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THE MCLAUGHLIN GROUP

HOST: JOHN MCLAUGHLIN

PANEL:
PATRICK BUCHANAN, MSNBC;
ELEANOR CLIFT, NEWSWEEK;
DYLAN RATIGAN, CNBC;
MORT ZUCKERMAN, U.S. NEWS & WORLD REPORT

TAPED: FRIDAY, MARCH 2, 2007
BROADCAST: WEEKEND OF MARCH 3-4, 2007

.STX


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THIS IS A RUSH TRANSCRIPT.
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MR. MCLAUGHLIN: Issue One: Money, Money, Money.

Six hundred and thirty-two billion dollars -- that's how much investors lost when the Dow Jones plunged on Tuesday, the worst day of trading since September 11, 2001, five and a half years ago. At one stage, the Dow was down by more than 500 points. At closing, the loss registered 3.29 percent.

In Europe, the Frankfurt stock exchange, Euro First 300, was down 2.86 percent. Leading emerging markets were the hardest hit. Turkish shares were down 4.5 percent, Russia's RTS index down 3.3 percent, and Brazil's Bovespa down 6.6 percent.

Shanghai, where the sell-off started, was down 9 percent. In the U.S. Wednesday, Federal Reserve Chairman Ben Bernanke calmed the waters, telling Congress --

BEN BERNANKE (Federal Reserve chairman): (From videotape.) Taking all the new data into account, that there is really no material change in our expectations for the U.S. economy since I last reported to Congress a couple of weeks ago.

MR. MCLAUGHLIN: Later the chairman grew even more upbeat.

MR. BERNANKE: (From videotape.) There is a reasonable possibility that we'll see some strengthening of the economy sometime during the middle of the year.

MR. MCLAUGHLIN: This week financial markets swung wildly in volatile trading. In the U.S. and Europe, credit markets were exceptionally heavy for a fourth consecutive day.

Question: Will this volatility last? Pat Buchanan.

MR. BUCHANAN: I think it will, John. I think there's a real sense of people who are in the market that it's been going up, up, up, and we're about to have a major correction. I think it's like a herd of buffalo. You know, you get one pistol shot and they're all gone. And this pistol shot in Asia sent down the Asian markets. Then it went all the way around to the United States.

I think Americans are concerned about a lot of things. You know, the economy seems good. We've got -- the mortgages are in trouble. We've got this huge foreign debt people talk about. And you've got other problems. I think it's just a product of nervousness on the part of investors all over the world.

MR. MCLAUGHLIN: Eleanor, what prompted it?

MS. CLIFT: Well, I think it's not over yet, and it's been prompted by a variety of factors -- Alan Greenspan uttering the word "recession" in a private paid speech. Suddenly everybody thinks he knows something that the rest of us don't know; the Chinese government doing some manipulation of their stock market. That's a psychological factor in a country here where we think we're now governed by the people who hold our debt. So there was a number of factors that played into this.

But basically global finance is a black hole. You have too many investors chasing money that's almost free and very little accountability or way of controlling it. And so I think this -- we're going to see more of the same. And I think it could be very unsettling in terms of sending signals about the underlying weakness of the American economy in terms of the automobile industry, and there's another industry that's --

MR. MCLAUGHLIN: Well, I guess that just about exhausts the issue.

Okay, hold on, Dylan.

MS. CLIFT: I can continue. (Laughs.)

MR. MCLAUGHLIN: The maestro that she referred to, Alan Greenspan, former Federal Reserve chairman, said this. Quote: "When you get this far away from a recession, invariably forces build up for the next recession. And indeed, we are beginning to see that sign." That was on Monday that he uttered those words, the day before the market plunged.

On Thursday, two days after the plunge, Greenspan watered down his Monday recession statement. Quote: "It is possible we can get a U.S. recession towards the end of the year -- possible. But I don't think it's probable."

Question: Did Greenspan's remarks spark the global sell-off? I ask you, Dylan.

MR. RATIGAN: Absolutely not. It's unadulterated nonsense; not his comments, but it's media distortion and, for that matter, investor distortion of an observation of the obvious. It may rain tomorrow. A meteor may hit the earth. And yes, at some point we may go into a recession. It was because Alan Greenspan -- because of who he is, the nature of who the observer is very significant. But the actual observation was not.

MR. MCLAUGHLIN: What did prompt the sell-off?

MR. RATIGAN: Biggest run in the U.S. stock market, consecutive up months, since 1983. Stock prices have gone up 2,000 Dow points since June. You're up a lot. That's number one. So there's -- to your point, listen, the cattle would love a chance to get out of here a little bit. And the Chinese stock market took a hit, not because there's a problem in China but because there's a problem -- there's a perceived problem with speculation in the Chinese stock market, and that created the sell-off.

MR. MCLAUGHLIN: You mean the hot market in Shanghai thought that Beijing was going to cool off the market --

MR. RATIGAN: You got it.

MR. MCLAUGHLIN: -- through federal --

MR. RATIGAN: Yes.

MR. MCLAUGHLIN: -- federal legislation --

MR. RATIGAN: Yes.

MR. MCLAUGHLIN: -- regulation. Is that it?

MR. RATIGAN: Yeah. The concern was that the Chinese were going to say, "You can no longer borrow as much money as you want to speculate in the Chinese stock market," because it's almost tripled in a year.

MR. MCLAUGHLIN: Mort, this has been --

MR. RATIGAN: That's a good thing, by the way.

MR. MCLAUGHLIN: -- a tough week for you.

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: Are you still grieving?

MR. ZUCKERMAN: Win some, lose some.

