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THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR; MORTIMER ZUCKERMAN, U.S. NEWS & WORLD REPORT TAPED: FRIDAY, JUNE 7, 2009 BROADCAST: WEEKEND OF JUNE 8-9, 2009

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DR. MCLAUGHLIN: Issue One: Cairo Heals.

PRESIDENT BARACK OBAMA: (From videotape.) I'm grateful for your hospitality and the hospitality of the people of Egypt. And I'm also proud to carry with me the good will of the American people and a greeting of peace from Muslim communities in my country. Assalaamu alaykum.

DR. MCLAUGHLIN: (Speaks Arabic phrase) -- to you, Barack Hussein Obama.

The president has been talking for two years about delivering a speech from the capital of a Muslim country. That forecast was fulfilled this week in Cairo. President Obama's stated intent was to close the gap between America and the Muslim world, with its 1.5 billion population.

This Muslim-America relationship has seen immense damage. In al Qaeda's 9/11 attack, 3,000 people were murdered. The Muslim-American relationship has been further damaged by the Iraq war, by the abuse of Muslim prisoners in Iraq's Abu Ghraib prison, and by the seemingly unending 60-year-plus Israeli-Palestinian conflict.

The extent of the American-Muslim split is registered in some gruesome polls also. Almost half of all Americans, 46 percent, look upon Muslim countries unfavorably, only 21 percent favorably, roughly one out of five. As for the converse, Muslim feelings towards the U.S., almost four out of five Muslims, 78 percent of Muslims, look upon America unfavorably. A meager 14 percent, hardly over one of 10, feel positively about the U.S. Obama wants to heal the ominous breach.

PRESIDENT OBAMA: (From videotape.) I've come here to Cairo to seek a new beginning between the United States and Muslims around the world, one based on mutual interest and mutual respect.

DR. MCLAUGHLIN: Question: Does this speech set a new tone for relations between Muslim nations, Islam, and the United States? Pat Buchanan.

MR. BUCHANAN: It certainly does, John. There's no doubt he's reaching out to Islam. They're much more receptive to him than they ever were to Bush. Specifically, he told the Iranians, "You're right; we did try to overthrow that government there. And you can have peaceful nuclear power." We've got diplomats going to Syria.

On the Palestinian question, he was even-handed, quite frankly. He said the Israelis have certain rights here and things that have been done that are terrible, but it's true about the Palestinians; we're going to have a Palestinian state. And these settlements are illegitimate.

So I think what you've got here, John, is you've got a transformation of American foreign policy. It used to be -- under Bush, frankly, it was Israel-centric. It is no longer. The United States now is taking a much larger game here. We're engaging with the entire Islamic world. The question is, is a lot of this utopian, or is it realistic? And I think we're going to find that out.

DR. MCLAUGHLIN: Is Obama's bottom line that Bush blew it?

MS. CLIFT: I think he didn't even have to address the past administration. I think just getting out there --

DR. MCLAUGHLIN: Well, in setting a new bright line. MS. CLIFT: -- and setting a new tone, by implication he's saying we're going to do things differently. He didn't waste his time bashing the previous administration. That's already out there.

I spent the last week at the Army War College, and they graduate the senior --

DR. MCLAUGHLIN: Newport?

MS. CLIFT: No, Carlisle, Pennsylvania. They graduate the senior leadership in the Army. The speech was very well received there, because it talks about projecting American power not solely through military might. And he's talking about cultural attitudes, and he addressed all the elephants in the room.

It was really a whole herd of elephants he addressed, and it was a challenge to Americans to get beyond the demonizing post-9/11, and also a challenge to moderate Muslims to stand up and reclaim their religion. And you see a little bit of that going on in Pakistan, where they are really getting very angry at the Taliban. And it's taken them a while to realize how much of a threat the Taliban is.

DR. MCLAUGHLIN: Hold on, Monica. I'll go to you upon my utterance of this.

Okay, the U.S.-Islam Obama healing. It dates back to his keynote address at the Democratic Convention, July '04.

BARACK OBAMA (from 2004 Democratic Convention speech): (From videotape.) If there's an Arab-American family being rounded up without benefit of an attorney or due process, that threatens my civil liberties. I am my brother's keeper. I am my sister's keeper. That makes this country work.

DR. MCLAUGHLIN: Question: Not all Arabs are Muslim, and not all Muslims are Arab. But was Obama's statement still a forecast of what will become the most signature and monumental accomplishment of his presidency?

MS. CROWLEY: Well, what I thought was interesting this week is we had a couple of moving parts. Yes, we had Obama delivering this speech in Cairo. We also had a brand new audio tape from Osama bin Laden with fresh warnings to the American people and to the West. We had the beheading of a British citizen in West Africa by al Qaeda. And we also had the shooting death of an American soldier in Little Rock, Arkansas by a Muslim convert.

And yet President Obama, in the course of 6,000 words in this speech, could not bring himself to utter the word "terrorism," or at least address the nexus between Islamic doctrine and terrorism, which is quite clear. We saw fresh evidence of this this week. It will be up to Obama -- I mean, his plate is very full, but the Islamic world is not monolithic. As you just pointed out, there are a lot of different elements to it. But in order to deal with the threat that we face right now from this enemy, which still exists -- and what I found particularly appalling in his speech was that he treated 9/11 almost in an academic way, in a detached, sort of cold way, as if he were talking about an event from the War of 1812 rather than addressing it as an ongoing problem. And unless and until he is able to do that in a way that Ronald Reagan called the Soviet Union an evil empire -- call the enemy what it is -- only then, I think, will he be able to address this effectively.

