MR. MCLAUGHLIN: Issue one: Black Hawk down.

PRESIDENT GEORGE W. BUSH: (From videotape.) The enemy in Iraq believes America will run. That's why they're willing to kill innocent civilians, relief workers, coalition troops. America will never run.

MR. MCLAUGHLIN: The second-bloodiest day of the war, and the commander in chief says Americans will never run. But others are already running: the Spaniards, the Bulgarians, the Dutch. They've pulled their diplomatic staff from Baghdad. Also the Red Cross and U.N. have pulled out most of their staffs. The Turks have put their troops on hold.

What's driving this exodus is the growing fierceness and sophistication of the anti-occupation guerrilla attacks. Three helicopters have been shot down, two this week -- a Chinook and a Black Hawk -- killing 22 servicemen, adding up to 31 deaths this week, 388 since the start of the war, and more than 2,200 wounded and injured.

Now for the first time, U.S. lawmakers are talking pullout or phase-out.

SENATOR ROBERT BYRD (D-WV): (From videotape.) The president owes the American people an exit strategy for Iraq. And it is time for the president to deliver.

MR. MCLAUGHLIN: And there are new signs that the American people are thinking twice about staying in Iraq. A recent Washington Post- ABC News poll shows 38 percent of Americans believe the United States should withdraw forces immediately -- the highest number to date. Sixty-two percent say there's been an unacceptable number of U.S. casualties, up from 28 percent in April. And for the first time since combat began, a majority of Americans describe the way the president is handling the war negatively; 51 percent disapprove.

Question: Whom are we fighting in Iraq? Two months ago, we were told it was disorganized pockets of local resistance with no central coordination. One month ago, it was scattered irredentists, Ba'athists and foreign terrorists. Now the insurgency is said to be centrally coordinated and controlled, perhaps by Saddam himself.

What's the story? Pat?

MR. BUCHANAN: John, I think we're fighting, as what General Abizaid said, a classic guerrilla war. I think it's a war of national resistance. I think it is rising. It is better coordinated. It is bolder. And I'm afraid that nationalism and patriotism, at least in the Sunni triangle, is shifting over to the anti-American side.

The president of the United States, however, has begun to withdraw troops. They're going to be coming down at a rate of 5,000 a month until May. At the same time, his legacy is on the line. American credibility, American policy in the Middle East are on the line. McCain is calling for 15,000 more troops. I think, John, we're coming to a real crunch and it's going to happen in the next several months.


MS. CLIFT: Well, the administration is in more trouble than they can publicly acknowledge. And among the troops that are going to be called up, the Reserve units and so forth, in order to allow some of the troops there to come home on leave will be Marines. Marines are not peacekeepers, Marines are warfighters; and so I think there is an acknowledgement that we are still in a perpetual war.

Who are the people we're fighting? It's a combination of Saddam loyalists, there are international jihadists who are flooding into the region from all over wanting to get a chance to strike at Satan, and then there are ordinary thugs, I think, who are in the society.

What I find most disturbing, though, in that conglomerate of enemies is the ordinary Iraqi citizens, because as we kill civilians because our troops are nervous and trigger-happy, every time you kill a civilian, you create a whole extended family of people wanting revenge, and the society is beginning to turn against us. And that's the clock that we're racing against.

MR. MCLAUGHLIN: Tony, what do you think of that 38 percent figure of the American people who want us out now, want the troops home now?

MR. BLANKLEY: That number doesn't surprise me.

I'd like to address several of these gloomy assessments here. First of all, this is not a national struggle upon the Iraqi people. All the polls show that two-thirds of the Iraqis are glad we're there.

In fact, Eleanor is right that it is increasingly the foreign jihadists, which is good for us, in this sense: They're killing -- the Iraqis don't like foreigners to come in, and they're killing other -- they're killing Iraqis.

And I think what's going to be happening is, you're going to see a shift in the kind of forces we're bringing in. There are going to be more Special Forces in, because we need to get into a quicker- reaction, anti-insurgency effort, rather than having the big battalions going down the avenues.

