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THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, SYNDICATED RADIO COMMENTATOR; DEMETRI SEVASTOPULO, FINANCIAL TIMES TAPED: FRIDAY, JULY 31, 2009 BROADCAST: WEEKEND OF AUGUST 1-2, 2009

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DR. MCLAUGHLIN: Issue One: Day 100 Versus Day 200.

PRESIDENT BARACK OBAMA: (From videotape.) After 100 days, I'm pleased with the progress we've made, but I'm not satisfied. I'm confident in the future, but I'm not content with the present.

DR. MCLAUGHLIN: April 29, 2009, the 100th day of his presidency -- just three months ago, April 29 -- Barack Obama's reservoir of political capital seemed inexhaustible; his approval rating, 63 percent, the best 100-day approval rating since Ronald Reagan; health care -- 51 percent for his handling of the tender issue of health care; economy -- 60 percent for his handling of the economy; budget deficit -- 50 percent for his handling of the $1.8 trillion budget deficit. Well, that was then and this is now. Next week Mr. Obama will cross the finish line of his second 100 days, and he will cross that line limping, not striding. His approval rating is now hovering just above the midway mark at 54 percent, down from 63 percent in three months. That's his best news.

Health care, his approval rating is now 42 percent, down from 51 percent in three months; economy, his approval rating on handling the economy is now 38 percent, down from 60 percent in three months; budget deficit, his approval rating is now 38 percent, down from 50 percent in three months.

Question: Why has Obama's job approval rating dropped so precipitously? Is there a generalized lack of confidence growing? Pat Buchanan.

MR. BUCHANAN: There is indeed, because Obama is perceived to have failed by now, John. The stimulus bill passed, and nobody believes it worked and everybody believes it's a boondoggle.

Secondly, the cap and trade, another big policy thing that came through the House, has no chance, apparently, to get through the Senate.

Third, on health care, his biggest project coming along, people are peeling off left, right and center. He's not going to get any progress before August. A lot of folks think it'll be -- the major bill will be dead by the fall.

I think what's happened, John, is Obama's still personally well- liked, but the people thought here was someone who really represented something different, real change, somebody who could work through the center, and they've come to believe that these are tax-and-spend liberals, just like the guys that went before them. And I think he's sinking, John, and it is hard to see anywhere where he's going to have any great gain.

This economy has got to turn around for him or his party is going to lose 40 seats in 2010.

DR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Well, he needs a victory, and he actually got one on Friday when the House of Representatives overwhelmingly approved more money for the Cash for Clunkers program, which has been an overwhelming success. They exhausted the federal money in one week after people --

DR. MCLAUGHLIN: What's all that clunkers?

MS. CLIFT: Well, it's not people, John, fortunately. (Laughs.) It's cars. If your cars gets under a certain number of miles, you can trade it in, get a nice rebate to get a new car. DR. MCLAUGHLIN: So this was --

MS. CLIFT: And the Ford Focuses are flying.

DR. MCLAUGHLIN: -- a congressional enactment.

MS. CLIFT: The Ford Focuses are flying out of the showrooms. But, look, to take the rest of your critique, this is a work in progress. I think when we look back, we will see that the recession probably officially ends this summer, but it'll be a long time before those jobs come back, and the president is paying the price.

On health care, he is going to get some bill before this year is out. It may not be everything he wants. Clinton, which was the last serious attempt to get health care reform, didn't even get a bill to Capitol Hill until November of that year. So he is making progress.

But there are lots of targets here for the other side. And now we're going to see, over the August recess, whether the vaunted Obama machine can counter all the attacks from the other side about creeping socialism and all the rest of it.

MR. SEVASTOPULO: But also --

DR. MCLAUGHLIN: Hold on.

MS. CROWLEY: There has been a major slippage in public support for Obama, not just in job approval but also issue by issue -- health care, the economy, budget deficits, taxes. And there's also been a slippage in his numbers in terms of trust, confidence in him, whether or not he's a trustworthy politician. Now, his numbers are still relatively stable there, but they are coming down.

And I think the real problem is that when he campaigned, he campaigned as a candidate whose positions and the way he articulated how he wanted to bring this country along actually belied his radical left-wing voting record in the Senate, where he was the most liberal senator.

He campaigned essentially as a moderate, John. Now that he's governing, he's governing from the far left. He's allowed the far left in the Congress -- Nancy Pelosi, Barney Frank -- to write the economic stimulus, which has failed; to write health care, which is going under; and to take control of the cap and trade, which is tantamount to the largest tax increase in the history of the world.

So by allowing the far left to dominate his presidency, which is where he is ideologically anyway, there's a huge discrepancy between --

MR. SEVASTOPULO: Hold on -- (Cross-talk.)

DR. MCLAUGHLIN: Let Demetri in. He hasn't spoken yet.

MR. SEVASTOPULO: In a year or so's time, when the congressional elections come up, it's the economy, stupid.

MS. CLIFT: Absolutely.

MR. SEVASTOPULO: Already the economy is looking a lot less bad than it did three months ago. We're not talking about the collapse of the financial system anymore. That's Bush and Obama. The economic figures that came out today are a lot better than people expected. And ultimately the question is going to be, how quickly do the jobs come back? They aren't going to come back in three months. It's going to take a year, a year and a half.

MR. BUCHANAN: Or longer.

MR. SEVASTOPULO: If they come back before -- or longer. If it takes longer, he's in real trouble.

If they come back, he'll be fine.

