Share

THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; DEMETRI SEVASTOPULO, FINANCIAL TIMES; MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR; MORTIMER ZUCKERMAN, U.S. NEWS & WORLD REPORT TAPED: FRIDAY, FEBRUARY 13, 2009 BROADCAST: WEEKEND OF FEBRUARY 14-15, 2009

-----------------------------------------------------------------
Copyright (c) 2009 by Federal News Service, Inc., Ste. 500 1000 Vermont Avenue, NW, Washington, DC 20005, USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service, please visit http://www.fednews.com or call(202)347-1400
-----------------------------------------------------------------


DR. MCLAUGHLIN: Issue One: I've Got To Be Me.

SEN. JUDD GREGG (R-NH): (From videotape.) For 30 years I've been myself, and it would be virtually impossible for me to step into a situation where I couldn't be myself.

DR. MCLAUGHLIN: The fourth high-profile withdrawal of a key Obama nominee this week. New Hampshire Senator Judd Gregg stepped aside as Commerce secretary. Gregg cited irresolvable policy conflicts.

SEN. GREGG: (From videotape.) For me, I just realized, as these issues started to come at us and they started to crystallize, that it really wasn't a good fit and that I wouldn't be comfortable doing this and that it wouldn't be fair to him to be part of a team and not be able to be 100 percent on the team.

DR. MCLAUGHLIN: President Obama's reaction to the Gregg abdication was philosophical.

PRESIDENT BARACK OBAMA: (From videotape.) It comes as something of a surprise, because the truth is, you know, Mr. Gregg approached us with interest and seemed enthusiastic.

DR. MCLAUGHLIN: Question: Why did Senator Gregg withdraw himself from consideration for secretary of Commerce? Pat Buchanan.

MR. BUCHANAN: The question is why he took this assignment or sought this assignment in the first place, John. This is a laconic New Hampshire fiscal conservative who really knows the budget in and out. The job of Commerce secretary is a salesman. He's a guy who sells the administration's program, the administration of Obama-Reid- Pelosi. How Judd Gregg was going to go around the country and sell the social and economic policies of the Obama administration escapes me. He should never have taken it. He's been hurt badly.

But John, this shows something about Obama too. He did cut Gregg dead when he said he came seeking the job. But what was Obama thinking? Was he thinking that this was a good fit for his administration? It makes you somewhat -- I mean, I blame Gregg first, but it makes you somewhat question Obama's judgment. Is he something of a utopian in who he thinks he can work with and work really in harness with?

DR. MCLAUGHLIN: Maybe he thought that -- Obama thought that he could move the Census and that whole area of activity over to the White House instead of keeping it at Commerce. And what's the significance of the Census in all of this, Demetri? Welcome, by the way.

MR. SEVASTOPULO: Thank you. The significance of the Census is that that's how you then basis redistricting of congressional districts around the country. And Rahm Emanuel wanted to have that power and to cut up the country in a way that would help Democrats. And clearly Judd Gregg came under pressure from Republicans who said, "Hold on a second. You may have signed up for this, but you didn't realize you were going to get that. And are you willing to do that?" And I think he ultimately decided no.

MR. LAUER: So the Census consideration played a big role in this, did it not?

MR. SEVASTOPULO: Well, the stimulus package had already been passed in the House before he decided to accept the nomination, so that can't have been a factor unless he woke up one morning and said - MS. CROWLEY: Yeah, he actually cited two reasons. He did cite the trillion-dollar economic stimulus package. He said he couldn't quite reconcile it. But when that vote came up for cloture, ending debate in the Senate, he actually abstained. So it looks like he could have stomached that.

The main issue was the Census. You know, Pat and I had worked with President Nixon in various manifestations of Nixon's career. They criticized Nixon for politicizing the White House. They criticized George W. Bush for politicizing his White House. And yet what we have here in the movement of the Census out of the Commerce Department into the White House and straight into the hands of Rahm Emanuel, who is one of the most vicious attack terriers, partisan terriers, that this country has ever seen, is a real act of politicization here of the White House. And I think that Gregg said, "Well, why in the world am I going over to Commerce if I can't really -- if my heart's not in selling the economic stimulus and they've taken away the Census from me?"

DR. MCLAUGHLIN: We're talking about the Census, which is required by the Constitution. However, it's called an enumeration, which is not exactly a census. What do you think of this attempt to usurp the power and the reach of Census-taking, which is a multibillion-dollar effort, by the way -

MR. ZUCKERMAN: Right.

DR. MCLAUGHLIN: -- which will take place next year?

MR. ZUCKERMAN: Right.

DR. MCLAUGHLIN: What's involved here?

MR. ZUCKERMAN: It's critical in terms of allocating which -- how many seats go to which -- congressional seats go to which states. And to some extent, the governors in those states will be very central in determining the specific allocation of the districts.

But Gregg, in previous years, had fought against allowing it to become a part of a political operation. And it was, I think, one of those things that does suggest, shall we say, that the White House was going to try and play games with this, or at least, shall we say, take it out of an objective hand to measure this.

So I think Gregg really felt, both personally and politically, under great pressure on the Census. And I agree; I think that was the issue that he finally realized he couldn't. He's actually a very, very serious man, a man of real integrity in terms of his political views.

DR. MCLAUGHLIN: Seventeen years in the Senate.

MR. ZUCKERMAN: Yes. But everybody knew him as somebody who would be very honest about where he was. MR. BUCHANAN: But John -

MR. ZUCKERMAN: And I agree with Pat. I'm amazed that he took it. And once he took it, he realized, when that Census thing came up, which I'm sure wasn't central, he said, "I can't live with that."

MR. BUCHANAN: John -

DR. MCLAUGHLIN: He did not lay any blame, however, the senator did not, on Obama.

MR. ZUCKERMAN: On Obama.

DR. MCLAUGHLIN: In fact, he said, "I may be able to do more for him as a United States senator." But it appears as though the Census was a trigger in all of this.

MR. BUCHANAN: John, in the Census, one of the problems -

MR. ZUCKERMAN: Yeah, and rightly.

MR. BUCHANAN: -- is they get the counts, especially in these heavily minority districts, and they can't get the counts exactly right in time. So what they do is they impute a certain number to various districts and how many people in these -

DR. MCLAUGHLIN: It's an estimate.

MR. BUCHANAN: Yeah, you use an estimate. And look -

DR. MCLAUGHLIN: And you also make a projection on the computer now. There's a technical aspect.

MR. BUCHANAN: They make these projections, yeah. And if you fix the computer one way, you come up with an awful lot more people in these districts, and these are Democratic districts.

DR. MCLAUGHLIN: Is there a commercial angle?

MR. BUCHANAN: Well, sure. People use the Census material. The whole country does, I mean, for 10 years.

DR. MCLAUGHLIN: Now, it's historically been known that the director of the Census and his staff, a very dedicated staff, is clean and independent.

MR. BUCHANAN: Right. My brother-in-law, late brother-in-law, was number two over there at the Census under President (Bush ?).

DR. MCLAUGHLIN: Did he so describe the bureau?

MR. BUCHANAN: Well, yeah. But he loved numbers. Those guys, they really know -

DR. MCLAUGHLIN: Did he encourage you to be similarly in your ethics, Pat?

MR. BUCHANAN: No, I wanted to bring it into the White House, John. (Laughter.)

MS. CROWLEY: Listen, this is why - DR. MCLAUGHLIN: Now, wait a minute. You worked for Nixon.

MS. CROWLEY: This is, again, my point.

DR. MCLAUGHLIN: Three of us worked for Nixon.

MR. BUCHANAN: (Laughs.)

MS. CROWLEY: But this is why this move out of the Commerce Department into the White House is potentially unconstitutional. Can you imagine the screaming from the left if this had been George W. Bush taking the Census and handing it to Karl Rove or Tom DeLay and saying, "Go ahead, run the Census and redistrict. Let's see how many Republican seats we can get out of this." And also it involves the allocation of federal money too. Let's not lose sight of that.

MR. ZUCKERMAN: It's one of those issues, by the way, that doesn't get much attention. And he really highlighted it. And in a way, it's amazing that this administration thought that they could actually do this, because it really is an outrage to really try and take something like this and politicize it. That would really undermine, really, some of the basic elements of our democracy on some level.

MR. SEVASTOPULO: You would think that President Obama and Rahm Emanuel would have paid more attention to getting this job right, given that Bill Richardson had already had to pull out because of various reasons. They haven't focused on this properly, and it shows a complete lack of good process.

DR. MCLAUGHLIN: Does that say -

MR. BUCHANAN: But, you know, I blame -

DR. MCLAUGHLIN: -- more about Obama?

MR. BUCHANAN: No, I think -

DR. MCLAUGHLIN: Do you think that things like this and the accumulation -- I mean, we now have four nominees rejected -- that this could have a more serious image-besmirching impact on Obama than is apparent right now? Has it now become a moving image?

MR. SEVASTOPULO: Well, if you can't put your parts in place and that image continues over time, it just gets worse and worse. And right now it's starting to look worse and not better.

DR. MCLAUGHLIN: Does it suggest inexperience? Does it suggest amateurism -

MR. BUCHANAN: John, I think - DR. MCLAUGHLIN: -- on his part?

MR. BUCHANAN: The problem, John, is not with Obama. I think Obama, quite frankly, has been horribly served. Tom Daschle was the ideal guy for that job.

MR. ZUCKERMAN: Right. Absolutely.

MR. BUCHANAN: The White House -- it was perfect; everybody agreed.

DR. MCLAUGHLIN: What's the point?

MR. BUCHANAN: The point is that he didn't level with Obama. People didn't come forward until there were problems.

MS. CROWLEY: Come on. But Pat, there's a vetting process. I mean, these people had three months of a transition. Now they've been in the presidency for over three weeks. Come on, what have they been doing?

MR. BUCHANAN: But it's -

MS. CROWLEY: I mean, look, for eight years we heard President Bush was so incompetent. Look at what this administration has been through over the last three and a half weeks.

MR. BUCHANAN: But that is Daschle's responsibility.

MR. ZUCKERMAN: Daschle did not -- he was really upset at Daschle because he was not alerted to this.

MR. BUCHANAN: Exactly.

MR. ZUCKERMAN: And Daschle should have done that. And I agree with Pat on that. That was Daschle's principal responsibility. They weren't going to get into this kind of an issue three months ago.

DR. MCLAUGHLIN: What's the impact on Obama's image? I ask you that.