DR. MCLAUGHLIN: The man-on-the-street reaction in the Muslim world is "Great rhetoric, but we want to see action." Do you have anything to add to that from your travels, Mort?

MR. ZUCKERMAN: No, I think that is certainly the case. And I do think that Obama was right in trying to reach out to the Arab and the Muslim world, and also to articulate American values -- democracy and independence and peaceful resolution of conflict.

DR. MCLAUGHLIN: Do you think it was cold or academic or neither?

MR. ZUCKERMAN: No, I don't think it was cold or academic. But I also think his history needs a lot of revision. And frankly, I do worry about his policies toward Israel.

When Pat supports it, this is a big problem for me.

But, look, let's face it, when he talks about the lack of a Palestinian state, it is not because of Israel. They had the chance to do it in 1947. They had it in 1936. They had it in 1967, 1980, et cetera. So some of his history was, I would say, shielded, because he's trying to appeal to that world.

I don't think you make new friends by casting aside old friends, and that's what --

DR. MCLAUGHLIN: You think it was unbalanced.

MR. ZUCKERMAN: Yes, I do think it was unbalanced.

DR. MCLAUGHLIN: Really?

MR. ZUCKERMAN: Sure.

MS. CLIFT: Oh, please. He took on the Holocaust deniers. He made a point of going to --

DR. MCLAUGHLIN: He also --

MS. CLIFT: -- a concentration camp. He reiterated America's close bond with Israel. I think he gave all sides something, which is the mark of his leadership and how he won election. And he said at the outset that one of the greatest threats this country faces is Islamic extremism, and we are going to defend ourselves.

MR. BUCHANAN: John, it is even-handed --

MS. CLIFT: So you don't have to say terrorism or 9/11 to get that point across.

MR. BUCHANAN: But that is a change from Bush, because Bush was not even-handed. Bush was enormously popular in Israel. The one country -- I think Mort is right -- the one country in the whole Middle East where Obama is far less popular than the previous administration is Israel.

DR. MCLAUGHLIN: Okay. Has there been a bit too much apologizing from the United States on Obama's part over too long a time? PRESIDENT OBAMA: (From videotape.) With my election and the early decisions that we've made, that you're starting to see some restoration of America's standing in the world.

There have been times where America has shown arrogance and been dismissive, even derisive.

The United States is still working through some of our own darker periods in our history.

We've at times been disengaged, and at times we've sought to dictate our terms.

We have to acknowledge potentially we've made some mistakes. That's how we learn.

Unfortunately, faced with an uncertain threat, our government made a series of hasty decisions. In other words, we went off-course.

DR. MCLAUGHLIN: He also added from Cairo, "In the middle of the Cold War, the United States played a role in the overthrow of a democratically elected Iranian government." So he's gone pretty far, has he not, in apologizing --

MS. CLIFT: It's fact. (Laughs.)

MR. ZUCKERMAN: He may have. He may have. I'll tell you --

DR. MCLAUGHLIN: Is he bad-mouthing us?

MR. ZUCKERMAN: You're darn right he is, because we saved the Iranian regime after World War II from Soviet domination. The United States was the only country in the world that stood up to Soviet attempts to dominate Europe. I mean, we have done an extraordinary job. No other country in history, I think --

MR. BUCHANAN: Right.

MR. ZUCKERMAN: -- has expended as much treasure and blood to try and preserve democracy and freedom in the world.

MS. CLIFT: It is --

MR. ZUCKERMAN: That is a ridiculous charge.

DR. MCLAUGHLIN: Do you think --

MS. CLIFT: It's factual. It's factual that we played a role --

MR. BUCHANAN: Well, no --

DR. MCLAUGHLIN: Let Eleanor in. MS. CLIFT: It is factual that we played a role in the overthrow of a democratically elected government in Iran. He acknowledged all the areas that the rest of the world looks at us and loathes us for. He acknowledged it.

MR. BUCHANAN: Well, I think maybe we did the right thing in Iran in 1953.

MS. CLIFT: He didn't apologize. He's now talking about going forward.

MR. BUCHANAN: We were in a Cold War.

MS. CLIFT: That's the whole point of --

DR. MCLAUGHLIN: What was his name?

MR. BUCHANAN: Mossadegh. We drove the Red Army, told them to get out of Iran in 1946. We did overthrow a government in Guatemala. We kept the communists out of there. We kept them out of the Dominican Republic. John, we won the Cold War. Why doesn't he mention some of the enormous things we've done, and we did some nasty things to win it?

DR. MCLAUGHLIN: Is he bad-mouthing the United States?

MS. CROWLEY: Yes. Yes.

MR. BUCHANAN: You're darn right he is. It's nothing good about the United States.

MS. CLIFT: This is the humble foreign policy that George W. Bush promised. (Laughs.)

MR. ZUCKERMAN: And that is not --

DR. MCLAUGHLIN: Let Monica in, will you?