MS. CLIFT: You know, ironically, what has hurt this president the most was his wading into the controversy over Henry Louis Gates, because it made Republicans who -- there were still some giving him the benefit of the doubt. It made independents think that he somehow had his thumb on the scale in favor of minorities. And I think --

DR. MCLAUGHLIN: Let's take a look at that. Okay, "brew-haha."

Two weeks after the arrest of Harvard Professor Henry Louis Gates, President Obama hosted Professor Gates and the arresting officer, Sergeant James Crowley, at the White House with beer and pretzels. So Sergeant Crowley of the Cambridge, Massachusetts police department took questions from the press.

(Begin videotaped segment.)

Q Can you share any words the president shared with you?

SGT. JAMES CROWLEY (Cambridge, Massachusetts police department): It was a private discussion. It was a frank discussion. I'd rather not go into the specifics of what was discussed.

Q Did the president make any contribution to the discussion?

SGT. CROWLEY: He provided the beer.

(End videotaped segment.)

DR. MCLAUGHLIN: Question: Vice President Joe Biden was also at the beer summit. Why was the vice president there? Monica.

MS. CROWLEY: They dragged the vice president off the Amtrak train at the last moment and got him there.

DR. MCLAUGHLIN: Why?

MS. CROWLEY: I think they were very concerned about the image, the photograph that would go all across the country, of having two African-American men, Professor Gates and the president of the United States, with one white police office squeezed in between the two of them. So for racial balance, I think they brought Joe Biden in. Also Joe Biden's background from Scranton, Pennsylvania gives him some blue-collar street cred, which I think the president desperately needs in view of all of this.

MR. BUCHANAN: John --

MR. SEVASTOPULO: Do you know what the irony here is that Joe Biden is the guy on the campaign trail, when he was running against Obama, who said that Obama was a "clean, articulate African-American." And he's the guy they bring in to make the team a little bit more balanced?

MR. BUCHANAN: John --

MS. CLIFT: Yes, because --

DR. MCLAUGHLIN: I think that maybe it was an effort to defuse, which Obama really --

MR. BUCHANAN: To Hillary's -- I mean, excuse me, to Eleanor's point, Obama has been hurt very badly by this because it was a rush to judgment on his part. And it was racial profiling in this sense, John. He and Gates especially and the governor of Massachusetts basically racially profiled this white cop who was up there doing his duty, who never brought up the issue of race. And the president said it was racist and he's a rogue cop, and Obama comes out and says he acted stupidly. And so his reflexes were bad.

But I will say his instincts on Friday in turning that around and saying, "Wait a minute, this thing is going down" --

DR. MCLAUGHLIN: We'll come in after this. What triggered the White House beer summit? Was it this?

PRESIDENT OBAMA: (From videotape.) The Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home.

DR. MCLAUGHLIN: Question: If there had been no intrusion of the president, would the contretemps have gone away without the commotion that has occurred? In other words, did Obama create the problem?

MS. CLIFT: Because he answered the question. If he had not used the word "stupidly," I think we would not have seen the outcry --

DR. MCLAUGHLIN: Would it have gone away? Would it have evaporated?

MS. CLIFT: I think these are still issues that disturb a lot of people on local levels, and it would have been fought out probably on a more local level. But Henry Louis Gates is a prominent professor at Harvard and he's a friend of the president. So I think this would have become an issue anyway. And you can't say that the sergeant acted smartly in arresting. The arrest was unnecessary. It was dismissed immediately. But I think they have all now agreed that everybody sort of overreacted based on the baggage they brought to the particular situation.

DR. MCLAUGHLIN: Given the set of circumstances, don't you think that the way the president handled this politically was a stroke of genius? He made himself disappear from the stage. It's like Houdini. He created the problem in a real way by reason of his intrusion with the word "stupid," and then he made it go away. He defused the problem by making it appear like a croquet exercise on the lawn --

MR. BUCHANAN: No, he came back, John --

DR. MCLAUGHLIN: -- with Prince Philip sitting there as Joe Biden.

MS. CLIFT: Yeah, I think this was directed at me. The initial intervention and the use of the word "stupidly" was a mistake. The going into the briefing room and gracefully saying he had called everyone and invited them to the White House, that was fine. I'm not sure that the beer summit was necessary, but I think this is all -- this has been damage control on the part of the White House.

MS. CROWLEY: That's right.

DR. MCLAUGHLIN: Is it going to go anywhere?

MR. BUCHANAN: No, it's over, John. Here's what he did.

DR. MCLAUGHLIN: Did he shut it down?

MR. BUCHANAN: Here's what he did.

DR. MCLAUGHLIN: Did he shut it down?

MR. BUCHANAN: I think it's fading out. But here's what he did. He went into that briefing room and he took himself as basically a belligerent in this quarrel and made around to a position of neutrality. "Both guys are good men; they're good guys." And he got himself out of it. He had to have the beer summit. Now he's up and away from it.

DR. MCLAUGHLIN: He moved right out of the threesome. It became a twosome.

MR. BUCHANAN: (Laughs.) That's right.

DR. MCLAUGHLIN: It was Obama and it was --

MR. BUCHANAN: It's now Gates versus the cop. DR. MCLAUGHLIN: Excuse me. It was Obama -- it was Gates and it was --

MR. SEVASTOPULO: Crowley.

MR. BUCHANAN: And now it's Gates and Crowley, with Obama as referee.

MS. CROWLEY: During the press conference, he realized he really stepped in it in two major ways. Number one, as president, he is the nation's chief law enforcement officer. So to be prejudging a case like this without the facts was dead wrong. He realized that.