MR. ZUCKERMAN: Well, I think it has hurt him, because it makes his administration look amateurish, because this is really a critical part of his administration, including his idea of being bipartisan. It does not help him. And frankly, they have gotten one of the worst starts of any administration in my memory.

MR. BUCHANAN: Exactly. It looks -

MR. ZUCKERMAN: It's really -- it's a part of the whole thing. It all fits together.

MR. BUCHANAN: John, it looks like they're snake-bit. It looks like they're snake-bit. DR. MCLAUGHLIN: Really?

MR. BUCHANAN: Oh, I mean, these three or four Cabinet -- everybody has one of them in trouble, but he's lost three or four of these people himself. He's got this horrible launch to the Geithner banking thing that sent the market down 5 percent in one day. The Dow Jones is probably down 1,000 since he approached office.

DR. MCLAUGHLIN: Exit question: Is it fair to say that, unlike the other Obama nominees -- Richardson, Daschle, who withdrew under a cloud -- Gregg did the right thing and he took a stand on principle? Pat Buchanan.

MR. BUCHANAN: Yeah, he did the right thing, but he should never have taken that post in the first place.

DR. MCLAUGHLIN: Well, maybe this Census business emerged when -

MR. BUCHANAN: He could not have been -

DR. MCLAUGHLIN: -- when Rahm Emanuel said, "We're going to keep this right here in the White House.

"

MR. BUCHANAN: Can you see him selling the social and economic programs for four years of Barack Obama, Reid and Pelosi?

MR. SEVASTOPULO: But John, if it was such a minor issue for him, then why -- sorry, if it was such a big issue for him, why didn't he say that yesterday at his press conference? He said it was a minor issue. Well, then he starts to look kind of wishy-washy. Either it was a big issue and he had to pull out or it wasn't.

DR. MCLAUGHLIN: Well, apparently it was big enough for Judd to leave.

MR. SEVASTOPULO: Well, why didn't he say that, then?

MS. CROWLEY: And he should have had a conversation with Obama about this, because this was last Friday night, under the cover of darkness, that the Obama administration took the Census out of Commerce and gave it to Rahm Emanuel. So a couple of days had transpired here. And this whole ending should have happened a lot sooner.

MR. ZUCKERMAN: Still, I can understand why he was going easy on Obama. I mean, you don't just accept it -- you don't seek it out and then pull back, whether it's about the Census or other issues. So I can understand why he was being cautious in terms of how he responded to Obama.

DR. MCLAUGHLIN: Judd Gregg will be in the Senate, of course, and I think he took a stand on principle. And I think he leaves the impression of refusing to be a patsy in the politicization of the U.S. Census Bureau.

Issue Two: U.S.-Iran Detente?

PRESIDENT BARACK OBAMA: (From videotape.) And my expectation is, in the coming months, we will be looking for openings that can be created where we can start sitting across the table, face to face.

IRANIAN PRESIDENT MAHMOUD AHMADINEJAD: (From videotape, through interpreter.) The new U.S. administration has announced it wants to make a change and start talking. The Iranian nation welcomes real changes. Iran is ready to talk, but in a fair atmosphere and mutual respect.

DR. MCLAUGHLIN: U.S. President Obama and Iran's President Ahmadinejad this week wrote a new chapter in U.S.-Iran relations, maybe. Coincidentally, the Iranian revolution this week celebrates its 30th anniversary. The international community, especially the European Union, is breathing a sigh of relief at the apparent detente. America should be especially glad. Military action against Iran, especially if it is systematic and protracted, would have grave impact, many believe, not only strategic but commercial.

Oil -- Iran shares a border with Azerbaijan. Up to one-third of Iran's 66 million people are Azeris living in Iran. A military strike against Iran could lead to hundreds of thousands of Azeris fleeing Iran, crossing the border into Azerbaijan as refugees, and once there, produce confusion, disruption, hostility. Also the oil-rich Caspian Basin fronts Iran and Azerbaijan. The capital of Azerbaijan is Baku, right on the Caspian. A 1,000-mile pipeline goes from the capital, Baku, on the Caspian across Azerbaijan, then across Georgia, down through Turkey to the Turkish city of Ceyhan on the Mediterranean. One million barrels of oil pass through the pipeline every day. If President Obama were to bomb Iran, not only would a great volume of oil from Iran itself be cut from the world market, but the Baku-Ceyhan pipeline also severed, depriving the U.S. of a quotient of 1 million barrels per day of oil.

So the message is, don't bomb Iran if you don't want to pay $10 more for a gallon of gasoline. This is based on a 10-day report on Azerbaijan, Georgia and Armenia conducted on-site by the host of this program about six months ago.

Question: Has the danger of a U.S. preemptive strike on Iran's nuclear facilities lessened? Demetri Sevastopulo.

MR. SEVASTOPULO: John, I think the danger of a strike actually lessened over the last year. You heard the chairman of the Joint Chiefs, Admiral Mullen, came out and warned the Israelis not to strike Iran. That's what the problem is right now. The question is, are the Israelis going to hit Iran this year or next year? Because their time line for when they think Iran will get a nuclear weapon is much closer than the U.S. timeline.

DR. MCLAUGHLIN: Is there a resolution to this situation that would permit Iran to go forward with civilian nuclear energy and exclude, at that point in the fissionable cycle, the point at which we have weapons-grade nuclear technology? Do you follow me? You see it as a linear cycle. You stop it down. You have IAEA supervision 7/24. You even have engineering done. Is that a possible resolution that you know about? MR. SEVASTOPULO: The critics of that, what they would say is that if you let them get to a position where they can do most of that and you stop at the last point, all they have to do is break out and do the last point. And that wouldn't take very long. So it depends where you are.

DR. MCLAUGHLIN: What about throwing some money into the economy, because they now have got about a 25 percent inflation rate and the sights over there are not pleasant to see with the exhaust coming out of millions of cars, and gasoline being rationed? But why couldn't you -

MR. SEVASTOPULO: John, are you suggesting -

DR. MCLAUGHLIN: -- with a system of inspection and co- engineering and money or grants to the government, why couldn't you -- how do you possibly shut down -

MR. BUCHANAN: That's the deal, John.

DR. MCLAUGHLIN: -- the civilian nuclear electricity anywhere?

MR. BUCHANAN: That's the deal. I think what you've outlined is frankly, I think, what Brzezinski talks about, which is they continue nuclear enrichment to produce uranium, not weapons-grade but industrial grade. And then you get wholesale massive inspections. Demetri is right. The real problem is coming. Obama is moving toward a detente with Iran. Ahmadinejad, who's got political problems, is moving there. The real problem is Bibi Netanyahu and the Israeli government, who have a very short time line, and they are going to be moving to strike or get us to strike. And if you recall, George Bush himself, according to The New York Times, took away -- would not give the Israelis the bunker busters and said, "You are not to overfly American air space in any strike on Iran." The crunch is coming between Bibi and Barack.

DR. MCLAUGHLIN: The Iranians point out that Saddam used chemical weapons of mass destruction against them during their eight-year war with Iraq. They also point out that they, the Iranians, have chemical weapons and did not use them against Saddam because they believe in the Koran. Does that emphasis at all -

MR. ZUCKERMAN: John -

MS. CROWLEY: John -

MR. ZUCKERMAN: John, you've got to address the central issue here. All of our allies in that region -- Saudi Arabia, Egypt, Kuwait, Jordan -- their threat, as far as they are concerned, is Iran. They are the expansionist power. If you see what happened even in this war in Gaza, all of them privately were saying, "Go after Hamas. You've got to stop Iran." If we undermine our alliances with those people by handling Iran in the wrong way, we will have done ourselves great damage in that part of the world. They're our key allies, and have been our allies -

DR. MCLAUGHLIN: Your point is well taken. In addition to that, it puts the Saudis in the position of "Do we develop our own nuclear weapon?"

MS. CROWLEY: Right. And then you have an arms -

DR. MCLAUGHLIN: But they also fear the radiation coming over the Gulf if there is an explosion, as happened in Ukraine. Do you remember that?

MR. ZUCKERMAN: Right.

MS. CROWLEY: John, then you will have an epic arms race in the heart of the Middle East, and that's something that nobody wants.

Listen, the Iranians -

DR. MCLAUGHLIN: How do you stop -

MS. CROWLEY: The Iranians have been -

DR. MCLAUGHLIN: -- civilian nuclear energy -

MS. CROWLEY: The Iranians -

DR. MCLAUGHLIN: -- when you have a condition of impoverishment in the country or semi-impoverishment -

MS. CROWLEY: John -- well, yeah, but the solution -

DR. MCLAUGHLIN: -- and you want to sell your oil?

MS. CROWLEY: The solution of the Bush administration, the solution that the Obama administration is looking at, is increased economic sanctions on Iran. The Iranians have been working on a nuclear cycle since the early 1980s. The most recent estimate is that they're about a year away from having a nuclear weapon.

MR. SEVASTOPULO: No, no, that's not -

MS. CROWLEY: There is nothing you can say or do -

MR. SEVASTOPULO: No, no, Monica. The most recent estimate came out yesterday.

MS. CROWLEY: The estimates vary, but -

MR. SEVASTOPULO: Admiral Blair -- Monica, Admiral Blair -

DR. MCLAUGHLIN: How about doing it the other way?

MS. CROWLEY: If they are really that close to having -

DR. MCLAUGHLIN: Give them a branch and invite them -

MS. CROWLEY: Listen, if they are really that close to having a nuclear weapon, there's nothing that can be said or done to dissuade them from having one. Talking is fine, John, but the question is, if those talks fail, what are you prepared to do about it? Are you prepared to strike in order to prevent them from having an operational nuclear weapon?

DR. MCLAUGHLIN: So you see it as -

MR. BUCHANAN: As a practical matter, Obama is moving down another road altogether. The Israelis can't do it in and of themselves. And I do not believe they are anywhere near a nuclear weapon. They're still in the enrichment process. They're putting together, you know, enriched uranium, up to 3 to 5 percent. That's not weapons-grade.

MS. CROWLEY: Pat, they -

DR. MCLAUGHLIN: Demetri, quickly.

MR. SEVASTOPULO: Admiral Dennis Blair, the new Director of National Intelligence, yesterday said the U.S. estimate is that anywhere between 2010 and 2015 they might develop just the uranium capability. Then they have to weaponize a miniature -

MS. CROWLEY: They've been working on this for almost 20 years, okay.