MR. BUCHANAN: (Laughs.)

MR. ZUCKERMAN: I'm slightly ahead, John, this year.

MR. MCLAUGHLIN: How many millions did you lose?

MR. ZUCKERMAN: I don't count them, John. You know, you just breathe them in and breathe them out. It's very easy to live with it, you know. Whatever the problem is, you just sort of skate over it. And this, by the way, as was suggested, was not a real problem. In China, the Shanghai market is just for domestic Chinese. It had gone up 170 percent last year, another 12 percent in January, and the Chinese government was worried that there was going to be a bubble that was going to burst. And so they're trying to take it down.

MR. RATIGAN: You should clap.

MR. ZUCKERMAN: Right. It is actually going to prevent some of the problems that they were foreseeing. So I don't look at that as a negative. Now, the world took that signal for a while, because, as was said, all markets have been up dramatically for a long period of time. It's a modest correction. It doesn't have anything to do with anything serious happening in our economy, in my judgment. Our economy is still strong.

MR. MCLAUGHLIN: Mort, I think you're missing the point. The world is jittery. The world is jittery. And the holder of the card that is causing the jitters, the jack or the --

MR. BUCHANAN: It would be the ace, John.

MR. MCLAUGHLIN: The ace -- which ace?

MR. BUCHANAN: (Laughs.) Of spades. (Laughs.)

MR. MCLAUGHLIN: Ace of spades -- is China. Everybody's wondering about China. Maybe it could cause a meltdown or create a meltdown or become a meltdown.

MR. ZUCKERMAN: I think that's about as low a risk as you can have.

MR. MCLAUGHLIN: You don't think China is the joker in the deck?

MR. ZUCKERMAN: I do not. I do not. I think China is -- it's an organized economy, a regulated economy. It's controlled by the government. What they were worried about is that they would have some kind of speculative outburst, and they were actually trying to make sure that they could maintain their 9 or 10 percent growth per year, and that's exactly what they were doing.

MR. MCLAUGHLIN: I'm not hearing it, though. What's causing the world jitters?

MR. RATIGAN: The world jitters are a function of the fact that prices went up on a lot in a short period of time. It's that simple, okay?

MR. ZUCKERMAN: It's a correction.

MR. MCLAUGHLIN: Where? Where?

MR. RATIGAN: Everywhere. Your house is --

MR. MCLAUGHLIN: Everywhere?

MR. RATIGAN: Your house is worth double --

MR. MCLAUGHLIN: Is this consumption?

MR. RATIGAN: Brazil, Russia, even Germany --

MR. MCLAUGHLIN: This is --

MR. RATIGAN: -- France, England.

MR. BUCHANAN: No, no, John, we've all got enormous amounts of money. Anybody with wealth has seen it grown up. The stocks are up. The bonds are up.

MR. RATIGAN: So you lose 5 percent of it.

MR. BUCHANAN: Everybody says, "It's going to hit; it's going to hit soon." And the first sign, get out.

MS. CLIFT: And meanwhile --

MR. MCLAUGHLIN: Well, does that mean it's worse than you are perceiving it now?

MR. BUCHANAN: No, I think you need to puncture the balloon from time to time.

MR. ZUCKERMAN: It's just a normal correction.

MS. CLIFT: The Chinese --

MR. MCLAUGHLIN: Doesn't it mean a recession in this country?

MR. ZUCKERMAN: No, it does not, not in my judgment. There will not be a recession.

MR. MCLAUGHLIN: Well, if there's going to be a reduction of consumption, if people are not going to buy as many clothes or whatever, automobiles --

MR. ZUCKERMAN: There's no evidence that that is happening.

MR. RATIGAN: Gasoline prices --

MS. CLIFT: To quote Alan --

MR. MCLAUGHLIN: I want to hear Eleanor.

MS. CLIFT: To quote Alan Greenspan, who gets paid $150,000 for his advice, he said recession is possible by the end of this year but not probable. That's enough to get a lot of people nervous. The Chinese stock market is a fraction of the American stock market. A lot of this is about psychology.

MR. MCLAUGHLIN: We need --

MS. CLIFT: Americans are nervous. And the housing market is poor in this country, and that affects real people.

MR. MCLAUGHLIN: All right, we need expert wisdom here. Let's call upon Hillary. Hillary, on the sell-off, called it "a great source of vulnerability is the fact that other countries, including China, own so much of our debt. We can too easily be held hostage to the economic decisions being made in Beijing, Shanghai and Tokyo."

Question: Is the United States being held hostage to the economic decisions being made in Asia? I ask you again, Dylan Ratigan.

MR. RATIGAN: No. There's two things there. One --

MR. MCLAUGHLIN: How much debt is China holding?

MR. BUCHANAN: One trillion dollars.

MR. MCLAUGHLIN: How much?

MR. BUCHANAN: A trillion. Japan's got almost --

MR. MCLAUGHLIN: That's not all U.S. debt.

MR. BUCHANAN: It's mostly U.S. debt.

MR. MCLAUGHLIN: How much is it?

MR. BUCHANAN: About $600 billion worth.

MR. MCLAUGHLIN: Well, that's not most. Go ahead.

MR. RATIGAN: This is the economic equivalent of mutually assured destruction. And just as sure as the Russians didn't want to launch nukes at the U.S. because they didn't want the U.S. to launch nukes at them, China has absolutely no interest in holding the U.S. economy hostage to anything, any more than the U.S. --

MR. BUCHANAN: Here's the problem, though, John.

MR. MCLAUGHLIN: No, she says it's a de facto situation.