Secondly, Obama positioned himself during the campaign as a transcendent figure, somebody who was going to help deliver a post- racial America. So by having this knee-jerk reaction, weighing in against the white police officers, boy, did he throw that in reverse. So what he was trying to do was correct both of those things with this beer summit.

DR. MCLAUGHLIN: If Henry Gates were white and not black, do you think that any of this --

MR. BUCHANAN: Nobody would have --

DR. MCLAUGHLIN: -- would have happened?

MR. BUCHANAN: Nobody would have paid any attention to it. Suppose it was Henry Kissinger. Everybody would have laughed and said they cuffed Henry.

It would have been a joke.

MS. CLIFT: If he were white --

MR. BUCHANAN: Race is what brought it to the --

MS. CLIFT: If he were white, all of those talk show hosts who are screaming now about what Obama did would be saying, "This is the sanctity of a man's home, and it was invaded by the stormtroopers."

MR. BUCHANAN: You mean if it was -- are you telling me, Eleanor, if it was Alan Dershowitz, we would have complained that they cuffed Alan Dershowitz? I don't think so.

MS. CLIFT: Well, an ordinary white -- well, an ordinary white, maybe not a Dershowitz, who is an ideological foe.

MR. SEVASTOPULO: The other point is that the fact that Henry Louis Gates is a famous guy, a Harvard professor, is what brought this onto the national stage. There are people being profiled every day, but we don't talk about it. Now, why isn't Obama out talking a little bit more about that? This is a good opportunity to bring the conversation forward.

MR. BUCHANAN: But the cop was the guy profiled.

DR. MCLAUGHLIN: Do you understand Professor Gates's outrage? They brought him to the police headquarters. They photographed him, correct?

MR. SEVASTOPULO: You know, when I came to the States, the first thing people told me was, "Don't argue with cops, because they don't like it when you argue with them." I don't know what happened, but I am always more careful in the States when I'm talking with cops than I am somewhere else.

DR. MCLAUGHLIN: The final question before we go to the exit question is the performance of the sergeant at the press conference.

MR. BUCHANAN: Right.

DR. MCLAUGHLIN: Was it flawless? MR. BUCHANAN: I think the sergeant -- the sergeant is a very large national figure.

DR. MCLAUGHLIN: Is he a political figure now?

MR. BUCHANAN: He's very positive. He's a potential political figure. John, he hasn't retreated a single inch from --

DR. MCLAUGHLIN: There were no apologies by anybody.

MR. BUCHANAN: Look, but the president has moved about 120 degrees. The sergeant hasn't moved an inch from the very first day.

DR. MCLAUGHLIN: What do you mean by the president moving 120 degrees?

MR. BUCHANAN: Well, the president first said, you know, "He acted stupidly." Second, he said, "This is a good cop. He's a good guy. We're going to have a beer." Originally he suggested that maybe the sergeant was --

DR. MCLAUGHLIN: You're not giving Obama the credit he deserves --

MR. BUCHANAN: I am giving him credit.

DR. MCLAUGHLIN: -- having this mess on his hands. He managed to extract himself right out of the picture.

MR. BUCHANAN: Well, that's what I said. He moved around to a position of neutrality.

DR. MCLAUGHLIN: Right out of the picture. It became suddenly Gates --

MR. BUCHANAN: Gates versus Crowley.

DR. MCLAUGHLIN: -- versus Crowley. You haven't seen anything like that since the Nixonian days.

MR. BUCHANAN: Well, it was Nixonian in his original move and in his later move. (Laughs.)

DR. MCLAUGHLIN: I mean, the layout of the whole thing, the lawn, bringing Biden in to further defuse.

MR. BUCHANAN: Bringing -- (laughs) --

DR. MCLAUGHLIN: Anything like Obama being pivoted against them.

MR. BUCHANAN: He wishes he had never done it. I can tell you that, John. (Laughs.) DR. MCLAUGHLIN: It's Obama's political genius. That's what it is.

MR. BUCHANAN: It's a week of real embarrassment and a disaster. It was damage control all the way.

DR. MCLAUGHLIN: The whole -- then he goes on, the president says, "I've learned that they met between themselves before they came out here" --

MR. BUCHANAN: (Laughs.)

DR. MCLAUGHLIN: -- meaning that they're going to settle it right over there.

MR. BUCHANAN: And Crowley's a world figure -- (laughs) -- thanks to Obama.

DR. MCLAUGHLIN: Academy Award. What is it? This is better than Yalta.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Well, as much as you want to say that he extracted himself from the situation, if you ask most people in America, they've made decisions about President Obama based on this last 10 days. And I don't think -- I think he's lost some ground.

DR. MCLAUGHLIN: Exit question --

MS. CLIFT: And I say that as a supporter.

MR. BUCHANAN: Yeah.

DR. MCLAUGHLIN: Is Obama in the political danger zone, meaning he's at risk of losing control of his ability to set the agenda? This, by the way, is the last lap of his 100 days. So this event on the White House lawn is kind of that last lap.

MR. BUCHANAN: You know, I think he is losing not the ability to set the agenda, but he is losing the opportunity he had of his first six months of creating what he called a transformational presidency. I think the moment has passed.

MS. CLIFT: Oh, I think transformation is on the way. (Laughs.) And he has far from lost control of the agenda. He's going to get a health care bill this year, the first president in, what, 60 years to accomplish what he set out to. That's huge. And he has stopped the bleeding in the economy. I agree with you, there's a lot of problems ahead, but I think his policies will have been shown to be effective.