MS. CROWLEY: It's not the truth, and it's not --

MS. CLIFT: It is the truth.

MS. CROWLEY: -- and it's not an appropriate exercise of American presidential leadership. I am sick and tired of this man running down his country when he's on foreign soil. You hire a president to represent the United States of America. I guess he fancies himself as president of the world.

DR. MCLAUGHLIN: All right, let me ask you this --

MS. CLIFT: You elect a president -- MS. CROWLEY: His apologies -- we get the point, Eleanor.

MS. CLIFT: You elect --

MS. CROWLEY: He doesn't need to keep saying it in every foreign speech. It is ridiculous.

MS. CLIFT: You elect a president --

MS. CROWLEY: It's ridiculous, and it is counterproductive.

DR. MCLAUGHLIN: Question: Is Obama --

MS. CLIFT: You elect a president --

DR. MCLAUGHLIN: Let me in, Eleanor.

MS. CLIFT: -- to further U.S. interests.

DR. MCLAUGHLIN: Please relinquish. Please relinquish.

MS. CLIFT: And he is establishing --

DR. MCLAUGHLIN: Is Obama looking too much like --

MS. CLIFT: -- a new relationship with the Muslim world.

DR. MCLAUGHLIN: Is he looking like an unrealistic idealist, head in the clouds, even though we all know, and many other people know who know him and see him in action, he's a gifted political pragmatist? And if that's all true, how does the column add up for Obama?

MR. BUCHANAN: His problem is --

DR. MCLAUGHLIN: Or has the law of diminishing returns set in for Obama --

MR. BUCHANAN: It has.

DR. MCLAUGHLIN: -- and people now are beginning to say, "Hey, you know, this all is a bit too much"?

MR. BUCHANAN: Everywhere he has gone, he has -- I mean, he's a good speaker, but he has acted like a guilt-besotted liberal. He goes to Latin America, apologizing to these guys. It's like Clinton. We go to Africa --

DR. MCLAUGHLIN: Who did he apologize to on Tobago and --

MR. BUCHANAN: Everything the United States did. He sat there and took abuse for 45 minutes from Danny Ortega. People are telling him about your Castro policy --

MS. CLIFT: I'd rather --

MR. BUCHANAN: We won the Cold War, you guys.

MS. CLIFT: He is --

DR. MCLAUGHLIN: Let Eleanor in. Let Eleanor in. MS. CLIFT: He is saying things that the rest of the world says about us all the time.

MR. ZUCKERMAN: Not the rest of the world.

MS. CLIFT: Excuse me.

DR. MCLAUGHLIN: Let Eleanor in. Let Eleanor in.

MS. CLIFT: Excuse me.

MR. ZUCKERMAN: Excuse me.

MS. CLIFT: It's my turn.

MR. ZUCKERMAN: Don't say that. Don't say that.

MS. CLIFT: It is my turn.

MR. ZUCKERMAN: Yes, you're not doing it alphabetically, though.

MS. CLIFT: Excuse me. You cannot talk about the mote, or whatever it is in the other person's eye, until you recognize what's in your own eye.

DR. MCLAUGHLIN: Mote.

MR. BUCHANAN: The beam.

MS. CLIFT: And he is acknowledging where America has gone awry, and he is resetting a relationship with the rest of the world with more diplomatic engagement.

DR. MCLAUGHLIN: Exit question --

MS. CLIFT: It's all to the good. Until I came on this set --

MR. BUCHANAN: Why doesn't he tell them where we were right?

MS. CLIFT: -- I heard nothing but rave reviews for this speech.

MR. ZUCKERMAN: Yeah, well --

MS. CLIFT: I feel like I'm in a total parallel reality here.

DR. MCLAUGHLIN: You've been hanging around with your liberal friends.

MS. CLIFT: The Army War College. The Army War College.

DR. MCLAUGHLIN: It's called flocking. We all do it. We flock. Exit question: Will the speech change the dynamic between the U.S. and Islam? That is, Muslim countries and the U.S. Yes or no, Pat.

MR. BUCHANAN: No. I do think, though, his policy -- he is changing the policy of the United States toward Iran, Syria, even Iraq, Israel, and, quite frankly, Hamas. And that's going to be the real major test and hard statesmanship back and forth. And, you know, his idealism is fine, but he better maintain a sense of realism about who and what we're dealing with.

MS. CLIFT: It's --

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's idealism, but it's also realism. And it's an opening to create a new relationship with one of the world's great religions and to take on the Islamic extremism, which is a huge threat to not only this country but to the West.

DR. MCLAUGHLIN: Quickly.

MS. CROWLEY: All of the negativity that he spews about the United States is counterproductive to our interests and only gives the enemy what they want. A lovely speech by the president. Look, I'm glad he made it --

DR. MCLAUGHLIN: Why? Why? Why?

MS. CLIFT: Because of all those other things. (Laughs.)

DR. MCLAUGHLIN: It was a besmirchment of the nation, you said.

MS. CROWLEY: He made some strong points. The problem is, he does this "On the one hand, on the other hand" routine that erases whatever good he did. National interest or ideological interest or religious interest in the Muslim world -- and they are very diverse -- are not going to change because he gives one speech.

