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MR. MCLAUGHLIN: Issue One: Bush Apostates.

Republicans dislike the immigration bill currently before Congress. This is due largely to the bill's path-to-citizenship provisions for the 12 million resident aliens in the U.S.

President Bush's backing of the bill has given his Republican base an apostasy excuse. They can now escape Bush and what they see as his '08 kiss of death. Immigration bill opponents can now let fly.

REP. TOM TANCREDO (R-CO): (From videotape.) He's a disaster. He's been a disaster in a number of ways. Certainly he's a disaster on this issue. He thinks that this is his legacy. And I must tell you that the legacy that I think he's going to leave us, if he actually gets this thing through, is a Republican Party that's in disarray and a country that is even more Balkanized than it is today.

MR. MCLAUGHLIN: More than immigration, the issue that has been causing Republicans even more Sturm und Drang is, as stated, Iraq. Republican Senator Gordon Smith, prominent in the Republican Senate Caucus, spoke to this on the Senate floor.

SEN. GORDON SMITH (R-OR): (From videotape.) I, for one, am at the end of my rope when it comes to supporting a policy that has our soldiers patrolling the same streets, in the same way, being blown up by the same bombs, day after day. That is absurd. It may even be criminal.

MR. MCLAUGHLIN: But of the two issues, it is immigration that has given the Republicans a respectable way to break from their leader, George Bush, without having to invoke the abandonment-of-the- troops issue that the president has inextricably tied to Iraq.

Question: Are Republicans losing faith in the war in Iraq, Mort Buchanan? I mean -- (laughter) -- Mort Zuckerman.

MR. ZUCKERMAN: I'll pass along the compliment to Pat. Look, I think the Republicans are divided, of course. They're schizophrenic. They are losing faith in the war in Iraq. But a large part of the Republican base is still in support of the president on the war in Iraq. A lesser part of the Republican base is in support of him on immigration.

So if you're running for a national office, you've got to stay close to the president, or at least closer. If you're in the Congress and you want to be re-elected, you're moving away from the president. So the Republicans, in this sense, depending on where they are, are moving in two different directions. But there is no doubt but that Bush's traction, even within the Republican Party, has dramatically diminished over the last number of months.

MR. MCLAUGHLIN: The figure that I have is that since January 1, 54 percent are saying, of the Republicans, that the war is going better. Only 10 percent say that it is -- excuse me. When asked about the situation whether it's gotten better or worse in the first six months of 2007, 54 percent say it's worse and only 10 percent say it's better.

MR. ZUCKERMAN: I can't imagine how anybody's going to be able to say it's going better, given what's happened over the last six months. The only thing that they're hopeful for is that by September, which is sort of the period of grace that the administration has been given, that there will be some amount of improvement and Petraeus and others will come in and report back that there has been enough of an improvement to at least justify some continued support for the president. But that's a very dubious proposition at this stage. MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The Republicans know they can't stick with the president's war policy, but they're staying with it into the fall because the Republican base, 75 percent of the Republican loyalists, still hope that the surge is going to work.

Senator Biden, a Democrat who's been in the Senate for 34 years, says his horse sense tells him that late fall you're going to see the Republicans begin to defect. He said if they were given a lie detector test and asked if they genuinely support the president, he doubts they'd get a dozen Republicans.

They're looking for a third way between what the Democrats want and the president's policy. And the Iraq Study Group is going to resurface as sort of the life raft for Republicans who want to back away from the president.

MR. ZUCKERMAN: But without Rudy Giuliani in the Iraq Study Group.

MS. CLIFT: (Laughs.) Right.

MR. MCLAUGHLIN: What about Republicans in Congress? Do you know anything about that situation? Naftali, welcome.

MR. BENDAVID: Thank you. Yeah, I mean, you asked if there is a revolt among Republicans in Congress. I think the best way to think of it might be as sort of a slow revolt. It's not some kind of an uprising against the president. But there's little question that on the two issues we're talking about, immigration and Iraq, they are more and more disaffected.

Another important point is that President Bush's popularity is very low. It's only at about 60 percent in the Republican Party itself, which is extraordinarily low within the president's party, but it's much lower with the nation at large. So he doesn't have a lot of clout. He doesn't have a lot that he can threaten or influence the Republicans with. And so if they need or want to depart from him on immigration, on Iraq, on a series of issues, they can.