DR. MCLAUGHLIN: Monica. MS. CROWLEY: I don't think he's ever had control over the agenda, because he's allowed the far left in the Congress to do the stimulus package, which we now know has failed, and also health care, and cap and trade, all of which, as Pat pointed out at the beginning, have contributed to his collapsing poll numbers.

MR. SEVASTOPULO: If he allowed the far left in Congress to completely control his agenda, wouldn't we have a very different position on health care right now?

MS. CROWLEY: But this is his position. He wants what the far left wants.

MR. SEVASTOPULO: That's not what --

DR. MCLAUGHLIN: He's not getting it.

MS. CLIFT: Earth to Monica. They're compromising on Capitol Hill.

MR. BUCHANAN: I think he will settle for --

MS. CLIFT: It's how the legislative process works.

MR. BUCHANAN: I think he's a pragmatist.

MS. CROWLEY: And the part about a public option is still out there.

Whether or not he will sign a bill that excludes it --

MS. CLIFT: The public option is not radical left.

MR. BUCHANAN: He'll sign it, as Eleanor said. "Get me something. I get health care."

DR. MCLAUGHLIN: We've got to go on. Did you make a conclusion statement?

MR. SEVASTOPULO: Well, I was going to say, one other thing next year people will start talking about again is Afghanistan. How has he done in Afghanistan?

MS. CLIFT: We're already talking about that. (Laughs.)

MR. SEVASTOPULO: Well, it's --

DR. MCLAUGHLIN: You mean his commitment to Afghanistan.

MR. SEVASTOPULO: He's made it his war. Is he going to make it a bigger war for himself, or is he going to roll it back?

DR. MCLAUGHLIN: Afghanistan is Obama's war.

MR. BUCHANAN: It's his Vietnam.

MR. SEVASTOPULO: It is, but it could be -- is it going to be a Vietnam, or is he going to roll it back quickly?

DR. MCLAUGHLIN: I don't know. It seems as though that's going to be impossible.

Issue Two: From G-8 to G-2.

PRESIDENT OBAMA: (From videotape.) The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world. That really must underpin our partnership.

DR. MCLAUGHLIN: A new world order is emerging. As American and European economies flounder, the world's geopolitical center of gravity is shifting, going east to Asia, not west to Europe. The other superpower in the world is now the People's Republic of China, and both superpowers convened in Washington this week for two days of strategic and economic dialogue, a twice-yearly bilateral encounter that grew out of the April G-20 private summit meeting between President Obama and his counterpart, Hu Jintao.

In 2008, America's economy grew at the rate of 1.4 percent. China grew at the rate of 9.8 percent. Who is America's largest creditor? Answer: China, by far. It holds $800 billion in U.S. debt. So instead of a G-8 -- the U.S., Canada, France, Germany, Italy, Japan, Russia and the UK -- we now have a G-2, a G-2, the U.S. and China.

How will that pan out?

PRESIDENT OBAMA: (From videotape.) I have no illusion that the United States and China will agree on every issue, nor choose to see the world in the same way. But that only makes dialogue more important.

DR. MCLAUGHLIN: Question: Is talk of a G-2 an accurate description of the U.S.-China relationship, or is it hyperbole? Demetri Sevastopulo.

MR. SEVASTOPULO: I think it's still hyperbole for the moment, but clearly in a few years' time -- no one knows exactly how many -- it is going to be the relationship, China and the U.S. At the moment, China is still a very important country for the U.S. It's still not a superpower.

MR. BUCHANAN: Right. John --

MS. CLIFT: Yeah, but these are the two countries that are going to shape really the economy of every other country in the world. And China is our banker. We have to be real nervous around them. We need them if there's going to be any climate change. And yet they need us because it's the U.S. Navy that protects the sea lanes, and we keep the peace. And they can't afford war, because they've got to take care of that huge population and modernize their country.

MR. BUCHANAN: John, China is not the first, second, third economic power on earth. Number one is the European Union. Number two is the United States. Number three is Japan. China is a very close fourth. I do agree that I think China is going to have to be brought into that G-8, but then you go to G-9, and India, Brazil will say, "What about us?" So maybe you need a G-11. I mean, China is growing; Eleanor is right.

DR. MCLAUGHLIN: I didn't hear Russia in that enumeration.

MR. BUCHANAN: Russia is already in the G-8. MS. CROWLEY: Right, right.

MR. BUCHANAN: You read it.

MS. CROWLEY: Going to a G-2, we're not there yet, but China clearly is on the ascent, particularly on economics, and also strategically. They are spreading their tentacles now into Central and South America, reinvigorating relationships with Hugo Chavez in Venezuela and the Castro brothers in Cuba. Also they're reaching deep into Africa and into the Middle East. So we've got to watch them strategically as well as economically.

DR. MCLAUGHLIN: So exit question: Is it obsolete or not, the G- 8?

MR. BUCHANAN: No, it's not. No, it's not, but it's going to have to be slowly enlarged to include China and India and probably Brazil.

MS. CLIFT: I'm not advocating a G-2. I'm just saying that China and the U.S. have to be partners in a lot of areas.

DR. MCLAUGHLIN: Right.

MS. CROWLEY: Absolutely. I totally agree.

DR. MCLAUGHLIN: You see, by the way, where the vice president of the United States is encouraging the China-U.S. relationship. She deserves a lot of credit. She was over there earlier.

MS. CLIFT: No, the secretary of State.

MR. BUCHANAN: You mean the secretary of State?

DR. MCLAUGHLIN: Excuse me -- the secretary of State.

MS. CLIFT: Right.

MR. SEVASTOPULO: There has been renewed interest in Asia since Barack Obama came to power. Hillary Clinton has been to Southeast Asia twice. Obama is going to go to Indonesia and China later this year. I think you're going to see a lot of attention on the region.

MR. BUCHANAN: Is the EU passe?

MR. SEVASTOPULO: I don't think so. If it is, where am I going to go?

MR. BUCHANAN: John, where he's going, he's going to Hong Kong as the bureau chief of the Financial Times. Demetri's our man in Hong Kong.

DR. MCLAUGHLIN: The EU is essential for running the world's economy. MR. BUCHANAN: It's number one.

MR. SEVASTOPULO: The EU is huge on trade. The problem the EU has is that its foreign policy is not aligned. When it comes to foreign policy, each country is still all over the place.

DR. MCLAUGHLIN: Are you going to tell that to Phil Stephens, who says it's the Switzerland of the world?

MR. SEVASTOPULO: I will. I'll tell him that, yeah. (Laughter.)

DR. MCLAUGHLIN: Issue Three: Leaving Las Vegas.

PRESIDENT OBAMA: (From videotape.) You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime.

DR. MCLAUGHLIN: No more Wayne Newton, no more Cirque du Soleil, no more Celine Dion for the employees of the U.S. federal government. President Obama's criticism goes beyond corporate executives who went to Las Vegas after accepting U.S. Treasury bailout funds.

Three of President Obama's Cabinet departments -- Justice, Agriculture and Homeland Security -- are directing federal employees not to host meetings, conferences or conventions in three cities: In Vegas, in Reno -- both in Nevada -- and Orlando in Florida. Instead, the feds are pushing cities like Denver, St. Louis and Chicago.

A private-sector conference planner from Las Vegas got the message from the FBI. The Wall Street Journal broke the story. Why the move out of Vegas, Reno and Orlando? President Obama wants to improve his administration's public image by demonstrating a frugal sensibility, especially during this time of economic woe, so no spas, no resorts, no gambling meccas for federal employees.

The White House claims that this is not a blacklist, but not everyone is buying that.

REP. ALAN GRAYSON (D-FL): (From videotape.) We have Rahm Emanuel, the chief of staff of the White House, telling the government that there should be no formal or informal, no official or unofficial blacklist. And then we have the Wall Street Journal coming up with hard evidence, e-mails from two different government offices saying that there is a blacklist. You know, we've got to get this straight.

DR. MCLAUGHLIN: But looking frugal is not the same thing as being frugal. The average room rate for three approved cities -- Chicago, Denver and St. Louis -- is $99.33 per day. The same rate for Reno, Las Vegas and Orlando is, collectively, $86.74 per day.

The U.S. Travel Association says the policy could not come at a worse time. Quote: "In the quest to demonize travel, we're killing jobs."

Question: What's the real agenda here? And why the secrecy and the apparent double-talk? Demetri, what do you think?

MR. SEVASTOPULO: It's a classic case of Washington optics getting in the way of rationality. You should go to the cheapest place. You shouldn't be banning cities just because they look bad.

DR. MCLAUGHLIN: They were keeping quiet this whole prohibition on Vegas and the selection of Chicago and two other cities. Do you think Rahm Emanuel from Chicago and the president of the United States from Chicago had anything to do with trying to steer Vegas business to Chicago?

MR. SEVASTOPULO: I don't know, but I wouldn't like to be campaigning in Vegas next year if I was the president.

MS. CLIFT: Well, there's a lot of -- this looks like it's part urban myth, and apparently it extended back to the Bush administration. And it's about not wanting to be seen sending federal employees to have fun --

DR. MCLAUGHLIN: Right. MS. CLIFT: -- at the taxpayer expense. And Senator Harry Reid, the Democratic leader, who is from Nevada, has introduced the Defense of Resort Cities Act.

DR. MCLAUGHLIN: Really? (Laughter.)

MS. CLIFT: Yes.

MS. CROWLEY: Right on.

MR. BUCHANAN: Eleanor --

MS. CLIFT: So whatever ban may or may not have existed will soon be gone.

DR. MCLAUGHLIN: The Democrats again.

MS. CLIFT: And Reid is running for re-election.

DR. MCLAUGHLIN: Clawing at each other, the Democrats, right?

MR. SEVASTOPULO: Yeah.

MR. BUCHANAN: John, that is the Defense of Harry bill that he's introduced. But, look, where are you going to go, to New Orleans? What do folks do down in New Orleans? Is South Beach okay for everybody? For heaven's sakes, I think this is preposterous to rule out Reno and Las Vegas for gatherings.

MS. CLIFT: Well, and I think during the Bush administration Homeland Security gave it sort of a patina that you shouldn't go to these three cities. But I don't know that they're any more vulnerable to terrorists than Miami or San Francisco or any place else.

DR. MCLAUGHLIN: If frugality is what they want to impress people with, should the first lady carry a handbag which was inordinately costly, something like $6,000?

MR. BUCHANAN: It was a knock-off of the $6,000 --

DR. MCLAUGHLIN: Oh, it was a knock-off?

MR. BUCHANAN: Yeah.

MS. CLIFT: I'm glad Pat follows these things, because I wouldn't have known.

MR. BUCHANAN: (Laughs.) Oh, I looked -- (inaudible) -- deeply. (Laughter.)

DR. MCLAUGHLIN: What about hosiery? Do you want to get into that now? MR. BUCHANAN: Yeah.

MS. CROWLEY: Speaking of travel, I mean, Obama went out there and said, "Don't take private jets. Don't go to these cities for business travel." But then he had no problem taking his wife on a half-a-million-dollar date night to New York City a couple of weeks ago on Air Force One, which is the ultimate private jet. Look, you can't --

MR. SEVASTOPULO: Well, Monica, he --

MS. CLIFT: Old news. Old news.

MS. CROWLEY: He shouldn't have.

MR. SEVASTOPULO: But he didn't go to Vegas or Orlando.

MS. CROWLEY: And maybe he should have.

DR. MCLAUGHLIN: Forced calculation: How much damage from the beer story to Barack Obama?

MR. BUCHANAN: Seven out of 10.

MS. CLIFT: I'm going to give it a four -- short-term, painful, but it'll go away.

MS. CROWLEY: Eight out of 10.

DR. MCLAUGHLIN: Really?

MS. CROWLEY: Yes.

MR. SEVASTOPULO: Three out of 10. People have short memories.

DR. MCLAUGHLIN: Three is right. People have short memories.

Don't forget to follow us and tweet us on Twitter. Bye-bye.



END.

s. The sergeant hasn't moved an inch from the very first day.

DR. MCLAUGHLIN: What do you mean by the president moving 120 degrees?

MR. BUCHANAN: Well, the president first said, you know, "He acted stupidly." Second, he said, "This is a good cop. He's a good guy. We're going to have a beer." Originally he suggested that maybe the sergeant was --

DR. MCLAUGHLIN: You're not giving Obama the credit he deserves --

MR. BUCHANAN: I am giving him credit.

DR. MCLAUGHLIN: -- having this mess on his hands. He managed to extract himself right out of the picture.

MR. BUCHANAN: Well, that's what I said. He moved around to a position of neutrality.

DR. MCLAUGHLIN: Right out of the picture. It became suddenly Gates --

MR. BUCHANAN: Gates versus Crowley.

DR. MCLAUGHLIN: -- versus Crowley. You haven't seen anything like that since the Nixonian days.

MR. BUCHANAN: Well, it was Nixonian in his original move and in his later move. (Laughs.)

DR. MCLAUGHLIN: I mean, the layout of the whole thing, the lawn, bringing Biden in to further defuse.

MR. BUCHANAN: Bringing -- (laughs) --

DR. MCLAUGHLIN: Anything like Obama being pivoted against them.

MR. BUCHANAN: He wishes he had never done it. I can tell you that, John. (Laughs.) DR. MCLAUGHLIN: It's Obama's political genius. That's what it is.

MR. BUCHANAN: It's a week of real embarrassment and a disaster. It was damage control all the way.

DR. MCLAUGHLIN: The whole -- then he goes on, the president says, "I've learned that they met between themselves before they came out here" --

MR. BUCHANAN: (Laughs.)

DR. MCLAUGHLIN: -- meaning that they're going to settle it right over there.

MR. BUCHANAN: And Crowley's a world figure -- (laughs) -- thanks to Obama.

DR. MCLAUGHLIN: Academy Award. What is it? This is better than Yalta.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Well, as much as you want to say that he extracted himself from the situation, if you ask most people in America, they've made decisions about President Obama based on this last 10 days. And I don't think -- I think he's lost some ground.

DR. MCLAUGHLIN: Exit question --

MS. CLIFT: And I say that as a supporter.

MR. BUCHANAN: Yeah.

DR. MCLAUGHLIN: Is Obama in the political danger zone, meaning he's at risk of losing control of his ability to set the agenda? This, by the way, is the last lap of his 100 days. So this event on the White House lawn is kind of that last lap.

MR. BUCHANAN: You know, I think he is losing not the ability to set the agenda, but he is losing the opportunity he had of his first six months of creating what he called a transformational presidency. I think the moment has passed.

MS. CLIFT: Oh, I think transformation is on the way. (Laughs.) And he has far from lost control of the agenda. He's going to get a health care bill this year, the first president in, what, 60 years to accomplish what he set out to. That's huge. And he has stopped the bleeding in the economy. I agree with you, there's a lot of problems ahead, but I think his policies will have been shown to be effective.

DR. MCLAUGHLIN: Monica. MS. CROWLEY: I don't think he's ever had control over the agenda, because he's allowed the far left in the Congress to do the stimulus package, which we now know has failed, and also health care, and cap and trade, all of which, as Pat pointed out at the beginning, have contributed to his collapsing poll numbers.

MR. SEVASTOPULO: If he allowed the far left in Congress to completely control his agenda, wouldn't we have a very different position on health care right now?

MS. CROWLEY: But this is his position. He wants what the far left wants.

MR. SEVASTOPULO: That's not what --

DR. MCLAUGHLIN: He's not getting it.

MS. CLIFT: Earth to Monica. They're compromising on Capitol Hill.

MR. BUCHANAN: I think he will settle for --

MS. CLIFT: It's how the legislative process works.

MR. BUCHANAN: I think he's a pragmatist.

MS. CROWLEY: And the part about a public option is still out there.

Whether or not he will sign a bill that excludes it --

MS. CLIFT: The public option is not radical left.

MR. BUCHANAN: He'll sign it, as Eleanor said. "Get me something. I get health care."

DR. MCLAUGHLIN: We've got to go on. Did you make a conclusion statement?

MR. SEVASTOPULO: Well, I was going to say, one other thing next year people will start talking about again is Afghanistan. How has he done in Afghanistan?