MR. BUCHANAN: Well, Hillary is right for this reason. Last year we had an $880 billion current account deficit. Every day, almost two and a half billion dollars goes out of this country. Dollars are piling up everywhere. Some day, John, the dollar is going to go down. The question is, is it going to come down slowly and gradually or is it going to crash one day? And China and Japan and the Asians, who are holding most of those dollars, they're the ones who are going to make the decision.

MR. MCLAUGHLIN: Does globalization make this whole situation worse?

MR. ZUCKERMAN: Well, it certainly makes it all relevant. That is to say, we do have a globalized financial world. When international investment is a part of everybody's investment portfolio, if the Chinese market goes down, then you're going to, in effect, sell off other assets in order to sort of equal it out or equalize it. So they are connected. But this is not a serious issue.

MR. MCLAUGHLIN: Emerging markets today -- that is, the markets around the world, principally, other than the United States, as in Asia -- is that becoming the high-tech draw that existed in the high-tech days?

MR. ZUCKERMAN: We still have, by far and away, the most advanced economy, in terms of technology, in the world. The Chinese economy is one-fifth the size of the United States -- one-fifth.

MS. CLIFT: This is --

MR. ZUCKERMAN: Even less.

MR. MCLAUGHLIN: If we had a housing bubble --

MR. ZUCKERMAN: With five times as many people.

MR. BUCHANAN: It's not -- it's fourth in the world, the Chinese now.

MR. ZUCKERMAN: It may be.

MR. BUCHANAN: They're closing on Germany.

MR. MCLAUGHLIN: Could not the bubble burst, Pat?

MR. BUCHANAN: I do believe, John -- I believe the bubble is going to burst. We can't continue pouring out dollars like that, spending 7 percent more a year than we earn.

MR. MCLAUGHLIN: Exit question: How long will it take for the Dow Jones to get back to where it was before this week's trading frenzy? Pat Buchanan.

MR. BUCHANAN: I think six months, at least.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: I think this is not over, and I'll go with Pat on that.

MR. MCLAUGHLIN: Six months.

MS. CLIFT: Yeah.

MR. RATIGAN: I agree with Pat. I don't want to, but I do. I think it'll take a while. But the reality is, listen, next week could be a miserable week in the stock market. That doesn't mean that there's a problem.

MR. MCLAUGHLIN: Are you personally prepared for it?

MR. RATIGAN: Sure.

MR. MCLAUGHLIN: Psychologically? (Laughter.)

MR. RATIGAN: I'm hopeful --

MR. MCLAUGHLIN: How about asset-wise?

MR. RATIGAN: It's good for ratings.

MR. MCLAUGHLIN: Asset-wise?

MR. RATIGAN: Asset-wise, I'm in mutual funds.

MR. MCLAUGHLIN: We won't ask you that.

MR. ZUCKERMAN: My pillow is stuffed with U.S. government bonds. That's the way I sleep, John.

MR. MCLAUGHLIN: Did you move into government -- did you see this coming?

MR. ZUCKERMAN: No, of course not.

MR. MCLAUGHLIN: Did anyone have the sense to move into government bonds before it hit?

MR. ZUCKERMAN: I'm sure some people did, but I don't think they did it in anticipation of the Shanghai market going down by 9 percent.

MR. MCLAUGHLIN: How can you seem so elated, almost, here today?

MR. BUCHANAN: John --

MR. ZUCKERMAN: I'm elated because I'm on this show, John. You know, it's such a thrill.

MR. BUCHANAN: Right. (Laughs.)

MR. ZUCKERMAN: That's not the point, John. I'm always elated when I'm here. I am not as worried about this drop in the stock market. It's a minor dip in a huge increase in the stock market.

MR. MCLAUGHLIN: How did Boston Properties do -- Boston Properties?

MR. ZUCKERMAN: Boston Properties, a company with which I have some familiarity, was off this past week, in part because it had gone up so dramatically.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: The answer --

MR. ZUCKERMAN: And, by the way, it's going to go up again. I just want to make that point.

MR. MCLAUGHLIN: Good. Now this is the time to buy, right?

Issue Two: Strings Attached.

PRESIDENT GEORGE W. BUSH: (From videotape.) Soon Congress is going to be able to vote on a piece of legislation that is binding, a bill providing emergency funding for our troops. Our troops are counting on their elected leaders in Washington, D.C. to provide them with the support they need to do their mission.

MR. MCLAUGHLIN: One hundred billion dollars in new money is the support that President Bush wants Congress to fund the war in Iraq. On Capitol Hill, battle lines are being drawn. Democrats maneuvered this week to attach 10 billion additional dollars to the $100 billion Iraq request.

The $10 billion is for -- get this -- domestic spending. The items the Democrats want to fund with the $10 billion add-on to the $100 billion Iraq war funding bill include these: Relief for victims of the drought, improvement for levees in New Orleans, health insurance for children, and aid to avocado farmers.

This Democrat budget strategy is flawless, perfectly contrived to zap the Republicans. It puts Republicans squarely on the horns of a dilemma: If they vote against the bill because of the $10 billion add-ons, it's a vote against funds for the troops.

If the Republicans vote yes on the $110 billion measure, it defies their Republican president and their leader and his demand that the appropriations package be clean -- no add-ons.

As for the president, he cannot veto the $110 billion bill because it puts him in the untenable position of vetoing funds for his own war.

Question: Is this a win-win for Democrats? They win if their bill passes; they win if Bush vetoes it. Mort Zuckerman.