MR. MCLAUGHLIN: Chrystia, has the leadership in the Congress, particularly the Senate, moved away from support for the war? I have in mind Mitch McConnell. It seems to me he emphasized the importance of a time line for September. He brought that back. And that suggests that he is running out of patience and perhaps insight into where the public stands on this in terms of '08.

MS. FREELAND: Well, I think you're absolutely right, John. And the Republicans, the party leadership, people who are worried about 2008, are carefully starting to lay the groundwork for saying, "Well, you know, this maybe isn't working and we're going to have to adopt a different policy." But I think you were really right in that segment to draw a sharp line between immigration and Iraq. I think for the Republican base it is still possible to make an argument which resonates emotionally that Iraq was essentially a good, principled idea; this was about bringing democracy to the world. Even if unpopular, that is America's mission, its job.

Immigration is different and more difficult for the president. I think that's why you're seeing a real splintering --

MR. MCLAUGHLIN: Do you think --

MS. FREELAND: -- because the base thinks -- you know, a lot of core Republican voters think it's actually wrong what the president is suggesting. And that's different from "It doesn't work."

MR. MCLAUGHLIN: You mean, if Republicans want to bail out, they now have an escape mechanism, and that is immigration. And that's reasonably respectable. But they don't have to --

MR. ZUCKERMAN: The fall is going to be a critical time for the war in Iraq. At that point there may be another vote where the Republicans are going to determine whether or not they can stop the funding on some level for the war in Iraq. And that -- I mean, there is at least a group of Republicans who think, not just as a principled matter of democracy but as a matter of national security, we can't pull out without huge consequences.

MR. MCLAUGHLIN: Okay, the human toll. In Iraq it was a bloody week, over Wednesday and Thursday particularly. Fourteen Americans were killed, bringing the total to 23 for the week. U.S. military dead in Iraq from the beginning, 3,546; more than one-half of these, 24 years of age and under; one-third of these dead -- 1,080, that is -- under 25 years of age or 25 years of age.

Exit question: With both the immigration bill and the Iraq crisis, does Mr. Bush face a Republican revolt on Capitol Hill? Yes or no, Mort Zuckerman.

MR. ZUCKERMAN: In September, yes; now, no.


MS. CLIFT: I would say it's a slow boil. And by late fall, the Republicans are going to abandon a policy. I agree with Senator Gordon Smith; it's almost criminal to be sacrificing these young lives in an effort that does not seem to be gaining any ground.

MR. MCLAUGHLIN: You've already kind of answered this, but Naftali, do you think he's going to get passage of his immigration bill? And do you think he would get passage of an Iraq funding bill if he were to go back to Congress?

MR. BENDAVID: Well, I think the immigration bill is going to be very -- I think it's very unlikely to pass. I mean, first of all, it has to scrape through the Senate, but then you've got the House, where there is very strong opposition. And I think it's really a long shot. And I think it's going to be a big deal if he can't get a major domestic priority through.

MR. MCLAUGHLIN: You mean 22 amendments won't save it?

MR. BENDAVID: (Laughs.) I mean, I think they're having incredible struggles in the Senate, which was supposed to be the easy one. You know, they reached this big grand compromise and people thought, "Okay, it'll get through the Senate, but the House is going to be the problem." Now they're having difficulty in the Senate. So I think he's in some trouble. MR. MCLAUGHLIN: Chrystia, do you see a revolt on Capitol Hill?

MS. FREELAND: Quiet defection by the fall, definitely.

MR. MCLAUGHLIN: I see a revolt on Capitol Hill.

Issue Two: Hamas Versus Fatah.

Fierce fighting in Palestine this month has brought terrible news from Gaza, but also perhaps a sliver of hope. Gaza is a strip of overcrowded land 25 miles long, about five miles wide, 140 square miles along the Mediterranean Sea, joined politically to the much larger West Bank, 2,300 square miles, 16 times bigger than Gaza.

Late last week in Gaza, the radical Islamic Hamas routed the moderate secular Fatah. This left the Palestinian Authority split in two: Gaza ruled by Hamas, and the West Bank ruled by Fatah. And this is how President Bush sees the current state of affairs: Fatah governing the West Bank, and Hamas governing a kind of fascist mini- state, Gaza.

