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MR. MCLAUGHLIN: Issue One: Iraq Price Tag.

PRESIDENT GEORGE W. BUSH: (From videotape.) These aren't joyous times. These are challenging times and they're difficult times, and they're straining the psyche of our country.

MR. MCLAUGHLIN: Not only the psyche, Mr. President, but the pocketbook.

Iraq is taking its toll on several fronts. On the dollar cost of the war, the comptroller general of the United States, David Walker, says this. DAVID WALKER (U.S. comptroller general): (From videotape.) The current costs are estimated at about $1.5 billion a week.

MR. MCLAUGHLIN: That $1.5 billion does not include the ancillary war costs. The comptroller general describes these costs as the tail.

MR. WALKER: (From videotape.) The tail is the cost associated with refurbishing, reconstituting our equipment, transferring the force, costs associated with disability and health care for those who have been disabled and wounded in battle.

MR. MCLAUGHLIN: These tail costs are estimated to be $400 million a week. That means that the combined primary cost and the tail cost of the war in Iraq add up to $1.9 billion a week, $7.6 billion a month and $271 million a day. Based on these figures, the total cost of the war today is $311 billion.

Question: Is Iraq a waste of money? Mort Zuckerman.

MR. ZUCKERMAN: Well, I'll tell you, this is not even close to what it's really going to cost us. The estimates are it's going to exceed a trillion dollars. And that's not the only cost. It is also going to have a tremendous cost in terms of the confidence of the American public in the political leadership of the United States, the military leadership, the CIA, the confidence of the rest of the world in the United States. So the costs are just going to be enormous.

And I think what most people in this country have concluded is that whatever the justification for the war, particularly since most of these costs were incurred after the military campaign, when there is a widespread feeling that huge mistakes were made in terms of the execution of the post-military phase, I think most people have concluded the costs do not justify the war.

MR. MCLAUGHLIN: Two-thirds of the public are against the war, Eleanor.

MS. CLIFT: Well, it's a waste of money in the sense that the mission is unclear. And if it is the grandiose goal of transforming the Middle East and turning it into a democracy utopia, it's questionable whether that can ever be accomplished, no matter how much we spend and how long we stay.

Thomas Ricks, who has an excellent new book out called "Fiasco" -- he's the Washington Post reporter who covers the Pentagon -- says that to leave behind anything that looks somewhat stable in Iraq will take 10 to 15 years, and that's the optimistic scenario.

Past presidents have raised taxes to pay for wars. This president has hidden the cost of this war, kept the cost off-budget, sending up supplementals, not really being up front about what's required of the military, putting an extraordinary burden on a volunteer army. Now Marines are being called up, involuntary call- ups. MR. MCLAUGHLIN: Multiple. Multiple, one after another.

MS. CLIFT: And this president cuts taxes, and the top 1 percent and the Halliburtons of the world party on while a very small number of people pay an extraordinary burden.

MR. MCLAUGHLIN: Reassure us, will you please, Tony? (Laughter.)

MR. BLANKLEY: Look, the American economy produces $11 trillion worth of economic activity per year. We can afford to spend on a war that is in our national security interest, but we shouldn't spend a penny on something that's not in our national security interest.

The question isn't how much it's costing. The question is, what is, from this point forward, in our national security interest? If it's to cut and run, then we're wasting money every day. If, on the other hand, as I believe, and I think most sensible people believe, that if we cut and run now rather than continue, it will be very risky for the United States and the world. Therefore, it's a bargain because it has to be done. We can afford what we have to do. We shouldn't waste a penny on what we don't have to do.

MR. MCLAUGHLIN: I'll let you in in a minute, Jay. I want to rubber-hose Tony with this and see if this works.

Okay, homeland neglect. The money spent on Iraq is not being spent on the United States homeland security. The most vulnerable targets here are airplanes and airports.

Item: Liquid explosives; no system detection.

Item: No integrated watch list to exclude potential terrorists.

Item: No puffer machines to identify tracer explosives.

Item: No biometric screening program, called, quote-unquote, "essential" by the 9/11 commission.

Item: No adequate air cargo screening or inspection system; also the port system, the other most vulnerable target in the U.S., at which a tiny percentage of containers are screened; also chemical plants, greatly undersecured.

