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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, NOVEMBER 21, 2008 BROADCAST: WEEKEND OF NOVEMBER 22-23, 2008

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MR. MCLAUGHLIN: Issue One: The "R" Word -- Recession.

News from Wall Street has done little to lift the nation's dark mood this week. The market hit its lowest level in more than five years. The Consumer Price Index, the CPI, fell by 1 percent; prices falling -- good for spenders, bad for businesses, bad for borrowers.

World markets, notably Asian, Tokyo and Hong Kong, both have lost 7 percent of their value; inflation down, deflation up -- something new to worry about.

The recession has arrived and already unpacked. The incoming Obama administration, taking over nine weeks from this weekend, has a lot on its plate. To stop the financial hemorrhaging, there are plans for another enormous financial stimulus, $300 billion more to banks or to individuals, one or the other, or a combination of both; also government spending, largely on infrastructure -- bridges, highways, sanitation, et cetera -- will see a dramatic increase. The economy is fragile; in fact, quite fragile. Americans are losing confidence fast.

Question: Do we have time to wait for Obama to be inaugurated to take steps to revive the economy? Pat Buchanan.

MR. BUCHANAN: No, we really don't, John. The market's down 2,000 points, about 20 percent, since Obama's been elected. And he is moving. Apparently Tim Geithner, New York Fed chair, is going to be named secretary of the Treasury this coming week.

And also I think he's got to intervene on this automobile thing. I don't think they can let Ford, Chrysler and GM go under. They've got to get some kind of deal. And I think if Barack Obama made the call to Pelosi and Reid saying, "We've got to do something to give them a bridge loan, to get them through until January, when we can take another," I think he's got to do it. Otherwise the blame is going to start being shifted from Bush to Barack Obama, the absentee president-elect.

MR. MCLAUGHLIN: Why not a bankruptcy proceeding with assurances to the auto industry that, if followed, they will be okay?

MR. BUCHANAN: Well, I think -- well, right now the bankruptcy proceeding could cause total freezing up of any interest in buying automobiles, although I think that's happening right now with GM. I can't think of anybody who would go down to a showroom and buy one, not knowing if that company is going to be around two years from now.

MR. MCLAUGHLIN: Well, the bankruptcy proceeding might clear the decks. It might be reassuring to people, especially if they conform and it is rewarded.

MR. BUCHANAN: Exactly. If you can get the money in definitely, maybe you can come back up.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, the three carmaker executives did not make it easy for Congress when they appeared in Washington this week and basically just came with their tin cups, with no plan of how they were going to change the corporate culture and how they were going to clean up their act. But --

MR. MCLAUGHLIN: But they came promptly. They came in their own jet. MS. CLIFT: (Laughs.) Right. But help is on the way. And the Congress, the new Congress, will be sworn in on January 6th. They will not then go home. They will stay. They will legislate from then until January 20th. And on the 20th, the new president will take the oath of office, go to the Congress for the traditional lunch in Statuary Hall, then he will sign the stimulus package. There will be legislation ready, and it will include money for infrastructure spending along $300 billion, like you suggested. And he will also probably be ready to sign the children's health care bill.

So there will be movement coming, but one president at a time. He can't coopt the current president. And there is legislation in place. They may be screwing it up. But I don't think he can save the country between now and January 20th.

MS. CROWLEY: No, but he can --

MR. MCLAUGHLIN: In the past year, $8.3 trillion in wealth has evaporated. There's no way we can wait till February, is there?

MS. CLIFT: January 20, not February.

MS. CROWLEY: Right. And there are things -- January, right. There are things that Obama can do now without stepping on the toes of President Bush. And there was a poll reported this week that showed 70 percent of the American people have no confidence in the sitting president, and they also don't have any confidence in the incoming president.

So there are things that he can do, because this really is a crisis of confidence on every level. There are things he can do. And we just heard that he's going to announce his economic team on Monday, the Treasury secretary and the other economic advisers that he's going to be bringing in. He needs to be careful, though, because if he goes too far in the direction of too much government spending, it does run the risk and the danger of making things worse.

Consider this initial bailout package -- $350 billion already spent, with no accountability, no oversight provided by the Congress, nobody stepping up to do that job, no transparency. And the initial wave of stimulus has not worked. So if you're going to sign another $300 (billion) to $500 billion in taxpayer money for stimulus, you ought to make sure that all of those conditions are in place and that there's some guarantee that it will work.

MR. MCLAUGHLIN: Mort, is the financial system sound?

MR. ZUCKERMAN: No, the financial system at this point is teetering. The $8.3 trillion that you referred to just refers to the losses in the stock market. Add to that the losses in housing and commercial buildings and bonds, you're talking about a $16 trillion collapse and evaporation of wealth. We have never experienced anything like that as a country, and nobody knows quite what the consequences are. So it's not just a matter of confidence. It is also a matter of the loss of real wealth. And it's continuing.

Housing prices are going to go down another 15 to 20 percent for sure.

So I think there must be some kind of an agreement on a fiscal stimulus program, which in my judgment should exceed the $300 billion. It should be closer to $500 (billion) to $600 billion. You'd better err on the size of a larger one rather than a smaller one.

And it should all provide what I would call the best bang for the buck, which means it's either money that is spent immediately through unemployment compensation, food stamps and things like that, or it goes to state and local governments so that they don't have to raise taxes and they can get the infrastructure programs on right away, because they've all done the planning and everything.

MR. MCLAUGHLIN: What about the plunging stock values of banks like Citibank, down 50 percent?

