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THE MCLAUGHLIN GROUP

HOST: JOHN MCLAUGHLIN

PANEL:
PATRICK BUCHANAN, MSNBC;
ELEANOR CLIFT, NEWSWEEK;
MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR;
BETH HIRSCHHORN, METLIFE

TAPED: FRIDAY, APRIL 17, 2009
BROADCAST: WEEKEND OF APRIL 18-19, 2009

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THIS IS A RUSH TRANSCRIPT.
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DR. MCLAUGHLIN: Issue One: America's DNA.

PRESIDENT BARACK OBAMA: (From videotape.) Homes have been lost, jobs shed, businesses shuttered, is a sapping of confidence across our land, a nagging fear that America's decline is inevitable. We have begun the essential work of keeping the American dream alive.

DR. MCLAUGHLIN: The American dream. What's left of the optimistic belief that because of our values and our strength, the level of achievement Americans can reach is limited by only one thing -- perseverance, the tenacity of our resolve.

This was the American DNA for generations, but the American DNA hasn't always been so understood and defined. In fact, two studies show that in the recent past, the American dream was indexed by one's financial net worth -- asset accumulation, buying power, conspicuous consumption.

Of course, that American dream was a byproduct of a soaring stock market and a booming housing market and an easy credit market, all fueling buying binges.

Well, that was then. Today's economic downturn is now 15 months old and counting. This slump, recession, depression, whatever, is changing how Americans view the good life. The 2009 American Dream survey commissioned by MetLife shows that, quote-unquote, "tectonic shifts are retooling the American dream to fit our new grim economy."

Item: Job security displaces upward mobility. Getting that promotion is no longer the goal. Keeping the job is.

Item: Self-reliance in. People are relying more on themselves, less on banks, less on government.

Item: Consumerism waning. Americans are slashing purchases, particularly for travel, dining out, and name-brand products.

Item: Social net worth rated above fiscal net worth. Americans are now counting friends and family as crucial to the American dream. They are counting less on consumer spending, which in the past has been responsible for 70 percent of our national wealth -- repeat, 70 percent.

Question: What implication does this downsizing of the American dream have for the rest of the world? Pat Buchanan.

MR. BUCHANAN: Enormous, John. The United States -- the American consumers basically were spending more than they earned by about 1 or 2 percent a year. We are now saving 5 percent. That is 6 percent of the American gross national product, which is pulled out of consumption, in addition to what we lost in equity and what we lost in bonds and stocks.

For the world, the bad news is we're not consuming all these goods. And all these Europeans and Japanese and Koreans and Chinese have sold their goods in the American market. One figure, John: Japan's exports -- and it's an export-oriented economy -- have dropped 50 percent in the last six months. This is happening to China, to Europe, to everyone that sells to the United States. And it's on a semi-permanent basis.

Barack Obama and the others are understandably pressing us to go out and spend again, get back into those stores. But I think we've got a new America, at least for the next 18 months to two years.

DR. MCLAUGHLIN: Eleanor, that pretty much exhausts that question, right?

MR. BUCHANAN: (Laughs.)

DR. MCLAUGHLIN: If you want to move it around, feel free to do so. (Laughter.)

MS. CLIFT: Okay. Well, first of all, the way you laid this out, it almost seemed depressing. It really isn't depressing. If you ask people if the country is on the right track, that number is now up to 45 percent here in America, and it was 14 percent in early January.

For the last three decades, most of the income gains have gone to the people at the high end of the income scale, and there's been basically an arms race of consumer goods. And if you ask people if this makes them happy, the answer is no. And there's been a sort of return to simplicity that was beginning before this recession. I think the recession is accelerating it.

And young people in particular between 18 and 30, the Millennials, they now consider themselves citizens of the world. And a greater awareness of the planet's fragility and global warming has led to a realization that we waste a lot. So I think the ethos is now spend less and make more. I think it's good news, not bad news.

DR. MCLAUGHLIN: Can I refine the question a bit?

MS. CROWLEY: Please do.

DR. MCLAUGHLIN: Do we have more than one event going on? We have a financial crisis.

MS. CROWLEY: Right.

DR. MCLAUGHLIN: It's essentially a bank crisis. And then we have an ongoing situation of recession.

MS. CROWLEY: Right.

DR. MCLAUGHLIN: Does that mean we have two crises?

MS. CROWLEY: Well, we have dual crises that are running along the same track. But I would add to that probably a third rail, which I think the MetLife study really points to, and which Eleanor touched on, which is that the global economic crisis, which has ramifications for every single American and practically everybody in the world, also has, for lack of a better word, a spiritual element to it, and that is that people -- everything that they thought they knew for sure -- their home, their job, their income, their ability to move up and get a promotion -- everything that they thought they once knew is no longer true, or at least no longer as certain.