What do you think, Jay, about this Iraq war? Is Bush derelict in his duty to protect America first?

MR. CARNEY: The thing that is so troubling to me is that, as Tony points out, we pay any price, if we have the money, for the right policy to make America safer.

The question is, is this the right policy? And does the president and the political leadership understand what it's doing?

And that press conference that we pulled a segment from earlier was frightening to me in the lack of sophistication in the president's arguments when he argued that nothing is going to change and we will stay the course; his argument that Hezbollah and Hamas and the terrorists in Iraq were terrorists who wanted to undo democracy.

With a nod to Fred Kaplan at Slate, Hezbollah is part of the government, the elected government in Lebanon. Hamas is part of an elected government in Gaza and in the Palestinian Authority. The notion that terrorism and democracy are opposites is simply a fallacy, okay.

The other thing is, the other day, a few weeks ago, I sat down and interviewed Condi Rice with a colleague of mine, Elaine Shannon, and in making a passionate argument for the greater good of the Iraq war and how change is hard and things don't come easy, she tried to make a comparison with Iraq to post-World War II Germany and Japan and said nobody thought in 1946 that those countries would become like they are today. And my jaw dropped. We're not in 1946. We are not -- 2006 in Iraq is not equivalent to 1946 in Germany and Japan. War was over. The war still rages in Iraq. There is no vision of Iraq that --

MR. BLANKLEY: Let me make a couple of points. He's saying the president said there will be no change. And I've certainly, and others from the right, have called for change -- more troops. But there has been change, although he didn't mention it in this particular press conference. They put about 3,500 more troops into Baghdad, and the amount of violence has dropped by about 40, 45 percent.

That may be temporary, but the fact is there's some evidence that putting more troops in Anbar, up river, and in Baghdad can suppress, at least temporarily, and maybe beyond, violence. So there can be adjustments to policy to be more successful.

As far as your list of spending programs on homeland security, almost every one of them I've editorialized for for years. I agree they should be spent. There's no limit, admittedly, to what you can do on homeland security. But as much as we do on homeland security, we have not made ourselves safe until we have defeated terrorism around the world. We can only make ourselves a little bit less dangerous.

MR. MCLAUGHLIN: Okay, McCain unchanged. Why didn't President Bush level with us on Iraq?

SEN. JOHN MCCAIN (R-AZ): (From videotape.) "Stuff happens," "mission accomplished," "last throes," "a few dead-enders." I'm more familiar with those statements than anyone else, because it grieves me so much that we have not told the American people how tough and difficult this task would be.

MR. MCLAUGHLIN: The days of the easy sell on Iraq are over. Isn't that what McCain is telling us by his --

MR. ZUCKERMAN: That's putting it mildly, John. I mean, we're way past that. I mean, the fact is that we overestimated the outcome and underestimated the problems in getting to those outcomes. And now we're paying the price, and this price is going to be gigantic.

MS. CLIFT: The administrative strategy, as best as I can determine it, is to put this unity government in place and to train the Iraqis to take over so Americans can leave.

The government is battened down in the green zone. The minute Americans leave, that government would collapse. And we appear to be training the Iraqis to go back into their sectarian communities and kill each other. So the two main pillars of the White House strategy are not working.

MR. MCLAUGHLIN: I've got a question --

MS. CLIFT: And if they stay the course, that's not a strategy.

MR. MCLAUGHLIN: I want to ask Jay this, because as bureau chief in Washington, he's got all kinds of channels open to him.

Do you think that this is going to be an albatross around the neck of the Republicans in the upcoming election, because it looks as though Bush is neglecting homeland security, which should be his dominant objective?

MR. CARNEY: I think Iraq is an albatross, no question; the biggest, biggest issue for Republicans, and a problematic one this fall.

Homeland security is a good talking point for Democrats, the failure to spend adequately on homeland security. However, people will vote against Republicans if they're really mad about the war, but they won't vote for more homeland security spending unless there's an attack. MR. MCLAUGHLIN: Do you think that he's lost the magic touch that he had in the polls on the terrorism issue?

MR. CARNEY: It appears to be the case, yes.

MR. MCLAUGHLIN: Fifty-one percent don't link Iraq with terrorism.

MR. BLANKLEY: Let me make a couple of quick points. One, his poll numbers are up five points based on the British foiling of the terrorist ring. So terrorism still works for Bush.

