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THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR; MORT ZUCKERMAN, U.S. NEWS & WORLD REPORT TAPED: FRIDAY, JANUARY 19, 2008 BROADCAST: WEEKEND OF JANUARY 20-21, 2008

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MR. MCLAUGHLIN: Issue One: Slowdown.

FORMER MASSACHUSETTS GOVERNOR MITT ROMNEY (R) (Republican presidential candidate): (From videotape.) I will fight to bring back good jobs. I will fight to strengthen our homes. I will fight to strengthen our economy.

MR. MCLAUGHLIN: Mitt Romney is right to be concerned over the economy, not only in Michigan, whose Republican primary Romney won this week, but across the nation. A slowdown is now in place. A recession may well be in the wings.

Is the recession inevitable? You be the judge. Big American banks and brand names are turning to foreign investment and foreign private investors for bailouts that stagger the imagination: Citigroup, $20 billion from Singapore, Kuwait, Abu Dhabi and Saudi Arabia; Merrill Lynch, $13 billion from Singapore, Kuwait, Japan and Korea; Morgan Stanley, $5 billion bailed out by China. Bear Stearns also announced huge sales of its stocks. Companies have not sought such high bailouts since pre-World War I.

Even more worrisome is how far the problem goes beyond foreign bailouts; namely, to U.S. consumers at home. They are pulling back on spending. Consumers are wary, as shown by U.S. retail sales, which are down for the whole year of 2007.

This bad news has sent stocks and bond yields tumbling. Winter has worsened the problem. Home heating is up 11 percent, '06 to '07. And for the 8 million homes that use heating oil, the news is worse. Their average heating bill is up 38 percent from last year.

On Capitol Hill this week, anxiety over the crisis has led to a stimulus package that could climb from $100 (billion) to $150 billion or beyond. Despite the reach of this worrisome news, the chairman of the Federal Reserve still sees daylight.

FEDERAL RESERVE BOARD CHAIRMAN BEN BERNANKE: (From videotape.) We currently see the economy as continuing to grow, but growing at a relatively slow pace, particularly in the first half of this year.

MR. MCLAUGHLIN: Question. Despite Bernanke's upbeat outlook and his bailout endorsement, the stock market dropped like a rock this week. Is any stimulus too little, too late? Pat Buchanan.

MR. BUCHANAN: I don't think it's going to prevent what's coming, John. We are really headed for a day of reckoning. We have overborrowed personally. Credit card debt is disintegrating. The mortgage debt is rotten. The government is borrowing itself, and it's going to increase that with this stimulus package. You've got $800 billion in borrowing for consumer goods coming in from abroad.

I think what's happening in the United States now, we are overextended at the personal level and at every -- the national level, government level. And I think a day of reckoning is really at hand for the United States. I think these packages aren't going to do it. I think Bernanke probably could go certainly a half-point drop in the interest rates. But you've also got inflation coming in this country now, and yet the dollar is sinking like a stone.

MR. MCLAUGHLIN: Okay, the secretary of the Treasury also weighed in this week.

SECRETARY OF TREASURY HENRY PAULSON: (From videotape.) We see a common objective here, a common need of doing something that's going to be temporary, something that will be robust and simple and get money into the economy this year. MR. MCLAUGHLIN: Question: Are the feds doing everything they should be doing in this challenging moment? Eleanor Clift.

MS. CLIFT: Well, they're acting belatedly. I think this problem has been going on for some months. And it really wasn't until the stock market took an historic tumble this month, the biggest drop in percentage terms in over 70 years, that got everybody's attention.

I think we should thank Mr. Bernanke. He didn't go up to Congress and speak with that normal Fedspeak where he obfuscates everything. He pretty much said Congress and the administration have to act. And we have a presidential campaign that is fueled by anger at the failure of the political class in this country. So they've got to perform or I think the country's in trouble, but they're also in trouble.

MS. CROWLEY: Politicians always love to look like they're doing something to fix the problem, and most of the time they look like they're rearranging the deck chairs on the Titanic. Now you've got the president coming out. He's working with Congress on a stimulus package. It involves, first and foremost, these tax rebates of a couple of hundred dollars individually; couples get a little bit more.

MR. MCLAUGHLIN: Eight hundred dollars.

MS. CROWLEY: Right. Last time this was tried, it was the summer of 2001. And what has been shown is that people took those rebates and they actually saved them. They didn't spend them. So it didn't have the effect of inserting and injecting consumer spending to actually fix the problem.

I think, this time around, it may have some marginal effect. But you've got to take on solutions that are going to take on the longer- term problems in this economy. It's not just about a quick fix. It's not just Whack-a-Mole and try to fix. There are some huge problems, as Eleanor points out, dealing with the banks and lenders, a stalled housing market, credit crisis. It goes on and on.

MR. MCLAUGHLIN: Was that an exaggeration, what Monica is saying?

MR. ZUCKERMAN: I don't think it's an exaggeration. I think it's an understatement. You've heard me say here, I think we are facing the worst financial crunch and crisis since the Great Depression. You have the entire banking system now that is virtually frozen, and not just the subprime mortgage thing.

There are other things called credit default swaps where they're going to lose as much money, $250 billion. The banks are frozen. They're not making loans because they have such huge debts that they have to take onto their balance sheets.

And nobody knows how to deal with that, because you had a dramatic -- you have two bubbles that have burst at the same time -- the housing bubble, which has collapsed in this country, the first time since the Great Depression that housing values have gone down for a year since the Depression. And it's going to go down even more next year.

The credit crunch -- you've just exploded the whole credit system in this country. We were way overleveraged. The banking system was overleveraged. People didn't even know about it. The bankers didn't know about it. They didn't assess the risk. Now that risk is piling in, and everybody's going to pay the price.

It's going to stimulate nothing other than -- I mean it's going to destimulate the economy. Nobody has money to lend. They're saving all their money to pay off their debts. They're borrowing money or looking at the rest of the world to enhance their capital. And it's still not going to solve their problem.

MR. MCLAUGHLIN: Okay, this -- (inaudible) -- tried to pull it together. Why is the economy tanking?

REP. RON PAUL (R-TX) (Republican presidential candidate).

We're fighting a trillion-dollar war and we shouldn't be doing it. Those resources should be spent back here at home. There is an inflationary factor. But if you don't understand how inflation comes, we can't solve this problem. It comes from deficit financing with this war-mongering foreign policy we have. We run up the deficits. We tax. We borrow. We borrow from the Chinese. We can't borrow enough.

Then what do we do? We print the money. Then you wonder where the inflation comes? The value of the dollar goes down and prices go up where the government gets involved. In certain things, like housing or medical care or education, prices are skyrocketing. So you have to deal with the monetary issue to solve the problem of the medical issue.

MR. MCLAUGHLIN: Is Ron Paul right? Do you have to deal with the monetary policy before you deal with anything else to account for deficit spending?

MR. ZUCKERMAN: You know, Mitt Romney starts your program and he says he's going to do something about the economy. When he was governor of Massachusetts, he had a one-half of 1 percent increase in employment in the four years he was governor while the country's employment went up by five and a half percent. He left the state with the highest unemployment rate of any state in the Union. So his words are just phony words. This guy doesn't even know what he's talking about. Romney does know what he's talking about, but --

MR. MCLAUGHLIN: What's wrong with what Paul says?

MR. ZUCKERMAN: I'm not arguing --

MR. MCLAUGHLIN: I think he pulled it together.

MR. ZUCKERMAN: He has pulled nothing together. He's just pulled words together. I'm not saying --

MR. MCLAUGHLIN: You don't think the Iraq war --

MR. ZUCKERMAN: I'm not saying the Iraq war was an economic boon. All I'm saying to you, it does not deal with the problems that this country is facing. MS. CLIFT: Well --

MR. MCLAUGHLIN: Despite the trillion-dollar cost of the war?

MR. ZUCKERMAN: We had five years of this war and the country was booming. The reason why the country is going down --

MS. CLIFT: Well, first of all --

MR. ZUCKERMAN: -- is because of the credit system, not because of --

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: First of all, Romney went to Michigan and pandered. He promised them $20 billion if he's president to revive the auto industry. So I'm not going to heap praise on him.

Ron Paul is the closest thing we have to a Ross Perot. He is out there hammering away on this issue. I think he has a point to make. And the American people, if they really do link a wasteful war in Iraq with problems at home, then the politicians will really be up against the wall.

MR. MCLAUGHLIN: What do you think of what Eleanor said?

MS. CROWLEY: Well, the U.N. this week came out with a report projecting that in Iraq, the Iraqi economy this year and next year will grow at the rate of 7 to 8 percent. The U.S. economy right now is growing at the rate of 1.5 percent. So all of these little stimulus packages -- and Hillary Clinton just recently said she's going to tack on a $40 billion rebate package along the lines of what President Bush is suggesting too. Look --

MR. MCLAUGHLIN: What do you want to do?

MS. CROWLEY: -- none of these problems address the long-term issues in this economy about job creation and growth. I want to see a cut -- I want to see the Bush tax cuts made permanent. I want to see a rollback of the tax breaks.

MR. MCLAUGHLIN: Wait a minute. I want to assign --

MS. CROWLEY: And I want -- the most important thing, John, is cutting federal spending. All these guys --

MR. MCLAUGHLIN: I want a villain here. I want culpability. I want a villain. Why should it be this way? I haven't heard it yet.

MR. BUCHANAN: John, look, let me talk to this. Look, the United States is completely tapped out. We borrow from Europe to defend Europe. We borrow from the Arabs to fight a war to bring democracy to Iraq. We borrow from the Chinese and the Japanese to defend their oil lifelines. The United States saves nothing. We are now -- we've got $5 trillion abroad. It is coming back to buy up Citibank --

MR. MCLAUGHLIN: Oh, so this goes back to Bush and it goes back to the White House. Is that right?

MS. CLIFT: Well --

MR. BUCHANAN: It goes back to 1992, John. There's $5 trillion abroad. They're moving it into the sovereign wealth funds. They are snapping up Citibank, Morgan Stanley, 3Com, all these other --

MS. CLIFT: Wait a second.

MR. MCLAUGHLIN: So it's traceable to overspending by the government --

MR. BUCHANAN: It is traceable --

MR. MCLAUGHLIN: -- and misspending by the government.

MS. CLIFT: Okay, I --

MR. BUCHANAN: It's traceable to the trade deficit --

MS. CLIFT: I agree the government is tapped out. But this is not the time for the ideological hobby horses. We're not going to solve the problem of sovereign wealth and we're not going to make the Bush tax cuts permanent.

MR. MCLAUGHLIN: I want to nail this down.

MS. CLIFT: This government is going to perform and do some immediate --

MR. MCLAUGHLIN: All right, I want to nail it down.

MR. BUCHANAN: The government --

MS. CLIFT: They're going to do some quick and immediate fixes that are needed for average people.

MR. MCLAUGHLIN: We've got to get out. Multiple choice on the Iraq war: Is the cost of the Iraq war, A, a major drag on the economy, a medium drag, a minor drag or no drag? Pat Buchanan.

MR. BUCHANAN: It is a minor drag, John. There's $5 trillion in American dollars out there that foreign countries have, and they're coming back to buy America.

MR. MCLAUGHLIN: Eleanor. MS. CLIFT: We wouldn't be reliant on those foreign countries to the extent that we are if we weren't funding a trillion or $2 trillion war -- major drag.

MS. CROWLEY: Minor drag in the whole context of the dynamic American economy that's having some serious problems.

MR. ZUCKERMAN: You know, we've had four booming years while the war in Iraq has been going on. It's no drag at all. The problems we're having now have nothing to do with the war in Iraq.

MR. MCLAUGHLIN: A major drag. We'd have that trillion dollars to spend here at home if we didn't have Iraq.

Issue Two: Super Tuesday.

Not since 1928 has a U.S. presidential race been so wide open. Neither party has an incumbent running. Neither party has a front- runner running. Less than 10 months from the November 4 election, the presidential nominations are still up for grabs.

That may change on Super Tuesday, February 5, two weeks from this coming Tuesday. Twenty-four states are participating in primary and caucus contests two weeks from Tuesday.

Here they are, blue states and red states. Blue means left wing. Red means right wing. Blue means left of center. Red means right of center.

Northwest. Blue: Connecticut, Massachusetts. Red: None.

Mid-Atlantic. Blue: Delaware, New Jersey, New York. Red: None.

Midwest. Blue: Illinois, Minnesota, Kansas. Red: Missouri, North Dakota.

South. Blue: None. Red: Alabama, Arkansas, Georgia, Oklahoma, Tennessee, West Virginia.

Southwest. Blue: None. Red: Arizona, New Mexico.

West. Blue: California. Red: Alaska, Colorado, Idaho, Montana, Utah.

All up a week from Tuesday, February the 5th.

Question: Is the real contest about to begin? Pat Buchanan, I presume you have that whole grid memorized and you can speak to all those individual states, right?

MR. BUCHANAN: I think February 5th, John, where virtually half the nation votes, will clearly decide the nominee of both parties. It will send out someone who is a front-runner and someone who's a challenger. We know in the Democratic Party it will be Obama and Hillary, almost certainly. The Republican Party is still somewhat undecided. But that is an enormous day. And at the end of that day, I think the race will be pretty much over.

MS. CLIFT: Right. And the blue-red distinction really is kind of irrelevant in this argument, because the parties are going to be voting for their candidates respectively. So you can have blue Democrats in a red state.

MR. MCLAUGHLIN: It might affect turnout.

MS. CLIFT: No, I think this will -- turnout is going to be big, especially big on the Democratic side. But the Republicans are getting excited too. MR. MCLAUGHLIN: It depends on who the nominees are.

MS. CLIFT: And the national polls are going to come into play now, because this is essentially a national primary. And if you're running first nationally, that means something. And it hasn't meant much as we've looked at these early contests. It's meant how well you were doing in Iowa or New Hampshire. But now you've got to do well nationally.

MR. MCLAUGHLIN: Who's going to win Super Tuesday?

MS. CROWLEY: Well, we don't know. And what we've had --

MR. MCLAUGHLIN: Well, do you want to put it together?

MS. CROWLEY: (Laughs.)

MR. MCLAUGHLIN: You've got to get a nominee in mind and you've got to say whether that nominee --

MS. CROWLEY: But it's been very difficult. So far what we've had is no-mentum. We've had an election a la carte where we've had a bunch of idiosyncratic states so far voting in bolloxed-up primaries, producing anomalous results. And the result has been no leader, no momentum, nothing for anybody to really brag about.

Super Tuesday will probably change that, although when you look at the Republican side, it has been a war of attrition, real splintering. You've got the economic conservatives going for Romney, the social conservatives going for Huckabee, and the national security hawks, who wanted to go for Rudy, have been gravitating toward McCain. On the Democratic side you've had a similar splintering. It's niche voting, only it's by race and by gender.

MR. MCLAUGHLIN: Are you critiquing the whole primary --

MS. CROWLEY: I --

MR. MCLAUGHLIN: Wait a minute -- the whole primary and caucus system?

MS. CROWLEY: No, but I'm saying -- you're asking about Super Tuesday. And what I'm saying is, because you've got this enormous splintering --

MR. MCLAUGHLIN: Yeah, but you critiqued the whole system.

MS. CROWLEY: -- on both sides, though, John, that Super Tuesday may not sort everything out the way we think it might.

MS. CLIFT: Right, but -- MR. MCLAUGHLIN: Monica, you dumped on the system.

MS. CLIFT: -- the chaos we're talking about --

MR. MCLAUGHLIN: Now, what do you want to put in its place? Is there anything to put in its place?

MS. CROWLEY: It's a lovable mess.

MS. CLIFT: I just want to say, the chaos you're talking about is not really occurring on the Democratic side.

MR. MCLAUGHLIN: A necessary mess.

MR. ZUCKERMAN: Let me just say one thing. There's a difference between the Republican and the Democratic Party. The Democratic candidates will allocate the representatives to the convention based on their percentage of the vote. So you may not have the front-runner being the candidate, because number two and number three can get together.

Let's just say that John Edwards, for example, has enough votes to put somebody over the top; say, Obama. He may do that even if Hillary is, in a sense, the ostensible leader.

MR. MCLAUGHLIN: There you are.

MR. ZUCKERMAN: But the Republicans, they get the whole state pretty much in almost every state, if you win, even if it's a plurality, right?

MR. BUCHANAN: Winner take all. I don't think that's necessarily true.

MR. ZUCKERMAN: It's winner take all in the Republicans. It's not in the Democrats.

MR. BUCHANAN: What it's going to be -- Eleanor is right, John.

MR. ZUCKERMAN: Therefore, you can have a combination --

MS. CLIFT: Let Pat speak. He said Eleanor is right. (Laughs.)

MR. MCLAUGHLIN: What about that? What about that?

MR. BUCHANAN: Eleanor is right. Look, what will happen February 5th, it will be pretty much a snapshot of the national polls. That's why the folks who are leading in the national polls -- because that's what people will go out and vote on, quite frankly, John, except for one factor, and that is intensity. Intensity of evangelical Christians and others may contradict that.

MS. CLIFT: And on the Republican side, whoever wins Florida will probably be the front-runner in the national polls. MR. BUCHANAN: Exactly. Exactly.

MR. MCLAUGHLIN: Exit question: Have candidates like Giuliani, who skipped Iowa and skipped New Hampshire to focus on Super Tuesday, have they been shrewd or have they been naive? Pat Buchanan.

MR. BUCHANAN: It may pay off, but it was an insane risk to forfeit the first four or five states and expect to be the front- runner going into the sixth.

MR. MCLAUGHLIN: Were you on all these primaries and caucuses?

MR. BUCHANAN: I lost 33 straight primaries to George W. Bush -- (laughter) -- rather, H.W.

MS. CLIFT: Look, it was a gamble that Giuliani took because he had to. He wasn't going to do well in these early states.

MR. MCLAUGHLIN: Why? Why?

MS. CLIFT: Because Iowa and New Hampshire are not his kind of place. He's a big-state kind of guy. And he thinks if he wins Florida, then he goes into Super Tuesday with --

MR. MCLAUGHLIN: So you think it was shrewd.

MS. CLIFT: I think it's shrewd because it was the only option open to him. And if it pays off, fine. It's unlikely to pay off.

MS. CROWLEY: Well, I'm not so sure going about this whole election a la carte, as a lot of these candidates have, has been entirely wise. Look, I think Rudy is banking on America's attention deficit disorder, that by the time we get to Florida, people will be so sick of McCain and Romney and Huckabee that they might be looking for a fresh face.

MR. MCLAUGHLIN: What is he forgetting?

MS. CROWLEY: But that's not exactly a solid strategy.

MR. MCLAUGHLIN: What he's forgetting is branding. The ones who are out front have been branded. They're way ahead, are they not?

MR. ZUCKERMAN: But he thought he was branded by 9/11, that he was America's mayor, and the only sort of leader and hero to come out of 9/11. That was his branding.

MR. MCLAUGHLIN: Was it a mistake?

MR. ZUCKERMAN: It may have been a mistake. If he wins Florida, which is where he's concentrated his money and his effort --

MS. CROWLEY: He'll be a genius.

MR. ZUCKERMAN: -- then he will look like he was a star. But the chances that he will win Florida have been greatly diminished because he's been out of the --

MR. BUCHANAN: He's blown his national lead. He blew it.

MR. MCLAUGHLIN: The answer is naive. He's been naive.

Issue Three: Preacher or Politician?

Mike Huckabee speaks freely and often about being a Christian. In his political addresses, he often alludes to and salutes Jesus Christ. (Video clips of Mike Huckabee invoking the name of Jesus Christ in campaign appearances.)

Question: Is it appropriate for a presidential candidate to wear his faith on his sleeve? Monica Crowley.

MS. CROWLEY: Well, it can be. I mean, we do want our candidates to believe in something. And if they're proud of their faith, that's one thing. But to use it as a brazen attempt to try to score votes in socially conservative states like South Carolina, that's another thing.

Now, look, we talked about Super Tuesday. Thirty percent of the Republican vote in the state of California is evangelical, so there may be some method to his madness here. But for Reverend Huckabee to take his campaign from the heartland to the holy land in such an extreme way, I think, ultimately is going to backfire on him and he will not get the nomination.

MS. CLIFT: I think he's overreached. When you talk about amending the Constitution to meet God's standards, that's a rather bracing comment to those of us who don't fully understand the code that he's speaking in.

MR. MCLAUGHLIN: Let's explain that a little bit more -- amending the U.S. Constitution to ban abortion and to ban gay marriage.

FORMER ARKANSAS GOVERNOR MIKE HUCKABEE (R) (Republican presidential candidate): (From videotape.) I have opponents in this race who do not want to change the Constitution. But I believe it's a lot easier to change the Constitution than it would be to change the word of the living God. And that's what we need to do is to amend the Constitution so it's in God's standards rather than try to change God's standard so it lines up with some contemporary view of how we treat -- (inaudible).

MR. MCLAUGHLIN: Governor Huckabee wants two constitutional amendments -- one prohibiting abortion, the other prohibiting gay marriage.

Question: To govern the way he wants, what part of the Constitution will President Huckabee need to amend first? Can you answer that, Patrick?

MR. BUCHANAN: Well, he's not going to get the amendments. But the Republican platform calls for a constitutional amendment outlawing abortion and a constitutional amendment on establishing marriage as between a man and a woman. And let me say about --

MR. MCLAUGHLIN: Wait a minute. You think it's wise for a presidential candidate to come out with that? MR. BUCHANAN: Why do you think he won Iowa? Why do you think --

MR. MCLAUGHLIN: Against the background of his devotion to Jesus?

MR. BUCHANAN: Look, John, my view is this. A man can go out and say anything he wants, if it's what he believes, to get nominated and elected. And if he's devoted to his faith and that governs his political decisions, you ought to say so and let the people judge.

MS. CLIFT: The problem is that when people who are not evangelicals hear him speak, they think that he wants to impose Christianity as the official --

MR. BUCHANAN: Vote against him then.

MS. CLIFT: -- that he wants to impose a theocracy.

MR. BUCHANAN: Then you should vote against him.

MS. CLIFT: What he's talking about is amendments to ban abortion --

MR. BUCHANAN: Right.

MS. CLIFT: -- amendments to ban gay marriage and amendments to bring back school prayer.

MR. BUCHANAN: What's wrong with that?

MR. MCLAUGHLIN: Can you --

MS. CLIFT: Most people in this country are --

MR. BUCHANAN: Well, then he'll lose. He'll lose.

MS. CLIFT: Exactly. He will lose. So I'm not worried. I'm not worried.

MR. BUCHANAN: He may get the nomination, though.

MR. MCLAUGHLIN: I want to know from you whether you have ever heard in political discourse such an open and continuous reference to Jesus Christ. You wrote speeches for Richard Nixon.

MR. BUCHANAN: Right.

MR. MCLAUGHLIN: And Richard Nixon was totally opposed. As a matter of fact, he asked Billy Graham not to endorse him in 1960 --

MR. BUCHANAN: Well, he goes back almost to --

MR. MCLAUGHLIN: -- because he wanted to keep religion outside of politics, because religion would be damaged in that political context. MR. BUCHANAN: Well, John, this is ridiculous. Look, we had a mixture, basically, of religion and politics in the civil rights movement, the abolition movement, the temperance movement. All came out of the pulpits and the churches. It is influence politics.

MR. MCLAUGHLIN: Does your skin crawl when you hear political discourse including Jesus Christ?

MR. ZUCKERMAN: No, it doesn't -- my skin doesn't crawl. But I still remember it was once written, "Render unto Caesar that which is Caesar's; render unto God that which is God's." We in this country have always believed in the separation of church and state. I think it has served --

MR. MCLAUGHLIN: Do you think he's violating that?

MR. ZUCKERMAN: I think it has served this country well. And, yes, I do think he's violating it.

MR. MCLAUGHLIN: Do you think he's violating it?

MS. CLIFT: He's speaking to a narrow group of Americans. He will not be the nominee. He will not even wedge himself on the ticket in the vice presidential. He's king of the evangelicals.

MR. MCLAUGHLIN: That goes to our exit question. Will Huckabee's religious views turn voters off or turn voters on?

MR. BUCHANAN: They are the reason why he has done so well. And you cannot separate God and country.

MS. CLIFT: He didn't even win, I don't believe, a majority of the evangelicals in Michigan, because evangelicals don't want to overstep either.

MR. MCLAUGHLIN: Also --

MR. BUCHANAN: Why did he win Iowa?

MS. CLIFT: Iowa is one state.

MR. MCLAUGHLIN: Pollsters are beginning --

MS. CLIFT: They also voted for Pat Robertson.

MR. MCLAUGHLIN: Pollsters have lowered their estimation of the importance of the audience that he's talking to by reason of cohesion, by reason of number. Therefore, is he making a drastically badly formed judgment?

MS. CROWLEY: He made a good decision at the beginning of this race, because we're talking about these quirky states that have big evangelical bases, whether it's Iowa, South Carolina --

MR. MCLAUGHLIN: We're talking about the Jesus rhetoric.

MS. CROWLEY: I'm talking about the American audience at large and we're talking about even within the Republican Party, a relatively small but vocal portion.

MR. ZUCKERMAN: Look, I think the reason why he did well is not just because he's a man of faith. He turned out to be a very, very attractive, intelligent political personality. And that was a total surprise to so many people. Now I think what's happening is that he's pushed that issue so far, he's alienating at least as many people as he's attracting.

MS. CLIFT: Absolutely.

MR. MCLAUGHLIN: I think you've hit the nail right on the head. I'll go along with that. Issue Four: Starbucks Froth.

Starbucks, an international giant, 10,000 stores within the U.S. alone, an additional 5,000 in 42 other countries. In 2007, the company's earnings growth reached double digits with a profit of $9.4 billion. Also in 2007, the Starbucks chain opened 2,500 new stores.

Now, alas, the world's largest coffee retailer may be going stale. Share prices slipped almost 50 percent last year, and cheaper competition has been brewed. It's now a McDonald's McLatte versus a Starbucks Caramel Macchiato. Customers complain that the shop has abandoned its focus, like creating unique drinks. Also service has slipped, and so has the atmosphere; less trendy cache, more stark commerce. Founder and CEO Howard Schultz says he can bring it all back, but with far fewer outlets in the U.S.

Question: Why didn't the Wal-Mart expansion strategy of trying to be on every corner work for Starbucks? Pat Buchanan.

MR. BUCHANAN: I think it's a saturation thing, John. I think it's much more of a specialty. It's very quality coffee. It's very powerful and different. And I don't think it is a McDonald's type product.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's also very expensive. And I think they went into some neighborhoods where people don't have this kind of discretionary income. And now they're running into the recessionary aspects of the economy. And spending four dollars on a cup of coffee is something that people are going to have to eliminate, a lot of them.

MR. MCLAUGHLIN: You could be doing consulting for them.

MS. CLIFT: Listen -- (laughs) --

MR. MCLAUGHLIN: What do you say, Monica? Quickly.

MS. CROWLEY: Once they introduced the pumpkin upside-down double-shot latte, that's when they hit the point of diminishing returns. (Laughs.)