And so what people are doing, I think, is retracting their spending. That's the most obvious economic signal that we have. People are saving more because they don't feel that they can rely on the government or even their banks anymore. And it's coming out in social ways.

It's coming, as Eleanor points out, that nesting trend that actually did begin before the economic crisis happened but is now accelerating -- nesting, looking more toward family relationships and personal relationships. That's why you also, John, see the rise of, say, Facebook or MySpace out on the Internet, social networking sites that make people have a sense of more certainty and continuity.

DR. MCLAUGHLIN: Beth Hirschhorn, it's good having you with us from MetLife.

MS. HIRSCHHORN: Good to be here.

DR. MCLAUGHLIN: How is the study doing? It certainly is an impressive study.

MS. HIRSCHHORN: Well, there's a lot of interest in it. And I think what everybody is sort of putting together I would describe as right-sizing. So there is a certain degree of downsizing, but it's necessary. I mean, we were going in the wrong directly, clearly. And people actually feel less pressure. I mean, a lot of people, especially young people, felt enormous pressure to buy more and better and better and more things. And now people are -- you know, they're forced to rethink exactly how they spent money. And that's healthy.

But the other healthy trend is --

MR. BUCHANAN: But Beth, you know, we've got 70 percent --

MS. HIRSCHHORN: -- again, more family and friends.

MR. BUCHANAN: You consume 70 percent of your GDP, and suddenly folks pull back. And I agree they're doing that. It's got enormous impact on your malls and your stores, and you see all these things shutting down and these businesses and stuff. That's going to last for a while.

MS. HIRSCHHORN: Well, then the GDP we had, you know, was unsustainable. So if it was built on credit, then it was. So the spending was out of control and out of whack.

MS. CLIFT: There's not as much anxiety about keeping up with the Joneses now that the Joneses aren't spending so much. But, look, we are talking about people at the upper levels. A lot of people in this country are retrenching, and they're retrenching because they don't have money to buy necessary things. So I think when the economy begins to right itself, there will be more consumerism. People still need to buy cars. They need to buy homes and refrigerators and everything else.

DR. MCLAUGHLIN: What's the impact on multinationals? Multinationals manufacture cheaply abroad -- a lot of them do -- and they sell at a premium price in the United States. Now they have to return abroad to sell it, in view of the fact that we are somewhat penny-pinching now in this country?

MR. BUCHANAN: This is why Obama is pushing and the others are pushing for the Chinese to have their own stimulus package, to start consuming more at home. But John, so many of these economies relied so heavily, especially the Asians -- they are export-driven. They dump their goods into the United States.

You take a place like Singapore. They can't consume what they produce. They need these markets, the Americans to buy all this. And when we're not doing it, nobody else in the world can pick up the slack for a $15 trillion economy.

MS. CLIFT: But you still have China, a huge economy that is industrializing, and that's a huge market. If American car companies are going to come back, it will be because they sell cars in China. So, you know, I think the bottoming out of consumerism is temporary. These other countries, developing countries, are just catching up to the world of --

DR. MCLAUGHLIN: Exit question: Are these changes in the American dream likely to be permanent or passing? Pat Buchanan.

MR. BUCHANAN: Intermediate. They're going to last for a couple of years, but Americans will pretty soon go back to happy days are here again, John.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: I think it's a more lasting mindset. I think the fragility of the economy and the fragility of the planet have now made themselves apparent to people, and I don't think overconsuming is going to be the way of life.

MS. CROWLEY: Yeah, I think people are less trusting of that job and being in a job and having a pension once they retire. I think people are less certain about that, and they will continue to save, but only to a certain extent, because once the economy comes back, Americans really love their stuff. They may not be going as hog-wild spending as they once did, but they'll go back to spending.

DR. MCLAUGHLIN: What do you think?

MS. HIRSCHHORN: This was a wakeup call. They're not going to return to the ways of the most recent past, when two-thirds of people, even when they had homes, were planning on trading up or making dramatic improvements. So they're not chasing, chasing, chasing the material goods as much anymore, but they still need to buy things.

DR. MCLAUGHLIN: I think it's permanent. I think the party's over. And there's probably a big hangover.

Issue Two: Home Sickness.

JOHN SILVIA (Wachovia chief economist): (From videotape.) The big problem right now is that we've got this huge inventory of homes. That huge inventory is putting intense downward pressure on prices across the board.

DR. MCLAUGHLIN: Home ownership has long been the foundation of the American dream. That dream took on a new look in recent years. Owners could tap into their home's value for liquidity, otherwise known as a home equity line of credit.