MS. CLIFT: We're already talking about that. (Laughs.)

MR. SEVASTOPULO: Well, it's --

DR. MCLAUGHLIN: You mean his commitment to Afghanistan.

MR. SEVASTOPULO: He's made it his war. Is he going to make it a bigger war for himself, or is he going to roll it back?

DR. MCLAUGHLIN: Afghanistan is Obama's war.

MR. BUCHANAN: It's his Vietnam.

MR. SEVASTOPULO: It is, but it could be -- is it going to be a Vietnam, or is he going to roll it back quickly?

DR. MCLAUGHLIN: I don't know. It seems as though that's going to be impossible.

Issue Two: From G-8 to G-2.

PRESIDENT OBAMA: (From videotape.) The relationship between the United States and China will shape the 21st century, which makes it as important as any bilateral relationship in the world. That really must underpin our partnership.

DR. MCLAUGHLIN: A new world order is emerging. As American and European economies flounder, the world's geopolitical center of gravity is shifting, going east to Asia, not west to Europe. The other superpower in the world is now the People's Republic of China, and both superpowers convened in Washington this week for two days of strategic and economic dialogue, a twice-yearly bilateral encounter that grew out of the April G-20 private summit meeting between President Obama and his counterpart, Hu Jintao.

In 2008, America's economy grew at the rate of 1.4 percent. China grew at the rate of 9.8 percent. Who is America's largest creditor? Answer: China, by far. It holds $800 billion in U.S. debt. So instead of a G-8 -- the U.S., Canada, France, Germany, Italy, Japan, Russia and the UK -- we now have a G-2, a G-2, the U.S. and China.

How will that pan out?

PRESIDENT OBAMA: (From videotape.) I have no illusion that the United States and China will agree on every issue, nor choose to see the world in the same way. But that only makes dialogue more important.

DR. MCLAUGHLIN: Question: Is talk of a G-2 an accurate description of the U.S.-China relationship, or is it hyperbole? Demetri Sevastopulo.

MR. SEVASTOPULO: I think it's still hyperbole for the moment, but clearly in a few years' time -- no one knows exactly how many -- it is going to be the relationship, China and the U.S. At the moment, China is still a very important country for the U.S. It's still not a superpower.

MR. BUCHANAN: Right. John --

MS. CLIFT: Yeah, but these are the two countries that are going to shape really the economy of every other country in the world. And China is our banker. We have to be real nervous around them. We need them if there's going to be any climate change. And yet they need us because it's the U.S. Navy that protects the sea lanes, and we keep the peace. And they can't afford war, because they've got to take care of that huge population and modernize their country.

MR. BUCHANAN: John, China is not the first, second, third economic power on earth. Number one is the European Union. Number two is the United States. Number three is Japan. China is a very close fourth. I do agree that I think China is going to have to be brought into that G-8, but then you go to G-9, and India, Brazil will say, "What about us?" So maybe you need a G-11. I mean, China is growing; Eleanor is right.

DR. MCLAUGHLIN: I didn't hear Russia in that enumeration.

MR. BUCHANAN: Russia is already in the G-8. MS. CROWLEY: Right, right.

MR. BUCHANAN: You read it.

MS. CROWLEY: Going to a G-2, we're not there yet, but China clearly is on the ascent, particularly on economics, and also strategically. They are spreading their tentacles now into Central and South America, reinvigorating relationships with Hugo Chavez in Venezuela and the Castro brothers in Cuba. Also they're reaching deep into Africa and into the Middle East. So we've got to watch them strategically as well as economically.

DR. MCLAUGHLIN: So exit question: Is it obsolete or not, the G- 8?

MR. BUCHANAN: No, it's not. No, it's not, but it's going to have to be slowly enlarged to include China and India and probably Brazil.

MS. CLIFT: I'm not advocating a G-2. I'm just saying that China and the U.S. have to be partners in a lot of areas.

DR. MCLAUGHLIN: Right.

MS. CROWLEY: Absolutely. I totally agree.

DR. MCLAUGHLIN: You see, by the way, where the vice president of the United States is encouraging the China-U.S. relationship. She deserves a lot of credit. She was over there earlier.

MS. CLIFT: No, the secretary of State.

MR. BUCHANAN: You mean the secretary of State?

DR. MCLAUGHLIN: Excuse me -- the secretary of State.

MS. CLIFT: Right.

MR. SEVASTOPULO: There has been renewed interest in Asia since Barack Obama came to power. Hillary Clinton has been to Southeast Asia twice. Obama is going to go to Indonesia and China later this year. I think you're going to see a lot of attention on the region.

MR. BUCHANAN: Is the EU passe?

MR. SEVASTOPULO: I don't think so. If it is, where am I going to go?

MR. BUCHANAN: John, where he's going, he's going to Hong Kong as the bureau chief of the Financial Times. Demetri's our man in Hong Kong.

DR. MCLAUGHLIN: The EU is essential for running the world's economy. MR. BUCHANAN: It's number one.

MR. SEVASTOPULO: The EU is huge on trade. The problem the EU has is that its foreign policy is not aligned. When it comes to foreign policy, each country is still all over the place.

DR. MCLAUGHLIN: Are you going to tell that to Phil Stephens, who says it's the Switzerland of the world?

MR. SEVASTOPULO: I will. I'll tell him that, yeah. (Laughter.)

DR. MCLAUGHLIN: Issue Three: Leaving Las Vegas.

PRESIDENT OBAMA: (From videotape.) You can't go take a trip to Las Vegas or go down to the Super Bowl on the taxpayer's dime.

DR. MCLAUGHLIN: No more Wayne Newton, no more Cirque du Soleil, no more Celine Dion for the employees of the U.S. federal government. President Obama's criticism goes beyond corporate executives who went to Las Vegas after accepting U.S. Treasury bailout funds.

Three of President Obama's Cabinet departments -- Justice, Agriculture and Homeland Security -- are directing federal employees not to host meetings, conferences or conventions in three cities: In Vegas, in Reno -- both in Nevada -- and Orlando in Florida. Instead, the feds are pushing cities like Denver, St. Louis and Chicago.

A private-sector conference planner from Las Vegas got the message from the FBI. The Wall Street Journal broke the story. Why the move out of Vegas, Reno and Orlando? President Obama wants to improve his administration's public image by demonstrating a frugal sensibility, especially during this time of economic woe, so no spas, no resorts, no gambling meccas for federal employees.

The White House claims that this is not a blacklist, but not everyone is buying that.

REP. ALAN GRAYSON (D-FL): (From videotape.) We have Rahm Emanuel, the chief of staff of the White House, telling the government that there should be no formal or informal, no official or unofficial blacklist. And then we have the Wall Street Journal coming up with hard evidence, e-mails from two different government offices saying that there is a blacklist. You know, we've got to get this straight.

DR. MCLAUGHLIN: But looking frugal is not the same thing as being frugal. The average room rate for three approved cities -- Chicago, Denver and St. Louis -- is $99.33 per day. The same rate for Reno, Las Vegas and Orlando is, collectively, $86.74 per day.

The U.S. Travel Association says the policy could not come at a worse time. Quote: "In the quest to demonize travel, we're killing jobs."

Question: What's the real agenda here? And why the secrecy and the apparent double-talk? Demetri, what do you think?

MR. SEVASTOPULO: It's a classic case of Washington optics getting in the way of rationality. You should go to the cheapest place. You shouldn't be banning cities just because they look bad.

DR. MCLAUGHLIN: They were keeping quiet this whole prohibition on Vegas and the selection of Chicago and two other cities. Do you think Rahm Emanuel from Chicago and the president of the United States from Chicago had anything to do with trying to steer Vegas business to Chicago?

MR. SEVASTOPULO: I don't know, but I wouldn't like to be campaigning in Vegas next year if I was the president.

MS. CLIFT: Well, there's a lot of -- this looks like it's part urban myth, and apparently it extended back to the Bush administration. And it's about not wanting to be seen sending federal employees to have fun --

DR. MCLAUGHLIN: Right. MS. CLIFT: -- at the taxpayer expense. And Senator Harry Reid, the Democratic leader, who is from Nevada, has introduced the Defense of Resort Cities Act.

DR. MCLAUGHLIN: Really? (Laughter.)

MS. CLIFT: Yes.

MS. CROWLEY: Right on.

MR. BUCHANAN: Eleanor --

MS. CLIFT: So whatever ban may or may not have existed will soon be gone.

DR. MCLAUGHLIN: The Democrats again.

MS. CLIFT: And Reid is running for re-election.

DR. MCLAUGHLIN: Clawing at each other, the Democrats, right?

MR. SEVASTOPULO: Yeah.

MR. BUCHANAN: John, that is the Defense of Harry bill that he's introduced. But, look, where are you going to go, to New Orleans? What do folks do down in New Orleans? Is South Beach okay for everybody? For heaven's sakes, I think this is preposterous to rule out Reno and Las Vegas for gatherings.

MS. CLIFT: Well, and I think during the Bush administration Homeland Security gave it sort of a patina that you shouldn't go to these three cities. But I don't know that they're any more vulnerable to terrorists than Miami or San Francisco or any place else.

DR. MCLAUGHLIN: If frugality is what they want to impress people with, should the first lady carry a handbag which was inordinately costly, something like $6,000?

MR. BUCHANAN: It was a knock-off of the $6,000 --

DR. MCLAUGHLIN: Oh, it was a knock-off?

MR. BUCHANAN: Yeah.

MS. CLIFT: I'm glad Pat follows these things, because I wouldn't have known.

MR. BUCHANAN: (Laughs.) Oh, I looked -- (inaudible) -- deeply. (Laughter.)

DR. MCLAUGHLIN: What about hosiery? Do you want to get into that now? MR. BUCHANAN: Yeah.

MS. CROWLEY: Speaking of travel, I mean, Obama went out there and said, "Don't take private jets. Don't go to these cities for business travel." But then he had no problem taking his wife on a half-a-million-dollar date night to New York City a couple of weeks ago on Air Force One, which is the ultimate private jet. Look, you can't --

MR. SEVASTOPULO: Well, Monica, he --

MS. CLIFT: Old news. Old news.

MS. CROWLEY: He shouldn't have.

MR. SEVASTOPULO: But he didn't go to Vegas or Orlando.

MS. CROWLEY: And maybe he should have.

DR. MCLAUGHLIN: Forced calculation: How much damage from the beer story to Barack Obama?

MR. BUCHANAN: Seven out of 10.

MS. CLIFT: I'm going to give it a four -- short-term, painful, but it'll go away.

MS. CROWLEY: Eight out of 10.

DR. MCLAUGHLIN: Really?

MS. CROWLEY: Yes.

MR. SEVASTOPULO: Three out of 10. People have short memories.

DR. MCLAUGHLIN: Three is right. People have short memories.

Don't forget to follow us and tweet us on Twitter. Bye-bye.



END.