MR. SEVASTOPULO: No, but the point is, it's not a one-year estimate.

MS. CROWLEY: And so every estimate we hear is five, 10 years away. Well, come on -

MR. BUCHANAN: The NIE -

DR. MCLAUGHLIN: I want to hear from Mort. Do you want to clean this up?

MR. ZUCKERMAN: I mean, listen, nobody knows exactly what those timetables are. I mean, the Director of National Intelligence is being very careful in his language, and rightly so. But the fact is, our allies, our critical allies, are really totally opposed to Iran. We have to be very careful. I'm not objecting to finding some way to deal with it. We have to be very, very careful how that is handled.

DR. MCLAUGHLIN: Do you think they will be, by international consensus, allowed -- allowed is the wrong word -- will it be okay with the international community for them to develop civilian nuclear power?

MR. ZUCKERMAN: That's what we have always said. We're perfectly happy to do that.

MR. BUCHANAN: They have a right to that, John, under the treaty. MR. ZUCKERMAN: And they have a right to that. That has never been the issue. The issue is, how do you prevent it from becoming a military power? And that, of course, is what has been -- we've offered that on many levels.

MS. CROWLEY: And don't forget that the Russians are playing an immediate and very vital role -

DR. MCLAUGHLIN: What does that mean?

MS. CROWLEY: -- in helping the Iranian nuclear program along.

MR. BUCHANAN: But it's a civilian -- Bushehr is a civilian reactor.

MS. CROWLEY: So we can say that the Iranians are -

DR. MCLAUGHLIN: That's another monkey wrench in the resolution machinery.

MS. CROWLEY: -- acting as an isolated actor. That's not true.

DR. MCLAUGHLIN: Issue Three: Quantum of Solace.

HOUSE SPEAKER NANCY PELOSI (D-CA): (From videotape.) A moment for us to have appreciation that in just a little while, maybe a couple of days, we will have passed legislation that will take the country in a new direction, which will begin us down the road of recovery.

DR. MCLAUGHLIN: Consoling movement this week on the economic stimulus package. The stimulus is now priced at $789 billion. This includes $275 billion in tax relief, $150 billion in infrastructure, public works spending, and $54 billion for the states.

But getting the stimulus package is not the only priority for the Obama team. Another notable priority is the U.S. bank debacle. On Tuesday, Treasury Secretary Timothy Geithner went before the Senate Budget Committee, and the air was at times electric.

(Begin videotaped segment.)

SEN. LINDSEY GRAHAM (R-SC): Okay, good. So you have no clue.

TREASURY SECRETARY TIMOTHY GEITHNER: No, that's not true, Senator. Senator, what I will not do is, even if you are frustrated -- (inaudible) -- about the details -

SEN. GRAHAM: See, I just don't believe that's enough money to fix housing and banking. I just wish you would say that.

(End videotaped segment.) DR. MCLAUGHLIN: Let's look at the banking component. The total cost of the Obama bailout of banks is $2 trillion, with $1 trillion of that $2 trillion, at best, private money. The U.S. banking system has suffered crippling losses. Geithner outlined four elements of the president's plan: Banks' assets and risks; toxicity banks; reviving credit; and preventing avoidable foreclosures.

Mort, here's a true-or-false question for you. Buying toxic assets from banks will shore up their solvency, but during this recession it gives no immediate relief for battered households who have lost almost one-fourth of their net worth. Twenty-three percent is what the feds say the average household has lost during this recession. Does buying toxic assets and putting them all in one institution, so to speak, does that do anything as far as battered households are concerned?

MR. ZUCKERMAN: Let me just amend the 23 percent. It's 23 percent of the total value of the housing. It takes much more of the home equity. If you have a mortgage, it can take up 50 or 60 percent of your home equity. In fact, out of that amount, it's probably over 50 percent of household equity in their homes, the largest asset on their balance sheet, has been lost so far. And we're still going south with that.

DR. MCLAUGHLIN: So it's a bigger figure.

MR. ZUCKERMAN: It's a much bigger figure and a much more serious figure. But what he's dealing with on two of the issues -- there's not enough time to cover them all, but let me just say this about the toxic assets. The big political problem is what price do you pay? And you do not want to benefit the banks.

So what he is suggesting is -- by the way, in addition to that, what he's suggesting is a way to get the private industry to buy them with federal support; that is, the federal government will lend the private interests to buy them. So the private interests will determine the price. And nobody in the federal government understands this paper, knows how to manage this paper. We already have $400 billion of it. I'll bet you there isn't a single person in the American government who understands that paper. So they've got to leave it in the private sector to understand how to deal with those securities.

MR. BUCHANAN: John -

MR. ZUCKERMAN: That's what he's doing. And it's the only intelligent way to do it, even though it didn't come across very well.

MR. BUCHANAN: John -

DR. MCLAUGHLIN: Hold on. I want to get the reaction to Geithner.

The market was unimpressed. Concerns that Geithner's address was detail-deficient and that the plan was not bold enough drove stocks down 382 points that day. Senate Republicans were also far from impressed by the Treasury secretary's message.

SEN. RICHARD SHELBY (R-AL): (From videotape.) He had nothing really to say to the American people and to Congress or to the banks. He basically admitted this. He wasted about three or four hours of the Senate's time. And we want to know where the specifics are, and he doesn't have them.