PRESIDENT GEORGE W. BUSH: (From videotape.) We're looking at the difference between a group of people that want to represent the Palestinians who believe in peace. They want a better way for their people that believe in democracy, versus a group of radicals and extremists who are willing to use violence, unspeakable violence sometimes, to achieve a political objective.

MR. MCLAUGHLIN: This dichotomizing of Palestine by the president was further emphasized by the spokesman for the State Department.

SEAN MCCORMACK (State Department spokesman): (From videotape.) As for the idea that we are somehow treating Fatah and Hamas differently, absolutely. Hamas is a terrorist organization, and we're not going to provide aid to a terrorist organization.

MR. MCLAUGHLIN: Question: In reviving the permanent-status peace talks between Palestinians and Israelis, what's the principal problem created by Hamas? Chrystia Freeland.

MS. FREELAND: Why don't I tell you what is the principal opportunity first, because I do think that now that you have Fatah clearly without Hamas in control of the West Bank, for the rest of the world it's created a real opportunity, which people have jumped on, to engage with them.

The difficulty is that you also have a very clear area, clearly controlled by Hamas, and that could be, even more than before, a magnet for radicals. And if the engagement with Fatah, which controls now a space, doesn't work, then you could see a permanent division. MR. MCLAUGHLIN: What about --

MS. CLIFT: I think --

MR. MCLAUGHLIN: What about this reason, that Hamas was legally and democratically elected, whereas the government in West Bank, which was recently appointed by Abu Mazen, was appointed, not democratically elected?

MS. CLIFT: Yeah, I think you just can't wish away people who were elected. And by marginalizing them, you're just going to increase the radicalism in that sliver of humanity. And I think that the opportunity is just a nice spin put on a disastrous situation and one that we invited by marginalizing Hamas.

I must say, I was with a small group of reporters who met with the prime minister of Israel at Blair House earlier in the week, and he does not conduct himself like a man who is at 17 percent in the polls. And so --

MR. MCLAUGHLIN: What does that mean?

MS. CLIFT: What does that mean? I think he wants to remain in office. I think he is trying to look for an opening. He's going to meet with the leaders of Egypt and Jordan. You know --

MR. MCLAUGHLIN: He was also very conciliatory, more so than I've ever heard, on the refugee status, which was what's caught in the throat of Arafat and the Palestinians after the last Camp David meeting. Do you know what I'm referring to?

MR. ZUCKERMAN: If you are referring to the Palestinians and the right of return, I don't think there is a single --

MS. CLIFT: Well, that's a nonstarter.

MR. ZUCKERMAN: -- change in the position of Israel on that.

MR. MCLAUGHLIN: Well, that's stretching it -- that's the ultimate point. But he had some very nice words when he was here, and they were conciliatory words. This is Olmert.

MR. ZUCKERMAN: Olmert has been very conciliatory in terms of his desire to see if there is an opportunity created by the fact that Fatah is no longer hindered by Hamas in terms of what it might do. But I would point out to you that Hamas did very well in the West Bank, in the election, the last time around, and they control the mayoralty of a whole group of cities, including Ramallah and Bethlehem.

Hamas is very powerful in the West Bank, and for the following reason, and the reason why Fatah lost in Gaza. Fatah is a totally corrupt organization. They all have expensive villas. They make a lot of money. They drive around in chauffeured limousines while the average Palestinian is really in terrible shape. And there is tremendous resentment against that.

Mohammed Dahlan, who is supposedly the leader of Fatah in Gaza, never even came back. He has a huge villa there -- so, by the way, did Abu Mazen. And he was in his villa in Cairo at the time, having just been in Germany. The whole leadership of Fatah left before this fight, and Abu Mazen never even gave them instructions to fight. They had 30,000 Fatah troops in Gaza and only 8,000 to 10,000 Hamas, and yet they didn't fight. So I would not place too much, shall we say, credit on the political will of Fatah to really go ahead and deal with these issues.

MR. MCLAUGHLIN: Now, the --

MS. FREELAND: But clearly they have to take the chance and try to engage them.

MR. ZUCKERMAN: Oh, sure, I agree with that.

