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THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, THE WASHINGTON TIMES; MORTIMER ZUCKERMAN, U.S. NEWS & WORLD REPORT TAPED: FRIDAY, FEBRUARY 5, 2010 BROADCAST: WEEKEND OF FEBRUARY 6-7, 2010

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MR. MCLAUGHLIN: Issue One: Jobs, Jobs, Jobs.

PRESIDENT BARACK OBAMA: (From videotape.) Today one in 10 Americans still can't find work. That's why jobs has to be our number one focus in 2010.

MR. MCLAUGHLIN: The number of Americans today without any kind of paid employment is over 15 million. It's the highest unemployment rate in over a quarter of a century. So President Obama has started a jobs-relief program, and it will focus on small businesses.

PRESIDENT OBAMA: (From videotape.) These are the companies that begin in basements in garages when an entrepreneur takes a chance on his dream or a worker decides it's time she becomes her own boss. MR. MCLAUGHLIN: The Obama proposal will get its funding from Troubled Asset Relief Program, TARP, T-A-R-P, the $700 billion bank bailout. How much of it? A cool $30 billion. Some believe that this $30 billion is a political gimmick. Democrats are alleged to be gearing up for elections nine months from now, when all 435 House seats plus 36 Senate seats will be in play.

Here's how a prominent Republican describes the alleged Democratic scheme.

(Begin videotaped segment.)

SEN. JUDD GREGG (R-NH): It's not for a piggy bank, because you're concerned about lending to small businesses and you want to get a political event when you go out and make a speech in Nashua, New Hampshire. That's not what this money is for. This money is to reduce the debt of our children.

MR. MCLAUGHLIN: Question. The Labor Department just released the unemployment rate for the month of January. It's 9.7 percent, down from 10 percent, a three-tenths-of-a-point drop. Now back to Senator Judd Gregg. What is Senator Gregg's main point, Pat Buchanan?

MR. BUCHANAN: Senator Gregg's main point, John, is that the government of the United States is spending 26, 27 percent of GDP. State and local governments take it up to about 37 percent. The deficit three years running is at about 10 percent of GDP. These are wartime deficits. We've played our cards. The Fed has played all its cards. The big stimulus package is running its course.

And yet we have these massive, mammoth debts that are going to lead this country basically to a run on the dollar or some kind of default. And Judd Gregg, a fiscal hawk, is fanatically concerned about the economy of this country, the bottom dropping out. And, quite frankly, it's not simply Obama that's in trouble. We're all in trouble, because we have not yet got ignition.

MR. MCLAUGHLIN: Okay, speaking of debt, let's pick this up.

The Obama budget for the fiscal year, starting next October 1, was unveiled this week. It's the biggest proposed federal budget outlay in U.S. history, $3.8 trillion. Almost half of that amount will be borrowed, $1.6 trillion -- borrowed from countries like China, where we have already borrowed more than $800 billion to cover our public debt.

With that $1.6 trillion incoming, America's total debt will climb to over $15 trillion, or $50,000 for every American man, woman, child and infant.

Question: Think of the percentage of federal spending as a portion of our gross domestic product. How much has that percentage grown under President Obama? MS. CLIFT: I can't give you an exact percentage. I'm sure you know the answer or you wouldn't be asking the question. But it is minimal. This president has added a minimal amount of spending. And in case you haven't noticed, the Republicans are also gearing up for election, and they're making deficit and scaring people about the deficit their main election issue.

This president has put in place a set of issues that mimic what Franklin Roosevelt did to get us out of the Great Depression. He's got to stick with his belief. Those are the right decisions that he's made, and that government spending is necessary.

There is a difference between the short-term deficit spending we're doing now and the long-term structural debt. That does have to be looked at. But that is not -- this is not the moment. President Reagan went into the 1982 midterms with 10.8 percent unemployment, and Republicans were terrified of charges Democrats were making that his policies were causing a recession. His slogan was "Stay the course." And that's what this president has to do.

MR. MCLAUGHLIN: Do you want to address the question?

MS. CROWLEY: Yes. You asked the question about federal spending outlays as a percentage of GDP. Under President Bush, it was about 18 to 20 percent, which was bad enough. Under President Obama, it's going up to and over 30 percent. You look at this budget, $3.8 trillion. You look at the national deficit, $1.6 trillion. President Bush in 2007 had a national deficit of -- I'm sorry -- $170 billion. In 2008, when he was still president, the deficit blew up to $450 billion. Why? Largely because of TARP and the recession.