And by the way, I do not believe there's an exit strategy. I think the president's speech this week was proof that he has -- doesn't want an exit strategy. We're going to have at least a hundred and -- over a hundred thousand troops in here, according to him, right through next year, past the election. And that's only if we have enough troops to -- if we don't get other foreign troops. So --

MR. MCLAUGHLIN: Did he use that figure, a hundred thousand, in the speech?

MR. BLANKLEY: That's the background information -- that they're only reducing it a little bit, and that -- and only reduce it a little bit if in fact we don't get other troops coming in and if conditions permit. There is no exit strategy, because the president has committed to give a long -- in his speech for a long-term commitment to democratize Iraq and the rest of the Middle East.

MR. MCLAUGHLIN: Were those -- was the poll figure you mentioned the Zogby poll?

MR. BLANKLEY: There were several polls. There have been two or three polls. Zogby was one. There have been two other polls there.

MR. MCLAUGHLIN: Well, Zogby wrote a piece saying that the president put a gloss on the poll that was totally ill-founded.

MR. BLANKLEY: Yeah, I'm not talking about --

MR. MCLAUGHLIN: There was nothing in the poll, he said, to give any comfort to the president or his administration.

MR. BLANKLEY: Well, Zogby's been antiwar from the beginning, for whatever reason.

MR. MCLAUGHLIN: Well, now you quote the polls --

MR. BLANKLEY: There were three polls --

MR. MCLAUGHLIN: I -- (inaudible) -- are you repudiating --

MR. BLANKLEY: I said there are three polls. There are three polls. There are three polls.

MR. MCLAUGHLIN: All right. I want --

MR. BLANKLEY: And I would live by Zogby's numbers, notwithstanding his gloss on his poll.


MR. BARBER: Look, the question -- it comes down to this: Have they a plan? Have they a strategy?

I think, one, they have understood that they need to rotate the troops. That plan came out this week.

Second, they must go for Iraqification, and that means bringing those soldiers that they disbanded earlier -- that was a big mistake -- back on the streets. These are the people, the Iraqi soldiers, who need to do the policing. And meanwhile, the American troops, Special Forces, need to go after these terrorists. But it's going to be, in Don Rumsfeld's phrase, a long, hard slog.

Second -- or last point, I think -- the president needs to redefine the terms of success. It is a big step to think that you can introduce a democracy in Iraq by next autumn, but you can move towards it.

MS. CLIFT: And I think it's particularly galling that --

MR. BLANKLEY: Well, he did --

MS. CLIFT: I think it's particularly galling that the president would deliver a speech casting this whole struggle in these lofty terms and at the same time not mentioning anything about the deaths that are going on, not attending any of the funerals and, you know, acting like we're in this Manichaean struggle, good versus evil, establishing democracy over there.



MS. CLIFT: You know, if his dream comes through, I don't think any of us will be living long enough to see it, because it'll be a long, hard slog.

MR. MCLAUGHLIN: Well, The Washington Post, in its headline, pretty much repudiated that by describing it as a clash between realism and idealism.

MR. BUCHANAN: There is no evidence to date, Tony -- first, only one-third of the American colonists wanted to get rid of the British, and they did the job.

Secondly, there is no evidence to date that the Iraqis --

MR. BARBER: Just about, Pat.

MR. BLANKLEY: We're still here!

MR. BARBER: (Pointing to himself.) We're still here! (Laughter.)

MR. BUCHANAN: Well, that's -- we didn't get rid of all the Loyalists. (Laughter.) Right.

But there is no evidence to date that the Iraqis in the Sunni Triangle are willing to take up arms and kill their fellow Sunnis for the kind of future the president wants. It may be an idealistic, good future. The Iraqis are not fighting --

MR. BLANKLEY: Wait, let me --

MR. MCLAUGHLIN: No, we've got to move on.

MR. BLANKLEY: No, let just rebut that. I'm told that we are getting some recruits for police work out -- Sunni policemen, who are doing work. And I don't know what the numbers are, but they are recruiting in Baghdad some Iraqis, who are presumably Sunni, to do the fighting.

MR. BUCHANAN: But where is the Iraqi --

MR. BLANKLEY: They've gone up to what, 85,000 police now --

MR. BUCHANAN: And they're going to go out and fight Sunnis? I've seen no evidence of that so far.

MR. BLANKLEY: And they're not bringing Kurds down from the North or --

MR. BUCHANAN: (Off mike) -- to the South.

MR. MCLAUGHLIN: Can we conclude? To answer my own question, which has not been satisfactorily addressed here, the resistance is gathering force, it is united, and it is orchestrating its action against us. It has gone from pockets of resistance into a coordinated and a united force. True or false?

MR. BUCHANAN: No, I don't believe it's totally -- I do believe it is more coordinated. I think it is more and more pockets are getting together. I don't seem Saddam or a single head of this whole thing.

MR. MCLAUGHLIN: All right. But you do see -- you do see that if Saddam is captured, that Bush's ratings would soar? That would probably last for two weeks to a month. But if the insurgency continues, he will drop like a stone again. True or false?

MR. BUCHANAN: Look, I think if we capture or kill Saddam, it will be a great victory. But that will not stop this insurgency.

MR. MCLAUGHLIN: All right's let's move on.

(Cross talk.)

MR. MCLAUGHLIN: We've got to move on.

The poll says that over one out of every three Americans want an immediate pull-out from Iraq. Will the poll climb to over 50 percent? And if so, when?

Pat Buchanan?

MR. BUCHANAN: It will by spring. But the American people will give George Bush the freedom to run this show as he thinks best.


MS. CLIFT: If helicopters are still going down and Americans are being killed at the clip they're being killed today, three or four months from now, that number will go over 50 percent.

MR. MCLAUGHLIN: Are you predicting that, taking the whole thing into consideration?

MS. CLIFT: I don't want those things to happen, but if they do --

MR. MCLAUGHLIN: I know. Do you think the resistance is officially coordinated --

MS. CLIFT: Oh, Tony, that's pretty severe what you just sneered at me here. I don't wish for any of those young people to die --

MR. BLANKLEY: Of course you don't.

MS. CLIFT: -- and I look at the news reports and I cry over it. I think it's a terrible thing.

MR. BLANKLEY: Of course --

MR. MCLAUGHLIN: You didn't mean it that way, did you?

MR. BLANKLEY: I didn't mean it that way, no.

Look, Bush's poll numbers have gone up in the last three weeks from 50 to 51, 52, to 55, 56. So -- during this bad news period.

MR. MCLAUGHLIN: They're unrelated to the war.

MR. BLANKLEY: Overall, his job approval --

MR. MCLAUGHLIN: Did you hear about the economy in that news?

MS. CLIFT: (Laughs.)

MR. BLANKLEY: Yeah. Overall, his job has -- overall, his numbers have gone up from 51 to 56. And so all things considered, to say that he's collapsing and dropping like a stone --

MR. MCLAUGHLIN: I didn't say that. I said do you think it will climb over 50. Apparently, you don't.

MR. BLANKLEY: No, in your last statement you said he was going to drop like a stone.

MR. MCLAUGHLIN: Well, he has dropped like a stone.

MR. BLANKLEY: No, he's gone up like a balloon.


MR. MCLAUGHLIN: He's gone from 68 percent to 44 percent.

MR. BARBER: John, I thought you felt that politicians shouldn't live by the polls. I mean, let's not get excited about whether it's 50 percent, 45 percent or what. The fact is, things are going to get harder in the short term than in the long term; it's going to be a rough ride. But the Congress has just voted an $87 billion aid package for Iraq. The Hill support is strong behind the president. And I agree with Pat, the president is not going to alter course. He may have to shift a little bit, redefine -- (inaudible) --

MS. CLIFT: You cannot -- you cannot -- you cannot wage --

MR. BARBER: -- but there will not be a cut and run.

MS. CLIFT: You cannot wage --

MR. MCLAUGHLIN: Mr. Barber, I wish you'd pay more attention to your own editorials, because their wisdom, I think, as far as this is concerned, is somewhat superior to yours, with all due respect to you.

MR. BARBER: Church and state. (Laughter.) Church and state. I mean, I'm in charge of the news, I don't write the editorials.


MS. CLIFT: I don't know how they do things in Britain, but you cannot wage a war long-term over here or you lose American public opinion. So you cannot ignore the polls.

MR. BARBER: Fifty percent is not a (killer ?).

MR. MCLAUGHLIN: He needs public support to sustain this war.

MS. CLIFT: Right. Exactly.

MR. MCLAUGHLIN: And Sharon is now showing some signs of change --

MR. BUCHANAN: But they stayed with Sharon a long time, John.

MR. MCLAUGHLIN: -- change -- pragmatic change because his support has somewhat dropped. And the president will have to change too. Now, the fact that this accommodation that you described earlier with regard to the troops going through is a good sign. But it won't sustain him, even if he catches Saddam and this insurgency continues to gather force, and I think it's really become unstoppable. I think this is a guerrilla war, and a guerrilla war is very hard to reverse.

MR. BLANKLEY: Is that a formal prediction?

MR. MCLAUGHLIN: When we come back: Why is it so few self- promoting pundits fail to see that Howard Dean's Confederate flag flap was deliberate and masterful?

MR. BUCHANAN: (Laughs.)


MR. MCLAUGHLIN: Issue two: Losing Dixie.

(Music: "Dixie.")

"Look away, Dixieland." Dixieland did look away from Democrats this past Tuesday. Gone with the wind: Democrat Ronnie Musgrove, Mississippi's incumbent governor cashiered by Haley Barbour, former head of the Republican National Committee, with 54 percent of the vote. Also gone: Kentucky's governorship, held by Democrats for more than three decades. Attorney General Ben Chandler crushed by Republican Congressman Ernie Fletcher, 55 to 45 percent.

With this double loss, Democratic governors nationwide will number 21, with 29 Republicans; in the South, four Democratic governors to the GOP's nine. The once "solid South" -- that's the phrase for the near monolithic voting bloc Democrats could depend on, more or less, for over a century -- is solid no more. Of 26 Southern senators, nine are Democrat; 17 Republican. A look at the map shows that seven of 13 Southern states -- Alabama, Kentucky, Mississippi, Oklahoma, Tennessee, Texas, Virginia -- have two Republican senators. Three Southern states are split -- Georgia, North Carolina, South Carolina. And three have two Democratic senators -- Arkansas, Florida, Louisiana.

In election '04, Democratic incumbents Bob Graham, Florida; John Edwards, North Carolina; Zell Miller, Georgia; Ernest Hollings, South Carolina, are all stepping down. John Breaux of Louisiana may also bow out.

In the House of Representatives, we find 81 Republicans to 55 Democrats.

In election 2000, George Bush won all 13 Southern states.

Question: In dissecting the entrails of Kentucky and Mississippi gubernatorial contests, do we divine any portents for the 2004 presidential race?

Eleanor Clift?

MS. CLIFT: Well, it reinforces a trend that's already been in place for some time. When Lyndon Johnson signed the Civil Rights Bill, he said, "There goes the South for a generation." It's been more like three generations. (Chuckles.) It also showed that Haley Barbour could buy Mississippi. The amount of money that the Republicans have -- and Barbour outspent his opponent by, I believe, more than two to one. Money matters in politics, and the Republicans are going to have a huge edge in 2004.

MR. MCLAUGHLIN: Speaking about Haley Barbour, is Lionel Barber related to Haley Barbour?

MR. BARBER: No, Haley Barbour is a Scottish -- O-U-R. No relation at all.

MR. MCLAUGHLIN: No Scottish?


MR. MCLAUGHLIN: There's no Scotch in you?


MR. BLANKLEY: (Laughs.) Except on a Saturday night, right? (Laughter.)

(Cross talk.)

MR. BARBER: A bit of Irish.

MR. MCLAUGHLIN: Oh, you're not even a pure Brit?

MR. BARBER: Well -- (laughter) --

MR. BUCHANAN: Hey, John --

MR. MCLAUGHLIN: What do you think of the situation with the solid South and with the Democrats?

MR. BARBER: Well, this shows just the mountain that the Democrats have to climb, not just because of the voting patterns, because the front-runner, of course, comes from Vermont. He's not from Arkansas or Louisiana or -- so I think the Democrats have a big, big challenge there.

MR. BUCHANAN: John, let me speak as a Scotch Irishman whose ancestors came from Okolona, Mississippi. The problem the Democrats have got on the national level is this: Not a single national Democrat was invited into either of those two states, Kentucky or Mississippi. They are told to stay out of there, whereas Bush and Cheney and every Republican in the country is invited into the South. I think the Democrats are now in danger of losing not only the entire South, but border states like Kentucky, as Tony and I were talking -- it used to be a swing state!

MR. MCLAUGHLIN: What this tells us, Tony, and you must realize this, is the power of money.

MR. BLANKLEY: (Laughs.)

MR. MCLAUGHLIN: The Republicans outspent the Democrats by 25 percent. Money talks, does it not? How unusual it is for an incumbent to be defeated by a challenger in a race like this. I can think of -- what was it? -- Huffington against Bob -- what was his name? -- in California, two Republicans?

MR. BUCHANAN: (Inaudible) -- Feinstein.


MR. BUCHANAN: He was against Feinstein.

MR. MCLAUGHLIN: No, no, no. I'm talking about when he ran for the House.

MS. CLIFT: When he ran for the Congress?

MR. BUCHANAN: (Inaudible.)

MR. MCLAUGHLIN: Michael Huffington. Michael Huffington against Bob Lagomarsino, right? Do you remember that? (Laughter.)

(Cross talk.)

MR. BUCHANAN: Very exciting race. (Laughter.)

MR. BLANKLEY: In the Santa Barbara --

MR. MCLAUGHLIN: Are you celebrating a birthday, or what? (Laughter.)

MR. BLANKLEY: That was in the Santa Barbara congressional district.

Look --

MR. MCLAUGHLIN: And he swamped him!

MR. BLANKLEY: -- money doesn't only talk, it shouts. I completely agree. Money matters in politics. On the other hand, one of the indicators of popularity is the ability to raise money. And quite frankly, to suggest that money --

MR. MCLAUGHLIN: (Inaudible.)

MR. BLANKLEY: -- and to suggest that money is the explanation why the Democrats are losing the South, instead of all the wrong issues they take on -- you know, for the Southerners -- culturally and on taxes and on abortion and on prayer is to, I think, overstate the value of money, important as money is.

MR. MCLAUGHLIN: Well, the other national lesson to be learned from this is scandal, scandal also is ruinous in politics.

Okay. Speaking about southern strategy, here's Howard Dean's. Dean told the Des Moines Register last week, quote: "I still want to be the candidate for guys with Confederate flags in their pickup trucks," unquote. That stirred up a hornet's nest. At Tuesday's "Rock the Vote" Democratic debate, Dean's rivals piled on.

SENATOR JOHN EDWARDS (D-NC): (From videotape.) It is wrong. It is condescending. And the only way that we as a party are going to win the White House back is to reach out to everybody.

REV. AL SHARPTON: (From videotape.) You are not a bigot, but you appear to be too arrogant to say "I'm wrong" and go on.

HOWARD DEAN (former Vermont governor): (From videotape.) We have had white southern working people voting Republican for 30 years, and they've got nothing to show for it. We need to bring folks together in this race, just like Martin Luther King tried to do before he was killed. He was right. And I make no apologies for reaching out to poor white people.

MR. MCLAUGHLIN: On Wednesday, regret.

HOWARD DEAN (former Vermont governor): (From videotape.) I regret the pain that I may have caused either to African American or southern white voters in the beginning of this discussion. But we need to have this discussion in an honest, open way.

MR. MCLAUGHLIN: Question: Did Dean fumble, or is this a calculated fumble? Pat Buchanan.

MR. BUCHANAN: Dean did a -- made a terrible mistake. He had stood his ground. Nothing wrong with what he said: folks with Confederate decals on their pickups, we ought to bring them into our party on the issues of education and health care. But faced with Al Sharpton, who called the battle flag an American swastika, he first stood up, then he buckled and backed down. Al Sharpton's now the moral arbiter of the Democratic Party. Not a single Democrat got up and said, "Look, that is over the top, outrageous; these guys are not racists simply because they honor a battle flag."

MS. CLIFT: Well, look, Dean is never going to get "the flaggers," as they're known in the South. They are the most conservative of the conservative, and they're not going to listen to his agenda. He should have said "NASCAR dads." That would not have been offensive. The Confederate flag as a symbol is offensive to blacks in this country, and it does stereotype southerners in a way that many of them don't want to be stereotyped. But his larger point is correct. The Democrats have to reach out to working-class whites, to men, to conservative men, if they want to win --

MR. MCLAUGHLIN: Okay. You're both only partially wrong, but wrong. And the fact is that he spoke to millions of southern males, and he was speaking with the stereotype of his being an arrogant northern liberal. That was shattered in one fell swoop with that appeal or that reference to the Confederate flag.

MR. BUCHANAN: How is the battle flag a "loathsome symbol"? Those are the words of Mr. Dean. You think that's going to go over down there?

MR. MCLAUGHLIN: Nevertheless, he still said he wanted them within the tent.

Okay. Here's more Dean. This week he told a Tallahassee audience that Southerners need to stop basing their votes on, quote- unquote, "race, guns, God and gays."

MR. BUCHANAN: What other issues are there? (Laughter.)

MR. MCLAUGHLIN: What do you think of that tactic?

MR. BLANKLEY: Well, look. I don't know what Dean was planning before, but obviously, he's not going to win many votes in the South, or in a lot of other parts of the country, opposing many of those issues. And to have a Northerner come down and preach to -- keep in mind that he's not -- he's telling them they shouldn't consider those issues, but he's taking his view of those issues and making them an issue. So I think it was foolish.

MR. MCLAUGHLIN: Dean was appealing to estranged Southerners who feel estranged on cultural grounds. And he pulled them in, did he not? In fact, his polls went up in New Hampshire. What do you make of that?

MR. BARBER: I think this was a fumble. Dean wants the "bubba" vote. He's not going to get it.

MR. MCLAUGHLIN: Okay. One-word answer. Exit. On balance, was this a good week for Dean, a bad week, or a draw?


MR. BUCHANAN: Dreadful.

MS. CLIFT: A draw, because he got a big union endorsement. Another one's on the way. That's probably going to seal Iowa for him.

MR. BLANKLEY: Yeah. Yeah.


MR. BLANKLEY: Eleanor's almost right. It's a win for him because of the big union support. Seeing institutional forces of the Democratic Party support an insurgent candidacy suggests to me he's well on his way to the nomination.


MR. BARBER: John --

MR. MCLAUGHLIN: He got the SEIU endorsement, and he's going to have --



MR. MCLAUGHLIN: -- AFSCME, two big unions.

MR. BARBER: Yeah. John, score draw.

MR. MCLAUGHLIN: Score draw.

MR. BARBER: He did the right thing identifying that the Democrats have a big problem in the South. But that politically correct admission of somehow that he made a big mistake was terrible. He caved in to Al Sharpton.

MR. MCLAUGHLIN: The answer is a major plus this week for Howard Dean.

We'll be right back.


MR. MCLAUGHLIN: Predictions, Pat?

MR. BUCHANAN: Colonel Allen West will not be court-martialed. He will be allowed to retire with benefits.


MS. CLIFT: Good job numbers for Bush this quarter, but he's got to do a lot better and is still going to go -- leave office with fewer jobs created since Hoover.


MR. BLANKLEY: Tenet, director of CIA, will be out by Christmas.

MR. BARBER: Watch out for Bob Rubin's book coming out: big defense of the Clinton years and withering attack on Bush's tax policy and irresponsible fiscal policy.

MR. MCLAUGHLIN: Israeli Yossi Beilen and Palestinian Yasser Abed Rabbo put forward an unofficial peace plan in Israel. It will reach critical mass in popularity. It already enjoys one-third of the vote of the Israeli people. And Sharon will let it go to a referendum. A great breakthrough.




MR. MCLAUGHLIN: Issue three: Taxing the 'net.

SENATOR RON WYDEN (D-OR): (From videotape.) The phrase "You've got mail," Mr. President, would be replaced with "You owe taxes." And that's what this proposal would mean to 142 million Americans with household Internet access. Under this proposal, Mr. President, the consumer could be taxed every time they send an e-mail, every time they read their local newspaper online or check the score of a football game.

MR. MCLAUGHLIN: What Senator Wyden is saying is that the next time you sign on to the Internet, you could be taxed. Access to the Internet has been tax-free since 1998, five years ago, when Congress put a five-year ban on access taxes. But the ban ran out last Saturday, November 1. Now, if Congress doesn't renew the ban, state and local governments could tax for accessing the Internet, signing online.

The House has already passed a bill to stay the ban forever, a permanent ban: Internet access tax-free for eternity.

But senators who had been governors don't all want the ban. State and local governments are broke, they say, and a ban kills potential sustainable revenue for those states.

SENATOR LAMAR ALEXANDER (R-TN): (From videotape.) This is none of the Congress's business. It's a state and local responsibility to decide how to pay the bill to fund state parks, local schools, roads, prisons, colleges, universities. That's what governors do.

MR. MCLAUGHLIN: Is Senator Lamar Alexander, former governor of Tennessee -- is he right or is he wrong? I ask you, Lionel.

MR. BARBER: He's absolutely right. The idea of taxing the Internet -- you know, this has been one of the great drivers for growth. Look at those numbers that came out this week on GDP third quarter -- you're seeing a revival in some of the Internet-based companies --

MR. BLANKLEY: So, you want a tax on it?

MR. MCLAUGHLIN: Wait a second.

MR. BARBER: (Inaudible.)

MR. MCLAUGHLIN: You know, he was arguing in favor of the tax --

MR. BLANKLEY: Lamar wants the tax.

MR. BARBER: (We ?) don't want a tax.

MR. BLANKLEY: Lamar wants the tax.

MR. BUCHANAN: Well, Lamar wants it, yeah.

MR. BLANKLEY: You know -- yeah, Lamar is making a state rights argument, that governors ought to have the right to raise revenues. He's completely wrong on --

MR. MCLAUGHLIN: He's making an economic argument: The states are broke.

MR. BLANKLEY: Yeah, well, he's completely wrong on this. He's going to lose. The Senate is going to pass a bill comparable to the House's in the next week or two. The president will sign it. There's going to be no Internet tax.

MR. BUCHANAN: John, this is the information highway, and there should be no toll booths on the information highway. I don't know why my friend Lamar Alexander is doing this. It is not Republican policy, and the states have other ways -- sales taxes, income taxes, property taxes -- to raise revenue. They don't need this.

MR. MCLAUGHLIN: Now, wait a second. You think that the e-mail to grandma ought to be not taxed? Is that what you think?

MR. BUCHANAN: No. Of course not.

MR. BARBER (?): Yeah! (Laughter.)

MS. CLIFT: Yeah. We're all addicted to e-mail. It's fast and it's free, and I think there's going to be universal opposition to this, although you can make a worthy argument that we tax phone usage, we tax cable television; why is the Internet different?

MR. MCLAUGHLIN: Do Internet providers pay tax? Internet providers?


MR. BLANKLEY: Yeah, I mean, the --

MR. MCLAUGHLIN: They pay corporate tax.

MR. BLANKLEY: They pay a corporate tax, but they don't pay a tax on the Internet connection (there ?).

MR. MCLAUGHLIN: They don't pay a sales tax, state or local. They do not pay that.

MR. BLANKLEY: No. And keep in mind that if this were on board, you could conceivably get taxed for the spam you receive, for goodness sake. It's an outrageous idea.

MR. MCLAUGHLIN: They also pay property taxes, payroll taxes, all the taxes of standard companies.

MS. CLIFT: How about taxing the spammers? (Laughs.)

MR. MCLAUGHLIN: Do you think we should tax -- do you think we should tax postage stamps? (Laughter.)

MR. BARBER: I think --

MR. MCLAUGHLIN: Well, you have a government supported -- (laughter) --

MR. BARBER: We've been trying --

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