MR. MCLAUGHLIN: Issue One: CEO Confidence Strong.

HANK MCKINNELL (BUSINESS ROUNDTABLE CHAIRMAN): (From videotape.) It is the most positive survey we've seen. That says there's strong outlook for strong economic and job growth during the next six months.

MR. MCLAUGHLIN: A survey of the nation's top 160 CEOs, the prestigious Business Roundtable, reports that their confidence in the U.S. economy is up -- way up. Speaking for the Roundtable this week, its chairman, Hank McKinnell, who is also chairman and CEO of Pfizer Pharmaceuticals, one of this program's enlightened sponsors. Mr. McKinnell says that the Business Roundtable's confidence in the U.S. economy is not only strongly positive, but also fully warranted.

Item: Growth up. The U.S. economy is expected to grow 3.5 percent this year. That's less than last year's 4.4 percent, but still, quote/unquote, "a healthy rate of growth," says McKinnell.

Item: Capital investment up. That's the money spent by businesses to improve and expand their operations, like new machinery. Over the next six months, 60 percent of CEOs plan to increase capital spending.

MR. MCKINNELL: (From videotape.) This is the strongest showing we've seen for those expecting capital spending to increase.

MR. MCLAUGHLIN: Item: Sales up. Eighty-nine percent of CEOs expect to see revenues grow in the next six months. On the hiring indicator, Roundtable Chairman McKinnell had this to say.

MR. MCKINNELL: (From videotape.) The economy is adding over a million jobs a year. And what this survey says is we can expect that to continue into 2005.

MR. MCLAUGHLIN: McKinnell's optimism was supported by Friday's government figures -- 262,000 jobs added in February, the highest in four months. And the jobs were across a broad range of industries -- construction, manufacturing, business services, retail; also, sales up, worker productivity up; also profits strongly up.

Question: Is this the beginning of the business turnaround we've all been waiting for? Pat Buchanan.

MR. BUCHANAN: John, certainly the United States economy is doing extremely well as compared, for example, to the second and third economies on earth, the Japanese and the Germans, both of which had fourth quarters last year of negative growth.

So there's good news in the American economy. The sales are terrific. Employment is up. But I was just in Michigan. They lost 8,000 more manufacturing jobs. And there are two clouds -- or we are in a mine field, John, let me put it that way. The trade deficit and the budget deficit are now combined over 10 percent of GDP. The American people have never been more indebted. But clearly I think the balance of the news is favorable. But I would keep an eye on those things and also the housing bubble.


MS. CLIFT: It's hard to find something negative to say in those numbers that you just put on the screen, but I managed. The economy looks good except for all of these lingering problems -- a gargantuan trade deficit, unsustainable debt, oil prices over $50 a barrel and likely to go higher. And when you look at that picture, I feel like we're in a twilight zone here when it comes to economics, that it's really hard to predict where this is going with any certainty. We haven't been here before.

MR. MCLAUGHLIN: Okay. An additional note: Both the Dow and the Standard & Poor's 500 both closed at their highest levels since the summer of 2001 on Friday.

Tony, don't forget we have Mort here, who's going to tell us what it really means.

MR. BLANKLEY: I bow to his deep pockets. (Laughter.) But look --

MR. MCLAUGHLIN: Don't we all.

MR. BLANKLEY: The investment --

MR. ZUCKERMAN: I accept the compliment.

MR. BLANKLEY: The fact that this is now an investment-led expansion is very important, because that's what creates higher productivity, which is more total wealth in the country. In the last couple of years since the recession, it was a consumer-driven recovery, and it was good to have it. But this is what builds the economy more substantially.

Now, Pat's obviously right. There are elements out there that are disconcerting. But keep in mind that the long-term interest rates are surprisingly low, given these deficits that Pat correctly talks about.

MR. MCLAUGHLIN: I want to play out a little bit Pat's scenario: U.S. hot, Europe not. The upbeat Business Roundtable report coincided with a dismal economic picture in Europe, says the Financial Times. A dismal European economy could mean trouble here in the U.S. The outlook for the Euro zone has been slashed to 1.6 percent for next year by the IMF. Japan is officially in recession. Why does this hurt us, Mort?