MS. CLIFT: It's called nuance -- "On the one hand, on the other hand."

MR. ZUCKERMAN: There is --

MS. CROWLEY: That's not leadership.

MR. ZUCKERMAN: There is an assumption of good will and reaching out and engagement in his policy that he hopes will work. We're going to find out whether -- there are a lot of very tough, cynical people in that part of the world. Al Qaeda is the only one. The Iranians have already rejected almost everything he has said. You could go through a lot of the bad guys in that part of the world. So far there's been no progress with any one of them. But it may work. Obviously it has changed. The Bush administration left a very difficult legacy for the United States, and I think he will try and deal with it and ameliorate it. Whether it will work or not, I don't know. One has a reason to doubt, though.

DR. MCLAUGHLIN: I think it was a beautifully modulated speech. I think it was a wide-arc speech. I think it was a sign of his audacity. A problem with it is the implementation, and there Obama may break down, because he's an intellectual. And like all intellectuals, they are smart, but they have a low boredom threshold.

And if they've conquered a problem and they vocalize it, then they tend to dismiss it and say, "What else is on the agenda?"

MS. CLIFT: I don't think so.

DR. MCLAUGHLIN: And I hope that he can enlist his --

MR. BUCHANAN: It's the Adlai Stevenson --

DR. MCLAUGHLIN: -- (inaudible) -- over there --

MS. CLIFT: This is --

DR. MCLAUGHLIN: -- to follow through in an action mode.

MS. CLIFT: This is a persistent --

MR. ZUCKERMAN: That's going to be the test. I agree with you. That is going to be the test. And it is too early to tell how it's going to work out.

MS. CLIFT: This is no Adlai Stevenson. He is persistent. He's very persistent, or he wouldn't --

MR. BUCHANAN: Well, we're going to find out about that too. (Laughs.)

MS. CLIFT: He wouldn't be president if he weren't persistent.

MR. BUCHANAN: When he goes up against Bibi, we're going to find out about that too.

MS. CROWLEY: And our enemies are persistent too.

DR. MCLAUGHLIN: This is going to take a lot of effort to implement it, but I think the seeds are there, and I think that underneath, they're saying, "We want action." They're pleased that this movement has been made, and it's overdue.

Issue Two: Real Traction?

TIMOTHY GEITHNER (U.S. secretary of Treasury): (From videotape.) There's a lot of risk ahead. This process is going to take some time. But I think if you just look at the impact already of this set of programs, I think you're starting to see some real traction.

DR. MCLAUGHLIN: Real traction, said Treasury Secretary Tim Geithner in Beijing this week, as he steadied the hand of China.

The U.S. report card: Household savings up; consumer confidence up; consumer spending up; new unemployment claims down; home sales up, April; income up; stocks up -- this week, a seven-month high.

But the coast is still not clear. GM, Chrysler both declare bankruptcy; the U.S. current accounts deficit and national debt both shockingly high; U.S. AAA credit rating now at risk, possibly, some say; dollar weak.

This week Geithner tried to assure a student audience at Peking University that Chinese dollar assets were safe. But there was a problem. The students openly laughed at him.

This was an encouraging report on the economy, but it ignored the turd in the punch bowl -- (laughter) -- which the Bureau of Labor Statistics pointed to on Friday when it announced that the unemployment rate vaulted from 8.9 percent to 9.4 percent.

That laughter was unseemly, Buchanan.

MR. BUCHANAN: (Laughs.)

DR. MCLAUGHLIN: Question: On the U.S. economy, is the arrow pointing up? Mort Zuckerman.

MR. ZUCKERMAN: John, it's hard to follow a line like "There's turd in the punch bowl," but I'll try. (Laughter.)

DR. MCLAUGHLIN: A turd.

MR. ZUCKERMAN: A turd, okay.

Look, the economy, I think, is definitely showing some signs of recovery. The real question is, though, how long and how strong is this recovery going to be? Because the downward pressures are still very strong. As you say, unemployment is going up. Consumer sales are going down. Investment is going down. Nevertheless, the stimulus program is just beginning to really penetrate the economy. And the question will be, will the confidence of the Americans, and particularly the American consumers, come back? Right now we don't know it.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: Well, these unemployment numbers are really quite staggering, and all predictions point to even greater numbers toward the end of the year. And so you are going to have a lot of fallout directly related to this unemployment; in other words, a second wave of credit card defaults, which could reach up to 20, 25 percent of all credit cards; auto loan defaults.

So the ripple effect could continue through at least another year. And I know a lot of experts smarter than I am on the economy say that this could actually be just a temporary upswing, and then we could face another recession coming along.

DR. MCLAUGHLIN: The head of the Fed is very worried about debt.

MR. ZUCKERMAN: Yes.

DR. MCLAUGHLIN: Is that justified, Pat?

MR. BUCHANAN: I think in the long run, John, I see the debt as a problem that's almost insoluble. And frankly --

DR. MCLAUGHLIN: How big is it?

MR. BUCHANAN: -- I think we're going to have to --

DR. MCLAUGHLIN: You're talking about the current accounts deficit.

MR. BUCHANAN: Well, not only current accounts deficit, the annual thing. The long-run debt of the United States, I think, is going to destroy the American dollar.

DR. MCLAUGHLIN: It's pushing $12 trillion.

MR. ZUCKERMAN: Yes, and it's going to get larger as a percentage of GDP.

MS. CLIFT: But despite --

MR. ZUCKERMAN: And at some point we may have to --

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Despite the bad news, the bad news wasn't as bad as was expected. And you see consumer confidence is actually going up. The stock market is actually going up. So the American people still seem to have some belief that by the end of this year, things are going to turn around. And the fact that all of the debt -- the Obama administration is seizing on that to give momentum to health care reform, to get down those long-term costs.

DR. MCLAUGHLIN: Give me an exit intuition. The global economy -- is the arrow on the global economy pointing up or pointing down? Quickly.

MR. BUCHANAN: It's going up, John. DR. MCLAUGHLIN: Pointing up?

MR. BUCHANAN: But it could plunge.

DR. MCLAUGHLIN: Which?

MS. CLIFT: It's pointing up, and -- (laughs) --

DR. MCLAUGHLIN: Global? Global?

MS. CLIFT: Pat always wishes for bad news on the Democrats' watch.

DR. MCLAUGHLIN: Global?

MS. CROWLEY: I say --

DR. MCLAUGHLIN: Quickly.

MS. CROWLEY: -- it's pointing sideways.

MR. ZUCKERMAN: The global economy is pointing down. It's the first time we're going to have a contraction in the global economy since the end of World War II.

DR. MCLAUGHLIN: Mort is right.

Issue Three: Britain's Got Talent.

(Videotaped clip of singer Susan Boyle.)

DR. MCLAUGHLIN: Fewer than two months ago, Susan Boyle stunned the world with her pure operatic voice. Susan Boyle is a 48-year-old Scottish woman who comes from a village 20 miles outside of Edinburgh. After her heart-rending performance of "I Dreamed a Dream" on a TV show called "Britain's Got Talent," Susan became an overnight international sensation. Her performance was viewed 100 million times within nine days, and her incredible talent was the subject of countless newspaper articles and television shows.

But when the final competition came, Susan took second place to an 11-member high-energy street dance troupe named Diversity.

ANNOUNCER: (From videotape.) The winner of Britain's Got Talent 2009 is Diversity.

DR. MCLAUGHLIN: Susan's second-place finish generated even more media attention. But the very next day, after the competition, Boyle checked into a clinic for what was described as exhaustion.

Sixty percent of adults in Britain today believe that the show Britain's Got Talent exploited Boyle in order to get higher ratings. So reports London's The Daily Telegraph.

Is Susan Boyle all washed up? You be the judge.

(Begin videotaped segment.)

SIMON COWELL: Okay, what's the dream?

SUSAN BOYLE: I'm trying to be a professional singer. (End videotaped segment.)

DR. MCLAUGHLIN: Professional singer. When Susan Boyle appeared on the show, Britain's Got Talent, was she presented as an amateur? Can anyone speak to that?

MR. ZUCKERMAN: Yeah, I think without question she was presented --

DR. MCLAUGHLIN: She was presented as an amateur.

MR. ZUCKERMAN: Absolutely.

DR. MCLAUGHLIN: Was she a true amateur?

MR. ZUCKERMAN: Well, to my knowledge, she had never been paid for any of the singing she had ever done.

MR. BUCHANAN: She had been singing locally, but not professionally.

MR. ZUCKERMAN: Right.

MR. BUCHANAN: And John, this is a real tragedy in the making. This is an unbelievable talent, but she cannot handle this. And I think it's -- I mean, she had a great moment, and it's come down and crashed. It'll never be this high again.

MS. CLIFT: Well, you understand how small a community she comes from, to have such a magnificent voice and to not have been discovered until she made it onto television. And I imagine she must feel like everybody wants a piece of her, and everybody did. But, you know, she can recover. I wouldn't say it's all over.

MR. BUCHANAN: She won't recover like --

MS. CLIFT: She's made a lot of money, and --

MR. BUCHANAN: She's never going to be back up there again.

MS. CLIFT: Well, I think -- I wouldn't say that. I think she's got her voice --

MS. CROWLEY: Yeah --

MS. CLIFT: -- and she's got the sympathy of the world.

MS. CROWLEY: She does. And she's got this enormous talent.

MS. CLIFT: And Monica and me. MS. CROWLEY: Yeah, right. We're on her side too. We're cheering her on. She's got the status of the underdog now. And I think there's an even bigger point, which is that our culture, western culture, American culture, we really prize all the things that she's not -- beauty and youth. And she came on the scene and just, by sheer talent, she just blew all of that straight out of the water. And that's why you saw the audience rise up in triumph. I think she's got the talent, she's got the ambition, and she does have the will, once she gets over this short-term --

DR. MCLAUGHLIN: What about --

MR. BUCHANAN: But as they say, this society of ours moves right on to the beauty again, all the rest of it. She's got the voice; it's unbelievable. But she doesn't have these other attributes that society wants.

DR. MCLAUGHLIN: What about --

MS. CLIFT: Yeah, but the voice is enough. (Laughs.)

DR. MCLAUGHLIN: What about the role of the Net in salvaging and promoting her ongoing career? What about that? One hundred million hits. If that were a penny -- let me ask you. You come from an auditing family, right?

MR. BUCHANAN: Right.

DR. MCLAUGHLIN: You've been audited several times. No, I don't mean that.

MR. BUCHANAN: Yes, I have. (Laughs.)

DR. MCLAUGHLIN: I mean, your father was --

MR. BUCHANAN: I come from a family of accountants. That's right.

DR. MCLAUGHLIN: Okay, accountants. Now, if she got one penny for every view -- not a hit, but a view -- of her performance on the Net, how much would that amount to?

MR. BUCHANAN: Well, if you got 100 million hits, she'd have a million dollars.

DR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Hezbollah wins big in Lebanon on Sunday. However, in Iran, a week later, it is very, very close. Mousavi could beat Ahmadinejad.

DR. MCLAUGHLIN: Eleanor. MS. CLIFT: GM will recover as a major auto manufacturer, and the U.S. government will make money on its investment in GM.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: To elaborate on Pat's point, the pro-Tehran coalition in these Lebanese general elections this weekend that includes Hezbollah will win. But they will fall short of the 65 seats they need to control the Parliament.

DR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: The banks will be under increasing pressure from the Federal Reserve to increase their lending, because the credit squeeze has not nearly eased enough to get the economy going.

DR. MCLAUGHLIN: Will that work?

MR. ZUCKERMAN: It will work if the banks do it.

DR. MCLAUGHLIN: The -- thanks, Mort. (Laughter.) The Food and Drug Administration will soon regulate tobacco, both its marketing and sales. Obama, the president, will sign the bill.

Bye-bye.



END.

has gone awry, and he is resetting a relationship with the rest of the world with more diplomatic engagement.

DR. MCLAUGHLIN: Exit question --

MS. CLIFT: It's all to the good. Until I came on this set --

MR. BUCHANAN: Why doesn't he tell them where we were right?

MS. CLIFT: -- I heard nothing but rave reviews for this speech.

MR. ZUCKERMAN: Yeah, well --

MS. CLIFT: I feel like I'm in a total parallel reality here.

DR. MCLAUGHLIN: You've been hanging around with your liberal friends.

MS. CLIFT: The Army War College. The Army War College.

DR. MCLAUGHLIN: It's called flocking. We all do it. We flock. Exit question: Will the speech change the dynamic between the U.S. and Islam? That is, Muslim countries and the U.S. Yes or no, Pat.

MR. BUCHANAN: No. I do think, though, his policy -- he is changing the policy of the United States toward Iran, Syria, even Iraq, Israel, and, quite frankly, Hamas. And that's going to be the real major test and hard statesmanship back and forth. And, you know, his idealism is fine, but he better maintain a sense of realism about who and what we're dealing with.

MS. CLIFT: It's --

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's idealism, but it's also realism. And it's an opening to create a new relationship with one of the world's great religions and to take on the Islamic extremism, which is a huge threat to not only this country but to the West.

DR. MCLAUGHLIN: Quickly.

MS. CROWLEY: All of the negativity that he spews about the United States is counterproductive to our interests and only gives the enemy what they want. A lovely speech by the president. Look, I'm glad he made it --

DR. MCLAUGHLIN: Why? Why? Why?

MS. CLIFT: Because of all those other things. (Laughs.)

DR. MCLAUGHLIN: It was a besmirchment of the nation, you said.

MS. CROWLEY: He made some strong points. The problem is, he does this "On the one hand, on the other hand" routine that erases whatever good he did. National interest or ideological interest or religious interest in the Muslim world -- and they are very diverse -- are not going to change because he gives one speech.

MS. CLIFT: It's called nuance -- "On the one hand, on the other hand."

MR. ZUCKERMAN: There is --

MS. CROWLEY: That's not leadership.

MR. ZUCKERMAN: There is an assumption of good will and reaching out and engagement in his policy that he hopes will work. We're going to find out whether -- there are a lot of very tough, cynical people in that part of the world. Al Qaeda is the only one. The Iranians have already rejected almost everything he has said. You could go through a lot of the bad guys in that part of the world. So far there's been no progress with any one of them. But it may work. Obviously it has changed. The Bush administration left a very difficult legacy for the United States, and I think he will try and deal with it and ameliorate it. Whether it will work or not, I don't know. One has a reason to doubt, though.

DR. MCLAUGHLIN: I think it was a beautifully modulated speech. I think it was a wide-arc speech. I think it was a sign of his audacity. A problem with it is the implementation, and there Obama may break down, because he's an intellectual. And like all intellectuals, they are smart, but they have a low boredom threshold.

And if they've conquered a problem and they vocalize it, then they tend to dismiss it and say, "What else is on the agenda?"

MS. CLIFT: I don't think so.

DR. MCLAUGHLIN: And I hope that he can enlist his --

MR. BUCHANAN: It's the Adlai Stevenson --

DR. MCLAUGHLIN: -- (inaudible) -- over there --

MS. CLIFT: This is --

DR. MCLAUGHLIN: -- to follow through in an action mode.

MS. CLIFT: This is a persistent --

MR. ZUCKERMAN: That's going to be the test. I agree with you. That is going to be the test. And it is too early to tell how it's going to work out.

MS. CLIFT: This is no Adlai Stevenson. He is persistent. He's very persistent, or he wouldn't --

MR. BUCHANAN: Well, we're going to find out about that too. (Laughs.)

MS. CLIFT: He wouldn't be president if he weren't persistent.

MR. BUCHANAN: When he goes up against Bibi, we're going to find out about that too.

MS. CROWLEY: And our enemies are persistent too.

DR. MCLAUGHLIN: This is going to take a lot of effort to implement it, but I think the seeds are there, and I think that underneath, they're saying, "We want action." They're pleased that this movement has been made, and it's overdue.

Issue Two: Real Traction?

TIMOTHY GEITHNER (U.S. secretary of Treasury): (From videotape.) There's a lot of risk ahead. This process is going to take some time. But I think if you just look at the impact already of this set of programs, I think you're starting to see some real traction.

DR. MCLAUGHLIN: Real traction, said Treasury Secretary Tim Geithner in Beijing this week, as he steadied the hand of China.

The U.S. report card: Household savings up; consumer confidence up; consumer spending up; new unemployment claims down; home sales up, April; income up; stocks up -- this week, a seven-month high.

But the coast is still not clear. GM, Chrysler both declare bankruptcy; the U.S. current accounts deficit and national debt both shockingly high; U.S. AAA credit rating now at risk, possibly, some say; dollar weak.

This week Geithner tried to assure a student audience at Peking University that Chinese dollar assets were safe. But there was a problem. The students openly laughed at him.

This was an encouraging report on the economy, but it ignored the turd in the punch bowl -- (laughter) -- which the Bureau of Labor Statistics pointed to on Friday when it announced that the unemployment rate vaulted from 8.9 percent to 9.4 percent.

That laughter was unseemly, Buchanan.

MR. BUCHANAN: (Laughs.)

DR. MCLAUGHLIN: Question: On the U.S. economy, is the arrow pointing up? Mort Zuckerman.

MR. ZUCKERMAN: John, it's hard to follow a line like "There's turd in the punch bowl," but I'll try. (Laughter.)

DR. MCLAUGHLIN: A turd.

MR. ZUCKERMAN: A turd, okay.

Look, the economy, I think, is definitely showing some signs of recovery. The real question is, though, how long and how strong is this recovery going to be? Because the downward pressures are still very strong. As you say, unemployment is going up. Consumer sales are going down. Investment is going down. Nevertheless, the stimulus program is just beginning to really penetrate the economy. And the question will be, will the confidence of the Americans, and particularly the American consumers, come back? Right now we don't know it.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: Well, these unemployment numbers are really quite staggering, and all predictions point to even greater numbers toward the end of the year. And so you are going to have a lot of fallout directly related to this unemployment; in other words, a second wave of credit card defaults, which could reach up to 20, 25 percent of all credit cards; auto loan defaults.

So the ripple effect could continue through at least another year. And I know a lot of experts smarter than I am on the economy say that this could actually be just a temporary upswing, and then we could face another recession coming along.

DR. MCLAUGHLIN: The head of the Fed is very worried about debt.

MR. ZUCKERMAN: Yes.

DR. MCLAUGHLIN: Is that justified, Pat?

MR. BUCHANAN: I think in the long run, John, I see the debt as a problem that's almost insoluble. And frankly --

DR. MCLAUGHLIN: How big is it?

MR. BUCHANAN: -- I think we're going to have to --

DR. MCLAUGHLIN: You're talking about the current accounts deficit.

MR. BUCHANAN: Well, not only current accounts deficit, the annual thing. The long-run debt of the United States, I think, is going to destroy the American dollar.

DR. MCLAUGHLIN: It's pushing $12 trillion.

MR. ZUCKERMAN: Yes, and it's going to get larger as a percentage of GDP.

MS. CLIFT: But despite --

MR. ZUCKERMAN: And at some point we may have to --

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Despite the bad news, the bad news wasn't as bad as was expected. And you see consumer confidence is actually going up. The stock market is actually going up. So the American people still seem to have some belief that by the end of this year, things are going to turn around. And the fact that all of the debt -- the Obama administration is seizing on that to give momentum to health care reform, to get down those long-term costs.

DR. MCLAUGHLIN: Give me an exit intuition. The global economy -- is the arrow on the global economy pointing up or pointing down? Quickly.

MR. BUCHANAN: It's going up, John. DR. MCLAUGHLIN: Pointing up?

MR. BUCHANAN: But it could plunge.

DR. MCLAUGHLIN: Which?

MS. CLIFT: It's pointing up, and -- (laughs) --

DR. MCLAUGHLIN: Global? Global?

MS. CLIFT: Pat always wishes for bad news on the Democrats' watch.

DR. MCLAUGHLIN: Global?

MS. CROWLEY: I say --

DR. MCLAUGHLIN: Quickly.

MS. CROWLEY: -- it's pointing sideways.

MR. ZUCKERMAN: The global economy is pointing down. It's the first time we're going to have a contraction in the global economy since the end of World War II.

DR. MCLAUGHLIN: Mort is right.

Issue Three: Britain's Got Talent.

(Videotaped clip of singer Susan Boyle.)