But in February 2007, the dream turned into a nightmare. Americans found themselves trapped. Their incomes were flattening or decreasing. Their household debt was escalating. Consumers started getting behind on their mortgages, and then the downward spiral. Delinquencies rose and escalated into foreclosures. The foreclosures led to the burst of the real estate bubble, and consumer spending came to a standstill.

The recession began later in 2007 and cascaded into a credit crisis by early 2008. By October 2008, 10 months later, the total net worth of Americans plunged by $11 trillion, from $63 trillion total to $52 trillion total, with the average family's net worth shrinking by 20 percent with less disposable income.

Continuous employment becomes critical. Seventy-five percent of Americans with incomes of $35,000 to $100,000, the so-called middle market, fear that if they lose their jobs, they will lose their homes to foreclosure. So reports a MetLife study.

Question: Should public policy encourage Americans to build a safety net of savings instead of saving for a home down payment? Eleanor Clift.

MS. CLIFT: Well, I think home ownership is still the dream. And in part it's because, if you rent, you don't get a tax benefit. So if government wants to rethink how we live, they would have to make rent tax-deductible. And I don't think we're there yet, but Richard Florida, who is a futurist -- he has a piece in -- I think it's Atlantic Magazine -- talking about how we're such a mobile society now that we might want to rethink the whole notion of owning a home, that it's cumbersome.

And I think I would like to rethink the American dream in terms -- instead of the white picket fence around the house, access to public transportation. And I think that's the new American dream, having homes that are accessible to getting around.

MR. BUCHANAN: Get a bus again? My old man used to do that in the '50s. (Laughs.)

MS. CLIFT: Well, and your old man probably wasn't overweight, and he got his exercise. So it's back to the future.

DR. MCLAUGHLIN: What do you think about the --

MR. BUCHANAN: John, the ownership --

DR. MCLAUGHLIN: Wait a minute, Pat. What do you think about the Atlantic publishing a futurist?

MR. BUCHANAN: (Laughs.) Look, John --

DR. MCLAUGHLIN: Has futurism arrived on the academic scene?

MR. BUCHANAN: Yeah, but it's on the popular scene, John. But, look, the idea of owning a home is as American as apple pie. And the reason we got into trouble is because we had a good idea, basically to get home ownership up among African-Americans and Hispanics, where it's about 50 percent, to where white folks, who got 75 percent.

The problem was we suspended all the rules, gave these mortgages that people couldn't handle, and that's how you got in this disaster.

MS. CLIFT: Now, that's not true.

MR. BUCHANAN: But people will always want to buy their own house, their own piece of property. It's natural. It's in human nature. It's a good thing and a healthy thing.

DR. MCLAUGHLIN: But homes are cheap now and people are not buying them. Why is that, Beth?

MS. HIRSCHHORN: Well, people have no money now and they can't get credit now. I think it'll stay a part of the dream, even though it's only been a part for about 50 years now, but not at any cost. And I don't mean price. I mean the cost of a treacherous commute. People moved far away from their jobs to get that picket fence, and that fence got bigger and bigger because their houses got so big.

So I think people will pull back and pick a place where they can really see their family and friends as they, you know, sort of get back to that different values exchange, you know, more about family than financial security.

MS. CROWLEY: Quality of life. Quality-of-life issues.

DR. MCLAUGHLIN: Do you live in a McMansion?

MS. CROWLEY: No, I have a one-bedroom apartment in New York City. (Laughs.) What's interesting to me is that we've, because of the global economic crisis and also because of the housing crisis, that we -- that the American dream with regard to the central point about home ownership has been thrown into reverse. So it used to be you get out of college, you rent an apartment, maybe with some friends; then you rent alone. Then you save enough money to buy a small modest home --

MS. HIRSCHHORN: A starter home.

MS. CROWLEY: -- and then you aspire to a bigger home, a McMansion, John. And now, because there's so many people who overextended themselves and who got credit for homes that they couldn't afford, now are going back into reverse. A lot of people who have those McMansions are now renting because they lost their homes, because they lost their jobs or their homes became too burdensome. And so it's going to be a long time, John, before we start to throw that back --

MS. CLIFT: And the reason --

DR. MCLAUGHLIN: Will the government -- do they have the consolation of knowing the government will bail them out?

MS. CROWLEY: Well, that's part of it. And that's part of the public policy question that you raise. And I think because -- I think Pat is right. Because public policy helped to get us into this mess, I'm not sure --

MS. CLIFT: And the reason --

MS. CROWLEY: -- homeowners want public policy further evolved.

MS. CLIFT: The reason that people traded up their homes to get into better neighborhoods is because schools -- the quality of the schools is tied to the neighborhood, and if you want to send your kids to good schools. So people borrowed more in order to get into places where they could send their kids to better schools. And, you know, it's a vicious circle.