MR. ZUCKERMAN: Well, Citibank is down way more than 50 percent. Citibank is down 50 percent in one week. So I think -- look, let me tell you what --

MR. MCLAUGHLIN: How worrisome is that, the banks?

MR. ZUCKERMAN: It's very worrisome, because what it does, somehow or other, whatever -- what it tells you is that nobody has confidence in Citigroup's statements that they're in good financial shape, because nobody really knows. They have a huge amount of credit cards outstanding, and nobody knows what the loss factor is going to be on those credit cards over the next year. The one thing we do know is that the losses, the delinquencies and the defaults and all of that, is going up dramatically. And Citigroup is the leading bank in this country --

MR. MCLAUGHLIN: What about Bank of America, down 30 percent in their stock?

MR. ZUCKERMAN: All the banks are down. Even the good banks are down.

MR. BUCHANAN: Look at Merrill Lynch. MR. ZUCKERMAN: Yeah, Merrill Lynch had to be absorbed. I mean, all the five investment banks that made it through the Great Depression did not make it through this period.

MR. MCLAUGHLIN: Is that the most worrisome part of the financial system crisis?

MR. ZUCKERMAN: Yes, absolutely. The banks --

MR. BUCHANAN: John, there's something else too.

MR. ZUCKERMAN: The commercial banks now are the mainstay of our financial system. They are not lending. The credit crisis, the credit crunch, is the single greatest problem this economy faces.

MR. BUCHANAN: John, there's another problem too.

MR. ZUCKERMAN: Nobody is lending money and nobody is spending money. The consumers are hording cash. They're saving it because they're worried about the loss of their value in their 401(k)s and in their homes. Businesses are not spending money and the banks aren't lending money.

MR. BUCHANAN: John, and also --

MR. ZUCKERMAN: That is a formula for a major decline in the economy.

MR. BUCHANAN: The federal government --

MR. MCLAUGHLIN: Are you pessimistic? Wait a minute, Pat. Are you pessimistic?

MR. ZUCKERMAN: Yes, I am very pessimistic.

MR. MCLAUGHLIN: I mean, are you pessimistic with dark, deep pessimism?

MR. ZUCKERMAN: Listen, I have to say, I am a genuine optimist and have every reason to be. But I will also say right now I think I am worried for this country in a way that I have never been worried because we have not yet solved the problem. Everything we have tried has not changed it. And Obama cannot stand on the sidelines, because between now and the next three months, when he will have the power, this whole country could get into a negative --

MR. MCLAUGHLIN: What do you think of -- one more question to Mort. What do you think of the FDIC chairwoman? Her name is Sheila Bair.

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: What do you think of her idea of coming in at the foreclosure on the consumer level? MR. ZUCKERMAN: She is absolutely right. The whole system of all of this, what is called TARP, all of these funding --

MR. MCLAUGHLIN: What does TARP mean?

MR. ZUCKERMAN: TARP means Troubled Asset Relief Program, okay. It's an acronym for that.

MR. MCLAUGHLIN: Was that the $700 billion?

MR. ZUCKERMAN: That's the $700 billion. Half of it, almost half of it, has been committed. They still have $60 billion in reserve. But it doesn't matter. They didn't go to the source of the problem, which was the collapsing housing market. If that continues, it could sink the financial system.

MR. MCLAUGHLIN: She says this could save 1.5 million homeowners.

MR. ZUCKERMAN: Yes, yes. But it's more than --

MS. CLIFT: Yeah, the Treasury is --

MR. ZUCKERMAN: It's more than saving the individual homeowners. What happens if you have foreclosed homes, they're thrown on the market, okay. The people who -- nobody knows how to manage them, so they're thrown on the market, sold at any price. That can break the housing prices on the way down, overshooting it on the way down, just as financing helped housing prices overshoot on the way up. That would be a catastrophe if we had another --

MR. MCLAUGHLIN: And then you have much lower consumption on the part of the buyers in retail stores.

MR. ZUCKERMAN: Everything. It will destroy everybody's sense of wealth.

MR. MCLAUGHLIN: I was in the Miami airport recently. It was practically empty.

MR. ZUCKERMAN: Listen, you go to the stores now; it's absolutely amazing. From the beginning of October, everybody's --

MR. MCLAUGHLIN: We're not making this worse with this conversation, are we?

MR. ZUCKERMAN: We are just trying to be realistic, not pessimistic.

MS. CLIFT: You would think --

MR. BUCHANAN: John -- MR. MCLAUGHLIN: Let Eleanor in, Pat.

MS. CLIFT: Well, you next.

MR. MCLAUGHLIN: All right, go ahead, Pat.

Oh, you have --

MS. CLIFT: No, I'll be quick.

Normally there's reason to cheer if prices go down. But now the dreaded word deflation has come into the picture, and that was the hallmark of the Great Depression and that was the hallmark of the decade that Japan spent in the doldrums. So this is serious.

But, look, I think the Treasury Department is rethinking their attitude about Sheila Bair's plan. They drew some hard ideological lines, and they're now ready to cross it. She's a very tough regulator. She's got a good plan. And I'll bet they buy it soon.

MR. BUCHANAN: John, you're talking about a $2 trillion deficit. And since we don't have any savings here, we're going to have to go borrow the money around the world. And a lot of the world are going to say, "We're not going to lend you all that money because the United States does not look like a AAA country anymore."

And let me tell you, the other way we're going to do it is we're going to inflate the currency, and the dollar that's gone down -- everybody, the Japanese are predicting it's going to turn around and it's going to be inflated. The value of the dollar is going to go down. This country is in deep, deep trouble.

MR. ZUCKERMAN: Pat, we may be in trouble. The other countries are in worse trouble. If you look at China and India and Russia and --

MR. BUCHANAN: China's got $2 trillion in cash.

MR. ZUCKERMAN: I don't care what they have in cash. They just have -- their stock market dropped 60 percent. Their economy is plunging.

MR. BUCHANAN: They're growing at 8 percent.

MR. ZUCKERMAN: Listen, that was last month. Okay, I guarantee you --

MR. BUCHANAN: (Laughs.) We're not growing. (Inaudible.)

MR. ZUCKERMAN: We are their biggest market, okay?

MR. BUCHANAN: Sure. MR. ZUCKERMAN: And that market is now dramatically declining. So we have to do what we have to do. I'm not worried about the dollar --

MR. BUCHANAN: When you stimulate our economy, we buy their goods.

MR. MCLAUGHLIN: Exit question: Can either administration, the Bush administration now or the Obama administration in February, reverse the course of this recession? Or do we just have to take our lumps and grit it out?

MR. BUCHANAN: The recession is baked in the cake, and it is going to go deep into the first half of next year. A lot of things we can do. Either administration may be able to ameliorate it down the road. But it is coming. It is going to be deep. And it's unavoidable.

MR. MCLAUGHLIN: We have not reached the bottom of the trough.

MR. BUCHANAN: We're not near the bottom.

MR. MCLAUGHLIN: When will we reach the bottom of the trough?

MR. BUCHANAN: I think by the middle of next year we could have eight and a half or 9 percent unemployment.

MS. CLIFT: You're not going to reverse it by February. But Obama is going to come into office and, as I said, he's going to sign some legislation on his very first day. It's very much in the FDR model, and FDR waited. He didn't join Herbert Hoover presiding during the transition. But with the announcement of a new Treasury secretary, there will be signals sent and there will be some coordination under the radar.

MS. CROWLEY: The recession is already here. It's going to be a lot longer than six months. I think we're probably looking at a year, even two years, maybe three. This is a deep, profound recession. One domino has led to another domino. The tentacles of this are everywhere. I think extreme government spending -- and we've already seen it under President Bush -- I think it's going to expand under President Obama, and I think that's going down a very dangerous path.

Look, the extreme spending that we've seen so far hasn't worked. So their idea of --

MS. CLIFT: Because it hasn't been extreme enough. (Laughs.)

MS. CROWLEY: No, because -- well, because they also haven't -- (inaudible) -- the conditions and the accountability and the oversight. So the money went to these banks. They ended up hording it or doing acquisitions and not going to loosening up the credit market and the things that we so desperately need. MR. MCLAUGHLIN: Well, you seem to have a pretty clear outline of what's coming. Have you arranged your portfolio accordingly?

MS. CROWLEY: (Laughs.)

MR. BUCHANAN: What portfolio? (Laughs.)

MS. CROWLEY: Right, whatever is left of it.

MR. MCLAUGHLIN: What have you done with the stock component of your portfolio? Are you moving out of stocks?

MS. CROWLEY: (Laughs.) There's just nothing left. There's nothing left of it, John.

MR. MCLAUGHLIN: Are you moving out of stocks? If you had a portfolio, what would you do?

MS. CROWLEY: I'd take what's left of it and go stand in the bread line. (Laughs.)

MR. MCLAUGHLIN: Would you move it into T-bills?

MS. CROWLEY: As Mr. Zuckerman has said, yes. That is a smart thing to do.

MR. BUCHANAN: Cash.

MR. MCLAUGHLIN: Go liquid?

MS. CROWLEY: Cash.

MR. MCLAUGHLIN: Well, then you'll never get back to where you were.

MS. CROWLEY: Cash in the mattress. It's going to be a long time before anybody gets back to where they were.

MR. MCLAUGHLIN: Now, you went liquid early.

MR. ZUCKERMAN: Yes, I did.

MR. MCLAUGHLIN: For a large part.

MR. ZUCKERMAN: Not enough, John; never enough. (Laughter.)

MR. MCLAUGHLIN: So you're hurting somewhat.

MR. ZUCKERMAN: We're all hurting.

Nobody is going to escape the consequences of what we're --

MR. MCLAUGHLIN: Should people keep their stocks or should they get out of the stock business and go into --

MR. BUCHANAN: It's too late to get out, John.

MR. MCLAUGHLIN: -- T-bills or, let's say, muni's at --

MR. ZUCKERMAN: It all depends what you can afford and what you're comfortable with. But if I were to go into stocks, which I'm going -- I'm going to say that -- I would go into stocks like Procter & Gamble and Wal-Mart and --

MR. MCLAUGHLIN: Individual stocks?

MR. BUCHANAN: What people need.

MR. ZUCKERMAN: Right, the retailing stocks. They may not go up as much, but they won't go down nearly as much.

MR. MCLAUGHLIN: You can go to Morgan Stanley and they'll put the whole package together and they'll tell you that this is your safest bet, but these are stocks.

MR. BUCHANAN: What Mort is saying --

MR. MCLAUGHLIN: But they don't want you to invest in individual stocks. They want to give you their collection.

MR. ZUCKERMAN: Well, they'll make a collection of it, and you have to look at what their collection or their philosophy is. I mean, they've been wrong too. They've all been wrong. Everybody's been wrong.

MS. CLIFT: And with all due respect, the hurting that is experienced by the people on this set does not match the hurting that's going on in most of America. And I think there is a disconnect also between --

MR. MCLAUGHLIN: Well, you don't know that. MS. CLIFT: Well, I --

MR. MCLAUGHLIN: You can't prove that.

MS. CLIFT: I think you're in pretty good shape, John, regardless. (Laughs.)

MR. BUCHANAN: The way he's talking -- (inaudible).

MR. MCLAUGHLIN: We're struggling through.

Issue Two: Obama Picks Hillary as the Secretary of State?

SEN. HILLARY CLINTON (D-NY, former Democratic presidential nominee): (From videotape.) Let's have a real campaign. Enough with the speeches and the big rallies and then using tactics that are right out of Karl Rove's playbook.

Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

Speeches versus solutions, talk versus action. You know, some people may think words are change. But you and I know better. Words are cheap.

I am in the solutions business. My opponent is in the promises business. I think we need answers, not questions, about what we're going to do.

MR. MCLAUGHLIN: Question: Why would Obama want his number one Cabinet position, secretary of State, to go to Hillary Clinton? Eleanor.

MS. CLIFT: Because she's a rock star on the international stage. She's very smart. She's great with details. She understands all the issues. She'll be very good in the job. And there'll be a synergy with her husband, who's got deeper pockets on the philanthropy side. So I think it's --

MR. MCLAUGHLIN: What about unity in the party?

MS. CLIFT: -- it's a good team. Secondly, he does remove her as a potential rival for -- what are we?

MR. BUCHANAN: '12.

MS. CLIFT: -- 2012, if, in fact, his administration doesn't perform as we all hope it will. And so I think it's smart politically, and it says a lot about his sense of confidence and that he really did read the Lincoln memoir --

MR. BUCHANAN: "Team of Rivals." MS. CLIFT: -- "Team of Rivals."

MR. MCLAUGHLIN: One thing he cannot do with Hillary is fire her.

MS. CLIFT: Right.

MR. BUCHANAN: No, he can't. But also she can't make a mistake here, because this is the capstone of her career. I think it's a very smart move.

MR. MCLAUGHLIN: What do you mean, capstone? There's 2012 coming up.

MR. BUCHANAN: She can't run against Obama, beat him and then win the presidency. That'd be absurd.

MR. MCLAUGHLIN: Why?

MR. BUCHANAN: Because you can't run against the president of the United States, beat him and expect to unite the party.

MR. MCLAUGHLIN: So is he coopting her for --

(Cross-talk.)

MR. MCLAUGHLIN: Is he also coopting her for 2012?

MR. BUCHANAN: It's in both their interests. She has a chance to make a historic contribution as secretary of State. There's only been so many of them. She's been a senator. And he's got a chance -- he's brought the party together, and it suggests a confidence on his part that speaks well of Barack Obama.

MR. ZUCKERMAN: And he really has strengthened himself with a huge wing of the Democratic Party. And besides that, she's an extraordinarily talented woman. She really is very, very serious about international affairs, Armed Services Committee work. Everybody you speak to who has worked with her has enormous respect for her.

And she's not somebody who's just looking for a story. I was speaking to somebody recently, a foreign leader, and he said she would call back and ask questions and make suggestions. You know, this was all off the record. So I think she's going to be a very constructive force. She's not going to play games. She can be very, very loyal, and I think she'll be very effective for him and for her.

MS. CROWLEY: This is a smart choice politically because it's a case of keep your friends close and your enemies closer. He doesn't want her outside the tent with her husband, nursing grudges about Obama. At least he's got her now very close to him, number one Cabinet position. And also I agree with Mort. I mean, look, our allies like her and they love her husband, and I think our enemies respect her. So I think she'll be a force, a really powerful force, in Foggy Bottom.

The problem is, as I mentioned, her husband. Now, when her husband was president, he had a real beef with Jimmy Carter, another Democratic former president, who had a tendency to freelance foreign policy when Clinton was president.

Clinton was really upset with that. He was really angry with it. So the question is, will Bill Clinton try to do payback to Obama for what Carter did to him?

MR. MCLAUGHLIN: You saw --

MS. CLIFT: No --

MR. MCLAUGHLIN: You saw the way Hillary --

MS. CROWLEY: Oh, come on. Bill Clinton's a rogue out there, and he --

(Cross-talk.)

MR. MCLAUGHLIN: You saw the way Hillary scissored Obama with her criticism. Is there any precedence for that? What did George W. --

MS. CLIFT: Lincoln.

MR. MCLAUGHLIN: What did H.W. Bush say about Reagan's economics?

MS. CROWLEY: Voodoo economics.

MR. MCLAUGHLIN: Voodoo economics. And what did Reagan did? What did Reagan do?

MR. ZUCKERMAN: Made him vice president.

MS. CROWLEY: Right, made him vice president.

MR. MCLAUGHLIN: Right.

MS. CROWLEY: I understand politics; all is forgiven. All is forgiven between Hillary and Obama. Just the question I'm raising is about whether or not it's forgiven between Bill and Obama. And when you've got a potential rogue ex-president --

MR. ZUCKERMAN: He will not --

MS. CLIFT: He is not going to -- MR. MCLAUGHLIN: Let her finish.

MR. ZUCKERMAN: He will not want to screw up her tenure as secretary of State.

MS. CLIFT: Right, exactly.

MR. MCLAUGHLIN: What? What?

MS. CROWLEY: Oh, come on.

MR. MCLAUGHLIN: Let him in.

MR. ZUCKERMAN: I don't agree with you.

MR. MCLAUGHLIN: What?

MR. ZUCKERMAN: Bill Clinton will not try and screw up Hillary's tenure as secretary of State.

MS. CROWLEY: Wait --

MR. ZUCKERMAN: He'll be a quiet force.

MS. CROWLEY: He tried to screw up her candidacy for the presidency.

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: He didn't try to screw it up. He may have done a little damage to it, he says mildly.

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: But this is --

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: Right. No, no, no, no. He'll be a very constructive force.

MR. BUCHANAN: He's not going to damage -- he was doing his best to see that she got this.

MR. MCLAUGHLIN: Exit question: Based on the nominees --

MS. CLIFT: Monica needs material for her radio show. She needs Bill Clinton to screw up.

MS. CROWLEY: He can do it on his own, thank you.

MR. MCLAUGHLIN: Question: Based on Obama's nominees so far -- we haven't mentioned Eric Holder, et cetera -- would you say his Cabinet picks come from the left wing of the Democratic Party or from the center or from the right wing? Pat Buchanan.

MR. BUCHANAN: It's very much Clinton II. It's a centrist Democratic --

MR. MCLAUGHLIN: Centrist?

MR. BUCHANAN: -- centrist Democratic administration.

MR. MCLAUGHLIN: What do you think, Eleanor?

MS. CLIFT: I think it's the broad center.

MR. MCLAUGHLIN: Center?

MS. CROWLEY: Center.

MR. MCLAUGHLIN: Center?

MR. ZUCKERMAN: Yes, I agree -- center.

MR. MCLAUGHLIN: Broad center.

Issue Three: Prop 8.

Proposition 8 was up for a vote by the people of California three weeks ago. The proposition outlaws a marriage between two men or between two women. The voters accepted this referendum to outlaw same-sex marriages. Marriage is the operative word. Gay activists are not happy. Gays want marriage, not just civil unions.

WOMAN: (From videotape.) I had never felt such a sense of being less of a person.

MR. MCLAUGHLIN: This vote is a replay of history. In the year 2000, eight years ago, the people of California voted no on marriage between people of the same sex, 61 to 38 percent. It was called Proposition 22. And from 2000 to 2008, it was the law -- no marriage between people of the same sex.

Eight years later, this June, only five months ago, California's supreme court ruled against the 2000 Proposition 22. The California high court ruled that same-sex marriage was both legal and valid. Then, this November 4th, Election Day, five months later, Proposition 8 appeared, saying no to gay marriage. It passed, 52 to 48 percent, a reversal of the Supreme Court decision of five months earlier.

Gay activists are furious. So the California supreme court agreed to sit on the issue yet again, beginning March '09, five months from now. Question: In a way similar, gay marriages and interracial marriages, like that of Obama's parents, were barred in many states as recently as 1960. Given his family background, why wouldn't Obama speak out more forcefully for gay rights and for gay marriage? I ask you, Monica.

MS. CROWLEY: Well, during the campaign, Barack Obama and Hillary Clinton came out against gay marriage.

And I think that there's an understanding that, despite the fact that the Democrats had huge gains electorally this year, that the country remains center-right, at least on the cultural issues.

That vote in California -- what was interesting about the demographic breakdown of that is that 70 percent of African-Americans voted against gay marriage, and a majority of Hispanic voters also voted against gay marriage.

MR. MCLAUGHLIN: So he doesn't want to lose that vote?

MS. CROWLEY: Well, no, I think it goes deeper than that. I don't think it's a strictly political calculation on Obama's part. I think that there is a cultural thing here going on.

MR. MCLAUGHLIN: Is there a religious thing?

MS. CROWLEY: Maybe, because there's certainly that component with the black voters who voted against gay marriage here.

MR. MCLAUGHLIN: Do you think he shares that?

MS. CROWLEY: He might. He hasn't spoken about that. He's spoken politically being against gay marriage, but he hasn't spoken about the religious component.

MR. MCLAUGHLIN: Do you think he will be forced to?

MS. CROWLEY: You know, when you look --

MR. MCLAUGHLIN: Don't forget, he himself is a product of an interracial marriage. He knows what the situation is like between gays analogously.

MS. CROWLEY: But this is different. But this is a whole different kind of thing. I mean, they're trying to cast it as a civil rights issue, but this is a different thing. And when most voters in the country -- and this proposition went down in Arizona and Florida and a couple of other states as well, just as it did in California.

MR. MCLAUGHLIN: Is there intrinsic injustice in denying gays a civil marriage status? Is that intrinsically unjust? I ask you, Eleanor. MS. CLIFT: Well, I think recognition of a civil relationship is what Barack Obama supports and Hillary Clinton supports and a lot of people support, and Barack Obama did --

MR. MCLAUGHLIN: That's discriminatory if you deny them marriage.

MS. CLIFT: Well, there is this feeling that the sanctity of marriage should be left to religious groups.

MR. MCLAUGHLIN: You mean, getting married jumping down in a parachute or under water --

MS. CLIFT: Well, look --

MR. MCLAUGHLIN: -- or in Vegas --

MS. CLIFT: I support gay marriage. And I think the force of history -- when you see the incredible strides we've made about attitudes towards gay people, you can see the direction we're going. This is going to happen at some point. The younger generation doesn't have any difficulties with gay marriage. But the point we're at now in our politics, it is a divisive issue and it is not an issue --

MR. MCLAUGHLIN: Because of evangelical Christians.

MS. CLIFT: Pardon me?

MR. MCLAUGHLIN: Because of evangelicals.

MS. CLIFT: Well, because --

MR. MCLAUGHLIN: Also because of the black community. They are not in favor of gay marriage.

MS. CLIFT: They have more traditional values. We're not there yet as a society. We will get there. I understand the impatience on the part of gay Americans.

MR. BUCHANAN: It's been defeated 30 times --

MS. CLIFT: But it's going to take time.

MR. BUCHANAN: Thirty times it's been defeated in elections.

MR. MCLAUGHLIN: What?

MR. BUCHANAN: It's been defeated 30 to zero in elections. The only way it wins, it goes to a group of these judges and they order it.

MR. MCLAUGHLIN: Is time on the side of the gays getting gay marriage, or is time on the other side? MR. BUCHANAN: It's on Eleanor's side.

MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: With Hillary gone to State, Ted Kennedy will lead the battle for universal health care as his legacy in the Senate.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The Obama White House staff is stuffed with congressional insiders. He will not run afoul of the Democratic Congress the way his predecessors, Bill Clinton and Jimmy Carter, did.

MR. MCLAUGHLIN: Monica.

MS. CROWLEY: By June of next year, Vladimir Putin will be back as the president of Russia.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: With the strong and broad support of the U.S. military, Bob Gates will continue as the secretary of Defense.

MR. MCLAUGHLIN: I predict that Ted Kennedy will be the driving force behind the passage of comprehensive health care legislation in 2009, concurring with Buchanan.

Happy Thanksgiving. Gobble, gobble.

END.

rtfolio accordingly?

MS. CROWLEY: (Laughs.)

MR. BUCHANAN: What portfolio? (Laughs.)

MS. CROWLEY: Right, whatever is left of it.

MR. MCLAUGHLIN: What have you done with the stock component of your portfolio? Are you moving out of stocks?

MS. CROWLEY: (Laughs.) There's just nothing left. There's nothing left of it, John.

MR. MCLAUGHLIN: Are you moving out of stocks? If you had a portfolio, what would you do?

MS. CROWLEY: I'd take what's left of it and go stand in the bread line. (Laughs.)

MR. MCLAUGHLIN: Would you move it into T-bills?

MS. CROWLEY: As Mr. Zuckerman has said, yes. That is a smart thing to do.

MR. BUCHANAN: Cash.

MR. MCLAUGHLIN: Go liquid?

MS. CROWLEY: Cash.

MR. MCLAUGHLIN: Well, then you'll never get back to where you were.

MS. CROWLEY: Cash in the mattress. It's going to be a long time before anybody gets back to where they were.

MR. MCLAUGHLIN: Now, you went liquid early.

MR. ZUCKERMAN: Yes, I did.

MR. MCLAUGHLIN: For a large part.

MR. ZUCKERMAN: Not enough, John; never enough. (Laughter.)

MR. MCLAUGHLIN: So you're hurting somewhat.

MR. ZUCKERMAN: We're all hurting.

Nobody is going to escape the consequences of what we're --

MR. MCLAUGHLIN: Should people keep their stocks or should they get out of the stock business and go into --

MR. BUCHANAN: It's too late to get out, John.

MR. MCLAUGHLIN: -- T-bills or, let's say, muni's at --

MR. ZUCKERMAN: It all depends what you can afford and what you're comfortable with. But if I were to go into stocks, which I'm going -- I'm going to say that -- I would go into stocks like Procter & Gamble and Wal-Mart and --

MR. MCLAUGHLIN: Individual stocks?

MR. BUCHANAN: What people need.

MR. ZUCKERMAN: Right, the retailing stocks. They may not go up as much, but they won't go down nearly as much.

MR. MCLAUGHLIN: You can go to Morgan Stanley and they'll put the whole package together and they'll tell you that this is your safest bet, but these are stocks.

MR. BUCHANAN: What Mort is saying --

MR. MCLAUGHLIN: But they don't want you to invest in individual stocks. They want to give you their collection.

MR. ZUCKERMAN: Well, they'll make a collection of it, and you have to look at what their collection or their philosophy is. I mean, they've been wrong too. They've all been wrong. Everybody's been wrong.

MS. CLIFT: And with all due respect, the hurting that is experienced by the people on this set does not match the hurting that's going on in most of America. And I think there is a disconnect also between --

MR. MCLAUGHLIN: Well, you don't know that. MS. CLIFT: Well, I --

MR. MCLAUGHLIN: You can't prove that.

MS. CLIFT: I think you're in pretty good shape, John, regardless. (Laughs.)

MR. BUCHANAN: The way he's talking -- (inaudible).

MR. MCLAUGHLIN: We're struggling through.

Issue Two: Obama Picks Hillary as the Secretary of State?

SEN. HILLARY CLINTON (D-NY, former Democratic presidential nominee): (From videotape.) Let's have a real campaign. Enough with the speeches and the big rallies and then using tactics that are right out of Karl Rove's playbook.

Senator McCain will bring a lifetime of experience to the campaign. I will bring a lifetime of experience. And Senator Obama will bring a speech that he gave in 2002.

Speeches versus solutions, talk versus action. You know, some people may think words are change. But you and I know better. Words are cheap.

I am in the solutions business. My opponent is in the promises business. I think we need answers, not questions, about what we're going to do.

MR. MCLAUGHLIN: Question: Why would Obama want his number one Cabinet position, secretary of State, to go to Hillary Clinton? Eleanor.

MS. CLIFT: Because she's a rock star on the international stage. She's very smart. She's great with details. She understands all the issues. She'll be very good in the job. And there'll be a synergy with her husband, who's got deeper pockets on the philanthropy side. So I think it's --

MR. MCLAUGHLIN: What about unity in the party?

MS. CLIFT: -- it's a good team. Secondly, he does remove her as a potential rival for -- what are we?