That did not give President Obama an excuse to quadruple it to $1.6 trillion. What the American people are saying is, "Look, the Democrats have had a year in charge where they have exploded the national debt and exploded the deficit. We see no end in sight. We want you to stop. Stop the spending. Stop the entitlement programs, all those proposals on health care and cap and trade. Stop raising taxes."

One of the ways you will get that unemployment rate really down -- and I'm glad to see it's 9.7 -- but the question is whether or not that's a statistical anomaly, because there is a lot of employment going on for the Census -- about a million people will be employed just for this year to run the Census -- whether or not that is sustainable and whether or not it is really going to come down.

And one of the ways you can do that is by removing the uncertainty of this out-of-control spending.

And what's hovering over everybody's heads, from small businesses to individuals to big businesses, is tax hikes and all of this other spending and debt that's going on.

MR. MCLAUGHLIN: Okay, the blame game.

Shift the blame to GWB, the guy who walked through the White House door before me.

PRESIDENT OBAMA: (From videotape.) When I first walked through the door, the deficit stood at $1.3 trillion.

MR. MCLAUGHLIN: When you first walked through the door, sir, what were deficits then projected to be?

PRESIDENT OBAMA: (From videotape.) Eight trillion over the next decade.

MR. MCLAUGHLIN: Question: Is President Obama justified in blaming Bush? I ask you, Mort.

MR. ZUCKERMAN: Well, I don't know that it's a question of blaming Bush. The fact is that we had a very serious economic crisis which began in the last year of President Bush's administration, and it's continued into President Obama's terms. And he had to respond to it. And frankly, a fiscal deficit at this particular time is exactly the appropriate response if it had been properly structured.

Unfortunately, the stimulus program which they put forward was not properly structured, and most of the money has gone to support the public-service unions rather than to create jobs, because they supported all the federal and local -- all the state and local administrations. So everybody now acknowledges that it was not nearly as effective as it should have been.

We are not out of the woods. The 9.7 percent unemployment rate that you mentioned is actually a statistical anomaly. In fact, the number of jobs in January went down, not up, even though the employment rate went down, because of the way they counted. The way they counted reflects how many people have left the labor force; 1,100,000 people left the labor force in January, 660,000 in December. If you had those people counted, which should be, and they should be counted, we'd have a much higher unemployment rate. Look, the overall unemployment rate, between partial unemployment and full-time unemployment, you're talking about an unemployment rate in this country in the range of 20 percent. The government must respond. It creates a hole in demand that only the government could fill. So I support the right kind of deficit, and that's what we need. Unfortunately, we didn't quite get it out of the first -- when it went through the Congress the first time around.

MS. CLIFT: Well, there's a famous --

MR. MCLAUGHLIN: What do you think of Obama's plan overall? How would you grade it?

MR. ZUCKERMAN: You know, as I say, unfortunately, my own view is he turned it over to the Congress, to Nancy Pelosi and Harry Reid, to really define what the stimulus was going to be, and it turned out to be a very, very limited and weak stimulus. It should have been more money. The whole idea was to get the money into the economy as quickly as possible, because --

MR. MCLAUGHLIN: (Clears throat.)

MR. ZUCKERMAN: Just a minute -- because the economy feeds on itself going down. And you have to stop that cycle, because, as it goes down, it gets worse and worse because it's going down. That is not what we did. So we are now sitting there with a huge unemployment rate. We've lost jobs all year. We have -- 40 percent of the people who are unemployed have been unemployed for 27 weeks or longer. These are staggering numbers, and they're going to get worse.

MS. CLIFT: Right. And a lot of the deficit is unemployment benefits and creating that safety net.

I'm not going to argue that the stimulus package was perfect, or the recovery package, which is the preferred title for it. But there's a famous anecdote that goes back to the Roosevelt era when John Maynard Keynes comes to him and says, "We have to do this spending," and Roosevelt says, "What would you suggest we spend it on?" And Keynes says, "Well, the American people like pyramids."