DR. MCLAUGHLIN: Question: So is Geithner essentially asking for a blank check?

MR. BUCHANAN: The bank crisis is far bigger than the stimulus package. If they get this one wrong, you really do have a depression. And Martin Wolf is right. I think you're at the point, John, you've got all these zombie banks. The question is, do you keep them alive or basically do you put them out of their misery? DR. MCLAUGHLIN: Demetri, you've got five seconds on this.

MR. SEVASTOPULO: You've got to get beyond the point of thinking that bailing out the banks is bad for the American people. It's supposed to be for the American people to solve the system and save it.

DR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Netanyahu will eventually form a government and Tzipi Livni will return as foreign secretary.

DR. MCLAUGHLIN: Demetri.

MR. SEVASTOPULO: President Obama will be back to Congress in a couple of months looking for more money for TARP.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: The Russians will move into Iran and help them develop their oil fields next.

DR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: The Obama administration will not only be looking for more money for TARP; they're going to be looking for a heck of a lot more money for a stimulus program, because the stimulus program we have now is going to be totally inadequate to the challenge we are facing economically.

DR. MCLAUGHLIN: How many trillions of dollars before we're through?

MR. ZUCKERMAN: At least -- we're going to have to have another stimulus program that's going to be somewhere between $500 billion and a trillion dollars before the end of this year.

DR. MCLAUGHLIN: Social Security, Medicare and Medicaid entitlement are expected to face financial crisis. The U.S. Congress will form a blue-ribbon bipartisan committee, with Democrats and Republicans, fully funding it. It will anticipate, deal with and reduce the intensity of these potential disasters, we hope.

Happy Valentine's Day. Bye-bye.



END.

especially glad. Military action against Iran, especially if it is systematic and protracted, would have grave impact, many believe, not only strategic but commercial.

Oil -- Iran shares a border with Azerbaijan. Up to one-third of Iran's 66 million people are Azeris living in Iran. A military strike against Iran could lead to hundreds of thousands of Azeris fleeing Iran, crossing the border into Azerbaijan as refugees, and once there, produce confusion, disruption, hostility. Also the oil-rich Caspian Basin fronts Iran and Azerbaijan. The capital of Azerbaijan is Baku, right on the Caspian. A 1,000-mile pipeline goes from the capital, Baku, on the Caspian across Azerbaijan, then across Georgia, down through Turkey to the Turkish city of Ceyhan on the Mediterranean. One million barrels of oil pass through the pipeline every day. If President Obama were to bomb Iran, not only would a great volume of oil from Iran itself be cut from the world market, but the Baku-Ceyhan pipeline also severed, depriving the U.S. of a quotient of 1 million barrels per day of oil.

So the message is, don't bomb Iran if you don't want to pay $10 more for a gallon of gasoline. This is based on a 10-day report on Azerbaijan, Georgia and Armenia conducted on-site by the host of this program about six months ago.

Question: Has the danger of a U.S. preemptive strike on Iran's nuclear facilities lessened? Demetri Sevastopulo.

MR. SEVASTOPULO: John, I think the danger of a strike actually lessened over the last year. You heard the chairman of the Joint Chiefs, Admiral Mullen, came out and warned the Israelis not to strike Iran. That's what the problem is right now. The question is, are the Israelis going to hit Iran this year or next year? Because their time line for when they think Iran will get a nuclear weapon is much closer than the U.S. timeline.

DR. MCLAUGHLIN: Is there a resolution to this situation that would permit Iran to go forward with civilian nuclear energy and exclude, at that point in the fissionable cycle, the point at which we have weapons-grade nuclear technology? Do you follow me? You see it as a linear cycle. You stop it down. You have IAEA supervision 7/24. You even have engineering done. Is that a possible resolution that you know about? MR. SEVASTOPULO: The critics of that, what they would say is that if you let them get to a position where they can do most of that and you stop at the last point, all they have to do is break out and do the last point. And that wouldn't take very long. So it depends where you are.

DR. MCLAUGHLIN: What about throwing some money into the economy, because they now have got about a 25 percent inflation rate and the sights over there are not pleasant to see with the exhaust coming out of millions of cars, and gasoline being rationed? But why couldn't you -

MR. SEVASTOPULO: John, are you suggesting -

DR. MCLAUGHLIN: -- with a system of inspection and co- engineering and money or grants to the government, why couldn't you -- how do you possibly shut down -

MR. BUCHANAN: That's the deal, John.

DR. MCLAUGHLIN: -- the civilian nuclear electricity anywhere?

MR. BUCHANAN: That's the deal. I think what you've outlined is frankly, I think, what Brzezinski talks about, which is they continue nuclear enrichment to produce uranium, not weapons-grade but industrial grade. And then you get wholesale massive inspections. Demetri is right. The real problem is coming. Obama is moving toward a detente with Iran. Ahmadinejad, who's got political problems, is moving there. The real problem is Bibi Netanyahu and the Israeli government, who have a very short time line, and they are going to be moving to strike or get us to strike. And if you recall, George Bush himself, according to The New York Times, took away -- would not give the Israelis the bunker busters and said, "You are not to overfly American air space in any strike on Iran." The crunch is coming between Bibi and Barack.