MR. ZUCKERMAN: It's just another example of the way politics is played in Washington. Democrats know that Bush cannot veto this bill, and therefore they're adding to it all of their own pet private programs and all of the usual stuff that goes on in Washington. And there's just no change in the way politics are being carried on.

MS. CLIFT: Well, there is some change.

MR. ZUCKERMAN: Just a minute. The Bush administration obviously cannot veto this bill, and that's why it's a veto-proof bill, and that's why they're throwing this stuff and laying this stuff on all their pet projects.

MR. MCLAUGHLIN: Pat.

MS. CLIFT: This is --

MR. MCLAUGHLIN: Oh, excuse me. Eleanor.

MS. CLIFT: This is some change. This is not a bridge to nowhere. These are worthy projects. This is children's health care, which the governors are lobbying for.

MR. MCLAUGHLIN: Levees.

MS. CLIFT: And you can laugh at the avocados, but California had a deep freeze in January and it's for the farm community there. But, look, this vehicle started out as a way to tie the president's hands on the war. The Democrats couldn't unify themselves on that. They can't do it. So they're now putting on some money that they need --

MR. RATIGAN: Well, you can both be right. It's politics as usual and it may be worthwhile.

MS. CLIFT: Excuse me. They're going to extract their priorities in exchange for supporting him on the war. It's not a bad deal.

MR. BUCHANAN: Here's what, John. I think it is almost veto-proof, unless they start getting resolutions and things on there that put restrictions on the president's war powers. If that happens, I think the president will hit it.

MR. MCLAUGHLIN: Veto it?

MR. BUCHANAN: I think he will if they do that and can attach those things to it. But if they don't do that and all they put is the social pork -- excuse me -- on there, I think they'll get it.

MR. ZUCKERMAN: Yes, I agree with that. But they're not going to do that. It's clear that the Democrats will not support restrictions on the way this war is going to be fought. They're going to fund the troops in the field. They know they have to do that. Rahm Emanuel has made it very clear. He's trying to say, "This war is owned by the White House, and we're not going to put our hands on it."

So you're not going to get those kinds of restrictions. What you're going to get is whatever you want to call them -- worthwhile programs. They may be. Some of them may be. A lot of them, it's just plain pork. It's the way Washington manages its politics.

MR. MCLAUGHLIN: Who comes off better in this situation, the Democrats for framing this esoteric strategy --

MR. BUCHANAN: It's crass, John.

MR. MCLAUGHLIN: -- which really puts them on the horns of a dilemma?

MR. BUCHANAN: John, it's cold and crass by the Democrats. Everybody knows, just as Mort says, what they're doing. They're packing this stuff in there.

MS. CLIFT: It's cold and crass --

MR. MCLAUGHLIN: What do you mean, cold and crass? They're highly motivated.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Excuse me. It's cold and crass by an administration that has never owned up to the cost of the war, and sending up -- asking for money in these supplementals that can't be scrutinized. Now they're getting a little scrutiny. It's fair game.

MR. RATIGAN: And -- (inaudible) -- by the debt when it's all paid for, by the way.

MR. MCLAUGHLIN: Exit question: On a veto probability scale, zero meaning Bush will not break his long-standing reluctance to use the veto, 10 meaning he's as certain to use the veto as Woodrow Wilson, rate the probability that Bush will veto the Iraq war money bill if it is loaded up with $10 billion of unrelated domestic money.

MR. BUCHANAN: I think there is a chance. I'll put it at one to two.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: I'll put it at one. This is a president who likes to play chicken.

MR. RATIGAN: Zero.

MR. MCLAUGHLIN: Zero.

MR. RATIGAN: Children's health care?

MR. ZUCKERMAN: Minus one.

MR. MCLAUGHLIN: The answer is three.

And this is Issue Three: "Wasted" Remark.

SEN. JOHN MCCAIN (R-AZ): (From videotape.) I am announcing that I will be a candidate for president of the United States.

MR. MCLAUGHLIN: That announcement was no surprise. It was another statement by the senator that put him in the hot seat.

SEN. MCCAIN: (From videotape.) We've wasted a lot of our most precious treasure, which is American lives, over there.

MR. MCLAUGHLIN: That word "wasted" resonated. The next day Senator McCain retracted the word. Quote: "Last evening I referred to American casualties in Iraq as 'wasted.' I should have used the word 'sacrificed,' as I have in the past," unquote.

This comes at a time when conservatives are already voicing doubts about McCain.

DAVID BOSSIE (conservative activist): (From videotape.) He has bucked the conservative positions, the conservative issues, year after year in the United States Senate. And why now should he be rewarded with being the standard bearer for the Republican Party?

MR. MCLAUGHLIN: Question: Was McCain's describing the loss of U.S. lives in Iraq as "wasted" a Freudian slip? Eleanor.

MS. CLIFT: Look, John McCain has given enough to this country that he gets more latitude than most politicians when he talks about the war. Barack Obama used the word "wasted" and everybody jumped all over him. It's not a good word in terms of people who have lost family members.

MR. BUCHANAN: It was --

MS. CLIFT: But I think nobody's going to doubt what he means and where he is on the war and where his commitment is to the country. I think this is a minor blip for him.

MR. BUCHANAN: It was a Freudian slip, though.

MR. MCLAUGHLIN: Huh?

MR. BUCHANAN: It was a Freudian slip in this sense, just like it was with Obama. What Obama was really saying is they've died in an unnecessary war. And what McCain is saying, a lot have died unnecessarily because of the way the war has been fought. So they both spoke the truth as they see it, and it is an unfortunate word to use.

