

MR. MCLAUGHLIN: And they've seen all of this during the debate --

MR. CARNEY: You fell for that, John? Just by the force of his personality? (Laughs.)

MR. MCLAUGHLIN: Oh, I think this is a true case of separation of powers. I think they ought to -- this GAO ought to get out of snooping --

(Cross talk.)

MR. BLANKLEY: It's not an Achilles' heel. It's, at worst, an Achilles' toenail.


MR. MCLAUGHLIN: Exit question: Who will prevail in court, Cheney or the GAO?

Pat Buchanan?

MR. BUCHANAN: Cheney will prevail, unless the Congress goes after him itself and elevates the thing.


MS. CLIFT: The GAO will prevail. And the paper trail is already leaking out of Ken Lay giving memos to the administration asking for certain appointments, and the administration yielding. It's not illegal, but it's a sure cozy relationship that's going to hurt the administration politically.

MR. MCLAUGHLIN: You don't think Cheney is on solid legal ground?

MS. CLIFT: I think --

MR. MCLAUGHLIN: You wait and see. You wait and see, Eleanor!

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

MR. BLANKLEY: The answer is that it won't get to a court decision. I think it will get negotiated out. But if it did, I think Cheney probably has the better of the two arguments.

MR. MCLAUGHLIN: What do you mean, that he'll settle for the release of certain data?

MR. BLANKLEY: Sure. I think --

MR. MCLAUGHLIN: You know if Waxman and Dingell get in there at all it's like the elephant's trunk.

MR. BLANKLEY: Yeah. Nonetheless, I think they will negotiate something out.

MR. CARNEY: I think they'll negotiate out, in part because they don't want to lose. They want to be able to say, "We negotiated, but we stand on our principle, and we'll fight again the next time around," so people are shy --

MR. MCLAUGHLIN: Oh! I think you're misreading Cheney. I think this is going to court and I think the administration is going to win.


MR. MCLAUGHLIN: When we come back, George Bush this week linked North Korea and Iran and Iraq into an "axis of evil." Is this warmongering?


MR. MCLAUGHLIN: If anyone thinks that Bush or Cheney sold out to Enron, or any other corporation -- this is what was produced by Mr. Cheney and his group. And it's about, what?, 150 pages. All they have to do is go through it and say, "Ah hah! That looks like he sold out."

MR. BLANKLEY: I mean, the truth --

MR. MCLAUGHLIN: Well, let them see if they can find something in here. Just examine it. This is the product.

MS. CLIFT: Well --

MR. BLANKLEY: There's a --

MS. CLIFT: -- the fact that that's a --

(Cross talk.)

MR. MCLAUGHLIN: We've got to go on. You want to make a quick point?

MR. BLANKLEY: Yeah. The truth is that he made a lot of policy decisions on coal, on nuclear energy, on not giving carbon reduction --

MR. MCLAUGHLIN: Against Enron.

MR. BLANKLEY: Against Enron.

MR. MCLAUGHLIN: (Of core ?) And you know what the people are saying, people like Eleanor: Well, Enron was against wage and price controls -- (laughter) -- and so was I. So was he. So were you.

MS. CLIFT: And -- and -- and --

MR. MCLAUGHLIN: Exit Two (sic)! Exit? Issue Two. (Laughter.) What did I say, Exit Two? Issue Two: Axis of Evil.

(Begin videotape.)

PRESIDENT BUSH: I will not stand by as peril draws closer and closer. The United States of America will not permit the world's most dangerous regimes to threaten us with the world's most destructive weapons.

(End videotape.)

MR. MCLAUGHLIN: Commander-in-Chief Bush, in his address to the nation this week, expanded the war on terrorism beyond terrorism. The battlefield now includes nations, regimes, three by name, listed in menacing terms.

(Begin videotape.)

PRESIDENT BUSH: North Korea is a regime arming with missiles and weapons of mass destruction while starving its citizens. Iran aggressively pursues these weapons and exports terror, while an un-elected few repress the Iranian people's hope for freedom. Iraq continues to flaunt its hostility toward America and to support terror. States like these, and their terrorist allies, constitute an axis of evil."

(End videotape.)

MR. MCLAUGHLIN: Iraq immediately ridiculed President Bush.

(Begin videotape.)

IRAQI VICE PRESIDENT TAHA YASSIN RAMADAN (through translator): "The statement of President Bush is stupid and does not befit the president of a major country."

(End videotape.)

MR. MCLAUGHLIN: North Korea said the Bush threat shows a, quote, "U.S. policy of aggression."

Iran scorned the president's remarks, quote, "It is possible that Americans will cheer Bush as the Congress did, but we will not be threatened by such aggressive language."

Well Akbar, not everyone in the U.S. Congress cheers the president, notably Senator Chuck Hagel, F-O-B, Friend of Bush, who did the opposite.

(Begin videotape.)

SENATOR CHUCK HAGEL (R-NB): But that's not the way to deal with Iran and to keep making progress there, not to lump them in with Iraq.

(End videotape.)

And here's a former member of Congress, the esteemed Lee Hamilton, director of the Woodrow Wilson International Center for Scholars.

(Begin videotape.)

LEE HAMILTON: I think that kind of language will strengthen the hard-liners in each of these three countries.

(End videotape.)

At week's end, North Korea issued a second statement. Quote: "This is in fact little short of declaring a war against a the Democratic People's Republic of Korea."

Question: Is North Korea a sponsor of terrorism? I ask you, Jay Carney.

MR. CARNEY: Well, the issue isn't so much whether it sponsors terrorism abroad, but the regime itself is, you know, has tried to develop nuclear weapons while starving its people, other weapons of mass destruction. It's a rogue regime, an enemy of America.

MR. MCLAUGHLIN: All right, but address the question of terrorism.

MR. CARNEY: But I'll tell you why he was in there.

MR. MCLAUGHLIN: Do they export terrorism? The answer is no.


MR. MCLAUGHLIN: They used to 20 years ago.

MR. CARNEY: I'll tell you why --

MR. MCLAUGHLIN: Twenty years ago they were.

MR. CARNEY: I'll tell you why Bush put them in there.

MR. MCLAUGHLIN: But they have not recently.

MR. CARNEY: North Korea -- there was a big debate in the White House. Iraq was the only nation named at first in the speech. They put in Iran and North Korea primarily because they felt that if Bush only named and singled out Iraq, it would raise expectations of immediate military action. And already it's two days --

MR. : (Inaudible.) (Laughter.)

MR. CARNEY: -- two days -- two days later --

MS. CLIFT: (Inaudible) -- not yet!

MR. MCLAUGHLIN: But wait a minute. Have you signed onto this justification -- this convoluted, incunabular justification for what they did?

MR. CARNEY: John, it's called reporting. This is why they did it. I'm not saying it didn't work, because --

(Cross talk.)

MR. BLANKLEY: How ridiculous! Because --

MR. MCLAUGHLIN: That makes the situation worse, because it just --

MR. CARNEY: But you saw a day --

MS. CLIFT: Well, the secretary --

(Cross talk.)

MR. MCLAUGHLIN: I mean, what kind of an explanation -- you wonder what's going on up here!

MR. BUCHANAN: John, look: The president's made a terrible blunder. He doesn't have the authority to go to war against these countries. United States is not prepared to go to war against these three countries. By naming North Korea, he has, in effect, discombobulated the South Korea. He has threatened a regime that is very dangerous. It's got thousands of artillery pieces on the DMZ that may have nuclear weapons. By threatening Iran, he is damaging relations with Iran --

(Cross talk.)

MR. CARNEY: This is no more a blunder than Churchill warning about the dangers of Hitler in 1930. (Exasperated "Oh" noises from others.)

MR. BLANKLEY: I'm sorry. This is the most portentous statement by an American president since Jack Kennedy during the Cuban Missile Crisis, and I think it's casting the dye for a fuller and more effective war on terrorism.

MS. CLIFT: Well, the hard --

MR. MCLAUGHLIN: Do you think we have a new Axis Germany, Japan and Italy, according to what the president's saying, in the three countries he mentioned: Iran, Iraq and North Korea? Do we have a new World War II Axis?

MR. BLANKLEY: I think that -- I know that Iran and Iraq's foreign ministers met last weekend to announce agreements as to working together after all these years of fighting.

(Cross talk.)

MR. CARNEY: I'm sure they're going to work together now!

MR. MCLAUGHLIN: What's wrong with that?

MR. BLANKLEY: Well, you're talking an about an axis -- there is an increased connection --

MR. CARNEY: Tony --

(Cross talk.)

MR. MCLAUGHLIN: Oh, please!

MS. CLIFT: To invoke language out of the Second World War brings up all sorts of historical echoes, and it's got Europe really nervous. And what --

MR. BLANKLEY: They should be nervous.

MS. CLIFT: And what --

MR. BLANKLEY: And we should be -- But it's still the right --

MS. CLIFT: Why does the president -- let me finish. What he has done is made for the first time a clear connection between nuclear proliferation and bioterrorism and his war on terrorism.


MS. CLIFT: He may be trying to lay the predicate for some pinpoint strikes or something. But what this is really about is conjuring up an enemy so he can get money for --

MR. BLANKLEY: He's not conjuring up the enemy! The enemy is --

MS. CLIFT: -- conjuring up -- excuse me!

MR. MCLAUGHLIN: Hold on. Let her finish! Let her finish!

MS. CLIFT: -- conjuring up an imminent threat, so that when he releases his budget next week and he goes to Congress, he can get money for the missile-defense deal.

MR. BLANKLEY: That's ridiculous!

MS. CLIFT: This is more about domestic policy --

MR. BLANKLEY: Not at all!

MS. CLIFT: -- keeping the country focused on war instead of red ink and recession.

MR. BLANKLEY: That is a complete misread -- that is a complete misread of the president. It has nothing to do with domestic issues.

MR. MCLAUGHLIN: You know -- you know -- wait a minute!

MS. CLIFT: The hard-liners are happy, and Colin Powell is not.

MR. MCLAUGHLIN: I want to shut this down, because this is -- we sound like, you know, the happy family -- the Soprano family. (Laughter.)

Let me ask you a question here: You know that Karl Rove's thinking is that as long as there is a security threat to the United States, then we have it made. That is a gift to us that will not stop giving, because it will give us the elections in 2002, coming up in 10 months --

MR. BLANKLEY: That has --

MR. MCLAUGHLIN: -- and it will give us 2004. Therefore, we have now a new "axis of evil."

MR. BLANKLEY: Look, look, look, that --

MR. MCLAUGHLIN: Now what do you think that?

MR. BLANKLEY: No, I think that's --

MR. MCLAUGHLIN: Do you think that's cynical?

MR. BLANKLEY: It's ridiculously cynical. Whatever Karl Rove is calculating has nothing to do with the president's absolute commitment to --

MR. MCLAUGHLIN: All right. Well, maybe you can explain this. North Korea condemned the September 11th attacks and three and half months ago signed two anti-terrorist treaties, the International Convention for the Suppression of the Financing of Terrorism and the International Convention against the Taking of Hostages.


MR. MCLAUGHLIN: Exit: Compared to the oratory of the September 20th address to the joint session of Congress, for which we give him a 10, rate Bush's State of the Union address this week.

MR. BUCHANAN: The oratory was good, John, but it was full of triumphalism and hubris. It is the substance of those paragraphs where he is threatening and telegraphing a punch he can't deliver that was a terrible mistake. I give him a nine on the oratory. With the substance, I think he's made one of the worst blunders of his presidency.

MR. MCLAUGHLIN: You want to also point out that the -- that Iran is violently anti-Taliban, and also Iran --

MR. BUCHANAN: You know, these are lousy regimes; there's no doubt about it. But you deal with them in different ways, and I think working together --



MS. CLIFT: Right. And Iran and North Korea were being dealt with on the diplomatic track.

MR. BUCHANAN: Exactly.

MS. CLIFT: And for him to derail that just because he's looking for a glib phrase --


MS. CLIFT: -- he -- it was wonderful oratory, but when it comes to reality and substance, I agree with Pat -- huge blunder.

MR. MCLAUGHLIN: How do you rate him compared to the September 20th address?

MS. CLIFT: Oh, failing grade, compared to that.

MR. MCLAUGHLIN: Failing grade.

What do you say?

MR. BLANKLEY: He got a B on oratory and an A-plus on substance.

MR. MCLAUGHLIN: Well, if September 20 is 10, what was this week?

MR. BLANKLEY: Ten on substance.

MR. MCLAUGHLIN: Ten on substance?

MR. BLANKLEY: About six on oratory.

MR. CARNEY: All right. Oratory actually was nowhere near as high as it was on September 20th. That was a beautiful speech, well-written, well-delivered.

MR. MCLAUGHLIN: Yeah, yeah, yeah.

MR. CARNEY: This was not as good, but he had a more complicated task, because he had -- half of it was domestic policy, very --

MR. MCLAUGHLIN: Thank you for that. Thank you for that.

MR. CARNEY: -- and jobs, jobs, jobs -- sounded -- echo of his father, inadvertently.

MR. MCLAUGHLIN: Yeah. What's the answer?

MR. CARNEY: The answer is --

MR. MCLAUGHLIN: What does he get?

MR. CARNEY: I agree with Pat on the substance. I think that they've committed themselves to military action that they won't be able to deliver on. And --

MR. BUCHANAN: Exactly. He will back down.

MR. MCLAUGHLIN: What do you rate him at, as against the other one?

MR. CARNEY: Oh, 10 in September, five this --


Well, this reminds me of the waiter who comes out with an ordered plate of soup, and in the middle of the soup is a fly.

MS. CLIFT: (Chuckles.)

MR. MCLAUGHLIN: And that pretty much --

MR. BUCHANAN: The soup is outstanding, though. (Laughs.)

MR. MCLAUGHLIN: Except for the fly.

MS. CLIFT: Right.

MR. MCLAUGHLIN: So I think that the fly was this "axis of evil" --

MS. CLIFT: Right.

MR. MCLAUGHLIN: -- and therefore I give him a five.

We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions, Pat Buchanan.

MR. BUCHANAN: Gary Condit's comeback will fail. He will lose his primary.


MR. BUCHANAN: He will lose to his opposition in the Democratic Party.

MR. MCLAUGHLIN: Who is that? Who is that? Oh, in the opposition? Oh, okay.

MR. BUCHANAN: Yes. (Laughs.)

MR. MCLAUGHLIN: What about the --

MR. BUCHANAN: You mean -- he'll lose the primary.

MR. MCLAUGHLIN: What's the guy's name? Quickly, Eleanor!

MS. CLIFT: Cardoza.

MR. MCLAUGHLIN: Cardoza. Right. (Laughter.)

Okay, quickly.

MR. BLANKLEY: OMB's decision to try to beat earmarks will lose, and rightfully so. Congress has a voice.


MR. CARNEY: The budget -- the new budget deficits this year will be $50 billion higher than the White House projects.

MR. MCLAUGHLIN: Out of time, but watch Ken Lay Monday in the Congress, giving his testimony, and bring your Kleenex. Bye-bye~!


MR. MCLAUGHLIN: Issue three: Sorry Spin.

(Begin videotape.)

LINDA LAY: I'm sad, I'm desperately sad, but I don't know where to place the anger. I don't know who to get mad at. I just know my husband didn't have any involvement.

(End videotape.)

MR. MCLAUGHLIN: Linda Lay, the wife of Enron's recently resigned CEO Ken Lay, appeared on the Today Show this week in an interview with NBC's Lisa Myers. Ken Lay himself isn't talking. Instead, the Texas wunderkind sent out his wife to defend him, an innovation for macho Texans. The attempt to off-load culpability for the nation's largest corporate meltdown was instantly repudiated by former Chief Financial Officer Andrew Fastow with this statement, quote: "Enron's senior management, the board of directors and outside legal and accounting counsel all had full knowledge of the transactions and approved them."

As for the shocking suicide of the former vice chairman, Cliff Baxter, Mrs. Lay blamed the press for reporting the lies, the arrogance and the betrayal of Enron.

(Begin videotape.)

MRS. LAY: It's a perfect example of how the media can play such havoc and destruction of people's lives.

(End videotape.)

MR. MCLAUGHLIN: The interview's biggest whopper was this:

(Begin videotape.)

MRS. LAY: We've lost everything.

(End videotape.)

MR. MCLAUGHLIN: As of last month, the Lays still owned $8 million dollars worth of stock, mainly Compaq computers and Eli Lilly pharmaceuticals, plus bagging $101 million by dumping some 2 million shares of Enron stock when the company was still flying high. Much of that profiteering occurred when the 401Ks, by the way, of Enron employees were frozen as the company spiraled toward collapse. Then there's $30 million dollars worth of real estate, including $7 million Houston condo they own plus at least a dozen other properties also in their possession throughout the state, worth several million dollars, none listed for sale. Plus two homes in Aspen on sale for $6 million and a third $4 million quote/unquote "cottage."

So where does that leave Mrs. Lay's statement?

(Begin videotape.)

MRS. LAY: Other than the home we live in, everything we own is for sale.

(End videotape.)

MR. MCLAUGHLIN: Question: Was it a public relations gaff for Ken Lay to send his wife out to defend him?

MR. BUCHANAN: Well, if I read your analysis of it, it certainly was, John. (Laughs.) But, no, you know, I don't know that it was, quite frankly. She goes up on television. She's an attractive lady. I don't think she's convincing.

MR. MCLAUGHLIN: Well, Hillary did it, right?

MR. BUCHANAN: But I don't think she's convincing, but there's probably -- there is a -- if there is a constituency out there, and it's small, she reached it.

(Cross talk.)

MR. MCLAUGHLIN: Lay's even richer than the figures I have here, because what -- how many foreign accounts were there that they have? Three-thousand foreign subsidiaries and partnerships.

MR. CARNEY: If they're broke, John --

MR. MCLAUGHLIN: And maybe not all were --

MR. CARNEY: If they're broke, I'd like to be that broke.

I mean, that was an embarrassment. It was -- you know, this is a scandal that has affected rank-and-file employees of this company and stockholders of this company, working people. And for them to watch that interview and hear her sing her sad song about being stricken by poverty, it's a disgrace.

MR. MCLAUGHLIN: Was Hill & Knowlton involved in this?


MR. CARNEY: And Ken Lay is far less of a man for putting her out there.

MR. MCLAUGHLIN: Yeah, but who from Hill & Knowlton?

MR. BLANKLEY: I don't know the name, but it was a friend of the family. And I'm not convinced that Mr. Lay sent Mrs. Lay out. This --

MR. MCLAUGHLIN: Well, he hid behind her skirts whether he sent her out or not.

MR. BLANKLEY: This may have been a situation where she decided on her own, with a publicist who was a friend of hers, to go out. I don't know. But I'm not convinced. Sometimes in these situations the spouses aren't fully under the control of --

MR. CARNEY: (Laughs.)

MS. CLIFT: Yeah, but still --

MR. MCLAUGHLIN: What was her intended message?

MR. CARNEY: Think of Margaret Mitchell.

MS. CLIFT: Her intended message is that he was being victimized; that he didn't know what went on.

MR. MCLAUGHLIN: Okay. Will they make -- will they successfully make a pigeon out of Andrew Fastow, the financial officer?

MS. CLIFT: I think Andrew Fastow is in trouble, and so is Mr. Skilling, but so is Mr. Lay. And her --

MR. MCLAUGHLIN: Do you have any doubt that Lay knew everything that was going on?

MS. CLIFT: The evidence so far suggests that he was fully aware.

MR. MCLAUGHLIN: Do you have any doubt about that?

MR. BUCHANAN: I do. I have a little doubt because I don't know that he knows all that much about the partnership --

MR. MCLAUGHLIN: What about you, do you have doubt about that?

MR. BLANKLEY: We have to find out.

MR. MCLAUGHLIN: Do you have any doubt about that?

MR. CARNEY: It doesn't matter, because the buck stops with the chairman.