But the notion that getting rid of redlining and making loans available to minorities created the housing collapse --

MR. BUCHANAN: What do you think --

MS. CLIFT: -- is very oversimplistic.

MR. BUCHANAN: John, let me just --

DR. MCLAUGHLIN: No, I want --

MS. CLIFT: Look, there was predatory lending, and that was the primary thing.

DR. MCLAUGHLIN: I want you to speak to this.

MR. BUCHANAN: Well, look --

MS. CLIFT: And I really don't like letting you get away with the notion that it's the minorities that created the problem.

MR. BUCHANAN: All right, take a look at the four biggest default states or foreclosures -- California, Nevada, Arizona, Florida. They're Hispanic folks who were put into houses they couldn't afford with no documents. What's your question?

MS. CLIFT: There were a lot of white folks who did that too.

MR. BUCHANAN: What's your question?

MS. HIRSCHHORN: Nevada and Florida --

DR. MCLAUGHLIN: Are the boomers the hardest-hit?

MR. BUCHANAN: The boomers --

DR. MCLAUGHLIN: You're a post-boomer, right?

MR. BUCHANAN: I'm a pre-boomer. (Laughs.)

MS. CLIFT: Let's --

MR. BUCHANAN: I'm post-you, but I'm a pre-boomer. (Laughs.)

DR. MCLAUGHLIN: You're not 55 to 64.

MR. BUCHANAN: John, I'm not in the -- I wasn't born in the '20s; let me put it that way.

DR. MCLAUGHLIN: Are they hardest-hit? And if so, why?

MR. BUCHANAN: It was the 1930s.

MS. CLIFT: Let's let our guest inject a few facts into the discussion.

MS. HIRSCHHORN: Pat, I have to come back at you on the Nevada and Florida. That's all investment properties. That's where all the defaults are. Those aren't immigrants. Those are not people's first homes. Those are people who are more affluent --

MR. BUCHANAN: They're boomers flipping houses.

MS. HIRSCHHORN: -- who thought they could keep going up and keep flipping, yes.

MR. BUCHANAN: Well, that's one of the problems too.

MS. HIRSCHHORN: That's a big problem, and that's --

MR. BUCHANAN: I'll tell you, the Community Reinvestment Act is one of the things here, buying up all these loans, subprime by Fannie and Freddie, turning them into securities. This is the disaster.

MS. CLIFT: That is one of several factors, and by no means the dominant factor. That is a Republican talking point.

DR. MCLAUGHLIN: Exit question: Is America's love affair with the dream home now over? Yes or no.

MR. BUCHANAN: It will never be over, John.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The dream home will be redefined so that it's near public transportation. (Laughs.)

DR. MCLAUGHLIN: Yes or no?

MS. CROWLEY: No, Americans still have their aspirations.

MS. CLIFT: Rapid rail.

MS. CROWLEY: Americans still have their aspirations. They're still optimistic people, as grim as the economic situation is now. And the home, the sanctuary, that'll remain integral.

MS. HIRSCHHORN: They still want a home, and it's going to take a little bit longer. They're graduating now with at least $25,000 in student loan debt. So they're going to have to take their time.

DR. MCLAUGHLIN: The home was once castle. It will live on.

Issue Three: Pink Slips by the Millions.

PRESIDENT OBAMA: (From videotape.) Over the next two years, this plan will save or create 3.5 million jobs.

DR. MCLAUGHLIN: Millions of unemployed Americans hope that their president is right. Four-point-four million jobs have disappeared since this recession began 15 months ago. That's about 10,000 job losses every day -- an apocalyptic rate. The result was the highest unemployment rate in 25 years, now over 8 percent.

Some economists say the unemployment is a permanent shift. Quote: "These jobs aren't coming back. A lot of other production either isn't going to happen at all or it's going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations," unquote.

So the reality is bleak, and so is the outlook. Probably nothing has hurt the American dream more than this job outlook. The MetLife study says 75 percent of Americans have either lost their job or have a friend, neighbor or relative who has been laid off. Sixty percent say they fear sudden unemployment would mean filing for bankruptcy. Fifty percent say they couldn't support themselves for more than a month without a paycheck.

This job loss terror is not only felt by low wage-earners. Get this: Of Americans earning more than $100,000 a year, 53 percent say that their financial stability would be at risk if they lost their job.

Beth, do you want to expand on this?

MS. HIRSCHHORN: Sure. Americans told us that one month into being without a job means that they are headed for financial ruin, and 28 percent say two weeks is all the time that they have.

MR. BUCHANAN: Two weeks? That's not a lot of savings.

MS. HIRSCHHORN: Yeah, two weeks without a paycheck. There's no safety net. People do not have any cash reserves. That's why, even though you want everybody to spend more --

MR. BUCHANAN: I don't want them to spend more. Obama does. (Laughs.)

MS. CLIFT: It's not an ordinary downturn. A lot of these jobs are not coming back. But there's $80 billion in the stimulus package for the new green economy, and that's going to create jobs in the economy of tomorrow.

MR. BUCHANAN: Near a bus line, hopefully. (Laughs.)

MS. CLIFT: Hopefully.

MS. CROWLEY: One of the positive trends --

MS. CLIFT: Rapid rail.

MS. CROWLEY: -- coming out of this crisis is that people are actually saving. The savings rate in America is going straight up.

DR. MCLAUGHLIN: Let's be very tight with this. Exit question: Are we witnessing the beginning of the end of American power? Is this the twilight of the American experiment? Yes or no. Pat Buchanan.

MR. BUCHANAN: The American empire is clearly receding. It's not over, but it's receding.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, we may not be the dominant consumer in the world community, but we can lead the way to the economy of tomorrow. And I think with the green jobs and green technology, and also health, not a lot of nurses are out of work, and there's a great future in the health care industry.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: The United States has experienced a lot of downturns over the course of our history; the Great Depression, of course, being the biggest of them all. We've survived them all and come out stronger.

DR. MCLAUGHLIN: Beth.

MS. HIRSCHHORN: New industry is the way to recover. I agree with Eleanor.

DR. MCLAUGHLIN: The middle class will survive, and there is a sunrise after the dawn.

Issue Four: Taking It In Stride -- Genflex.

WOMAN: I haven't thought too much about it. I guess I'm hoping that everything will be okay two years from now. (Laughs.) I'm hoping for a big turnaround.

DR. MCLAUGHLIN: Many young Americans are now experiencing something entirely new -- the first severe economic downturn of their lifetime. Generation X and Generation Y, roughly Americans aged 45 or younger, have both enjoyed opportunity and affluence, but they have also been among those hardest-hit by layoffs, by lost wages and by other career setbacks. At least 20 percent of Xers and Yers have lost their jobs. How are they taking it? The MetLife study says surprisingly well. They have not soured on the American dream, as might have been expected. They are optimistic about their ability to achieve the dream eventually.

But their definition of the American dream is far more likely to center on not only conspicuous consumption but on friends, on family, on marriage. Earlier generations, like the boomers, are the ones that regard financial security as the bedrock of the American dream. Do Gen X and Gen Y worry that their personal safety nets may break? Yes, they do. Eighty-one percent do. But do they fold? No. They are seen as self-reliant, flexible and hard-working, all of which convince them that they will persevere. So says the MetLife study that christens this age group the Genflex generation for their noteworthy resilience.

Beth, can you say something about this study?

MS. HIRSCHHORN: Sure. You can get it at MetLife.com. We already have thousands of people who've downloaded it. And we surveyed only a month or so ago, so this data is very fresh and new and covers all generational cohorts.

DR. MCLAUGHLIN: This is the third volume.

MS. HIRSCHHORN: It's the third one, yes.

DR. MCLAUGHLIN: And you do one a year. You've been doing one a year.

MS. HIRSCHHORN: Yes.

DR. MCLAUGHLIN: Great. Why is it no surprise that Genflex would focus more on social than financial success?

MS. HIRSCHHORN: Well, the Gen Ys -- and that's the youngest of the two groups -- have always been an optimistic sort. And also they've always been rewarded for teamwork as opposed to individualism, so they are all about the group and the wellness of the group. They are materialistic; don't get me wrong. That's deteriorated a lot. They're much healthier in that respect. So they don't -- they're not chasing more and better. They are into the collective health.

MS. CLIFT: Also the Millennials, which go from 18 to 30, are the biggest generation in American history. There will be 90 million of them once they get into the electorate, dwarfing the baby boomers. And John Zogby, the pollster, has a book out called "The Way We Will Be," and he calls this generation the first global citizens. A majority of them expect to live and work in a foreign capital at some time in their life, and they're very keenly aware of the planet's resources. They have been brought up saving things. Now, they're environmentalists, and they sometimes shame their parents.

DR. MCLAUGHLIN: They also have a lot of self-esteem, and that's due to the fact that they were brought up to expect that they will be winners.

MS. CROWLEY: Everybody is a winner, right. Well, speaking as a member of Generation X, I can tell you that the first real big public policy question that Generation Xers came into contact with was in the '80s, that first big debate about the viability of Social Security. And when that hit us, it was -- all of a sudden a light bulb went off saying, "We cannot rely on the government. We cannot necessarily even rely on an employer. We've got to make sure that we have talents and skills and social networking and other things going on so that we'll be able to create a career, regardless of what the economic situation might be."

DR. MCLAUGHLIN: That may explain Buchanan. He doesn't have to worry about Medicare and Medicaid and Social Security. Right?

MR. BUCHANAN: Aren't you beyond eligibility for Medicare? (Laughs.) Let me, John -- I'll say, look, Gen Y is very flexible, adaptive. They're young people. They can take most anything that hits them and they come back. But I'll tell you this. What we're leaving out of this is the working-class people who work with their hands, tools and machines. These are the forgotten Americans who've really been losing the jobs.

DR. MCLAUGHLIN: Will there be health reform, Pat?

MR. BUCHANAN: Incremental reform.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Yes, principally because the Senate Finance chairman, Max Baucus, wants it, and he can make the Congress move.

MS. CROWLEY: Yes, but in a much more limited way than what the president wants.

DR. MCLAUGHLIN: Beth.

MS. HIRSCHHORN: Yes, because it's the biggest drain on the economy.

DR. MCLAUGHLIN: Yes, but incremental, not sweeping.

Bye-bye.

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�FC�END
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ded all the rules, gave these mortgages that people couldn't handle, and that's how you got in this disaster.

MS. CLIFT: Now, that's not true.

MR. BUCHANAN: But people will always want to buy their own house, their own piece of property. It's natural. It's in human nature. It's a good thing and a healthy thing.

DR. MCLAUGHLIN: But homes are cheap now and people are not buying them. Why is that, Beth?

MS. HIRSCHHORN: Well, people have no money now and they can't get credit now. I think it'll stay a part of the dream, even though it's only been a part for about 50 years now, but not at any cost. And I don't mean price. I mean the cost of a treacherous commute. People moved far away from their jobs to get that picket fence, and that fence got bigger and bigger because their houses got so big.

So I think people will pull back and pick a place where they can really see their family and friends as they, you know, sort of get back to that different values exchange, you know, more about family than financial security.

MS. CROWLEY: Quality of life. Quality-of-life issues.

DR. MCLAUGHLIN: Do you live in a McMansion?

MS. CROWLEY: No, I have a one-bedroom apartment in New York City. (Laughs.) What's interesting to me is that we've, because of the global economic crisis and also because of the housing crisis, that we -- that the American dream with regard to the central point about home ownership has been thrown into reverse. So it used to be you get out of college, you rent an apartment, maybe with some friends; then you rent alone. Then you save enough money to buy a small modest home --

MS. HIRSCHHORN: A starter home.

MS. CROWLEY: -- and then you aspire to a bigger home, a McMansion, John. And now, because there's so many people who overextended themselves and who got credit for homes that they couldn't afford, now are going back into reverse. A lot of people who have those McMansions are now renting because they lost their homes, because they lost their jobs or their homes became too burdensome. And so it's going to be a long time, John, before we start to throw that back --

MS. CLIFT: And the reason --

DR. MCLAUGHLIN: Will the government -- do they have the consolation of knowing the government will bail them out?

MS. CROWLEY: Well, that's part of it. And that's part of the public policy question that you raise. And I think because -- I think Pat is right. Because public policy helped to get us into this mess, I'm not sure --

MS. CLIFT: And the reason --

MS. CROWLEY: -- homeowners want public policy further evolved.

MS. CLIFT: The reason that people traded up their homes to get into better neighborhoods is because schools -- the quality of the schools is tied to the neighborhood, and if you want to send your kids to good schools. So people borrowed more in order to get into places where they could send their kids to better schools. And, you know, it's a vicious circle.

But the notion that getting rid of redlining and making loans available to minorities created the housing collapse --

MR. BUCHANAN: What do you think --

MS. CLIFT: -- is very oversimplistic.

MR. BUCHANAN: John, let me just --

DR. MCLAUGHLIN: No, I want --

MS. CLIFT: Look, there was predatory lending, and that was the primary thing.

DR. MCLAUGHLIN: I want you to speak to this.

MR. BUCHANAN: Well, look --

MS. CLIFT: And I really don't like letting you get away with the notion that it's the minorities that created the problem.

MR. BUCHANAN: All right, take a look at the four biggest default states or foreclosures -- California, Nevada, Arizona, Florida. They're Hispanic folks who were put into houses they couldn't afford with no documents. What's your question?

MS. CLIFT: There were a lot of white folks who did that too.

MR. BUCHANAN: What's your question?

MS. HIRSCHHORN: Nevada and Florida --

DR. MCLAUGHLIN: Are the boomers the hardest-hit?

MR. BUCHANAN: The boomers --

DR. MCLAUGHLIN: You're a post-boomer, right?

MR. BUCHANAN: I'm a pre-boomer. (Laughs.)