MR. BUCHANAN: '12.

MS. CLIFT: -- 2012, if, in fact, his administration doesn't perform as we all hope it will. And so I think it's smart politically, and it says a lot about his sense of confidence and that he really did read the Lincoln memoir --

MR. BUCHANAN: "Team of Rivals." MS. CLIFT: -- "Team of Rivals."

MR. MCLAUGHLIN: One thing he cannot do with Hillary is fire her.

MS. CLIFT: Right.

MR. BUCHANAN: No, he can't. But also she can't make a mistake here, because this is the capstone of her career. I think it's a very smart move.

MR. MCLAUGHLIN: What do you mean, capstone? There's 2012 coming up.

MR. BUCHANAN: She can't run against Obama, beat him and then win the presidency. That'd be absurd.

MR. MCLAUGHLIN: Why?

MR. BUCHANAN: Because you can't run against the president of the United States, beat him and expect to unite the party.

MR. MCLAUGHLIN: So is he coopting her for --

(Cross-talk.)

MR. MCLAUGHLIN: Is he also coopting her for 2012?

MR. BUCHANAN: It's in both their interests. She has a chance to make a historic contribution as secretary of State. There's only been so many of them. She's been a senator. And he's got a chance -- he's brought the party together, and it suggests a confidence on his part that speaks well of Barack Obama.

MR. ZUCKERMAN: And he really has strengthened himself with a huge wing of the Democratic Party. And besides that, she's an extraordinarily talented woman. She really is very, very serious about international affairs, Armed Services Committee work. Everybody you speak to who has worked with her has enormous respect for her.

And she's not somebody who's just looking for a story. I was speaking to somebody recently, a foreign leader, and he said she would call back and ask questions and make suggestions. You know, this was all off the record. So I think she's going to be a very constructive force. She's not going to play games. She can be very, very loyal, and I think she'll be very effective for him and for her.

MS. CROWLEY: This is a smart choice politically because it's a case of keep your friends close and your enemies closer. He doesn't want her outside the tent with her husband, nursing grudges about Obama. At least he's got her now very close to him, number one Cabinet position. And also I agree with Mort. I mean, look, our allies like her and they love her husband, and I think our enemies respect her. So I think she'll be a force, a really powerful force, in Foggy Bottom.

The problem is, as I mentioned, her husband. Now, when her husband was president, he had a real beef with Jimmy Carter, another Democratic former president, who had a tendency to freelance foreign policy when Clinton was president.

Clinton was really upset with that. He was really angry with it. So the question is, will Bill Clinton try to do payback to Obama for what Carter did to him?

MR. MCLAUGHLIN: You saw --

MS. CLIFT: No --

MR. MCLAUGHLIN: You saw the way Hillary --

MS. CROWLEY: Oh, come on. Bill Clinton's a rogue out there, and he --

(Cross-talk.)

MR. MCLAUGHLIN: You saw the way Hillary scissored Obama with her criticism. Is there any precedence for that? What did George W. --

MS. CLIFT: Lincoln.

MR. MCLAUGHLIN: What did H.W. Bush say about Reagan's economics?

MS. CROWLEY: Voodoo economics.

MR. MCLAUGHLIN: Voodoo economics. And what did Reagan did? What did Reagan do?

MR. ZUCKERMAN: Made him vice president.

MS. CROWLEY: Right, made him vice president.

MR. MCLAUGHLIN: Right.

MS. CROWLEY: I understand politics; all is forgiven. All is forgiven between Hillary and Obama. Just the question I'm raising is about whether or not it's forgiven between Bill and Obama. And when you've got a potential rogue ex-president --

MR. ZUCKERMAN: He will not --

MS. CLIFT: He is not going to -- MR. MCLAUGHLIN: Let her finish.

MR. ZUCKERMAN: He will not want to screw up her tenure as secretary of State.

MS. CLIFT: Right, exactly.

MR. MCLAUGHLIN: What? What?

MS. CROWLEY: Oh, come on.

MR. MCLAUGHLIN: Let him in.

MR. ZUCKERMAN: I don't agree with you.

MR. MCLAUGHLIN: What?

MR. ZUCKERMAN: Bill Clinton will not try and screw up Hillary's tenure as secretary of State.

MS. CROWLEY: Wait --

MR. ZUCKERMAN: He'll be a quiet force.

MS. CROWLEY: He tried to screw up her candidacy for the presidency.

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: He didn't try to screw it up. He may have done a little damage to it, he says mildly.

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: But this is --

MS. CLIFT: He didn't try to.

MR. ZUCKERMAN: Right. No, no, no, no. He'll be a very constructive force.

MR. BUCHANAN: He's not going to damage -- he was doing his best to see that she got this.

MR. MCLAUGHLIN: Exit question: Based on the nominees --

MS. CLIFT: Monica needs material for her radio show. She needs Bill Clinton to screw up.

MS. CROWLEY: He can do it on his own, thank you.

MR. MCLAUGHLIN: Question: Based on Obama's nominees so far -- we haven't mentioned Eric Holder, et cetera -- would you say his Cabinet picks come from the left wing of the Democratic Party or from the center or from the right wing? Pat Buchanan.

MR. BUCHANAN: It's very much Clinton II. It's a centrist Democratic --

MR. MCLAUGHLIN: Centrist?

MR. BUCHANAN: -- centrist Democratic administration.

MR. MCLAUGHLIN: What do you think, Eleanor?

MS. CLIFT: I think it's the broad center.

MR. MCLAUGHLIN: Center?

MS. CROWLEY: Center.

MR. MCLAUGHLIN: Center?

MR. ZUCKERMAN: Yes, I agree -- center.

MR. MCLAUGHLIN: Broad center.

Issue Three: Prop 8.

Proposition 8 was up for a vote by the people of California three weeks ago. The proposition outlaws a marriage between two men or between two women. The voters accepted this referendum to outlaw same-sex marriages. Marriage is the operative word. Gay activists are not happy. Gays want marriage, not just civil unions.

WOMAN: (From videotape.) I had never felt such a sense of being less of a person.

MR. MCLAUGHLIN: This vote is a replay of history. In the year 2000, eight years ago, the people of California voted no on marriage between people of the same sex, 61 to 38 percent. It was called Proposition 22. And from 2000 to 2008, it was the law -- no marriage between people of the same sex.

Eight years later, this June, only five months ago, California's supreme court ruled against the 2000 Proposition 22. The California high court ruled that same-sex marriage was both legal and valid. Then, this November 4th, Election Day, five months later, Proposition 8 appeared, saying no to gay marriage. It passed, 52 to 48 percent, a reversal of the Supreme Court decision of five months earlier.

Gay activists are furious. So the California supreme court agreed to sit on the issue yet again, beginning March '09, five months from now. Question: In a way similar, gay marriages and interracial marriages, like that of Obama's parents, were barred in many states as recently as 1960. Given his family background, why wouldn't Obama speak out more forcefully for gay rights and for gay marriage? I ask you, Monica.

MS. CROWLEY: Well, during the campaign, Barack Obama and Hillary Clinton came out against gay marriage.

And I think that there's an understanding that, despite the fact that the Democrats had huge gains electorally this year, that the country remains center-right, at least on the cultural issues.

That vote in California -- what was interesting about the demographic breakdown of that is that 70 percent of African-Americans voted against gay marriage, and a majority of Hispanic voters also voted against gay marriage.

MR. MCLAUGHLIN: So he doesn't want to lose that vote?

MS. CROWLEY: Well, no, I think it goes deeper than that. I don't think it's a strictly political calculation on Obama's part. I think that there is a cultural thing here going on.

MR. MCLAUGHLIN: Is there a religious thing?

MS. CROWLEY: Maybe, because there's certainly that component with the black voters who voted against gay marriage here.

MR. MCLAUGHLIN: Do you think he shares that?

MS. CROWLEY: He might. He hasn't spoken about that. He's spoken politically being against gay marriage, but he hasn't spoken about the religious component.

MR. MCLAUGHLIN: Do you think he will be forced to?

MS. CROWLEY: You know, when you look --

MR. MCLAUGHLIN: Don't forget, he himself is a product of an interracial marriage. He knows what the situation is like between gays analogously.

MS. CROWLEY: But this is different. But this is a whole different kind of thing. I mean, they're trying to cast it as a civil rights issue, but this is a different thing. And when most voters in the country -- and this proposition went down in Arizona and Florida and a couple of other states as well, just as it did in California.

MR. MCLAUGHLIN: Is there intrinsic injustice in denying gays a civil marriage status? Is that intrinsically unjust? I ask you, Eleanor. MS. CLIFT: Well, I think recognition of a civil relationship is what Barack Obama supports and Hillary Clinton supports and a lot of people support, and Barack Obama did --

MR. MCLAUGHLIN: That's discriminatory if you deny them marriage.

MS. CLIFT: Well, there is this feeling that the sanctity of marriage should be left to religious groups.

MR. MCLAUGHLIN: You mean, getting married jumping down in a parachute or under water --

MS. CLIFT: Well, look --

MR. MCLAUGHLIN: -- or in Vegas --

MS. CLIFT: I support gay marriage. And I think the force of history -- when you see the incredible strides we've made about attitudes towards gay people, you can see the direction we're going. This is going to happen at some point. The younger generation doesn't have any difficulties with gay marriage. But the point we're at now in our politics, it is a divisive issue and it is not an issue --

MR. MCLAUGHLIN: Because of evangelical Christians.

MS. CLIFT: Pardon me?

MR. MCLAUGHLIN: Because of evangelicals.

MS. CLIFT: Well, because --

MR. MCLAUGHLIN: Also because of the black community. They are not in favor of gay marriage.

MS. CLIFT: They have more traditional values. We're not there yet as a society. We will get there. I understand the impatience on the part of gay Americans.

MR. BUCHANAN: It's been defeated 30 times --

MS. CLIFT: But it's going to take time.

MR. BUCHANAN: Thirty times it's been defeated in elections.

MR. MCLAUGHLIN: What?

MR. BUCHANAN: It's been defeated 30 to zero in elections. The only way it wins, it goes to a group of these judges and they order it.

MR. MCLAUGHLIN: Is time on the side of the gays getting gay marriage, or is time on the other side? MR. BUCHANAN: It's on Eleanor's side.

MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: With Hillary gone to State, Ted Kennedy will lead the battle for universal health care as his legacy in the Senate.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The Obama White House staff is stuffed with congressional insiders. He will not run afoul of the Democratic Congress the way his predecessors, Bill Clinton and Jimmy Carter, did.

MR. MCLAUGHLIN: Monica.

MS. CROWLEY: By June of next year, Vladimir Putin will be back as the president of Russia.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: With the strong and broad support of the U.S. military, Bob Gates will continue as the secretary of Defense.

MR. MCLAUGHLIN: I predict that Ted Kennedy will be the driving force behind the passage of comprehensive health care legislation in 2009, concurring with Buchanan.

Happy Thanksgiving. Gobble, gobble.

END.