MR. MCLAUGHLIN: Exit question: McCain is trailing Giuliani by about 14 percent among GOP voters. What accounts for Giuliani's strength over McCain when Giuliani is pro-gun control, pro-gay rights and pro-abortion, all of which are odious to conservatives? Pat Buchanan.

MR. BUCHANAN: Conservatives are looking for an alternative to McCain. They haven't found it in Romney. Rudy's the temporary alternative.

MS. CLIFT: Rudy is a souffle. He will fall. And I think McCain will rise again.

MR. RATIGAN: 9/11 versus Iraq; 9/11 resonates positive, Iraq resonates negative. It's that easy.

MR. MCLAUGHLIN: Mort Zuckerman.

MR. ZUCKERMAN: Rudy Giuliani is the General Grant of 9/11, the only American hero to come out of it. And that's still the way he's being presented and seen by the country, as a strong leader at a time when the country needed a strong leader. And that is why he's getting support. The conservative movement, the evangelicals, do not only vote on that one issue -- I mean, on the social issues.

MR. MCLAUGHLIN: You mean, they --

MR. ZUCKERMAN: They see him in very positive terms. And he earned it when he was America's mayor after 9/11.

MR. MCLAUGHLIN: You mean conservatives like Buchanan want authoritarians to rule them. Is that it? (Laughter.)

MR. ZUCKERMAN: Well, are you suggesting that Rudy Giuliani is an authoritarian?

MR. MCLAUGHLIN: Predictions. Pat. Take your time.

MR. BUCHANAN: Important issue, John. Walter Jones, a Republican congressman, has proposed a resolution in the House which would tell the president, "You cannot attack Iran unless Iran attacks us first." Jim Webb, U.S. senator, I believe is going to introduce that in the United States Senate, which really elevates it.

I also believe Harry Reid, the majority leader of the Senate, is going to support it. I think you might have a real effort here on the part of Congress, for the first time since Harry Truman took us into Korea, to take back the war power.

MR. MCLAUGHLIN: Congressional crisis?

MR. BUCHANAN: You mean, constitutional crisis?

MR. MCLAUGHLIN: Congressional and constitutional.

MR. BUCHANAN: Well, it will be if the president tries to go to war against Iran after they pass this.

MR. MCLAUGHLIN: So you've got the president and his assurance by the Constitution that he's commander in chief. And then you have the listed powers of the Congress.

MR. BUCHANAN: But the Congress takes us to war.

MR. MCLAUGHLIN: It's a gray area there, Pat.

MR. BUCHANAN: There is. But the Congress takes us to war unless we've been attacked and you've got to respond immediately.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: There will be at least one, maybe two, third-party independent candidacies next year because the two parties will settle on their nominees the first week of February. That leaves nine months until the election; lots of time for buyer's remorse to set in.

Unity '08 will hold a virtual convention in June of '08, and they will come up with a bipartisan ticket, a Republican and a Democrat running together. And Mayor Bloomberg of New York is looking at an independent candidacy. He could go with Unity '08. He could strike out on his own. He can spend half a billion dollars and not even notice it. So we're in for more --

MR. MCLAUGHLIN: And legitimately.

MS. CLIFT: -- candidates than just the two major nominees.

MR. MCLAUGHLIN: Dylan.

MR. RATIGAN: China does better in the next two years than it has in the past two years. The ripple this week is a growing pain. The key word is "growing." Look for them to actually get a better, more efficient capital market, a more stable market, and be a stronger economic and political ally to the U.S. over the next two years than they have been in the past.

MR. MCLAUGHLIN: Is that good news, Mort?

MR. ZUCKERMAN: Yes, it is good news. Given the fact we have a global economy, of course it's good news. China is one of the major drivers in the world economy today, given the rate of growth that they have.

MR. MCLAUGHLIN: Also, if China is the joker in the deck, as I believe, and China has stability, then the world economy -- chances are that it's going to be okay.

What's your prediction?

MR. ZUCKERMAN: Ehud Barak will succeed in his attempt to become a leader of the Labor Party in May. He will then become the defense minister of Israel, and he will then be the principal contender in the next election against Bibi Netanyahu, a replay of an old political rivalry.

MR. MCLAUGHLIN: I predict that next year, 2008, in November, at the time of the U.S. election, the nation will be in economic recession. Does that help Hillary?

MR. BUCHANAN: It doesn't help the Republican. (Laughs.)

MR. MCLAUGHLIN: Bye-bye.

(PBS Segment.)

MR. MCLAUGHLIN: Issue Four: Hold the Phone.

Cell phone chatter is a growing public nuisance, and it's everywhere -- elevators, lecture halls, buses, restrooms. Even concert halls are not safe from ringers and full-fledged conversations. Eighty percent of American adults -- that's 190 million -- say that they are irritated by cell phones. Yet less than 10 percent of cell phoners are aware that they are being a nuisance.

Airplanes had been our final sanctuary, free from this noise pollution, this scourge. Two months ago, an extensive report showed that phones can be used safely on board. But before you flip your phone, why not ask your neighbor? Over four out of five travelers do not want cell phones in airplanes.

Question: Should the use of cell phones on airplanes be limited to text messaging? Eleanor Clift.

MS. CLIFT: Look, I think it's inevitable that cell phones are going to be allowed on planes eventually -- not this year, because the FAA and the FCC both have to rule, and they're not going to rule this year. But it'll have to be done with significant restrictions or we will all go mad.

MR. MCLAUGHLIN: Four out of five people do not want cell phones on airplanes. It could lead to brawls. That could create hazards to one's life and limb. Flight attendants would be overcome with that kind of a situation. You don't want cell phones on planes, do you?