But let me go back to your segment. You got Senator McCain out.


MR. BLANKLEY: I think McCain has undercut himself with this.

MR. MCLAUGHLIN: No, he hasn't. He wants the independents' vote, and he knows where the independents are.

MR. BLANKLEY: Let me explain to you. He's supposed to be the straight-talking express. He's made the same statements he's quoting against Bush people earlier. He's had three years to make these points when it's been contended here and around the country. He's never spoken it. Now he's pulling a Hillary Clinton and trying to move himself to sort of the half-antiwar side without quite opposing the war.

MR. MCLAUGHLIN: Do you think he lost votes today?

MR. BLANKLEY: He looked cynical himself. Whatever the truth of the matter, he personally looked cynical.

MR. MCLAUGHLIN: The hard-liners like you are getting fewer and far between, and he knows that. And he needs the independent vote.


MR. ZUCKERMAN: Well, it's not just the war in Iraq that's the albatross. It is the sense that we haven't managed it competently, that this administration is not a competent administration in the management of the war, any more than they were with Katrina. That to me is the one thing that underlines this. People have lost confidence in the competence of this administration.

MR. MCLAUGHLIN: Is there now a civil war?

MR. ZUCKERMAN: In Iraq? It's a low-level civil war. I don't know that it's the maximum. As long as we're there, I don't think you're going to have the sort of all-out civil war -- MR. BLANKLEY: You want to see a civil war? Wait till we leave.

MR. MCLAUGHLIN: Did you see them firing into that crowd?

MR. ZUCKERMAN: Of course. I mean, that's been going on at all levels.


MS. CLIFT: Well, they caught McCain with a piece of videotape saying early on that he felt we'd be greeted as liberators in Iraq. So they got him for talking out of both sides. But he has been consistent in saying we need more troops over there.

And I think people generally have more confidence in a John McCain than they do in all of the spin that's come out of the White House.

MR. BLANKLEY: I've agreed with him for years on that point.

MR. CARNEY: Well, more than a year ago Senator McCain called for Don Rumsfeld's resignation. So he has been critical, while at the same time -- and this, I think, could hurt him -- being one of the most ardent supporters of the war. And he is, as Tony says, in some ways trying to have it both ways. And the sense of which the unpopularity of the war becomes an issue in 2008, this could be a problem for him.

MR. MCLAUGHLIN: He needs the independents. They're critical for him.

MR. CARNEY: Absolutely.

MR. MCLAUGHLIN: Okay, the human toll: U.S. military dead in Iraq, including suicides, 2,617; U.S. military amputeed, wounded, severely injured, injured, mentally ill, all now out of Iraq, 62,800; Iraqi civilians dead, 130,290.

Exit question: Has the Iraq war made America safer from terrorism, yes or no? Be brief, please, Mort Zuckerman.

MR. ZUCKERMAN: Well, it's probably made us safer from state terrorism but not from terrorism in general, because I think we've stimulated a lot of terrorist development out of that war.


MS. CLIFT: Iraq wasn't practicing state terrorism. They were oppressing their own people, but they weren't practicing state terrorism. It has not made us safer. And I think the polls bear out that most of the American people believe that Iraq has nothing to do with the broader war against terror.

MR. MCLAUGHLIN: Well, part of that government is fielding militias. Is that what you're referring to? MR. ZUCKERMAN: And, look, the fact is, we have put the fear of God in some of these states in terms of what they will get involved in in the future.

MR. MCLAUGHLIN: Tony, what's the answer? Straighten us out.

MR. BLANKLEY: The answer is, as I said when I endorsed what Howard Dean said in 2004, that we're not safer; we're not going to be safer. To talk about safety at a time when radical Islamism is rising in the world is silly. We're going to be in extreme danger for a long period of time. And I don't think one moment here or there, one move, makes much difference.

MR. MCLAUGHLIN: What do you think?

MS. CLIFT: So Iraq makes no difference?

MR. CARNEY: I think we -- I think it's probably a net wash. We've probably inspired and created more terrorists but have terrified some state sponsors of terrorism. I think the question is, would we be safer if we hadn't invaded Iraq? And I think, of course, it's hypothetical. I think the answer is probably yes.

MR. MCLAUGHLIN: I think we're significantly less safe. I think we're feeding terrorism.

Issue Two: Political Potpourri.

Item: Hillary Burning.

He calls her one of the most polarizing personalities in American politics. "I fear that Senator Clinton has focused more on the negative and on attacking, as opposed to coming up with any positive solutions," unquote. That's what New York Republican Governor George Pataki says about New York Democratic Senator Hillary Clinton.

Pataki made the statements this week in New Hampshire, a key presidential primary state. Currently Pataki trails other presidential aspirants; Virginia Senator George Allen, former mayor of New York Rudy Giuliani, Arizona Senator John McCain.

Question: Can Pataki score points in New Hampshire by bashing Hillary? Tony.

MR. BLANKLEY: I don't think Pataki could score points if he was the only one in the field. (Laughter.) He has no chance at all. He's done a very poor job as governor. He's not a particularly good speaker. He's got no base in the party. And what he says or doesn't say about Hillary won't make any difference to Hillary or his campaign.

MR. MCLAUGHLIN: Eleanor. MS. CLIFT: I can't improve on that. (Laughter.) Governor Pataki's approval rating in New York is half what Hillary's is, and so he could only wish he could get some of that polarizing "umph" in his own persona.

MR. MCLAUGHLIN: Mort, isn't that totally out of character for Pataki to be criticizing anyone that way? You'll recall that he has --

MR. ZUCKERMAN: Excuse me?

MR. MCLAUGHLIN: I mean, he doesn't criticize --

MR. ZUCKERMAN: Have you been to New York? He can be very, very rough with this kind of stuff. And as his own political position has eroded in New York state, which it certainly has, his rhetoric has gotten tougher and tougher as a way of compensating for his weakness.

MR. MCLAUGHLIN: Well, he wasn't comfortable with attacks against Cuomo in 1994. Do you remember that?

MR. ZUCKERMAN: I remember it very well. He didn't need to attack Cuomo to win that election, okay. Cuomo defeated himself. But Pataki has really lost almost all credibility in New York state after now 12 years.

MR. MCLAUGHLIN: Item: Independents' day.

SEN. JOHN KERRY (D-MA): (From videotape.) And the fact is, Joe Lieberman is out of step with the people of Connecticut. I believe that he's just dead wrong with respect to the war.

MR. MCLAUGHLIN: Earlier this month, Democratic Senator Joseph Lieberman, a hawk on Iraq, lost his primary race to Democrat Ned Lamont, who now officially represents the Democratic Party in the upcoming November faceoff with Lieberman.

The very day that Lieberman lost the primary, he announced that he would run as an independent. Now fellow Democrats have turned on Lieberman, endorsing Lamont -- both Clintons, Kerry, Kennedy and Edwards, among others. And one prominent Democrat filed a complaint with the Connecticut secretary of state, demanding that Lieberman be kept off the November 7th ballot, accusing him of creating a, quote- unquote, "fake political party."

Question: This goes beyond that. Should Lieberman be expelled from the Democratic Party? I ask you, Jay.

MR. CARNEY: Absolutely not.


MR. CARNEY: Because any party should welcome members who believe different things. MR. MCLAUGHLIN: But he's going to --

MR. CARNEY: If Joe Lieberman stays in the race and squeaks out a victory against Ned Lamont and he is the difference between a Democratic minority and a Democratic majority, he will be embraced and loved.

But, having said that --

MR. MCLAUGHLIN: You're telling me that party membership means nothing?

MR. CARNEY: I think party membership means who you're going to vote for for speaker of the House or Senate majority leader.

MR. MCLAUGHLIN: He's running as an independent Democrat. What is that? What is that beast?

MR. CARNEY: Now you're going to the issue of Joe Lieberman's self-regard and sanctimony, which has always been an issue with Joe Lieberman, for example, when he refused to not run for re-election to the Senate even as he was a vice presidential candidate. He tends to --

MR. MCLAUGHLIN: He puts his career above his loyalties to his party.

MR. ZUCKERMAN: What a shock. What a shock, putting his personal career ahead of --

MR. MCLAUGHLIN: Well, I mean, he's going to dilute it for --

MR. ZUCKERMAN: He will not. He's going to vote with the Democrats in the Senate to keep control of the Senate, and that's all that the Senate Democrats are going to worry about.