DR. MCLAUGHLIN: The Iranians point out that Saddam used chemical weapons of mass destruction against them during their eight-year war with Iraq. They also point out that they, the Iranians, have chemical weapons and did not use them against Saddam because they believe in the Koran. Does that emphasis at all -

MR. ZUCKERMAN: John -

MS. CROWLEY: John -

MR. ZUCKERMAN: John, you've got to address the central issue here. All of our allies in that region -- Saudi Arabia, Egypt, Kuwait, Jordan -- their threat, as far as they are concerned, is Iran. They are the expansionist power. If you see what happened even in this war in Gaza, all of them privately were saying, "Go after Hamas. You've got to stop Iran." If we undermine our alliances with those people by handling Iran in the wrong way, we will have done ourselves great damage in that part of the world. They're our key allies, and have been our allies -

DR. MCLAUGHLIN: Your point is well taken. In addition to that, it puts the Saudis in the position of "Do we develop our own nuclear weapon?"

MS. CROWLEY: Right. And then you have an arms -

DR. MCLAUGHLIN: But they also fear the radiation coming over the Gulf if there is an explosion, as happened in Ukraine. Do you remember that?

MR. ZUCKERMAN: Right.

MS. CROWLEY: John, then you will have an epic arms race in the heart of the Middle East, and that's something that nobody wants.

Listen, the Iranians -

DR. MCLAUGHLIN: How do you stop -

MS. CROWLEY: The Iranians have been -

DR. MCLAUGHLIN: -- civilian nuclear energy -

MS. CROWLEY: The Iranians -

DR. MCLAUGHLIN: -- when you have a condition of impoverishment in the country or semi-impoverishment -

MS. CROWLEY: John -- well, yeah, but the solution -

DR. MCLAUGHLIN: -- and you want to sell your oil?

MS. CROWLEY: The solution of the Bush administration, the solution that the Obama administration is looking at, is increased economic sanctions on Iran. The Iranians have been working on a nuclear cycle since the early 1980s. The most recent estimate is that they're about a year away from having a nuclear weapon.

MR. SEVASTOPULO: No, no, that's not -

MS. CROWLEY: There is nothing you can say or do -

MR. SEVASTOPULO: No, no, Monica. The most recent estimate came out yesterday.

MS. CROWLEY: The estimates vary, but -

MR. SEVASTOPULO: Admiral Blair -- Monica, Admiral Blair -

DR. MCLAUGHLIN: How about doing it the other way?

MS. CROWLEY: If they are really that close to having -

DR. MCLAUGHLIN: Give them a branch and invite them -

MS. CROWLEY: Listen, if they are really that close to having a nuclear weapon, there's nothing that can be said or done to dissuade them from having one. Talking is fine, John, but the question is, if those talks fail, what are you prepared to do about it? Are you prepared to strike in order to prevent them from having an operational nuclear weapon?

DR. MCLAUGHLIN: So you see it as -

MR. BUCHANAN: As a practical matter, Obama is moving down another road altogether. The Israelis can't do it in and of themselves. And I do not believe they are anywhere near a nuclear weapon. They're still in the enrichment process. They're putting together, you know, enriched uranium, up to 3 to 5 percent. That's not weapons-grade.

MS. CROWLEY: Pat, they -

DR. MCLAUGHLIN: Demetri, quickly.

MR. SEVASTOPULO: Admiral Dennis Blair, the new Director of National Intelligence, yesterday said the U.S. estimate is that anywhere between 2010 and 2015 they might develop just the uranium capability. Then they have to weaponize a miniature -

MS. CROWLEY: They've been working on this for almost 20 years, okay.

MR. SEVASTOPULO: No, but the point is, it's not a one-year estimate.

MS. CROWLEY: And so every estimate we hear is five, 10 years away. Well, come on -

MR. BUCHANAN: The NIE -

DR. MCLAUGHLIN: I want to hear from Mort. Do you want to clean this up?

MR. ZUCKERMAN: I mean, listen, nobody knows exactly what those timetables are. I mean, the Director of National Intelligence is being very careful in his language, and rightly so. But the fact is, our allies, our critical allies, are really totally opposed to Iran. We have to be very careful. I'm not objecting to finding some way to deal with it. We have to be very, very careful how that is handled.

DR. MCLAUGHLIN: Do you think they will be, by international consensus, allowed -- allowed is the wrong word -- will it be okay with the international community for them to develop civilian nuclear power?

MR. ZUCKERMAN: That's what we have always said. We're perfectly happy to do that.

MR. BUCHANAN: They have a right to that, John, under the treaty. MR. ZUCKERMAN: And they have a right to that. That has never been the issue. The issue is, how do you prevent it from becoming a military power? And that, of course, is what has been -- we've offered that on many levels.

MS. CROWLEY: And don't forget that the Russians are playing an immediate and very vital role -

DR. MCLAUGHLIN: What does that mean?

MS. CROWLEY: -- in helping the Iranian nuclear program along.

MR. BUCHANAN: But it's a civilian -- Bushehr is a civilian reactor.

MS. CROWLEY: So we can say that the Iranians are -

DR. MCLAUGHLIN: That's another monkey wrench in the resolution machinery.

MS. CROWLEY: -- acting as an isolated actor. That's not true.

DR. MCLAUGHLIN: Issue Three: Quantum of Solace.

HOUSE SPEAKER NANCY PELOSI (D-CA): (From videotape.) A moment for us to have appreciation that in just a little while, maybe a couple of days, we will have passed legislation that will take the country in a new direction, which will begin us down the road of recovery.

DR. MCLAUGHLIN: Consoling movement this week on the economic stimulus package. The stimulus is now priced at $789 billion. This includes $275 billion in tax relief, $150 billion in infrastructure, public works spending, and $54 billion for the states.

But getting the stimulus package is not the only priority for the Obama team. Another notable priority is the U.S. bank debacle. On Tuesday, Treasury Secretary Timothy Geithner went before the Senate Budget Committee, and the air was at times electric.

(Begin videotaped segment.)

SEN. LINDSEY GRAHAM (R-SC): Okay, good. So you have no clue.

TREASURY SECRETARY TIMOTHY GEITHNER: No, that's not true, Senator. Senator, what I will not do is, even if you are frustrated -- (inaudible) -- about the details -

SEN. GRAHAM: See, I just don't believe that's enough money to fix housing and banking. I just wish you would say that.

(End videotaped segment.) DR. MCLAUGHLIN: Let's look at the banking component. The total cost of the Obama bailout of banks is $2 trillion, with $1 trillion of that $2 trillion, at best, private money. The U.S. banking system has suffered crippling losses. Geithner outlined four elements of the president's plan: Banks' assets and risks; toxicity banks; reviving credit; and preventing avoidable foreclosures.

Mort, here's a true-or-false question for you. Buying toxic assets from banks will shore up their solvency, but during this recession it gives no immediate relief for battered households who have lost almost one-fourth of their net worth. Twenty-three percent is what the feds say the average household has lost during this recession. Does buying toxic assets and putting them all in one institution, so to speak, does that do anything as far as battered households are concerned?

MR. ZUCKERMAN: Let me just amend the 23 percent. It's 23 percent of the total value of the housing. It takes much more of the home equity. If you have a mortgage, it can take up 50 or 60 percent of your home equity. In fact, out of that amount, it's probably over 50 percent of household equity in their homes, the largest asset on their balance sheet, has been lost so far. And we're still going south with that.

DR. MCLAUGHLIN: So it's a bigger figure.

MR. ZUCKERMAN: It's a much bigger figure and a much more serious figure. But what he's dealing with on two of the issues -- there's not enough time to cover them all, but let me just say this about the toxic assets. The big political problem is what price do you pay? And you do not want to benefit the banks.

So what he is suggesting is -- by the way, in addition to that, what he's suggesting is a way to get the private industry to buy them with federal support; that is, the federal government will lend the private interests to buy them. So the private interests will determine the price. And nobody in the federal government understands this paper, knows how to manage this paper. We already have $400 billion of it. I'll bet you there isn't a single person in the American government who understands that paper. So they've got to leave it in the private sector to understand how to deal with those securities.

MR. BUCHANAN: John -

MR. ZUCKERMAN: That's what he's doing. And it's the only intelligent way to do it, even though it didn't come across very well.

MR. BUCHANAN: John -

DR. MCLAUGHLIN: Hold on. I want to get the reaction to Geithner.

The market was unimpressed. Concerns that Geithner's address was detail-deficient and that the plan was not bold enough drove stocks down 382 points that day. Senate Republicans were also far from impressed by the Treasury secretary's message.

SEN. RICHARD SHELBY (R-AL): (From videotape.) He had nothing really to say to the American people and to Congress or to the banks. He basically admitted this. He wasted about three or four hours of the Senate's time. And we want to know where the specifics are, and he doesn't have them.

DR. MCLAUGHLIN: Question: So is Geithner essentially asking for a blank check?

MR. BUCHANAN: The bank crisis is far bigger than the stimulus package. If they get this one wrong, you really do have a depression. And Martin Wolf is right. I think you're at the point, John, you've got all these zombie banks. The question is, do you keep them alive or basically do you put them out of their misery? DR. MCLAUGHLIN: Demetri, you've got five seconds on this.

MR. SEVASTOPULO: You've got to get beyond the point of thinking that bailing out the banks is bad for the American people. It's supposed to be for the American people to solve the system and save it.

DR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Netanyahu will eventually form a government and Tzipi Livni will return as foreign secretary.

DR. MCLAUGHLIN: Demetri.

MR. SEVASTOPULO: President Obama will be back to Congress in a couple of months looking for more money for TARP.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: The Russians will move into Iran and help them develop their oil fields next.

DR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: The Obama administration will not only be looking for more money for TARP; they're going to be looking for a heck of a lot more money for a stimulus program, because the stimulus program we have now is going to be totally inadequate to the challenge we are facing economically.

DR. MCLAUGHLIN: How many trillions of dollars before we're through?

MR. ZUCKERMAN: At least -- we're going to have to have another stimulus program that's going to be somewhere between $500 billion and a trillion dollars before the end of this year.

DR. MCLAUGHLIN: Social Security, Medicare and Medicaid entitlement are expected to face financial crisis. The U.S. Congress will form a blue-ribbon bipartisan committee, with Democrats and Republicans, fully funding it. It will anticipate, deal with and reduce the intensity of these potential disasters, we hope.

Happy Valentine's Day. Bye-bye.



END.