MR. BUCHANAN: No, I don't want cell phones on --

MR. MCLAUGHLIN: Suppose you were a salesman, however, and you had to make a call in advance? Would you not want the opportunity to do it?

MR. BUCHANAN: Take the Greyhound.

MR. MCLAUGHLIN: Oh, there is --

MR. BUCHANAN: Well, look at Mort. He's smiling because he can use his cell phone because he's got his own plane. But the average guy, no, John. (Laughs.)

MR. MCLAUGHLIN: What about that?

MR. ZUCKERMAN: You know, I think --

MR. MCLAUGHLIN: You have no problem with cell phones?

MR. ZUCKERMAN: I think the kind of discrimination that I receive on this show is something I'm just going to have to learn to handle. (Laughter.) But somehow or other I've made it through the crisis.

MR. MCLAUGHLIN: Let me ask you --

MR. ZUCKERMAN: I think it is absolutely inevitable. Four out of five people might oppose it, but four out of five people would use it if it were permitted.

MR. RATIGAN: Flying is bad enough today.

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: It is?

MR. RATIGAN: It's already horrible. Why are they going to do this?

MR. MCLAUGHLIN: Do you think it's anti-social behavior, chatter on cell phones?

MR. BUCHANAN: I do. On a plane, I do. You ought to be courteous to your seat mates.

MR. MCLAUGHLIN: Is it not true, too, that the people who are called on cell phones -- first of all, cell phone conversation is invariably 95 percent banal, correct?

MR. ZUCKERMAN: All conversation is 95 percent banal on that standard. (Laughter.)

MR. MCLAUGHLIN: I mean cell phones on airplanes. Anybody you call on a cell phone, invariably it's a banal conversation, and you call the same people. You even have the auto-dial for the same people. So it's not developing, is it? It's not developing of the self.

MR. ZUCKERMAN: You mean, there's no character development on a cell phone? I don't understand why you feel that way.


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p so dramatically.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: The answer --

MR. ZUCKERMAN: And, by the way, it's going to go up again. I just want to make that point.

MR. MCLAUGHLIN: Good. Now this is the time to buy, right?

Issue Two: Strings Attached.

PRESIDENT GEORGE W. BUSH: (From videotape.) Soon Congress is going to be able to vote on a piece of legislation that is binding, a bill providing emergency funding for our troops. Our troops are counting on their elected leaders in Washington, D.C. to provide them with the support they need to do their mission.

MR. MCLAUGHLIN: One hundred billion dollars in new money is the support that President Bush wants Congress to fund the war in Iraq. On Capitol Hill, battle lines are being drawn. Democrats maneuvered this week to attach 10 billion additional dollars to the $100 billion Iraq request.

The $10 billion is for -- get this -- domestic spending. The items the Democrats want to fund with the $10 billion add-on to the $100 billion Iraq war funding bill include these: Relief for victims of the drought, improvement for levees in New Orleans, health insurance for children, and aid to avocado farmers.

This Democrat budget strategy is flawless, perfectly contrived to zap the Republicans. It puts Republicans squarely on the horns of a dilemma: If they vote against the bill because of the $10 billion add-ons, it's a vote against funds for the troops.

If the Republicans vote yes on the $110 billion measure, it defies their Republican president and their leader and his demand that the appropriations package be clean -- no add-ons.

As for the president, he cannot veto the $110 billion bill because it puts him in the untenable position of vetoing funds for his own war.

Question: Is this a win-win for Democrats? They win if their bill passes; they win if Bush vetoes it. Mort Zuckerman.

MR. ZUCKERMAN: It's just another example of the way politics is played in Washington. Democrats know that Bush cannot veto this bill, and therefore they're adding to it all of their own pet private programs and all of the usual stuff that goes on in Washington. And there's just no change in the way politics are being carried on.

MS. CLIFT: Well, there is some change.

MR. ZUCKERMAN: Just a minute. The Bush administration obviously cannot veto this bill, and that's why it's a veto-proof bill, and that's why they're throwing this stuff and laying this stuff on all their pet projects.

MR. MCLAUGHLIN: Pat.

MS. CLIFT: This is --

MR. MCLAUGHLIN: Oh, excuse me. Eleanor.

MS. CLIFT: This is some change. This is not a bridge to nowhere. These are worthy projects. This is children's health care, which the governors are lobbying for.

MR. MCLAUGHLIN: Levees.

MS. CLIFT: And you can laugh at the avocados, but California had a deep freeze in January and it's for the farm community there. But, look, this vehicle started out as a way to tie the president's hands on the war. The Democrats couldn't unify themselves on that. They can't do it. So they're now putting on some money that they need --

MR. RATIGAN: Well, you can both be right. It's politics as usual and it may be worthwhile.

MS. CLIFT: Excuse me. They're going to extract their priorities in exchange for supporting him on the war. It's not a bad deal.

MR. BUCHANAN: Here's what, John. I think it is almost veto-proof, unless they start getting resolutions and things on there that put restrictions on the president's war powers. If that happens, I think the president will hit it.

MR. MCLAUGHLIN: Veto it?

MR. BUCHANAN: I think he will if they do that and can attach those things to it. But if they don't do that and all they put is the social pork -- excuse me -- on there, I think they'll get it.

MR. ZUCKERMAN: Yes, I agree with that. But they're not going to do that. It's clear that the Democrats will not support restrictions on the way this war is going to be fought. They're going to fund the troops in the field. They know they have to do that. Rahm Emanuel has made it very clear. He's trying to say, "This war is owned by the White House, and we're not going to put our hands on it."

So you're not going to get those kinds of restrictions. What you're going to get is whatever you want to call them -- worthwhile programs. They may be. Some of them may be. A lot of them, it's just plain pork. It's the way Washington manages its politics.

MR. MCLAUGHLIN: Who comes off better in this situation, the Democrats for framing this esoteric strategy --

MR. BUCHANAN: It's crass, John.

MR. MCLAUGHLIN: -- which really puts them on the horns of a dilemma?

MR. BUCHANAN: John, it's cold and crass by the Democrats. Everybody knows, just as Mort says, what they're doing. They're packing this stuff in there.

MS. CLIFT: It's cold and crass --

MR. MCLAUGHLIN: What do you mean, cold and crass? They're highly motivated.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Excuse me. It's cold and crass by an administration that has never owned up to the cost of the war, and sending up -- asking for money in these supplementals that can't be scrutinized. Now they're getting a little scrutiny. It's fair game.

MR. RATIGAN: And -- (inaudible) -- by the debt when it's all paid for, by the way.

MR. MCLAUGHLIN: Exit question: On a veto probability scale, zero meaning Bush will not break his long-standing reluctance to use the veto, 10 meaning he's as certain to use the veto as Woodrow Wilson, rate the probability that Bush will veto the Iraq war money bill if it is loaded up with $10 billion of unrelated domestic money.

MR. BUCHANAN: I think there is a chance. I'll put it at one to two.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: I'll put it at one. This is a president who likes to play chicken.

MR. RATIGAN: Zero.

MR. MCLAUGHLIN: Zero.

MR. RATIGAN: Children's health care?

MR. ZUCKERMAN: Minus one.

MR. MCLAUGHLIN: The answer is three.

And this is Issue Three: "Wasted" Remark.

SEN. JOHN MCCAIN (R-AZ): (From videotape.) I am announcing that I will be a candidate for president of the United States.

MR. MCLAUGHLIN: That announcement was no surprise. It was another statement by the senator that put him in the hot seat.

SEN. MCCAIN: (From videotape.) We've wasted a lot of our most precious treasure, which is American lives, over there.

MR. MCLAUGHLIN: That word "wasted" resonated. The next day Senator McCain retracted the word. Quote: "Last evening I referred to American casualties in Iraq as 'wasted.' I should have used the word 'sacrificed,' as I have in the past," unquote.

This comes at a time when conservatives are already voicing doubts about McCain.

DAVID BOSSIE (conservative activist): (From videotape.) He has bucked the conservative positions, the conservative issues, year after year in the United States Senate. And why now should he be rewarded with being the standard bearer for the Republican Party?

MR. MCLAUGHLIN: Question: Was McCain's describing the loss of U.S. lives in Iraq as "wasted" a Freudian slip? Eleanor.

MS. CLIFT: Look, John McCain has given enough to this country that he gets more latitude than most politicians when he talks about the war. Barack Obama used the word "wasted" and everybody jumped all over him. It's not a good word in terms of people who have lost family members.

MR. BUCHANAN: It was --

MS. CLIFT: But I think nobody's going to doubt what he means and where he is on the war and where his commitment is to the country. I think this is a minor blip for him.

MR. BUCHANAN: It was a Freudian slip, though.

MR. MCLAUGHLIN: Huh?

MR. BUCHANAN: It was a Freudian slip in this sense, just like it was with Obama. What Obama was really saying is they've died in an unnecessary war. And what McCain is saying, a lot have died unnecessarily because of the way the war has been fought. So they both spoke the truth as they see it, and it is an unfortunate word to use.

MR. MCLAUGHLIN: Exit question: McCain is trailing Giuliani by about 14 percent among GOP voters. What accounts for Giuliani's strength over McCain when Giuliani is pro-gun control, pro-gay rights and pro-abortion, all of which are odious to conservatives? Pat Buchanan.

MR. BUCHANAN: Conservatives are looking for an alternative to McCain. They haven't found it in Romney. Rudy's the temporary alternative.

MS. CLIFT: Rudy is a souffle. He will fall. And I think McCain will rise again.

MR. RATIGAN: 9/11 versus Iraq; 9/11 resonates positive, Iraq resonates negative. It's that easy.

MR. MCLAUGHLIN: Mort Zuckerman.

MR. ZUCKERMAN: Rudy Giuliani is the General Grant of 9/11, the only American hero to come out of it. And that's still the way he's being presented and seen by the country, as a strong leader at a time when the country needed a strong leader. And that is why he's getting support. The conservative movement, the evangelicals, do not only vote on that one issue -- I mean, on the social issues.

MR. MCLAUGHLIN: You mean, they --

MR. ZUCKERMAN: They see him in very positive terms. And he earned it when he was America's mayor after 9/11.

MR. MCLAUGHLIN: You mean conservatives like Buchanan want authoritarians to rule them. Is that it? (Laughter.)

MR. ZUCKERMAN: Well, are you suggesting that Rudy Giuliani is an authoritarian?

MR. MCLAUGHLIN: Predictions. Pat. Take your time.

MR. BUCHANAN: Important issue, John. Walter Jones, a Republican congressman, has proposed a resolution in the House which would tell the president, "You cannot attack Iran unless Iran attacks us first." Jim Webb, U.S. senator, I believe is going to introduce that in the United States Senate, which really elevates it.

I also believe Harry Reid, the majority leader of the Senate, is going to support it. I think you might have a real effort here on the part of Congress, for the first time since Harry Truman took us into Korea, to take back the war power.

MR. MCLAUGHLIN: Congressional crisis?