MR. MCLAUGHLIN: The legitimate nominee ought to get the party's backing indisputably.

MS. CLIFT: The legitimate nominee --

MR. ZUCKERMAN: And they are getting it. The legitimate nominee is getting it.

MR. MCLAUGHLIN: In name only. It's pro forma backing they're getting; that's all.

MR. ZUCKERMAN: Of course it is. I couldn't agree with you more. MS. CLIFT: The Democrats have lots of other races they have to worry about. They're going to retain that seat, whoever wins. And Lieberman has been assured by the Senate leader, Harry Reid, that he will retain his seniority if he wins. So this is --

MR. MCLAUGHLIN: So you don't find any fault with his presence in the party and the party kind of going along with this?

MS. CLIFT: I think a lot of Democrats would prefer he didn't do this, but he's there. And, hey, pragmatism rules when you've got an election as close as this one.

MR. MCLAUGHLIN: He's thumbing his nose at the majority who voted in the Democratic primary --

MR. BLANKLEY: Let me just get into this.

MS. CLIFT: He's not thumbing his nose. He's saying that he wants to appeal to a broader electorate. And if he can pull it off, you know, more power to him.

MR. BLANKLEY: Let me say, John, I think this is a wonderful debate, and I'd like to see the Democrats debate this --

MS. CLIFT: Well, we're not debating it.

MR. BLANKLEY: -- whether he should be kicked out of the party all season. As a good Republican, I hope they do kick him out, because I think --

MR. MCLAUGHLIN: Do you think they have grounds for kicking him out? Has it ever happened?


MR. BLANKLEY: No, no grounds for kicking him out.

MR. MCLAUGHLIN: The Democrats are afraid to do anything.

MR. BLANKLEY: The Democrats aren't going to kick him out. But if they do, it would be wonderful, because he's probably going to get re-elected. He's a good solid hawk. I'd like to see him in the Republican Party.

MR. MCLAUGHLIN: So shameful.

Item: Monkey business.

SEN. GEORGE ALLEN (R-VA): This fellow over here with the yellow shirt, "Macaca" or whatever his name is, he's with my opponent. He's following us around everywhere. Let's give a welcome to "Macaca" here. MR. MCLAUGHLIN: At a campaign rally for his re-election bid, Virginia Republican Senator George Allen referred to a campaign worker as "Macaca." The Indian-American worker's name is S.R. Sidarth, and he's a campaign worker for Allen's Democratic challenger, Jim Webb. Sidarth has been dogging Allen, videotaping constantly everything Allen says and does. A macaca is a type of lemur. Senator Allen has apologized several times, saying the remark was unpremeditated. Senator Allen also apologized over the phone to Mr. Sidarth.

Question: Is "macaca" the political equivalent for George Allen of George Romney's comment about being brainwashed in Vietnam, meaning does it finish him off? Eleanor.

MS. CLIFT: I think it's a killer for his presidential chances, and it's hurting him in Virginia as well. I'd like to point out that videotaping your opponent is standard procedure in campaigns these days. That wasn't unusual. And what Allen has lost is he was presenting himself as a genial Reagan-like figure. And what we see there, aside from any racial slur, is a really mean streak. And Ronald Reagan would never have done that.


MR. MCLAUGHLIN: He was shoving the camera in his face.

MS. CLIFT: He wasn't shoving it in his face.

MR. MCLAUGHLIN: He was dogging him.


MS. CLIFT: That's done in campaigns all the time.

MR. BLANKLEY: Wait a second.

MS. CLIFT: He was in the room. He wasn't dogging him.

MR. MCLAUGHLIN: What about the fact that he made the word up on the spot? Would you say that?

MR. BLANKLEY: There is a huge debate about what "macaca" means.

MR. MCLAUGHLIN: Linguistics.

MR. BLANKLEY: In Italian and Tunisian, it's supposed to be a clown. In other languages it's nastier things. But to answer your question, the brainwashing incident came during the primary season for Romney. This is two and a half years before. It's an embarrassing moment. It's taken him a long time to kill the story, to make the apology sufficiently end it.

MR. MCLAUGHLIN: Do you think he's killed it? MR. BLANKLEY: It's petering out. The word's so funny-sounding that everyone likes to repeat the word.