DR. MCLAUGHLIN: Fewer than two months ago, Susan Boyle stunned the world with her pure operatic voice. Susan Boyle is a 48-year-old Scottish woman who comes from a village 20 miles outside of Edinburgh. After her heart-rending performance of "I Dreamed a Dream" on a TV show called "Britain's Got Talent," Susan became an overnight international sensation. Her performance was viewed 100 million times within nine days, and her incredible talent was the subject of countless newspaper articles and television shows.

But when the final competition came, Susan took second place to an 11-member high-energy street dance troupe named Diversity.

ANNOUNCER: (From videotape.) The winner of Britain's Got Talent 2009 is Diversity.

DR. MCLAUGHLIN: Susan's second-place finish generated even more media attention. But the very next day, after the competition, Boyle checked into a clinic for what was described as exhaustion.

Sixty percent of adults in Britain today believe that the show Britain's Got Talent exploited Boyle in order to get higher ratings. So reports London's The Daily Telegraph.

Is Susan Boyle all washed up? You be the judge.

(Begin videotaped segment.)

SIMON COWELL: Okay, what's the dream?

SUSAN BOYLE: I'm trying to be a professional singer. (End videotaped segment.)

DR. MCLAUGHLIN: Professional singer. When Susan Boyle appeared on the show, Britain's Got Talent, was she presented as an amateur? Can anyone speak to that?

MR. ZUCKERMAN: Yeah, I think without question she was presented --

DR. MCLAUGHLIN: She was presented as an amateur.

MR. ZUCKERMAN: Absolutely.

DR. MCLAUGHLIN: Was she a true amateur?

MR. ZUCKERMAN: Well, to my knowledge, she had never been paid for any of the singing she had ever done.

MR. BUCHANAN: She had been singing locally, but not professionally.

MR. ZUCKERMAN: Right.

MR. BUCHANAN: And John, this is a real tragedy in the making. This is an unbelievable talent, but she cannot handle this. And I think it's -- I mean, she had a great moment, and it's come down and crashed. It'll never be this high again.

MS. CLIFT: Well, you understand how small a community she comes from, to have such a magnificent voice and to not have been discovered until she made it onto television. And I imagine she must feel like everybody wants a piece of her, and everybody did. But, you know, she can recover. I wouldn't say it's all over.

MR. BUCHANAN: She won't recover like --

MS. CLIFT: She's made a lot of money, and --

MR. BUCHANAN: She's never going to be back up there again.

MS. CLIFT: Well, I think -- I wouldn't say that. I think she's got her voice --

MS. CROWLEY: Yeah --

MS. CLIFT: -- and she's got the sympathy of the world.

MS. CROWLEY: She does. And she's got this enormous talent.

MS. CLIFT: And Monica and me. MS. CROWLEY: Yeah, right. We're on her side too. We're cheering her on. She's got the status of the underdog now. And I think there's an even bigger point, which is that our culture, western culture, American culture, we really prize all the things that she's not -- beauty and youth. And she came on the scene and just, by sheer talent, she just blew all of that straight out of the water. And that's why you saw the audience rise up in triumph. I think she's got the talent, she's got the ambition, and she does have the will, once she gets over this short-term --

DR. MCLAUGHLIN: What about --

MR. BUCHANAN: But as they say, this society of ours moves right on to the beauty again, all the rest of it. She's got the voice; it's unbelievable. But she doesn't have these other attributes that society wants.

DR. MCLAUGHLIN: What about --

MS. CLIFT: Yeah, but the voice is enough. (Laughs.)

DR. MCLAUGHLIN: What about the role of the Net in salvaging and promoting her ongoing career? What about that? One hundred million hits. If that were a penny -- let me ask you. You come from an auditing family, right?

MR. BUCHANAN: Right.

DR. MCLAUGHLIN: You've been audited several times. No, I don't mean that.

MR. BUCHANAN: Yes, I have. (Laughs.)

DR. MCLAUGHLIN: I mean, your father was --

MR. BUCHANAN: I come from a family of accountants. That's right.

DR. MCLAUGHLIN: Okay, accountants. Now, if she got one penny for every view -- not a hit, but a view -- of her performance on the Net, how much would that amount to?

MR. BUCHANAN: Well, if you got 100 million hits, she'd have a million dollars.

DR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Hezbollah wins big in Lebanon on Sunday. However, in Iran, a week later, it is very, very close. Mousavi could beat Ahmadinejad.

DR. MCLAUGHLIN: Eleanor. MS. CLIFT: GM will recover as a major auto manufacturer, and the U.S. government will make money on its investment in GM.

DR. MCLAUGHLIN: Monica.

MS. CROWLEY: To elaborate on Pat's point, the pro-Tehran coalition in these Lebanese general elections this weekend that includes Hezbollah will win. But they will fall short of the 65 seats they need to control the Parliament.

DR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: The banks will be under increasing pressure from the Federal Reserve to increase their lending, because the credit squeeze has not nearly eased enough to get the economy going.

DR. MCLAUGHLIN: Will that work?

MR. ZUCKERMAN: It will work if the banks do it.

DR. MCLAUGHLIN: The -- thanks, Mort. (Laughter.) The Food and Drug Administration will soon regulate tobacco, both its marketing and sales. Obama, the president, will sign the bill.

Bye-bye.



END.