MR. BUCHANAN: You mean, constitutional crisis?

MR. MCLAUGHLIN: Congressional and constitutional.

MR. BUCHANAN: Well, it will be if the president tries to go to war against Iran after they pass this.

MR. MCLAUGHLIN: So you've got the president and his assurance by the Constitution that he's commander in chief. And then you have the listed powers of the Congress.

MR. BUCHANAN: But the Congress takes us to war.

MR. MCLAUGHLIN: It's a gray area there, Pat.

MR. BUCHANAN: There is. But the Congress takes us to war unless we've been attacked and you've got to respond immediately.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: There will be at least one, maybe two, third-party independent candidacies next year because the two parties will settle on their nominees the first week of February. That leaves nine months until the election; lots of time for buyer's remorse to set in.

Unity '08 will hold a virtual convention in June of '08, and they will come up with a bipartisan ticket, a Republican and a Democrat running together. And Mayor Bloomberg of New York is looking at an independent candidacy. He could go with Unity '08. He could strike out on his own. He can spend half a billion dollars and not even notice it. So we're in for more --

MR. MCLAUGHLIN: And legitimately.

MS. CLIFT: -- candidates than just the two major nominees.

MR. MCLAUGHLIN: Dylan.

MR. RATIGAN: China does better in the next two years than it has in the past two years. The ripple this week is a growing pain. The key word is "growing." Look for them to actually get a better, more efficient capital market, a more stable market, and be a stronger economic and political ally to the U.S. over the next two years than they have been in the past.

MR. MCLAUGHLIN: Is that good news, Mort?

MR. ZUCKERMAN: Yes, it is good news. Given the fact we have a global economy, of course it's good news. China is one of the major drivers in the world economy today, given the rate of growth that they have.

MR. MCLAUGHLIN: Also, if China is the joker in the deck, as I believe, and China has stability, then the world economy -- chances are that it's going to be okay.

What's your prediction?

MR. ZUCKERMAN: Ehud Barak will succeed in his attempt to become a leader of the Labor Party in May. He will then become the defense minister of Israel, and he will then be the principal contender in the next election against Bibi Netanyahu, a replay of an old political rivalry.

MR. MCLAUGHLIN: I predict that next year, 2008, in November, at the time of the U.S. election, the nation will be in economic recession. Does that help Hillary?

MR. BUCHANAN: It doesn't help the Republican. (Laughs.)

MR. MCLAUGHLIN: Bye-bye.

(PBS Segment.)

MR. MCLAUGHLIN: Issue Four: Hold the Phone.

Cell phone chatter is a growing public nuisance, and it's everywhere -- elevators, lecture halls, buses, restrooms. Even concert halls are not safe from ringers and full-fledged conversations. Eighty percent of American adults -- that's 190 million -- say that they are irritated by cell phones. Yet less than 10 percent of cell phoners are aware that they are being a nuisance.

Airplanes had been our final sanctuary, free from this noise pollution, this scourge. Two months ago, an extensive report showed that phones can be used safely on board. But before you flip your phone, why not ask your neighbor? Over four out of five travelers do not want cell phones in airplanes.

Question: Should the use of cell phones on airplanes be limited to text messaging? Eleanor Clift.

MS. CLIFT: Look, I think it's inevitable that cell phones are going to be allowed on planes eventually -- not this year, because the FAA and the FCC both have to rule, and they're not going to rule this year. But it'll have to be done with significant restrictions or we will all go mad.

MR. MCLAUGHLIN: Four out of five people do not want cell phones on airplanes. It could lead to brawls. That could create hazards to one's life and limb. Flight attendants would be overcome with that kind of a situation. You don't want cell phones on planes, do you?

MR. BUCHANAN: No, I don't want cell phones on --

MR. MCLAUGHLIN: Suppose you were a salesman, however, and you had to make a call in advance? Would you not want the opportunity to do it?

MR. BUCHANAN: Take the Greyhound.

MR. MCLAUGHLIN: Oh, there is --

MR. BUCHANAN: Well, look at Mort. He's smiling because he can use his cell phone because he's got his own plane. But the average guy, no, John. (Laughs.)

MR. MCLAUGHLIN: What about that?

MR. ZUCKERMAN: You know, I think --

MR. MCLAUGHLIN: You have no problem with cell phones?

MR. ZUCKERMAN: I think the kind of discrimination that I receive on this show is something I'm just going to have to learn to handle. (Laughter.) But somehow or other I've made it through the crisis.

MR. MCLAUGHLIN: Let me ask you --

MR. ZUCKERMAN: I think it is absolutely inevitable. Four out of five people might oppose it, but four out of five people would use it if it were permitted.

MR. RATIGAN: Flying is bad enough today.

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: It is?

MR. RATIGAN: It's already horrible. Why are they going to do this?

MR. MCLAUGHLIN: Do you think it's anti-social behavior, chatter on cell phones?

MR. BUCHANAN: I do. On a plane, I do. You ought to be courteous to your seat mates.

MR. MCLAUGHLIN: Is it not true, too, that the people who are called on cell phones -- first of all, cell phone conversation is invariably 95 percent banal, correct?

MR. ZUCKERMAN: All conversation is 95 percent banal on that standard. (Laughter.)

MR. MCLAUGHLIN: I mean cell phones on airplanes. Anybody you call on a cell phone, invariably it's a banal conversation, and you call the same people. You even have the auto-dial for the same people. So it's not developing, is it? It's not developing of the self.

MR. ZUCKERMAN: You mean, there's no character development on a cell phone? I don't understand why you feel that way.


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