MR. ZUCKERMAN: Well, I'm not sure that it does. In fact, part of the reason why Europe is in trouble is because the Euro has appreciated so much that their exports are no longer as competitive as they were, and our exports to that part of the world are competitive.

In addition to that, because of the good news about the economy, a lot of European capital and indeed Japanese capital is coming into the United States. So in the short run, I'm not sure that it really hurts the American economy. It does hurt the European economy and it does hurt Japan because of what's happened to their dollar and their export-driven and export-led economies. So they're having more trouble than we are.

MR. MCLAUGHLIN: What's your level of optimism about a business turnaround having now occurred?

MR. ZUCKERMAN: Well, I think the business turnaround occurred last year by a good margin. I mean, if you're talking about a 4 percent plus growth in GDP, when you think about the fact during the 1990s boom years it grew at 3.2 percent, we already have the turnaround.

What may be happening this year, as Tony points out, A, you've had a turnaround in capital investment, which is a big part of it, and B, if the employment numbers continue to go the way they are, we will have the biggest increase in employment that we've had in four years.

You had 260,000 new jobs in the last month. And you will have an economy where the retail sales will be sustained by growth in employment and in wages. Wages are up. Employment is up. Inflation is well under control. Interest rates are relatively low. I think we're heading into a very, very strong economic year.

MR. MCLAUGHLIN: What are the dark spots?

MR. ZUCKERMAN: Well, the dark spots --


MR. ZUCKERMAN: Oil is a big one. I mean --

MR. MCLAUGHLIN: It could go to $60.

MR. ZUCKERMAN: It could go to $60. But again, oil has dropped from being 8 percent of our economy down to under 3 percent. So it doesn't have that big an impact, and certainly not what it used to have. I think the biggest one is the fear that the current-account deficit, and particularly the budget deficit, could really ripple through the economy. You saw where the Bank of South Korea stopped buying dollars. And it just sent the whole financial --

MR. BUCHANAN: One hundred and seventy points on the Dow.

MR. ZUCKERMAN: Yeah, in one day.

MR. BUCHANAN: Just like that.

MR. MCLAUGHLIN: What about inflation? Any inflationary worries?

MR. ZUCKERMAN: Not at this point. Not at this point. If you take out food and energy, the inflation rate is literally under one and a half percent.

MS. CLIFT: Didn't Alan Greenspan, the great oracle, utter the word "stagnation" again this week? Not that I take anything he says with any credibility anymore.

MR. BLANKLEY: You know, Clinton appointed him.

MS. CLIFT: He deplores -- maybe he was better back then. (Laughter.) He deplores everything he blessed. He blessed the tax cuts. Now he's saying --

MR. MCLAUGHLIN: Did you see that the minority leader of the Senate called him a political hack?

MR. BUCHANAN: Well, John, look --

MR. MCLAUGHLIN: Does that summarize your views?

MS. CLIFT: I think that was a rare burst of truth uttered in Washington.

MR. BUCHANAN: The real problem, I think, is I believe deep in the American economy there are real structural problems. This economy is changing. Retail sales are great, but those manufacturing jobs, those factories are going out to China. There's no doubt about it; as the dollar goes down and the Chinese currency goes down, the Europeans are in the worst shape possible. Who is that great --

MR. MCLAUGHLIN: I believe totally in what Mort had to say, because I see he's on the cover of Forbes. Are you going to write out a big check to promote the flat tax for Steve Forbes?

MR. ZUCKERMAN: It's a wonderful magazine, I have to tell you; that great journalistic integrity and insight.

MR. MCLAUGHLIN: I see that you've got some office space that you haven't rented.

MR. ZUCKERMAN: Very, very little, John. With your credit, though, we could find a small amount of space for you.

MR. MCLAUGHLIN: Why don't you give me a deal, because my digs are cheesy.

MR. ZUCKERMAN: Well, absolutely. I mean, I think you definitely should. Given your income, you can afford a lot better space if that's the case, John.

MR. MCLAUGHLIN: Are you going to get the contract for building a new Pennsylvania Station in New York?

MR. ZUCKERMAN: I don't know. We're one of the finalists. It's very difficult to tell at this --

MR. MCLAUGHLIN: Well, what do you hear? Is your ear to the ground?

MR. ZUCKERMAN: We wouldn't know. Based on merit, of course, we would probably win.

MR. MCLAUGHLIN: Okay, exit question: Will there be a hiring boom in 2005, yes or no? Pat Buchanan.

MR. BUCHANAN: I think we're going to do well for the next six months.


MS. CLIFT: I agree, and it's going to be spurred by Mort. (Laughter.)


MR. BLANKLEY: We're going to have sustained growth, 200,000 a month, I think, in that vicinity, for the next six to 10 months.


MR. ZUCKERMAN: I think we'll have over 2 million jobs created in the year 2005. And by our standards, that's a hiring boom.

MR. MCLAUGHLIN: Two hundred thousand?

MR. ZUCKERMAN: Two million jobs --

MR. MCLAUGHLIN: Two million?

MR. ZUCKERMAN: -- for the year, over the year.


MR. ZUCKERMAN: Absolutely.

MR. BUCHANAN: That's what Reagan did for eight years.

MR. MCLAUGHLIN: I have to go along with Mort. When we come back, the noose tightens on Syria. Will Syria capitulate?


MR. MCLAUGHLIN: Issue Two: Iraq's murderous week.

Over a month has elapsed since elections were held in Iraq. Yet violence rages, reaching a crescendo this week with the car-bomb massacre of 125 Iraqis and over 130 wounded, the bloodiest act of terror since the war began almost two years ago.

Angry Iraqis poured into the streets protesting the bombing and the lax security and demanding the resignation of officials. In Baghdad on Tuesday, a Kurdish judge on the tribunal that will try Saddam Hussein was shot to death. His son was also killed.

Insurgent attacks across Iraq have been so frequent and so ferocious that interim Prime Minister Allawi has extended the state of emergency through the end of the month. U.S. military dead in Iraq, including suicides, has crossed the 1,500 threshold; U.S. amputeed, wounded, injured and mentally ill, all now out of Iraq, 35,850; Iraqi civilian dead, 107,200.

These numbers are taking their toll at home. In Vermont, a local revolt: 48 towns passed a resolution this week that opposes further sending Vermont's National Guard troops to Iraq. Vermont has suffered the highest per capital death rate of this war. And the resolution demands Vermont's lawmakers to assess whether Iraq impairs the Guard's readiness to handle crises at home.

"I don't want to wake up some morning and look out my window and see mushroom clouds. I want my National Guard here in this country." So said one Vermonter to the Washington Post. The resolution also calls on the White House to start bringing U.S. troops home.

Italian journalist Giuliana Sgrena was released from captivity on Friday after spending a month as a hostage in Baghdad. On her way home, a U.S. armored vehicle fired on her car, wounding her and killing her Italian secret service escort. It was an accident.

Question, multiple choice. Assess the state of the Iraq insurgency. Is it, A, on the ropes; B, somewhat declining; C, holding steady; D, getting bigger; or E, expanding rapidly? Tony Blankley.

MR. BLANKLEY: Well, it's a bit of a lot of those things. The most disturbing element is that the Baathists may have infiltrated a fair amount of the government, the Iraqi government, which we're seeing evidence of by their anticipating where government officials are going. So that's on the bad side for us.

On the good side, there are apparently some pretty credible negotiations with other elements of Baathists who may want to surrender their guns and join the government. That's on the good side. They seem to be sustaining about the same level of violence, although less against Americans now than against Iraqi civilians.


MS. CLIFT: The rate of American casualties has actually gone down somewhat. But a lot of Iraqis are dying. And I think there is really almost a sense of optimism about Iraq in this country. I'm not sure the Iraqis share that. I think the images of the election are still carrying forward and the other developments in the Middle East, democracy seeming to take -- emerging in various places. I think people have a sense that maybe we're on the right course there. But if the dying doesn't stop --

MR. MCLAUGHLIN: The polling says 53 percent on the right course. The bad news is that it's still around low 40s whether or not -- to the extent that this is a good course of action; that is, going into Iraq at all.

MR. BUCHANAN: The incidence of violence --

MR. ZUCKERMAN: The original decision.

MR. MCLAUGHLIN: The original decision is well below 50 percent.

MR. ZUCKERMAN: Forty-seven percent are against the original decision. But the support for today is over -- it's around 53, 54 percent.

MR. MCLAUGHLIN: Yeah. What I want to know is --

MR. BUCHANAN: Let me talk to this, John. Look, I think the incidence of violence used to -- it was 80 to 100 a month. It's now gone back to 50 or 60. They're not killing Americans.

I think, post the election, a good thing is happening. There is no argument that the insurgency has. They have no political agenda, and they know it. And the country knows it. They're just killing people. And so I think this idea of reaching out to the elements in the insurgency who simply want us out of there is a workable strategy.

MR. MCLAUGHLIN: What about the Vermont phenomenon, the 48 towns? Is that a predictive event, do you think?

MR. ZUCKERMAN: I think for Maine it is. (Laughter.)



MR. MCLAUGHLIN: It will not spread?

MR. ZUCKERMAN: As Vermont goes, so goes Maine. No, I don't think it'll spread; quite the opposite. I think the election itself, in a sense, rebuilt, to some extent, the bond, such as it is, between American public support for what we're doing in Iraq and the Iraqis. I think there is a sense that there is progress being made in the direction of democracy. Therefore I think --

MS. CLIFT: The phenomenon --

MR. MCLAUGHLIN: Wait a minute. I've got a question.

MR. ZUCKERMAN: That's all I'm saying. I don't want to overstate it, but I don't think there is any national call or national mood to pull out.

MR. MCLAUGHLIN: Do you think the press has now relegated Iraq to page six or seven or beyond, Eleanor?

MS. CLIFT: It is disturbing that the deaths are often in a little tiny box on page A-18, and Iraq has become --

MR. MCLAUGHLIN: Popular attention has been --

MS. CLIFT: -- a bit like wall paper. And frankly, I'm surprised that there hasn't been more of an outcry against the abuse of the National Guard and the Reserves and the way they've been used. But I think where it is spread, where the revolt is spreading, is the fact that they can't recruit people to join in the future. And that's a long-term problem.

MR. MCLAUGHLIN: Okay, Syria's President Bashar al-Assad went to Riyadh this week to confer with Crown Prince Abdullah of Saudi Arabia, where the de facto Saudi ruler told Bashar that Syrian troops must withdraw from Lebanon. Also President Bush on Thursday said that Syrian troops should be out of Lebanon by the time elections are held in May.

Question: Have his fellow Arabs now almost totally, by the Saudi action as indicative, isolated Bashar?

MR. ZUCKERMAN: Absolutely. You have Egypt calling for Syria to withdraw. You have the Jordanians. You have the Saudis. You have not just the United States; France, which is a long-time ally of Syria, calling for the withdrawal of Syrian troops.

But the most important part is, on a multi-ethnic basis, the Lebanese people are no longer afraid of Syria. They're willing to stand up there against the Syrians in a way that was unprecedented until this time. Walid Jumblatt --

MS. CLIFT: This is --

MR. ZUCKERMAN: Just a minute. Walid Jumblatt, who's the head of the Druze, okay --


MR. ZUCKERMAN: -- his father was killed by the Syrians. He then became a supporter of Syria. He has now publicly stated that they're going to stand up against the Syrians. This is unprecedented for Lebanon, and I don't think that Syria can stay there. They no longer have a tenable position.

MS. CLIFT: The Syrians have --

MR. MCLAUGHLIN: Yeah. Hariri was beloved and he rebuilt Beirut, and the Arab world has turned against Syria. Do you think we're going to be satisfied with pulling troops out of Syria, Eleanor? Or do you think this administration wants regime change in Syria?

MS. CLIFT: Well, I don't think this administration can maneuver the kind of regime change they would like. And they're calling for diversity and they're championing diversity and saying there should be no foreign influence. The most popular political party in Lebanon is Hezbollah, which we consider a terrorist organization. And they believe an Islamic --


MS. CLIFT: Excuse me. This may come under the heading of "Be careful what you ask for; you may get it."

MR. MCLAUGHLIN: Also the French believe that Hezbollah is a legitimate political entity in Lebanon.


MR. MCLAUGHLIN: Exit question: Will Syrian troops be out of Lebanon by May?

MR. BUCHANAN: They're going to be out of Lebanon by May, John. And when they go, it is such a blow to Assad, there's a real danger his regime could collapse, because what is the argument for a dictator if he can't control what he's got?

MR. MCLAUGHLIN: You think he could be the victim of a palace coup?

MR. BUCHANAN: I certainly do.


MS. CLIFT: Yeah, the troops will be out of there. And actually, an administration official was quoted anonymously saying Syria is a dictatorship without a dictator, because Assad is so weak.

MR. MCLAUGHLIN: We should remember that the Syrian government turned over the brother of Saddam Hussein. When, this week?

MR. ZUCKERMAN: Half-brother.

MR. MCLAUGHLIN: Half-brother -- last week. And that was a coup, and that will lead to more intelligence.

MR. BLANKLEY: Yeah, look, Pat's right. I mean, they are going to pull out soon. It is going to destabilize the regime. And I was talking with a leader of the Syrian opposition, and they're now kicking up their efforts, which had been at a pretty low level. They're now kicking it up because they think there may be an opportunity --

MR. MCLAUGHLIN: If there is a coup in Syria, we may rue the day that that takes place, because the right-wing old guard may take over. Maybe we're better off with Bashar.

MR. ZUCKERMAN: Bashar Assad is an Alowite. They are 12 percent of the Syrian population. That tribe has taken over everything in Syria. The rest of the country wants them out. If we can get them out -- if the fear factor disappears, they can be forced out. That would be a great move for the West.

MR. MCLAUGHLIN: Okay, the troops will be out by May. And there go some of the troops now. (Laughter.)

Issue Three: Sinn Fein Equals IRA.

St. Patrick's Day is around the corner, but Gerry Adams, famed leader of Ireland's Sinn Fein party, for the first time in 10 years will not be here to celebrate with the U.S. president. The White House withdrew its annual invitation to Adams last week because of published ties to the IRA.

Those allegations were bolstered by Irish Justice Minister Michael McDowell, who declared this week that Sinn Fein and the Irish Republican Army are, quote, "a single entity, which terms itself the Republican movement. It has a single leadership. The entire movement, including Sinn Fein, regards that leadership as the authentic source of political legitimacy on this island. Its decisions are law. Its murders are mere executions," unquote.

The belief that Sinn Fein and the IRA are one and the same was confirmed by former Irish Prime Minister and current European Union Ambassador to the United States John Bruton.

(Begin videotape.)

MR. MCLAUGHLIN: Is Gerry at the top rungs of the leadership of the IRA?

MR. BRUTON: Yes, because people close their eyes to it, because they're hoping that by closing their eyes to the reality that we have an organization, Sinn Fein, which is joined at the top with the IRA, that by closing our eyes to that, we might get them to give up. But unfortunately, they haven't given up.

(End of videotape.)

MR. MCLAUGHLIN: What's the genesis of Adams being disinvited to the White House? It had to do with a murder in a pub. Do you know?

MR. ZUCKERMAN: Well, it had to do with a murder in a pub, and the fact is that they also robbed a bank of some 26 and a half million pounds, $53 million. And they did this while they were negotiating with the British. The British have really finally lost patience with Gerry Adams and the leadership of Sinn Fein. And I'm sure that conversation between Tony Blair and George Bush was, "Hey, disinvite this guy. We are going to have" --

MR. BUCHANAN: The key thing, John --

MR. MCLAUGHLIN: Wait a second. The murder of the man named Robert McCartney in a gutter outside a Belfast pub -- McCartney went to the aid of a friend who a local IRA commander believed had insulted his girlfriend in a pub. One of the IRA thugs cut the friend's throat. McCartney tried to shield the friend, but the IRA members then turned on him and killed him. Now, the five sisters of whom -- McCartney?

MR. ZUCKERMAN: McCartney. Not only did they kill McCartney, but they threatened everybody in the pub, that if they talked to the law, they would kill them. And the five sisters said -- they went and talked publicly. And now you really have the -- even Gerry Adams is forced to say, "We are going to disavow the people who killed McCartney."

MR. MCLAUGHLIN: Pat, what do you --

MR. ZUCKERMAN: But it's another way to discredit --

MR. MCLAUGHLIN: Wait a minute, I want to ask Tony this. What do you think of the ambassador from the European Union saying on air that Sinn Fein and the IRA are one and the same?

MR. BLANKLEY: This is an amazing event, because the larger politics here in America is that with 38 million Irish-American voters, both Democrats and Republicans have been hesitant to make this statement. Now that you've got this very prominent Irish gentleman making this statement, it's possible to disinvite. The British have always wanted Adams not to be recognized here in the United States. But the Americans, both Clinton and Newt Gingrich, when he was speaker, respected the 38 million Irish-American voters.

MR. MCLAUGHLIN: I should point out to remind people that Bruton was prime minister after Haughey and before Ahern.

MR. BUCHANAN: Tony's got the key. When the Irish leadership themselves provide cover for the British and they say Adams and that other fellow, Martin McGuinness, these guys, IRA and Sinn Fein, are one, that undercuts the IRA completely. It is a very courageous thing, frankly, for an Irish --

MS. CLIFT: I also don't think President Bush's radar screen is big enough right now to deal with Northern Ireland. And this was an easy --


MR. MCLAUGHLIN: Give me a quick one-word answer. Did Bush do the right thing in disinviting Adams? Yes or no?

MR. BUCHANAN: Yes, he did.

MS. CLIFT: Yeah.


MR. ZUCKERMAN: Yes, absolutely.

MR. MCLAUGHLIN: Yes, definitely. We'll be right back with predictions.


MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Wolfowitz will not get the World Bank job. Carly Fiorina will not get the World Bank job, the Hewlett-Packard lady. A friend of mine, Peter McPherson, is in contention for the World Bank job.

MR. MCLAUGHLIN: What job did he hold?

MR. BUCHANAN: He held AID in the Reagan administration.


MR. BUCHANAN: And he was also in Iraq for Bush.


MS. CLIFT: The Republican Congress got class-action reform, but they will not get medical malpractice reform.


MR. BLANKLEY: The Republican Congress will get medical malpractice reform. They'll get asbestos reform. They'll get bankruptcy reform. And they're going to pass a budget resolution before the mandatory date, for the first time in years.


MR. ZUCKERMAN: Sinn Fein may be too weak to make a deal, but they're strong enough to block anything happening in Ireland -- between Ireland and England in terms of making progress there.

MR. MCLAUGHLIN: You don't think that what's happened will effectively neutralize them?

MR. ZUCKERMAN: His popularity has dropped dramatically from 51 to 31 percent; Gerry Adams. Nevertheless, he still has that core.

MR. MCLAUGHLIN: The SEC lawsuit against Martha Stewart will result in a consent decree which, compared to what Stewart's gone through, is like going to heaven.

Don't forget, you can watch the McLaughlin Group on streaming video worldwide at Next week: Will the reorganized U.S. intelligence architecture stabilize? Bye bye.


MR. MCLAUGHLIN: Issue Four: Americans Outlived.

First, the good news: Americans are living longer than ever; women, 80.1 years, men, 74.8 years; on average, 77.6 years for all Americans. The bad news: The populations of two dozen countries live longer than Americans: Japan, 81.9 years on average; Monaco, 81.2; Switzerland, 80.6; San Marino, 80.6; Australia, 80.4.

Besides these five, an additional 19 countries have longer life expectancies than we do: Andorra, Austria, Belgium, Canada, Finland, France, Germany, Greece, Iceland, Israel, Italy, Luxembourg, Malta, Netherlands, New Zealand, Norway, Singapore, Spain, the United Kingdom; then, at the bottom of that list, the United States.

What's the principal reason that all these other 24 nations live longer?

MR. BLANKLEY: Bad record-keeping. No, no --

MR. MCLAUGHLIN: Bad record-keeping. Quickly.

MR. BLANKLEY: I'm kidding. No, we have an underclass and they don't have an underclass.

MR. MCLAUGHLIN: What does that mean? That's almost there. What does it mean?

MR. BUCHANAN: Americans of Norwegian descent live longer than Norwegians.

MR. MCLAUGHLIN: That's one factor.

MS. CLIFT: Obesity is a big culprit. We're getting fatter than --

MR. MCLAUGHLIN: Some of those nations' population is just as obese as ours. What's the reason, quickly?

MR. ZUCKERMAN: We have a large immigrant population and no health care --

MR. MCLAUGHLIN: That's not it either. The reason is we do not have health insurance for 45 million people.


MR. MCLAUGHLIN: That's the reason. The correlation is where there is health insurance, the people live longer. And it's usually socialized medicine.