MS. CLIFT: Let's --

MR. BUCHANAN: I'm post-you, but I'm a pre-boomer. (Laughs.)

DR. MCLAUGHLIN: You're not 55 to 64.

MR. BUCHANAN: John, I'm not in the -- I wasn't born in the '20s; let me put it that way.

DR. MCLAUGHLIN: Are they hardest-hit? And if so, why?

MR. BUCHANAN: It was the 1930s.

MS. CLIFT: Let's let our guest inject a few facts into the discussion.

MS. HIRSCHHORN: Pat, I have to come back at you on the Nevada and Florida. That's all investment properties. That's where all the defaults are. Those aren't immigrants. Those are not people's first homes. Those are people who are more affluent --

MR. BUCHANAN: They're boomers flipping houses.

MS. HIRSCHHORN: -- who thought they could keep going up and keep flipping, yes.

MR. BUCHANAN: Well, that's one of the problems too.

MS. HIRSCHHORN: That's a big problem, and that's --

MR. BUCHANAN: I'll tell you, the Community Reinvestment Act is one of the things here, buying up all these loans, subprime by Fannie and Freddie, turning them into securities. This is the disaster.

MS. CLIFT: That is one of several factors, and by no means the dominant factor. That is a Republican talking point.

DR. MCLAUGHLIN: Exit question: Is America's love affair with the dream home now over? Yes or no.

MR. BUCHANAN: It will never be over, John.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The dream home will be redefined so that it's near public transportation. (Laughs.)

DR. MCLAUGHLIN: Yes or no?

MS. CROWLEY: No, Americans still have their aspirations.

MS. CLIFT: Rapid rail.

MS. CROWLEY: Americans still have their aspirations. They're still optimistic people, as grim as the economic situation is now. And the home, the sanctuary, that'll remain integral.

MS. HIRSCHHORN: They still want a home, and it's going to take a little bit longer. They're graduating now with at least $25,000 in student loan debt. So they're going to have to take their time.

DR. MCLAUGHLIN: The home was once castle. It will live on.

Issue Three: Pink Slips by the Millions.

PRESIDENT OBAMA: (From videotape.) Over the next two years, this plan will save or create 3.5 million jobs.

DR. MCLAUGHLIN: Millions of unemployed Americans hope that their president is right. Four-point-four million jobs have disappeared since this recession began 15 months ago. That's about 10,000 job losses every day -- an apocalyptic rate. The result was the highest unemployment rate in 25 years, now over 8 percent.

Some economists say the unemployment is a permanent shift. Quote: "These jobs aren't coming back. A lot of other production either isn't going to happen at all or it's going to happen somewhere other than the United States. There are going to be fewer stores, fewer factories, fewer financial services operations," unquote.

So the reality is bleak, and so is the outlook. Probably nothing has hurt the American dream more than this job outlook. The MetLife study says 75 percent of Americans have either lost their job or have a friend, neighbor or relative who has been laid off. Sixty percent say they fear sudden unemployment would mean filing for bankruptcy. Fifty percent say they couldn't support themselves for more than a month without a paycheck.

This job loss terror is not only felt by low wage-earners. Get this: Of Americans earning more than $100,000 a year, 53 percent say that their financial stability would be at risk if they lost their job.

Beth, do you want to expand on this?

MS. HIRSCHHORN: Sure. Americans told us that one month into being without a job means that they are headed for financial ruin, and 28 percent say two weeks is all the time that they have.

MR. BUCHANAN: Two weeks? That's not a lot of savings.

MS. HIRSCHHORN: Yeah, two weeks without a paycheck. There's no safety net. People do not have any cash reserves. That's why, even though you want everybody to spend more --

MR. BUCHANAN: I don't want them to spend more. Obama does. (Laughs.)

MS. CLIFT: It's not an ordinary downturn. A lot of these jobs are not coming back. But there's $80 billion in the stimulus package for the new green economy, and that's going to create jobs in the economy of tomorrow.

MR. BUCHANAN: Near a bus line, hopefully. (Laughs.)

MS. CLIFT: Hopefully.

MS. CROWLEY: One of the positive trends --

MS. CLIFT: Rapid rail.

MS. CROWLEY: -- coming out of this crisis is that people are actually saving. The savings rate in America is going straight up.

DR. MCLAUGHLIN: Let's be very tight with this. Exit question: Are we witnessing the beginning of the end of American power? Is this the twilight of the American experiment? Yes or no. Pat Buchanan.