The point is, you needed to spend that money almost on anything. You needed to get it out there. And so they didn't do it perfect, but --

MR. ZUCKERMAN: No, they didn't.

MS. CLIFT: -- fair-minded economists will --

MS. CROWLEY: (Inaudible.)

MS. CLIFT: Excuse me. Fair-minded economists will give this administration credit for pulling the economy back from the brink. MS. CROWLEY: Four million people have lost their jobs since this president has entered office. And the question is, is he making the situation better or is he making it worse? We talked about the initial stimulus, $862 billion. That was a political act. It was not an economic act. And that's why you're seeing it be an abject failure. Now they're talking about a second stimulus coming up in the Senate this week.

Look, you talked about debt at the beginning. Treasury debt has gone up 41 percent over the last year, while commercial and consumer lending has gone down over 20 percent. The government is hogging the loan window, and that is having the effect of blocking, rather than catalyzing, real job creation.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: The budget as a percentage of GDP went up 7 percent under Obama with this year's budget over Bush.

MR. BUCHANAN: Well, look, GDP, it's about 26, 27 percent, according to Laffer. All government at all levels is about 38 percent. That is -- used to be considered socialism.

Look, Obama is right in this extent. When he came in, there was a projection of the budget deficit for 2009, Bush's first four months, of $1.2 trillion. And so Obama increased that somewhat dramatically. But, John, here's the problem. Obama is a Keynesian, and the Keynesian economics they tried; FDR tried. He has tried everything. We've doubled the money supply. The Fed has bought up all this toxic assets. The stimulus package has gone out there. It hasn't worked. The deficits are growing.

And here's the hellish problem. Republicans are not going to give anybody one dime in tax revenues, and Democrats are not going to stop spending. What is spending for? Medicare, Medicaid, Social Security, defense, interest. That's what the budget is.

MS. CLIFT: And the politicians are not --

MR. ZUCKERMAN: (Inaudible.)

MR. MCLAUGHLIN: Let Eleanor in.

MS. CLIFT: The politicians are not going to cut those programs, which is why they wanted to create this bipartisan commission that would make the tough choices. Republicans voted against that, even though they sponsored that legislation.

MR. MCLAUGHLIN: Exit question.

MR. BUCHANAN: This is not the -- (inaudible). MS. CLIFT: It is -- (inaudible).

MR. MCLAUGHLIN: What's the likelihood that any recovery this year will be a jobless one? Pat.

MR. BUCHANAN: I think -- I would say that the odds are -- I mean, look, I think joblessness might come down marginally. But John, I think we are in a slough of despond, and I think there could be another big drop coming. And the market seems to be saying that.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: The president in his budget projects 10 percent unemployment through the year. I think we got a little bit of a gift this month. I hope that indicates a downward trend.

But I'm going to go with the Reagan model here. President Reagan's policies did not take hold by one year, or two years in, even, when he faced the midterm elections. This president has put his policies in place. Millions of people elected him.

MR. BUCHANAN: John --

MS. CLIFT: And he's got, with the force of his --

MR. BUCHANAN: Let me make a quick point.

MS. CLIFT: Excuse me. I'm not finished. With the force of his personality --

MR. BUCHANAN: One point --

MS. CLIFT: -- and his beliefs, he's got to stick with these policies and not let --

MR. MCLAUGHLIN: Quickly, Pat. Quickly.

MR. BUCHANAN: Ronald Reagan --

MS. CLIFT: -- people undermine it with the fear of imaginary deficit. MS. CROWLEY: Imaginary?

MS. CLIFT: Imaginary deficit fears.

MS. CROWLEY: One-point-six trillion is not imaginary.

MS. CLIFT: What were you saying when Bush was in office?

MR. MCLAUGHLIN: All right, can we --

MR. BUCHANAN: Obama is betting on the public sector. Ronald Reagan bet on the private sector.

MS. CROWLEY: Correct.

MR. MCLAUGHLIN: Quickly.

MS. CROWLEY: And if Eleanor appreciates the Reagan model, then she'll appreciate the tax cuts that Reagan put in place to alleviate the recession that he faced. I think we are looking at a jobless recovery here for an extended period of time, because we're not just dealing with the immediate problems of consumer confidence. We're dealing with real structural problems in the economy.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: Look, frankly, nobody quite knows, because it's an unprecedented kind of recession caused by a financial crisis.

MR. MCLAUGHLIN: What's your intuition?

MR. ZUCKERMAN: My intuition is we're not going to improve our jobless problems. And I'll say one other thing, though. I've got to say this. I don't agree that it didn't accomplish anything, frankly. It did, I think, prevent this economy from sliding into a much, much worse recession. It's just it didn't have -- we wasted so much money and we drew -- we exhausted the political capital that Obama had in order to --

MR. MCLAUGHLIN: No, he inherited TARP. TARP was undertaken under George Bush.

MR. ZUCKERMAN: That's correct.

MR. MCLAUGHLIN: But the stimulus, you say, was productive.

MR. ZUCKERMAN: Yes, I do --

MR. MCLAUGHLIN: Okay, I agree with you on both points.

Issue Two: Holdering On. SEN. LAMAR ALEXANDER (R-TN): (From videotape.) He's doing a better job of interrogating CIA employees than he is of interrogating terrorists. Perhaps he should step down.

MR. MCLAUGHLIN: Attorney General Eric Holder appears to be in hot water. He is under fire from both sides of the aisle for his policies on terrorists and terrorism, and the call for his ouster seems to be growing.

Here are the raps against Holder: One, investigating the CIA, whether the agency denied the civil rights of 9/11 principals Khalid Sheikh Mohammed, KSM, and Abu Zubaydah. Many regard this investigation as a vicious witch hunt.

Two, civilian trial for KSM in New York City. General Holder wanted KSM put on trial in Manhattan, just blocks from the 9/11 atrocity. The White House scrapped the plan but is now trying to relocate the trial to some other city.

Three, Mirandizing the enemy. General Holder issued Miranda rights, primarily the right to remain silent when interrogated by the FBI and other law-enforcement authorities, to the would-be bomber, 23- year-old Umar Abdulmutallab. He did stay silent for six weeks but is now cooperating -- gushing, in fact.

Rap number four: Undermining the Justice Department, allegedly. General Holder populated the Justice Department with lawyers who previously had defended terrorist suspects like Neal Katyal, who represented the driver of Osama bin Laden.

SEN. CHARLES GRASSLEY (R-IA): (From videotape.) There are attorneys at the Justice Department working on this issue who either represented Guantanamo detainees or worked for groups who advocated for them. This prior representation, I think, creates conflict-of- interest problems for these individuals.

MR. MCLAUGHLIN: Question: Senator Lamar Alexander and Senator Chuck Grassley appear to want Holder to go because he's soft on terrorism. Should Obama ask for Holder's resignation? Monica.

MS. CROWLEY: Yes, but he won't, because Holder is merely carrying out President Obama's approach to this war, which is essentially to treat it as a law-enforcement operation and not as a war. What we have now is reality intruding on this administration, and now we have them approaching this whole war in total chaos. They put out a series of bad decisions, again, based on treating it as a law-enforcement issue, bringing Khalid Sheikh Mohammed to New York, matriculating these terrorists into the civilian justice system. And now they're being forced, step by step, to walk the cat back.

You cannot prosecute a war like this out of total chaos, and that's what you have. And the reason now that Holder is backing off on New York City, maybe even on civilian trials for Khalid Sheikh Mohammed and the others, is because Democrats like Senator Dianne Feinstein, the head of the Senate Intelligence Committee, have said this is not a good idea. You have Republicans and Democrats in the Congress moving now to take away the money for any civilian trials for these folks. So now you have an administration in chaos. And, believe me, the American people see the chaos, and so does the enemy.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's not an administration in chaos, and Holder's job is safe. He has treated the terrorist, the underwear bomber, just like other terrorists captured on U.S. soil were treated under President Bush. Richard Reid, the shoe bomber, was Mirandized in five minutes.

Apparently they did get information out of -- I'm not going to try to pronounce his name -- out of the Detroit airplane bomber in the first 50 minutes. Then he shut down. And the FBI went to his homeland, spoke to his family, brought them back. He is now cooperating. And the belief is that they got more out of him through the respect that his family has for the American justice system as opposed to putting him before a military tribunal.

MR. BUCHANAN: This is --

MR. MCLAUGHLIN: Do you think --

MS. CLIFT: And the other side --

MR. MCLAUGHLIN: Okay, we got the point, