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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, OCTOBER 3, 2008 BROADCAST: WEEKEND OF OCTOBER 4-5, 2008

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DR. MCLAUGHLIN: Issue One: Veep Faceoff.

ALASKA GOVERNOR SARAH PALIN (Republican vice presidential nominee): (From videotape.) When we talk about the Bush administration, there's a time too when Americans are going to say, "Enough is enough with your ticket on constantly looking backwards and pointing fingers and doing the blame game." There have been huge blunders throughout this administration, as there are with every administration.

DR. MCLAUGHLIN: Question: What's the impact of the Republican vice presidential candidate Sarah Palin cutting loose from her Republican president and the leader of her party, the blunderer, George Bush? Pat Buchanan. MR. BUCHANAN: Well, John, she had a sensational debate. She re- established herself as the real factor, the exciting factor in the Republican race. With Bush, she's maintained her reputation. She's a maverick. She's an outsider. That's what she's got to do. Bush would understand it.

I think overall what it's done for the race is it's probably stopped the bleeding of the McCain-Palin ticket, but they stopped the bleeding probably at five points behind nationally and behind in almost all of the big swing states. It is now up to John McCain.

DR. MCLAUGHLIN: Senator Biden is trying to establish a line between the president and the nominee, a direct line. Now, she has obviously broken that line as far as she's concerned.

MS. CLIFT: Sarah Palin can't shed George Bush for John McCain. And I thought one of the most effective moments in the debate that Senator Biden had was when he said that McCain's policies on the war, Iraq, Afghanistan, on the economy, on health care, on any subject -- name it -- they're no different from President Bush.

So I think Sarah Palin went into this debate on the verge of becoming a national joke, and she basically revived her own image as a compelling political figure, and she maybe even won on style points. But substantively, if you listen to what she had to say, she strings together phrases quite effectively, but when it comes to policy, all she can say is, "We're mavericks. We're going to reform things." It's gibberish.

DR. MCLAUGHLIN: What about that?

MS. CROWLEY: She was dynamite during this debate -- dynamite. And one of the reasons why is because the other three men who are running for the top places in the American government, they are all part of the United States Senate. The U.S. Congress is down at 10 percent job approval rating. The president, from which she was trying to distance herself and trying to distance John McCain, is at 22 percent job approval.

All she had to do was stand there representing the American people as an outsider from a state as far away as you can get from Washington, D.C. and still be an American. She drew the line, I think, even more effectively than John McCain did last week in his debate. She was much more focused. She made the differences very clear. And she laid out the conservative governing philosophy even better than the guy at the top of her ticket did.

DR. MCLAUGHLIN: Okay, Democratic vice presidential nominee Senator Joe Biden linked McCain to Bush.

SEN. JOSEPH BIDEN (D-DE, Democratic vice presidential nominee): (From videotape.) Let's talk about the maverick, John McCain. And again, I love him. He's been a maverick on some issues. But he has been no maverick on the things that matter to people's lives. He voted four out of five times for George Bush's budget, which put us half a trillion dollars in debt this year and over $3 trillion in debt since he got there.

DR. MCLAUGHLIN: Question: Is Biden successful in the Bush- McCain linkage? I ask you, Mort.

MR. ZUCKERMAN: Yeah, I think he made, from his point of view, some political progress in linking the two. And, of course, that is greatly in the political interest of Obama and him. Bush is so unpopular, Bush's approval rating is down to 15 percent. And he has no --

DR. MCLAUGHLIN: Fifteen?

MR. ZUCKERMAN: Yes, it's down to 15 now.

DR. MCLAUGHLIN: Is that an all-time record?

MR. ZUCKERMAN: I've seen polls anywhere from 15 to 22. It's as low as it's ever been.

DR. MCLAUGHLIN: That's below Truman. Truman was the lowest.

MR. BUCHANAN: Truman was at 23 and Nixon was at 25.

DR. MCLAUGHLIN: Who was at 23?

MR. BUCHANAN: Truman was at 23; Nixon, 25.

MS. CLIFT: This is not a competition you want to win. (Laughter.)

MR. ZUCKERMAN: This week the highest number I've seen for Bush is 22.

MR. BUCHANAN: I saw 26.

MR. ZUCKERMAN: So, in any event, let's say -- it doesn't make that much of a difference. Let's be generous. I'll tell you what. I'll give you 27.

DR. MCLAUGHLIN: Okay, the economy as seen by a mom.

GOV. PALIN: (From videotape.) It was my connection to the heartland of America, being a mom, being one who is very concerned about a son in the war, about a special-needs child, about kids heading off to college -- how are we going to pay those tuition bills? -- about (times ?) and Todd and our marriage and our past, where we didn't have health insurance. And we know what other Americans are going through as they sit around the kitchen table and try to figure out, how are they going to pay out of pocket for health care? We've been there also. So that connection was important.

DR. MCLAUGHLIN: Question: Does Governor Palin's heartland mom experience help her with economic credentials? Monica.

MS. CROWLEY: Yes, I believe that it does, because, look, when -- she was out there relating directly to the people who are just like her. This is why John McCain chose her, not because she's a woman, not because they were trying to appeal to the Hillary voters, but because she -- she was sent out there to represent the people who are just like her. Those folks out there in middle America, she is one of them, not of the Washington establishment.

The guy she was debating -- 36 years in the U.S. Senate -- his feet are in cement in the U.S. Senate.

MS. CLIFT: She is not running to be president. She's running with a man who's been in the Senate a long time. So I wouldn't go down that path too far.

MS. CROWLEY: But I'm talking about her populist appeal, Eleanor, which is tremendous.

MS. CLIFT: And there aren't that many moose-hunting people married to snowmobile champions --

MR. ZUCKERMAN: Now, wait a minute. (Laughter.)

MS. CLIFT: And I assume you're going to play the section with Senator Biden saying, as a father, he knows what it's like to raise children and can understand economic problems.

MR. BUCHANAN: John --

MS. CLIFT: And Barack Obama has opened a huge lead --

DR. MCLAUGHLIN: Well, have you seen our advertisement for the Snowmobile Manufacturing Association?

MR. BUCHANAN: The reason --

MS. CLIFT: -- over McCain on economic issues.

MR. BUCHANAN: The reason she wins this is she is authentic. Now, Joe might have been from Scranton, but that is --

MS. CLIFT: I think he was authentic too.

MR. BUCHANAN: He's 65 years old. But the key thing, John, we are talking about things which aren't the reason why McCain is down now. It is this crash of Lehman Brothers and the things that happened, the big events. I mean, it's not tying him to Bush. McCain and Palin could have beaten that. This economy has tanked, and that is what is killing --

DR. MCLAUGHLIN: It's because Obama is perceived to be a better manager of the faltering economy.

MR. BUCHANAN: No, no. Obama is riding the wave. The problem is, the wave is powerful.

DR. MCLAUGHLIN: They're blaming Bush, and it transfers to McCain. MR. BUCHANAN: The whole Republican Party is being blamed, and it's dragging them down.

MR. ZUCKERMAN: Well, they're the party in power, and the economy has gone down dramatically. It's become the overwhelming issue in the last couple of weeks because of what is an unprecedented financial crash. It dominates the news. Before that, after all, McCain was doing very well, which has knocked McCain right off his game.

DR. MCLAUGHLIN: Okay --

MS. CLIFT: And McCain's behavior has been very erratic responding to this crisis as well.

DR. MCLAUGHLIN: Okay, Senator Biden says John McCain, Republican presidential nominee, is out of touch.

SEN. BIDEN: (From videotape.) Well, you know, until two weeks ago -- it was two Mondays ago John McCain said at 9:00 in the morning that the fundamentals of the economy were strong. Two weeks before that he said we've made great economic progress under George Bush's policies. At 9:00 the economy was strong. At 11:00 that same day, two Mondays ago, John McCain said that we have an economic crisis. That doesn't make John McCain a bad guy, but it does point out he's out of touch.

DR. MCLAUGHLIN: Question: Is John McCain out of touch, or is he a political opportunist, or is he a true blue maverick following his conscience and not his party? I ask you, Mort.

MR. ZUCKERMAN: Well, number one, he certainly is a maverick. I don't believe he's out of touch. What was involved in that is a very simple statement, which is, in fact, true, that much of the fundamentals of this economy are what has powered us for a long time and are still in place. What has happened, we've had a huge financial collapse which is separate from the basic operation of our economy and is now feeding into that economy. So it was an inappropriate statement politically. But, in fact, it's fundamentally correct.

MS. CLIFT: Well, it's the same thing that Herbert Hoover said, and you don't want to be caught repeating that kind of language. But more importantly, John McCain hasn't really put forward a middle-class agenda on the economy that people can relate to. And people are not going to turn to somebody who is this closely associated with the Bush administration to trust on the economy.

MR. BUCHANAN: John, he did -- in McCain, there's no doubt about it, Eleanor's correct. In the first week, with the AIG thing, that statement, "Fire Chris Cox," McCain was scrambling all over the lot while this disaster was breaking. And that's what --

DR. MCLAUGHLIN: But he's a maverick, Pat. MR. BUCHANAN: But that's what's really damaged him.

DR. MCLAUGHLIN: Okay, see whether this works -- Washington outsider.

GOV. PALIN: (From videotape.) I'm a Washington outsider and someone just not used to the way you guys operate, because here you voted for the war and now you oppose the war. You're one who says, you know, as so many politicians do, "I was for it before I was against it," or vice versa. Americans are craving that straight talk and just want to know, "Hey, if you voted for it, tell us why you voted for it."

DR. MCLAUGHLIN: Question: Does outsider status work for Palin? I ask you, Monica.

MS. CROWLEY: Joe Biden -- you know, your heart went out to him because he turned around; he had a four-inch stiletto in his rear before he realized what happened to him. She's the perfect messenger for the kind of reform message that John McCain is running on, because she is from outside.

Remember, of the four top people running for the presidency and vice presidency, she's the only one who wasn't in the U.S. Senate voting on the $700 billion behemoth bill, bailout bill. So I think, you know what? When you look at John McCain's poll numbers --

MS. CLIFT: She's not --

DR. MCLAUGHLIN: Let her finish. Let her finish.

MS. CROWLEY: Let me just finish -- on the economy, and you see that he's bearing the brunt of the backlash of the financial crisis, it's not because Barack Obama is a Nobel laureate in economic. It's because they're blaming the incumbent party.

DR. MCLAUGHLIN: Eleanor --

MS. CLIFT: Monica, she's --

MS. CROWLEY: But what we're forgetting --

DR. MCLAUGHLIN: Hold on.

MS. CROWLEY: Excuse me. What we're forgetting is that the Democrats are the incumbent party in the Congress. They are equally responsible.

DR. MCLAUGHLIN: Ah.

MS. CROWLEY: And none of that seems to be (slipping up under ?) Barack Obama. DR. MCLAUGHLIN: What about that, Eleanor?

MS. CLIFT: Because that's not what the voters are responding to. They're responding to a message of change, and that's what Obama represents. Palin is not an independent operator. Who cares whether she voted for or didn't vote for the $700 billion package?

MS. CROWLEY: Because she's not --

DR. MCLAUGHLIN: Let her finish. Let her finish.

MS. CROWLEY: She's not part of the establishment, Eleanor.

MS. CLIFT: And as I recall, she was for the Bridge to Nowhere before she was against it. So they play those games out there in Wasilla, just like they play them in Washington --

(Cross-talk.)

DR. MCLAUGHLIN: Sometimes you have to do what you have to do. She rather adroitly addressed that.

MR. BUCHANAN: Look, that was one of the most effective moments of the whole campaign. And it's the way she delivers it, as this gal from Alaska who's witty --

MS. CLIFT: Pat's in love. Pat's in love. (Laughs.)

MR. BUCHANAN: Look, it's not only Pat. It's about 50 million others. (Laughs.

)

DR. MCLAUGHLIN: What's the point? She handled the Bridge to Nowhere well?

MR. BUCHANAN: John, let's get away from this prose. The point is, this woman is tremendously fresh. Her vocabulary is different. She comes from outside. She's authentic. Joe Biden, for whatever you say about him, is the same boring old Joe.

MR. ZUCKERMAN: There's one other thing here, which I have to say astonishes me. This $700 billion package is so unpopular in the country because it is seen to be helping the very people --

DR. MCLAUGHLIN: Wait a minute, now. There are more recent polls. The country is pretty much split.

MR. BUCHANAN: They're desperate. That's why they're for it.

MR. ZUCKERMAN: Let me tell you, if somebody's for it, they feel they have no other option. But I was amazed that somebody like McCain or indeed even Obama didn't say, "You know, the average guy has to sell his home at whatever the market price is, and the government is going to go in and buy out from these guys at above-market prices. There's something totally unfair about that."

MS. CLIFT: But the country --

MR. ZUCKERMAN: Just a minute. Let me finish. It is absolutely the case that this bill was as unpopular as any bill I have seen in the last decade.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The country got a glimpse of the abyss on the two days after the House voted it down, and that changed a lot of minds.

DR. MCLAUGHLIN: Okay.

MR. ZUCKERMAN: They only saw the stock market go down; that's all. MS. CLIFT: And Sarah Palin may -- (inaudible) -- but there's not a comfort level with her as a potential president.

DR. MCLAUGHLIN: All right, let --

MR. BUCHANAN: There is a comfort level --

MS. CLIFT: It has not happened.

MR. BUCHANAN: There's a comfort level with me, Eleanor. (Laughs.)

MS. CLIFT: Well, there is with you, but not with the majority of Americans.

DR. MCLAUGHLIN: We just had Washington outsider. Okay, Washington insider.

SEN. BIDEN: (From videotape.) I have 35 years in public office. I will place my record and Barack's record against John McCain's or anyone else in terms of fundamental accomplishments -- wrote the crime bill, put 100,000 cops on the street, wrote the Violence Against Women Act, which John McCain voted against it, both of them.

DR. MCLAUGHLIN: Question: Does insider status work for Biden? Pat.

MR. BUCHANAN: With due respect, Joe can be a very clever, witty guy. He was a bore.

DR. MCLAUGHLIN: What about at the very end?

MR. BUCHANAN: The ending was touching. He had a couple of touching moments -- the Jesse Helms thing and when he broke down. That was the real Joe Biden. Why didn't he show more of himself?

MS. CLIFT: I think he showed plenty to people who weren't aware of him.

MR. ZUCKERMAN: There's one thing that Joe Biden --

DR. MCLAUGHLIN: Let Eleanor in. Go ahead.

MS. CLIFT: I think he showed plenty to people who aren't really aware of him. But it's not about Joe Biden. It's about Barack Obama. And I think he kept the focus on Barack Obama versus John McCain.

DR. MCLAUGHLIN: And also he clearly won the polling afterwards by, what, 30 points?

MS. CLIFT: He won the polling and --

MR. BUCHANAN: (Inaudible.) DR. MCLAUGHLIN: What?

MR. BUCHANAN: On Drudge she won 70 percent.

MS. CLIFT: Well, Drudge. Consider the source.

MR. BUCHANAN: Frank Luntz's focus group went entirely for Palin; all these other things. This CBS poll, I'm convinced, is a phony.

DR. MCLAUGHLIN: Drudge conducted a poll?

MR. BUCHANAN: Yeah, 500,000 people. She got 70 percent.

DR. MCLAUGHLIN: Really? Exit question --

MS. CLIFT: And I'm sure Dick Cheney conducted a poll, too, and it came out just the way you wanted it. (Laughs.)

DR. MCLAUGHLIN: Who won the debate, Palin or Biden?

MR. BUCHANAN: Oh, come on. Palin was a star.

MS. CLIFT: Palin beat expectations, but she didn't beat Joe Biden. And she didn't reassure American people that she's ready to be president. She gets to stay in the race, but she's irrelevant from now on.

MS. CROWLEY: Oh, she gets to stay in the race. Thanks a lot. (Laughter.)

MS. CLIFT: There are a lot of calls for her to get out.

MS. CROWLEY: This was another star turn by Sarah Palin. She's got a bright future even if the ticket doesn't win.

DR. MCLAUGHLIN: She won the debate?

MS. CROWLEY: She won the debate. Yes, she did.

MR. ZUCKERMAN: She was the focus of the debate because of her previous stumbling.

DR. MCLAUGHLIN: Did she win the debate?

MR. ZUCKERMAN: No, I don't think she won the debate. I think she tied for the debate. And I have to say, I thought Joe Biden handled it very well, considering what he had to -

DR. MCLAUGHLIN: What?

MR. ZUCKERMAN: I thought they both did well. But she was much more engaging emotionally than was Joe Biden. DR. MCLAUGHLIN: What's the calculus here -- debate points?

MR. ZUCKERMAN: Well, no, it's not debate points. Joe Biden came across as an authoritative, knowledgeable person; you know, something which --

DR. MCLAUGHLIN: Who won politically the debate?

MR. ZUCKERMAN: I think she did for where she was, just by -- but just barely.

DR. MCLAUGHLIN: You mean, she had further to travel.

MR. ZUCKERMAN: She had a lot further to travel. Everybody was worried about whether or not she would be able to handle --

DR. MCLAUGHLIN: I think it's --

MR. ZUCKERMAN: If she had missed on this debate, the campaign would have been over.

DR. MCLAUGHLIN: I think it's a clear political win for her. She had so far to go. Remember where she was before the debate.

When we come back, the $700 billion bailout -- now $810 billion, by the way -- is it capitalism betrayed?

(Announcements.)

DR. MCLAUGHLIN: Issue Two: Bailout Capitalism.

SENATE MAJORITY LEADER HARRY REID (D-NV): (From videotape.) This is not a piece of legislation for Lower Manhattan. It's legislation for all America.

DR. MCLAUGHLIN: The U.S. Senate said yes this week, 74 to 25, to President Bush's $700 billion financial rescue package, slightly modified. The support came from both sides of the aisle.

SENATE MINORITY LEADER MITCH MCCONNELL (R-KY): (From videotape.) We clearly have demonstrated, in the toughest possible situation, five weeks from an election, that we can come together and address a major crisis.

DR. MCLAUGHLIN: The bailout bill runs more than 450 pages. The deal-making to create it became frantic. In basic principle, the bill is largely the same as Treasury Secretary Henry Paulson's three-page plan; namely, give the government the green light to spend $700 billion to bail out financial institutions.

Both presidential candidates supported the measure. Senator Obama urged passage.

SEN. BARACK OBAMA (D-IL, Democratic presidential nominee): (From videotape.) We can't afford to take a risk that the economy of the United States of America, and as a consequence the worldwide economy, could be plunged into a very, very deep hole.

DR. MCLAUGHLIN: Early this week, Senator McCain did the same.

SEN. JOHN MCCAIN (R-AZ, Republican presidential nominee): (From videotape.) We cannot allow a crisis in our financial system to become a crisis in confidence. I call on everyone in Washington to come together in a bipartisan way to address this crisis. DR. MCLAUGHLIN: Question: Is the bailout necessary to prevent a collapse of the banking system? Mort Zuckerman.

MR. ZUCKERMAN: Look, here's what it's going to do. It's going to save, presumably, any major financial house from collapsing and going through the trap door. What it is not going to do is to relieve the credit crunch. So they were trying to present it as helping small-town America, small businesses, individuals. Bull. It's not going to help that.

Those people are going to be squeezed all through the rest of the year. The banks are going to contract their assets, which means contracting their loans. They're going to be saved by this, I have to tell you. It is going to benefit primarily Wall Street, I hate to say. It will also prevent the collapse. But it is not going to help the average American.

DR. MCLAUGHLIN: Why is it not doing the other? Why is it not an engine to do the kind of reform that you want?

MR. ZUCKERMAN: For two reasons. One is the banks still have to contract their lending because they have lost so much money. Now, the only way to get around that is if they overpay to such a degree -- the average American has to sell his home for the market price. These people may be able to sell this paper for way above the market price, which is one of the reasons why it's so unfair. But the fact is, the banks are still tight for money. The credit has stopped all across the board. Commercial paper has dropped. Money market funds have collapsed. It is just extraordinary what we're going through, and it's all --

DR. MCLAUGHLIN: Okay, hold on. Hog heaven.

The Senate served this bailout bill to the House this week with a large portion of pork in it. The bill includes $1.7 billion in targeted tax breaks, notably --

Item: $192 million, rum producers in Puerto Rico and the Virgin Islands.

Item: $129 million, auto racing tracks.

Item: $33 million, corporations in American Samoa.

Item: $10 million, budget television and film production.

Item: $6 million, manufacturers of wooden arrows for kids.

All of which budget deficits add up over five years to $112 billion.

I'm going to be good to you. I'm going to give you the opportunity to speak first on the hog heaven. MR. ZUCKERMAN: Okay, look, this is not socialism. This is the worst kind of political capitalism. It is absolutely --

DR. MCLAUGHLIN: But it's the way they do business for years --

MR. ZUCKERMAN: It may be the way they do business. You're taking $700 billion. You're adding $120 billion to our budget deficit. We do not have the money. It's going to create a huge fiscal deficit next year that we're going to have great problems with, all to buy their way through this kind of legislation. If this is what this crisis produces, we have a real problem with the way our political system works.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: In Washington, trillion is the new billion. Look, these sums are peanuts that you just delineated. I would like to see the members who have advocated the tax breaks in American Samoa and the rum people stand up and defend that. There needs to be a little more transparency here.

But there are a lot of good tax breaks in this thing. The alternative minimum tax, which would have hit a lot of middle-class people, that's a big number and that's going through. And if we're going to write off all this debt for Wall Street, we might as well --

MR. BUCHANAN: Eleanor's right in this sense. The real true pork was what you mentioned, $1.7 billion. The rest of it's AMT. That's the big stuff, John. But you're right. It's going to be an enormous, enormous deficit.

MS. CROWLEY: They took a lemon. They sprinkled some Splenda on it. It is still a lemon of a bill. And now you see this pork on top of the $700 billion bailout plan. You know, they like to say, "Well, the taxpayers are going to get their money back. We'll be able to turn a profit eventually." Listen to me. Taxpayers will never see one dime of this money back, because this is going to go right back to the government. And have you ever known the government not to spend money that's coming in? We are never going to see this. You know what this is tantamount to? A huge tax increase on the American people.

DR. MCLAUGHLIN: The answer to all of this is hold your nose and vote yes.

We'll be right back with predictions.

(Announcements.)

DR. MCLAUGHLIN: Predictions. Pat. MR. BUCHANAN: The Republicans will go after Barney Frank and all the other guys in that Fannie Mae racket. And secondly, Reverend Wright will make a return because Republicans have got to go hardball.

DR. MCLAUGHLIN: Did Barney get $800,000 from Fannie Mae?

MR. BUCHANAN: Not to my knowledge, John.

DR. MCLAUGHLIN: I believe so.

MS. CLIFT: The last four weeks of this campaign will be just as Pat outlined -- lots of negative attacks, reviving the charge that Obama is an elitist and all these past associations. It won't work.

DR. MCLAUGHLIN: I meant as a political contribution, of course.

MS. CROWLEY: We are going to have two new nuclear crises on our hands. The nuclear disarmament talks with North Korea are crumbling because they are reactivating their weapons program. And now the Syrians are blocking inspectors coming into suspect sites.

MR. ZUCKERMAN: The Federal Reserve role as a regulatory body will be expanded to include the whole shadow banking system that has been left unregulated -- investment banks, all kinds of hedge funds, all kinds of other similar things.

DR. MCLAUGHLIN: Okay, the unemployment rate is currently at 6.1 percent. Next year it will rise to 11 percent.

Bye-bye.



END.

ometimes you have to do what you have to do. She rather adroitly addressed that.

MR. BUCHANAN: Look, that was one of the most effective moments of the whole campaign. And it's the way she delivers it, as this gal from Alaska who's witty --

MS. CLIFT: Pat's in love. Pat's in love. (Laughs.)

MR. BUCHANAN: Look, it's not only Pat. It's about 50 million others. (Laughs.

)

DR. MCLAUGHLIN: What's the point? She handled the Bridge to Nowhere well?

MR. BUCHANAN: John, let's get away from this prose. The point is, this woman is tremendously fresh. Her vocabulary is different. She comes from outside. She's authentic. Joe Biden, for whatever you say about him, is the same boring old Joe.

MR. ZUCKERMAN: There's one other thing here, which I have to say astonishes me. This $700 billion package is so unpopular in the country because it is seen to be helping the very people --

DR. MCLAUGHLIN: Wait a minute, now. There are more recent polls. The country is pretty much split.

MR. BUCHANAN: They're desperate. That's why they're for it.

MR. ZUCKERMAN: Let me tell you, if somebody's for it, they feel they have no other option. But I was amazed that somebody like McCain or indeed even Obama didn't say, "You know, the average guy has to sell his home at whatever the market price is, and the government is going to go in and buy out from these guys at above-market prices. There's something totally unfair about that."

MS. CLIFT: But the country --

MR. ZUCKERMAN: Just a minute. Let me finish. It is absolutely the case that this bill was as unpopular as any bill I have seen in the last decade.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The country got a glimpse of the abyss on the two days after the House voted it down, and that changed a lot of minds.

DR. MCLAUGHLIN: Okay.

MR. ZUCKERMAN: They only saw the stock market go down; that's all. MS. CLIFT: And Sarah Palin may -- (inaudible) -- but there's not a comfort level with her as a potential president.

DR. MCLAUGHLIN: All right, let --

MR. BUCHANAN: There is a comfort level --

MS. CLIFT: It has not happened.

MR. BUCHANAN: There's a comfort level with me, Eleanor. (Laughs.)

MS. CLIFT: Well, there is with you, but not with the majority of Americans.

DR. MCLAUGHLIN: We just had Washington outsider. Okay, Washington insider.

SEN. BIDEN: (From videotape.) I have 35 years in public office. I will place my record and Barack's record against John McCain's or anyone else in terms of fundamental accomplishments -- wrote the crime bill, put 100,000 cops on the street, wrote the Violence Against Women Act, which John McCain voted against it, both of them.

DR. MCLAUGHLIN: Question: Does insider status work for Biden? Pat.

MR. BUCHANAN: With due respect, Joe can be a very clever, witty guy. He was a bore.

DR. MCLAUGHLIN: What about at the very end?

MR. BUCHANAN: The ending was touching. He had a couple of touching moments -- the Jesse Helms thing and when he broke down. That was the real Joe Biden. Why didn't he show more of himself?

MS. CLIFT: I think he showed plenty to people who weren't aware of him.

MR. ZUCKERMAN: There's one thing that Joe Biden --

DR. MCLAUGHLIN: Let Eleanor in. Go ahead.

MS. CLIFT: I think he showed plenty to people who aren't really aware of him. But it's not about Joe Biden. It's about Barack Obama. And I think he kept the focus on Barack Obama versus John McCain.

DR. MCLAUGHLIN: And also he clearly won the polling afterwards by, what, 30 points?

MS. CLIFT: He won the polling and --

MR. BUCHANAN: (Inaudible.) DR. MCLAUGHLIN: What?

MR. BUCHANAN: On Drudge she won 70 percent.

MS. CLIFT: Well, Drudge. Consider the source.

MR. BUCHANAN: Frank Luntz's focus group went entirely for Palin; all these other things. This CBS poll, I'm convinced, is a phony.

DR. MCLAUGHLIN: Drudge conducted a poll?

MR. BUCHANAN: Yeah, 500,000 people. She got 70 percent.

DR. MCLAUGHLIN: Really? Exit question --

MS. CLIFT: And I'm sure Dick Cheney conducted a poll, too, and it came out just the way you wanted it. (Laughs.)

DR. MCLAUGHLIN: Who won the debate, Palin or Biden?

MR. BUCHANAN: Oh, come on. Palin was a star.

MS. CLIFT: Palin beat expectations, but she didn't beat Joe Biden. And she didn't reassure American people that she's ready to be president. She gets to stay in the race, but she's irrelevant from now on.

MS. CROWLEY: Oh, she gets to stay in the race. Thanks a lot. (Laughter.)

MS. CLIFT: There are a lot of calls for her to get out.

MS. CROWLEY: This was another star turn by Sarah Palin. She's got a bright future even if the ticket doesn't win.

DR. MCLAUGHLIN: She won the debate?

MS. CROWLEY: She won the debate. Yes, she did.

MR. ZUCKERMAN: She was the focus of the debate because of her previous stumbling.

DR. MCLAUGHLIN: Did she win the debate?

MR. ZUCKERMAN: No, I don't think she won the debate. I think she tied for the debate. And I have to say, I thought Joe Biden handled it very well, considering what he had to -

DR. MCLAUGHLIN: What?

MR. ZUCKERMAN: I thought they both did well. But she was much more engaging emotionally than was Joe Biden. DR. MCLAUGHLIN: What's the calculus here -- debate points?

MR. ZUCKERMAN: Well, no, it's not debate points. Joe Biden came across as an authoritative, knowledgeable person; you know, something which --

DR. MCLAUGHLIN: Who won politically the debate?

MR. ZUCKERMAN: I think she did for where she was, just by -- but just barely.

DR. MCLAUGHLIN: You mean, she had further to travel.

MR. ZUCKERMAN: She had a lot further to travel. Everybody was worried about whether or not she would be able to handle --

DR. MCLAUGHLIN: I think it's --

MR. ZUCKERMAN: If she had missed on this debate, the campaign would have been over.

DR. MCLAUGHLIN: I think it's a clear political win for her. She had so far to go. Remember where she was before the debate.

When we come back, the $700 billion bailout -- now $810 billion, by the way -- is it capitalism betrayed?

(Announcements.)

DR. MCLAUGHLIN: Issue Two: Bailout Capitalism.

SENATE MAJORITY LEADER HARRY REID (D-NV): (From videotape.) This is not a piece of legislation for Lower Manhattan. It's legislation for all America.

DR. MCLAUGHLIN: The U.S. Senate said yes this week, 74 to 25, to President Bush's $700 billion financial rescue package, slightly modified. The support came from both sides of the aisle.

SENATE MINORITY LEADER MITCH MCCONNELL (R-KY): (From videotape.) We clearly have demonstrated, in the toughest possible situation, five weeks from an election, that we can come together and address a major crisis.

DR. MCLAUGHLIN: The bailout bill runs more than 450 pages. The deal-making to create it became frantic. In basic principle, the bill is largely the same as Treasury Secretary Henry Paulson's three-page plan; namely, give the government the green light to spend $700 billion to bail out financial institutions.

Both presidential candidates supported the measure. Senator Obama urged passage.

SEN. BARACK OBAMA (D-IL, Democratic presidential nominee): (From videotape.) We can't afford to take a risk that the economy of the United States of America, and as a consequence the worldwide economy, could be plunged into a very, very deep hole.

DR. MCLAUGHLIN: Early this week, Senator McCain did the same.

SEN. JOHN MCCAIN (R-AZ, Republican presidential nominee): (From videotape.) We cannot allow a crisis in our financial system to become a crisis in confidence. I call on everyone in Washington to come together in a bipartisan way to address this crisis. DR. MCLAUGHLIN: Question: Is the bailout necessary to prevent a collapse of the banking system? Mort Zuckerman.

MR. ZUCKERMAN: Look, here's what it's going to do. It's going to save, presumably, any major financial house from collapsing and going through the trap door. What it is not going to do is to relieve the credit crunch. So they were trying to present it as helping small-town America, small businesses, individuals. Bull. It's not going to help that.

Those people are going to be squeezed all through the rest of the year. The banks are going to contract their assets, which means contracting their loans. They're going to be saved by this, I have to tell you. It is going to benefit primarily Wall Street, I hate to say. It will also prevent the collapse. But it is not going to help the average American.

DR. MCLAUGHLIN: Why is it not doing the other? Why is it not an engine to do the kind of reform that you want?

MR. ZUCKERMAN: For two reasons. One is the banks still have to contract their lending because they have lost so much money. Now, the only way to get around that is if they overpay to such a degree -- the average American has to sell his home for the market price. These people may be able to sell this paper for way above the market price, which is one of the reasons why it's so unfair. But the fact is, the banks are still tight for money. The credit has stopped all across the board. Commercial paper has dropped. Money market funds have collapsed. It is just extraordinary what we're going through, and it's all --

DR. MCLAUGHLIN: Okay, hold on. Hog heaven.

The Senate served this bailout bill to the House this week with a large portion of pork in it. The bill includes $1.7 billion in targeted tax breaks, notably --

Item: $192 million, rum producers in Puerto Rico and the Virgin Islands.

Item: $129 million, auto racing tracks.

Item: $33 million, corporations in American Samoa.

Item: $10 million, budget television and film production.

Item: $6 million, manufacturers of wooden arrows for kids.

All of which budget deficits add up over five years to $112 billion.

I'm going to be good to you. I'm going to give you the opportunity to speak first on the hog heaven. MR. ZUCKERMAN: Okay, look, this is not socialism. This is the worst kind of political capitalism. It is absolutely --

DR. MCLAUGHLIN: But it's the way they do business for years --

MR. ZUCKERMAN: It may be the way they do business. You're taking $700 billion. You're adding $120 billion to our budget deficit. We do not have the money. It's going to create a huge fiscal deficit next year that we're going to have great problems with, all to buy their way through this kind of legislation. If this is what this crisis produces, we have a real problem with the way our political system works.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: In Washington, trillion is the new billion. Look, these sums are peanuts that you just delineated. I would like to see the members who have advocated the tax breaks in American Samoa and the rum people stand up and defend that. There needs to be a little more transparency here.

But there are a lot of good tax breaks in this thing. The alternative minimum tax, which would have hit a lot of middle-class people, that's a big number and that's going through. And if we're going to write off all this debt for Wall Street, we might as well --

MR. BUCHANAN: Eleanor's right in this sense. The real true pork was what you mentioned, $1.7 billion. The rest of it's AMT. That's the big stuff, John. But you're right. It's going to be an enormous, enormous deficit.

MS. CROWLEY: They took a lemon. They sprinkled some Splenda on it. It is still a lemon of a bill. And now you see this pork on top of the $700 billion bailout plan. You know, they like to say, "Well, the taxpayers are going to get their money back. We'll be able to turn a profit eventually." Listen to me. Taxpayers will never see one dime of this money back, because this is going to go right back to the government. And have you ever known the government not to spend money that's coming in? We are never going to see this. You know what this is tantamount to? A huge tax increase on the American people.

DR. MCLAUGHLIN: The answer to all of this is hold your nose and vote yes.

We'll be right back with predictions.

(Announcements.)

DR. MCLAUGHLIN: Predictions. Pat. MR. BUCHANAN: The Republicans will go after Barney Frank and all the other guys in that Fannie Mae racket. And secondly, Reverend Wright will make a return because Republicans have got to go hardball.

DR. MCLAUGHLIN: Did Barney get $800,000 from Fannie Mae?

MR. BUCHANAN: Not to my knowledge, John.

DR. MCLAUGHLIN: I believe so.

MS. CLIFT: The last four weeks of this campaign will be just as Pat outlined -- lots of negative attacks, reviving the charge that Obama is an elitist and all these past associations. It won't work.

DR. MCLAUGHLIN: I meant as a political contribution, of course.

MS. CROWLEY: We are going to have two new nuclear crises on our hands. The nuclear disarmament talks with North Korea are crumbling because they are reactivating their weapons program. And now the Syrians are blocking inspectors coming into suspect sites.

MR. ZUCKERMAN: The Federal Reserve role as a regulatory body will be expanded to include the whole shadow banking system that has been left unregulated -- investment banks, all kinds of hedge funds, all kinds of other similar things.

DR. MCLAUGHLIN: Okay, the unemployment rate is currently at 6.1 percent. Next year it will rise to 11 percent.

Bye-bye.



END.