MR. BUCHANAN: The American empire is clearly receding. It's not over, but it's receding.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, we may not be the dominant consumer in the world community, but we can lead the way to the economy of tomorrow. And I think with the green jobs and green technology, and also health, not a lot of nurses are out of work, and there's a great future in the health care industry.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: The United States has experienced a lot of downturns over the course of our history; the Great Depression, of course, being the biggest of them all. We've survived them all and come out stronger.

DR. MCLAUGHLIN: Beth.

MS. HIRSCHHORN: New industry is the way to recover. I agree with Eleanor.

DR. MCLAUGHLIN: The middle class will survive, and there is a sunrise after the dawn.

Issue Four: Taking It In Stride -- Genflex.

WOMAN: I haven't thought too much about it. I guess I'm hoping that everything will be okay two years from now. (Laughs.) I'm hoping for a big turnaround.

DR. MCLAUGHLIN: Many young Americans are now experiencing something entirely new -- the first severe economic downturn of their lifetime. Generation X and Generation Y, roughly Americans aged 45 or younger, have both enjoyed opportunity and affluence, but they have also been among those hardest-hit by layoffs, by lost wages and by other career setbacks. At least 20 percent of Xers and Yers have lost their jobs. How are they taking it? The MetLife study says surprisingly well. They have not soured on the American dream, as might have been expected. They are optimistic about their ability to achieve the dream eventually.

But their definition of the American dream is far more likely to center on not only conspicuous consumption but on friends, on family, on marriage. Earlier generations, like the boomers, are the ones that regard financial security as the bedrock of the American dream. Do Gen X and Gen Y worry that their personal safety nets may break? Yes, they do. Eighty-one percent do. But do they fold? No. They are seen as self-reliant, flexible and hard-working, all of which convince them that they will persevere. So says the MetLife study that christens this age group the Genflex generation for their noteworthy resilience.

Beth, can you say something about this study?

MS. HIRSCHHORN: Sure. You can get it at MetLife.com. We already have thousands of people who've downloaded it. And we surveyed only a month or so ago, so this data is very fresh and new and covers all generational cohorts.

DR. MCLAUGHLIN: This is the third volume.

MS. HIRSCHHORN: It's the third one, yes.

DR. MCLAUGHLIN: And you do one a year. You've been doing one a year.

MS. HIRSCHHORN: Yes.

DR. MCLAUGHLIN: Great. Why is it no surprise that Genflex would focus more on social than financial success?

MS. HIRSCHHORN: Well, the Gen Ys -- and that's the youngest of the two groups -- have always been an optimistic sort. And also they've always been rewarded for teamwork as opposed to individualism, so they are all about the group and the wellness of the group. They are materialistic; don't get me wrong. That's deteriorated a lot. They're much healthier in that respect. So they don't -- they're not chasing more and better. They are into the collective health.

MS. CLIFT: Also the Millennials, which go from 18 to 30, are the biggest generation in American history. There will be 90 million of them once they get into the electorate, dwarfing the baby boomers. And John Zogby, the pollster, has a book out called "The Way We Will Be," and he calls this generation the first global citizens. A majority of them expect to live and work in a foreign capital at some time in their life, and they're very keenly aware of the planet's resources. They have been brought up saving things. Now, they're environmentalists, and they sometimes shame their parents.

DR. MCLAUGHLIN: They also have a lot of self-esteem, and that's due to the fact that they were brought up to expect that they will be winners.

MS. CROWLEY: Everybody is a winner, right. Well, speaking as a member of Generation X, I can tell you that the first real big public policy question that Generation Xers came into contact with was in the '80s, that first big debate about the viability of Social Security. And when that hit us, it was -- all of a sudden a light bulb went off saying, "We cannot rely on the government. We cannot necessarily even rely on an employer. We've got to make sure that we have talents and skills and social networking and other things going on so that we'll be able to create a career, regardless of what the economic situation might be."

DR. MCLAUGHLIN: That may explain Buchanan. He doesn't have to worry about Medicare and Medicaid and Social Security. Right?

MR. BUCHANAN: Aren't you beyond eligibility for Medicare? (Laughs.) Let me, John -- I'll say, look, Gen Y is very flexible, adaptive. They're young people. They can take most anything that hits them and they come back. But I'll tell you this. What we're leaving out of this is the working-class people who work with their hands, tools and machines. These are the forgotten Americans who've really been losing the jobs.

DR. MCLAUGHLIN: Will there be health reform, Pat?

MR. BUCHANAN: Incremental reform.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Yes, principally because the Senate Finance chairman, Max Baucus, wants it, and he can make the Congress move.

MS. CROWLEY: Yes, but in a much more limited way than what the president wants.

DR. MCLAUGHLIN: Beth.

MS. HIRSCHHORN: Yes, because it's the biggest drain on the economy.

DR. MCLAUGHLIN: Yes, but incremental, not sweeping.

Bye-bye.

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