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: Listen, he happens to be a business genius, the guy who started it and is now coming back. But I do agree he over- expanded. You know, it happens all the time. And he over-expanded. He knows it. He's going to cut it back. There are no magic formulas now. It's going to go back to the basic business model that he had before.

MR. MCLAUGHLIN: Exactly right. Big is not necessarily better. Predictions. Pat.

MR. BUCHANAN: Because the Democrats, all of them, say all our troops will be out within a year, combat troops, General David Petraeus will be a major player in the campaign of 2008, this year.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: You heard it here first: Wisconsin Governor Tim Pawlenty likely to be the Republican running mate, whoever gets the nomination.

MR. MCLAUGHLIN: Really?

Monica.

MS. CROWLEY: Things have been relatively stable in Pakistan since the Islamic fundamentalists took out Benazir Bhutto. That is all going to change. The militants look at this as their moment. They're starting to encroach on some of the big cities in Pakistan. And you will see increasing destabilization and perhaps even the elimination of President Musharraf.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: We are heading in for the worst recession, I believe, since the Depression. We are going to have a recession that's going to last more than a year. We will have a 6-and-a-half to 7 percent unemployment rate. We will have a drop in the federal funds rate to below 3 percent, and it still will not cure the problem of huge losses, both in the housing market, which will drop by another 10 percent going into next year, and in the credit markets, which have unimaginable losses, in the literally hundreds and hundreds of billions of dollars.

MR. MCLAUGHLIN: This is take-to-the-ledge time, right? (Laughter.)

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: I predict that on January 30th, one week from Wednesday, the Federal Reserve will cut the interest rate 75 basis points, three-quarters of 1 percent.

Bye-bye.



END.
l, do you want to put it together?

MS. CROWLEY: (Laughs.)

MR. MCLAUGHLIN: You've got to get a nominee in mind and you've got to say whether that nominee --

MS. CROWLEY: But it's been very difficult. So far what we've had is no-mentum. We've had an election a la carte where we've had a bunch of idiosyncratic states so far voting in bolloxed-up primaries, producing anomalous results. And the result has been no leader, no momentum, nothing for anybody to really brag about.

Super Tuesday will probably change that, although when you look at the Republican side, it has been a war of attrition, real splintering. You've got the economic conservatives going for Romney, the social conservatives going for Huckabee, and the national security hawks, who wanted to go for Rudy, have been gravitating toward McCain. On the Democratic side you've had a similar splintering. It's niche voting, only it's by race and by gender.

MR. MCLAUGHLIN: Are you critiquing the whole primary --

MS. CROWLEY: I --

MR. MCLAUGHLIN: Wait a minute -- the whole primary and caucus system?

MS. CROWLEY: No, but I'm saying -- you're asking about Super Tuesday. And what I'm saying is, because you've got this enormous splintering --

MR. MCLAUGHLIN: Yeah, but you critiqued the whole system.

MS. CROWLEY: -- on both sides, though, John, that Super Tuesday may not sort everything out the way we think it might.

MS. CLIFT: Right, but -- MR. MCLAUGHLIN: Monica, you dumped on the system.

MS. CLIFT: -- the chaos we're talking about --

MR. MCLAUGHLIN: Now, what do you want to put in its place? Is there anything to put in its place?

MS. CROWLEY: It's a lovable mess.

MS. CLIFT: I just want to say, the chaos you're talking about is not really occurring on the Democratic side.

MR. MCLAUGHLIN: A necessary mess.

MR. ZUCKERMAN: Let me just say one thing. There's a difference between the Republican and the Democratic Party. The Democratic candidates will allocate the representatives to the convention based on their percentage of the vote. So you may not have the front-runner being the candidate, because number two and number three can get together.

Let's just say that John Edwards, for example, has enough votes to put somebody over the top; say, Obama. He may do that even if Hillary is, in a sense, the ostensible leader.

MR. MCLAUGHLIN: There you are.

MR. ZUCKERMAN: But the Republicans, they get the whole state pretty much in almost every state, if you win, even if it's a plurality, right?

MR. BUCHANAN: Winner take all. I don't think that's necessarily true.

MR. ZUCKERMAN: It's winner take all in the Republicans. It's not in the Democrats.

MR. BUCHANAN: What it's going to be -- Eleanor is right, John.

MR. ZUCKERMAN: Therefore, you can have a combination --

MS. CLIFT: Let Pat speak. He said Eleanor is right. (Laughs.)

MR. MCLAUGHLIN: What about that? What about that?

MR. BUCHANAN: Eleanor is right. Look, what will happen February 5th, it will be pretty much a snapshot of the national polls. That's why the folks who are leading in the national polls -- because that's what people will go out and vote on, quite frankly, John, except for one factor, and that is intensity. Intensity of evangelical Christians and others may contradict that.

MS. CLIFT: And on the Republican side, whoever wins Florida will probably be the front-runner in the national polls. MR. BUCHANAN: Exactly. Exactly.

MR. MCLAUGHLIN: Exit question: Have candidates like Giuliani, who skipped Iowa and skipped New Hampshire to focus on Super Tuesday, have they been shrewd or have they been naive? Pat Buchanan.

MR. BUCHANAN: It may pay off, but it was an insane risk to forfeit the first four or five states and expect to be the front- runner going into the sixth.

MR. MCLAUGHLIN: Were you on all these primaries and caucuses?

MR. BUCHANAN: I lost 33 straight primaries to George W. Bush -- (laughter) -- rather, H.W.

MS. CLIFT: Look, it was a gamble that Giuliani took because he had to. He wasn't going to do well in these early states.

MR. MCLAUGHLIN: Why? Why?

MS. CLIFT: Because Iowa and New Hampshire are not his kind of place. He's a big-state kind of guy. And he thinks if he wins Florida, then he goes into Super Tuesday with --

MR. MCLAUGHLIN: So you think it was shrewd.

MS. CLIFT: I think it's shrewd because it was the only option open to him. And if it pays off, fine. It's unlikely to pay off.

MS. CROWLEY: Well, I'm not so sure going about this whole election a la carte, as a lot of these candidates have, has been entirely wise. Look, I think Rudy is banking on America's attention deficit disorder, that by the time we get to Florida, people will be so sick of McCain and Romney and Huckabee that they might be looking for a fresh face.

MR. MCLAUGHLIN: What is he forgetting?

MS. CROWLEY: But that's not exactly a solid strategy.

MR. MCLAUGHLIN: What he's forgetting is branding. The ones who are out front have been branded. They're way ahead, are they not?

MR. ZUCKERMAN: But he thought he was branded by 9/11, that he was America's mayor, and the only sort of leader and hero to come out of 9/11. That was his branding.

MR. MCLAUGHLIN: Was it a mistake?

MR. ZUCKERMAN: It may have been a mistake. If he wins Florida, which is where he's concentrated his money and his effort --

MS. CROWLEY: He'll be a genius.

MR. ZUCKERMAN: -- then he will look like he was a star. But the chances that he will win Florida have been greatly diminished because he's been out of the --

MR. BUCHANAN: He's blown his national lead. He blew it.

MR. MCLAUGHLIN: The answer is naive. He's been naive.

Issue Three: Preacher or Politician?

Mike Huckabee speaks freely and often about being a Christian. In his political addresses, he often alludes to and salutes Jesus Christ. (Video clips of Mike Huckabee invoking the name of Jesus Christ in campaign appearances.)

Question: Is it appropriate for a presidential candidate to wear his faith on his sleeve? Monica Crowley.

MS. CROWLEY: Well, it can be. I mean, we do want our candidates to believe in something. And if they're proud of their faith, that's one thing. But to use it as a brazen attempt to try to score votes in socially conservative states like South Carolina, that's another thing.

Now, look, we talked about Super Tuesday. Thirty percent of the Republican vote in the state of California is evangelical, so there may be some method to his madness here. But for Reverend Huckabee to take his campaign from the heartland to the holy land in such an extreme way, I think, ultimately is going to backfire on him and he will not get the nomination.

MS. CLIFT: I think he's overreached. When you talk about amending the Constitution to meet God's standards, that's a rather bracing comment to those of us who don't fully understand the code that he's speaking in.

MR. MCLAUGHLIN: Let's explain that a little bit more -- amending the U.S. Constitution to ban abortion and to ban gay marriage.

FORMER ARKANSAS GOVERNOR MIKE HUCKABEE (R) (Republican presidential candidate): (From videotape.) I have opponents in this race who do not want to change the Constitution. But I believe it's a lot easier to change the Constitution than it would be to change the word of the living God. And that's what we need to do is to amend the Constitution so it's in God's standards rather than try to change God's standard so it lines up with some contemporary view of how we treat -- (inaudible).

MR. MCLAUGHLIN: Governor Huckabee wants two constitutional amendments -- one prohibiting abortion, the other prohibiting gay marriage.

Question: To govern the way he wants, what part of the Constitution will President Huckabee need to amend first? Can you answer that, Patrick?

MR. BUCHANAN: Well, he's not going to get the amendments. But the Republican platform calls for a constitutional amendment outlawing abortion and a constitutional amendment on establishing marriage as between a man and a woman. And let me say about --

MR. MCLAUGHLIN: Wait a minute. You think it's wise for a presidential candidate to come out with that? MR. BUCHANAN: Why do you think he won Iowa? Why do you think --

MR. MCLAUGHLIN: Against the background of his devotion to Jesus?

MR. BUCHANAN: Look, John, my view is this. A man can go out and say anything he wants, if it's what he believes, to get nominated and elected. And if he's devoted to his faith and that governs his political decisions, you ought to say so and let the people judge.

MS. CLIFT: The problem is that when people who are not evangelicals hear him speak, they think that he wants to impose Christianity as the official --

MR. BUCHANAN: Vote against him then.

MS. CLIFT: -- that he wants to impose a theocracy.

MR. BUCHANAN: Then you should vote against him.

MS. CLIFT: What he's talking about is amendments to ban abortion --

MR. BUCHANAN: Right.

MS. CLIFT: -- amendments to ban gay marriage and amendments to bring back school prayer.

MR. BUCHANAN: What's wrong with that?

MR. MCLAUGHLIN: Can you --

MS. CLIFT: Most people in this country are --

MR. BUCHANAN: Well, then he'll lose. He'll lose.

MS. CLIFT: Exactly. He will lose. So I'm not worried. I'm not worried.

MR. BUCHANAN: He may get the nomination, though.

MR. MCLAUGHLIN: I want to know from you whether you have ever heard in political discourse such an open and continuous reference to Jesus Christ. You wrote speeches for Richard Nixon.

MR. BUCHANAN: Right.

MR. MCLAUGHLIN: And Richard Nixon was totally opposed. As a matter of fact, he asked Billy Graham not to endorse him in 1960 --

MR. BUCHANAN: Well, he goes back almost to --

MR. MCLAUGHLIN: -- because he wanted to keep religion outside of politics, because religion would be damaged in that political context. MR. BUCHANAN: Well, John, this is ridiculous. Look, we had a mixture, basically, of religion and politics in the civil rights movement, the abolition movement, the temperance movement. All came out of the pulpits and the churches. It is influence politics.

MR. MCLAUGHLIN: Does your skin crawl when you hear political discourse including Jesus Christ?

MR. ZUCKERMAN: No, it doesn't -- my skin doesn't crawl. But I still remember it was once written, "Render unto Caesar that which is Caesar's; render unto God that which is God's." We in this country have always believed in the separation of church and state. I think it has served --

MR. MCLAUGHLIN: Do you think he's violating that?

MR. ZUCKERMAN: I think it has served this country well. And, yes, I do think he's violating it.

MR. MCLAUGHLIN: Do you think he's violating it?

MS. CLIFT: He's speaking to a narrow group of Americans. He will not be the nominee. He will not even wedge himself on the ticket in the vice presidential. He's king of the evangelicals.

MR. MCLAUGHLIN: That goes to our exit question. Will Huckabee's religious views turn voters off or turn voters on?

MR. BUCHANAN: They are the reason why he has done so well. And you cannot separate God and country.

MS. CLIFT: He didn't even win, I don't believe, a majority of the evangelicals in Michigan, because evangelicals don't want to overstep either.

MR. MCLAUGHLIN: Also --

MR. BUCHANAN: Why did he win Iowa?

MS. CLIFT: Iowa is one state.

MR. MCLAUGHLIN: Pollsters are beginning --

MS. CLIFT: They also voted for Pat Robertson.

MR. MCLAUGHLIN: Pollsters have lowered their estimation of the importance of the audience that he's talking to by reason of cohesion, by reason of number. Therefore, is he making a drastically badly formed judgment?

MS. CROWLEY: He made a good decision at the beginning of this race, because we're talking about these quirky states that have big evangelical bases, whether it's Iowa, South Carolina --

MR. MCLAUGHLIN: We're talking about the Jesus rhetoric.

MS. CROWLEY: I'm talking about the American audience at large and we're talking about even within the Republican Party, a relatively small but vocal portion.

MR. ZUCKERMAN: Look, I think the reason why he did well is not just because he's a man of faith. He turned out to be a very, very attractive, intelligent political personality. And that was a total surprise to so many people. Now I think what's happening is that he's pushed that issue so far, he's alienating at least as many people as he's attracting.

MS. CLIFT: Absolutely.

MR. MCLAUGHLIN: I think you've hit the nail right on the head. I'll go along with that. Issue Four: Starbucks Froth.

Starbucks, an international giant, 10,000 stores within the U.S. alone, an additional 5,000 in 42 other countries. In 2007, the company's earnings growth reached double digits with a profit of $9.4 billion. Also in 2007, the Starbucks chain opened 2,500 new stores.

Now, alas, the world's largest coffee retailer may be going stale. Share prices slipped almost 50 percent last year, and cheaper competition has been brewed. It's now a McDonald's McLatte versus a Starbucks Caramel Macchiato. Customers complain that the shop has abandoned its focus, like creating unique drinks. Also service has slipped, and so has the atmosphere; less trendy cache, more stark commerce. Founder and CEO Howard Schultz says he can bring it all back, but with far fewer outlets in the U.S.

Question: Why didn't the Wal-Mart expansion strategy of trying to be on every corner work for Starbucks? Pat Buchanan.

MR. BUCHANAN: I think it's a saturation thing, John. I think it's much more of a specialty. It's very quality coffee. It's very powerful and different. And I don't think it is a McDonald's type product.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's also very expensive. And I think they went into some neighborhoods where people don't have this kind of discretionary income. And now they're running into the recessionary aspects of the economy. And spending four dollars on a cup of coffee is something that people are going to have to eliminate, a lot of them.

MR. MCLAUGHLIN: You could be doing consulting for them.

MS. CLIFT: Listen -- (laughs) --

MR. MCLAUGHLIN: What do you say, Monica? Quickly.

MS. CROWLEY: Once they introduced the pumpkin upside-down double-shot latte, that's when they hit the point of diminishing returns. (Laughs.)

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: Listen, he happens to be a business genius, the guy who started it and is now coming back. But I do agree he over- expanded. You know, it happens all the time. And he over-expanded. He knows it. He's going to cut it back. There are no magic formulas now. It's going to go back to the basic business model that he had before.

MR. MCLAUGHLIN: Exactly right. Big is not necessarily better. Predictions. Pat.

MR. BUCHANAN: Because the Democrats, all of them, say all our troops will be out within a year, combat troops, General David Petraeus will be a major player in the campaign of 2008, this year.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: You heard it here first: Wisconsin Governor Tim Pawlenty likely to be the Republican running mate, whoever gets the nomination.

MR. MCLAUGHLIN: Really?

Monica.

MS. CROWLEY: Things have been relatively stable in Pakistan since the Islamic fundamentalists took out Benazir Bhutto. That is all going to change. The militants look at this as their moment. They're starting to encroach on some of the big cities in Pakistan. And you will see increasing destabilization and perhaps even the elimination of President Musharraf.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: We are heading in for the worst recession, I believe, since the Depression. We are going to have a recession that's going to last more than a year. We will have a 6-and-a-half to 7 percent unemployment rate. We will have a drop in the federal funds rate to below 3 percent, and it still will not cure the problem of huge losses, both in the housing market, which will drop by another 10 percent going into next year, and in the credit markets, which have unimaginable losses, in the literally hundreds and hundreds of billions of dollars.

MR. MCLAUGHLIN: This is take-to-the-ledge time, right? (Laughter.)

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: I predict that on January 30th, one week from Wednesday, the Federal Reserve will cut the interest rate 75 basis points, three-quarters of 1 percent.

Bye-bye.



END.