MS. FREELAND: I mean, even if the chance is minimal, you still have to try.

MR. ZUCKERMAN: I think we have to be realistic about what they can do and what they have done.

MR. MCLAUGHLIN: The strategy of this administration is to send in revenue into Fatah to make it clear that Fatah can deliver the goods, and at the same time to isolate the Hamas.

Do you think that's a good strategy?

MR. BENDAVID: I think there are some real potential problems with it, for some of the reasons that have been outlined. I mean, I think to just isolate Hamas, to just try to completely shut off Gaza, is a problem. They did win an election. There's a million-and-a-half Palestinians there. And I think you can't just hope that it would go away.

It was very interesting to see, over the last few days, everybody talking about restarting peace talks. You know, you have this very interesting summit meeting next week with an Israeli and, you know, three Arab leaders, and Hamas being excluded.

MR. MCLAUGHLIN: Jordan and Egypt will be there.

MR. BENDAVID: Because they are very worried by this.

MR. MCLAUGHLIN: Do you think that is a peace conference, or is it something else?

MR. BENDAVID: Well, I mean, I think it's --

MR. MCLAUGHLIN: Could it be described as a security conference, because they're afraid that what Hamas did in the West Bank, they will also do in Cairo and in Jordan and in -- what's the fourth one there? Cairo, Jordan and Saudi Arabia.

MR. BENDAVID: I think in Egypt in particular there's a great deal of concern. They've been very afraid about their radical elements. Of course, Egypt is right next to Gaza, and so I think there's a great deal of concern about what this could all mean. I think you could call it a peace conference. I think in many ways it's a "What the heck do we do now?" conference.

MR. ZUCKERMAN: It's an attempt to shore up Mahmoud Abbas and the Palestinian Authority on Fatah. Bear in mind that Hamas is an offshoot of the Muslim Brotherhood, and the Muslim Brotherhood is the big alternative and opposition to Mubarak of Egypt. So that is something he definitely wants to choke off as soon as he possibly can.

MS. CLIFT: Right. MR. MCLAUGHLIN: Exit question: Assign Bush an interim letter grade from A to F for his management of the Gaza crisis. Mort Zuckerman.



MS. CLIFT: (Laughs.) An F. He's been disengaged. The only thing he knows how to do is put spin on it.

MR. MCLAUGHLIN: What do you think?

MR. BENDAVID: I'm not going to give a grade, but I think that question of what he's done before the Gaza crisis is an important one, because he did disengage himself very much from the process.

MR. MCLAUGHLIN: What do you think?

MS. FREELAND: C- for disengagement.

MR. MCLAUGHLIN: I think I'm with you.

Issue Three: New York For Now.

NEW YORK MAYOR MICHAEL BLOOMBERG (R): (From videotape.) I've got the greatest job in the world, and I'm going to keep doing it.

MR. MCLAUGHLIN: So that's your intention, Mr. Mayor?

MAYOR BLOOMBERG: (From videotape.) My intention is to be mayor for the next 925 days and probably about 10 hours, whatever is left; 11 hours.

MR. MCLAUGHLIN: Michael Bloomberg said this week that he's going to stay in his job, and he's emphatic about it. That was Wednesday. But on Tuesday, the day before, Mayor Bloomberg disaffiliated from the Republican Party. That's right -- gave up being a Republican.

Then Mayor Bloomberg officially declared himself an independent. Bloomberg's political hegira thus far has brought him from Democrat to Republican and now an independent.

Question: Bloomberg wants to wiggle free from the Republican label, but is it easy -- that easy to convince voters that you're not a Republican anymore? I ask you, Eleanor.

MS. CLIFT: Yes. I mean, he's pro-gun control, pro-gay rights, pro-choice. His issue profile is that of a liberal Democrat. He was a lifelong Democrat until he wanted to run for mayor and he saw a clear field on the Republican side. So I don't think he has any problem shedding the Republican label. He's the ultimate RINO -- Republican In Name Only. MR. MCLAUGHLIN: Do you think that he shed the Republican label for what we are speculating here to be the dominant reason, namely that he's running as an independent? Is that the only reason or the dominant reason -- I mean, the controlling reason, do you think, Mort?

MR. ZUCKERMAN: Well, there are two reasons that I could speculate on. Number one, if you want to register as an independent in any number of states, you have to have been an independent for a certain period of time before you register.


MR. ZUCKERMAN: Now, you just think about the fact that he's got to start registering in February of next year. So this gives him at least enough of a period of time to register as an independent.

But secondly, he is a man who stated in this case he's working with both parties. He wants to present himself, and rightly so, as a bipartisan leader.

MR. MCLAUGHLIN: Well, yeah, I know, but he must be aware that he's creating the impression that he's going to run as an independent. Now, which is it?

MR. ZUCKERMAN: If he runs, he is definitely going to run as an independent. That's not even an issue.

MR. MCLAUGHLIN: So if he runs, if he runs --

MR. ZUCKERMAN: Yes, absolutely.

MR. MCLAUGHLIN: How fixed is he in that?

MR. ZUCKERMAN: Whether he's going to run?

MR. MCLAUGHLIN: Did he take this action because he's running as an independent? If he were not running as an independent, would he have done it?

MR. ZUCKERMAN: If he runs, he's going to run as an independent. But he's not going to make up his mind until February of next year, after the super-primary on February the 5th, when he'll know who his opponents are in the Democratic and the Republican Party.

MS. CLIFT: Right. And he could well be the nominee for Unity '08, which is a website in search of a candidate, and they're doing all the hard work of getting on the ballot in 50 states. So, you know, Bloomberg thinks there's an opening if Hillary's the nominee and the Republicans have a candidate mired in war. He thinks there's a lot of dissatisfied voters.

MS. FREELAND: The interesting thing -- MS. CLIFT: I don't know that he's right, and I don't think he'll run if he thinks he'll only be a spoiler.

MR. ZUCKERMAN: I agree with that.

MR. MCLAUGHLIN: Issue Four: Thompson On Top.

Fred Thompson, that is. Get this: Fred Thompson is still an unannounced candidate for president, yet he has overtaken Rudy Giuliani as the number one Republican contender for president: Thompson, 28 percent; Giuliani, 27 percent. So says a Rasmussen poll released this week.

Earlier this month, Thompson announced an exploratory committee and talked about why he wants to be president.

FORMER SENATOR FRED THOMPSON (R-TN): (From videotape.) I have never craved the job of president, but I want to do some things that only a president can do.

MR. MCLAUGHLIN: Question: What explains Thompson's appeal? Naftali Bendavid.

MR. BENDAVID: I think his appeal is explained a lot more by the current Republican field than it is by any intrinsic merit of Fred Thompson, to tell you the truth.

The Republican base, Republican loyalists, have been pretty unhappy with the choices that they have. Thompson, by being conservative, consistent and appealing, I think, automatically vaults into the front ranks of those candidates.

MR. MCLAUGHLIN: Do you think that euphoria will evaporate, the euphoria of having another option? Will that evaporate the way it has seemed to have evaporated to a great extent with Giuliani?

MR. BENDAVID: I mean, I think to some degree it will, in the sense that for now he is the candidate who's not a candidate. He hasn't gotten a ton of scrutiny. He's in this kind of messiah-savior phase. When he comes in and people start taking a hard look, I think there's a real chance.

MS. CLIFT: He's Reagan redux. He's been on TV. He looks the part. He's an actor. And he's also been a consistent conservative over the years. He also has an ease with popular culture --


MS. CLIFT: -- that people are responding to.

MR. ZUCKERMAN: He's at ease with himself. He's very comfortable in his own skin.

MR. MCLAUGHLIN: Speaking about an ease with popular culture --

Issue Five: Hillary Hilarity.

Hillary Clinton's presidential campaign made waves this week with this "Sopranos" takeoff.

(Begin videotaped segment.)


SEN. HILLARY CLINTON (D-NY): We have some great choices. I ordered for the table.

PRESIDENT CLINTON: No onion rings? SEN. CLINTON: I'm looking out for you.

Where's Chelsea?

PRESIDENT CLINTON: Parallel parking.

How's the campaign going?

SEN. CLINTON: Well, like you always say, focus on the good times.

PRESIDENT CLINTON: So what's the winning song?

SEN. CLINTON: You'll see.

PRESIDENT CLINTON: My money's on Smash Mouth. Everybody in America wants to know how it's going to end.


(End of videotaped segment.)

MR. MCLAUGHLIN: Rate this as a political stratagem, A to F. Mort.



MS. CLIFT: A+. Boffo. (Laughs.)


MR. BENDAVID: I think it's an A also.


MS. FREELAND: A+, showing the human side of Hillary.


Predictions. Mort, be quick.

MR. ZUCKERMAN: Come this fall, Lebanon is going to explode when the president retires and tries to appoint another government that will block the Siniora government, and Hezbollah makes a move in Beirut on the government. So watch out for that front.


MS. CLIFT: More high-profile generals will be coming out against the Iraq war. MR. MCLAUGHLIN: Naftali.

MR. BENDAVID: Several presidential candidates will drop out in the next few weeks.

MR. MCLAUGHLIN: By the way, congratulations on the book "Thumpin': How Rahm Emanuel and the Democrats Learned to be Ruthless and Ended the Republican Revolution." I've got news for you. The Republican evolution was ebbing.


MS. FREELAND: I have a dangerous one, which is that Bloomberg will run for the presidency. I think he's just going to find it too hard to resist. And his pragmatic centrism will be pretty appealing.

MR. MCLAUGHLIN: I predict that when President Bush goes to Congress the next time for money for Iraq, he won't get it.


(PBS segment.)

Issue Six: Democrats Loaded.

Republicans are usually thought to have the big bucks, but at least half of the Democrats who want to become president next year also have high net worth: John Edwards, $12 (million) to $60 million; Hillary Clinton, $10 (million) to $50 million; Bill Richardson, $3 (million) to $10 million; Christopher Dodd, $1.5 (million) to $3.5 million.

Question: Are these Democratic candidates living examples of the growing wage gap in America? I ask you, Naftali.

MR. BENDAVID: I mean, sure, they are. But I think that what matters to -- Americans don't really mind rich people. I think it's only if there's a question of hypocrisy or perhaps a question of shady dealings that they end up getting nervous.

MR. MCLAUGHLIN: Who believes that? Who believes that wealth is not a political negative if you're seeking public office?

MS. CLIFT: Oh, Rockefeller, Carnegie --

MR. MCLAUGHLIN: Well, after you get established. But initially --

MS. CLIFT: Yeah, Kennedy.

MR. BENDAVID: Roosevelt.

MS. CLIFT: Exactly. I mean -- MR. MCLAUGHLIN: There is a way of insulating yourself against the damage that wealth can do. But wealth in itself is damaging for a political career.

MS. CLIFT: No, it isn't, because if you have money, there's less interest on your part to be bought by anybody else. And so I --

MR. MCLAUGHLIN: This is true. But what about --

MS. CLIFT: I don't think it's negative at all.

MS. FREELAND: I think it depends on the time. It depends on the era. And I do think you're right to point to this as a potential issue for the Democrats, because income inequality is a potential campaign issue for the Democrats. And if you're a smart Democratic politician right now, you need to find a way to talk about income inequality, which says being rich is great if you're an entrepreneur, but income inequality is a problem maybe for our country.

MR. MCLAUGHLIN: You notice how Mort Zuckerman has abstained from politics. You know why. He's loaded. Right?

MR. ZUCKERMAN: I think it is outrageous to suggest that wealth is a handicap, John. I don't know where you get that. (Laughter.)

MR. MCLAUGHLIN: Seriously, Mort, don't you think it is?

MR. ZUCKERMAN: No, I don't.

MR. MCLAUGHLIN: You don't?

MR. ZUCKERMAN: I really don't. I mean, by the way, neither inherited wealth nor wealth that is sort of the reflection of self- made man.

MR. BENDAVID: I think -- (inaudible) -- makes an important point. A lot of these Democrats are talking about -- started out with very little. They earned a lot along the way. I think that's an important difference.

MR. MCLAUGHLIN: How can you insulate yourself against the political liability problems with wealth? How can you do it?

MR. BENDAVID: Well, as I say, I think it's a liability if there's hypocrisy involved, and that's why some people are --

MR. MCLAUGHLIN: Well, how can you insulate yourself from it?

MR. BENDAVID: Well, I think by not being hypocritical about it. I think --

MR. MCLAUGHLIN: By charity. END.