MR. MCLAUGHLIN: Do you think it's in any sense excusable or understandable?

MR. BLANKLEY: It's understandable. It's sloppy politics.

I don't think it's a killer, but he's got to recover from it.

MR. MCLAUGHLIN: The young man is a Virginia-born American.

MR. CARNEY: Right.

MR. MCLAUGHLIN: What about this?

MR. CARNEY: Well, the problem, I think, is that it reflects on George Allen's judgment. I mean, he wants to play in prime time. And he should know, as he surely did -- I mean, as he said from the stage, "He's been following us around." He sees the guy with the videotape. What on earth is he thinking? And maybe he's not politically smart enough to be a serious --

MR. MCLAUGHLIN: Do you think he's too thin-skinned?

MR. CARNEY: Maybe, yeah, maybe he's a little thin-skinned.

MR. MCLAUGHLIN: Do you think this is going to hurt him one whit in Virginia, running for the Senate?

MR. CARNEY: Well, I think it has hurt him. I think it's given life to what was a moribund campaign by Jim Webb.

MR. MCLAUGHLIN: In Virginia? Do you think Virginians are concerned by this?

MR. BLANKLEY: How does "macaca" play in the Piedmont? (Laughter.)

MR. CARNEY: It's definitely tightened the polls. It means Allen's going to have to work harder, spend more money. And if the Democrats can take advantage of it, they can make it a race.

MR. MCLAUGHLIN: Mort, what do you think?

MR. ZUCKERMAN: Look, I think it has hurt him in Virginia. And it echoes, frankly, some of his earlier history in which he was on the border of seeming to be racist. This is all going to come back again. So I think it's definitely damaged him, and it does show he's not ready for prime time on a national scale. MS. CLIFT: He kept --

MR. BLANKLEY: He's never been racist.

MR. MCLAUGHLIN: What other mistakes has he made? What history of mistakes has he --

MR. ZUCKERMAN: Well, I mean, voting against the Martin Luther King holiday; Confederate flags. There's a whole history of that which was outlined in The New Republic which didn't make him look very good.

MR. BLANKLEY: That doesn't make him a racist. It makes him --

MR. MCLAUGHLIN: Let him finish.

MR. ZUCKERMAN: It makes him acceptable to --


MR. MCLAUGHLIN: That's not a bad list he put together.

MR. BLANKLEY: He's a Virginian. He has a Confederate flag. It's been a contentious issue in the South. Perfectly honorable southerners like to have the Confederate flag.

MS. CLIFT: He grew up in southern California. He's not a traditional Virginian.

MR. BLANKLEY: And he moved to become a Virginian.

MS. CLIFT: And even if you're a traditional Virginian, you know what the message sends if you --

MR. MCLAUGHLIN: Don't you think that he's fundamentally a likable fellow, George Allen?

MR. ZUCKERMAN: Absolutely.

MS. CLIFT: I actually think --

MR. MCLAUGHLIN: Absolutely he is -- absolutely. I think it'll blow over, but probably a little slowly.

Issue Three: Karr Crash.

Six-year-old JonBenet Ramsey was brutally murdered at home in Colorado 10 years ago.

JOHN MARK KARR (murder suspect): (From videotape.) I was with JonBenet when she died. MR. MCLAUGHLIN: Last week John Karr confessed to the murder, but his confession has been called into question.

Question: Is the media hyping this story because of its lurid qualities? Jay Carney.

MR. CARNEY: As opposed to? Of course it's hyping it because of its lurid qualities.

MR. MCLAUGHLIN: You're crowding out stories on the environment.

MR. CARNEY: We actually are not at Time. We haven't touched it. But, I mean, it is -- it got a lot of prominence for a lot of bad reasons 10 years ago. But the emergence of this potential --

MR. MCLAUGHLIN: You mean a pedophile living in Thailand?

MR. CARNEY: It's a textured story; very interesting.

MR. MCLAUGHLIN: What about you, Mort? You're another mogul in the publishing industry.

MR. ZUCKERMAN: The Daily News in New York finds that this is one of our most interesting stories. We broke the story about the fact that he's looked for a sex change. He's been calling plastic surgeons in Thailand. We have somebody in Thailand who has the real inside story.

MR. MCLAUGHLIN: Out of time. Bye-bye.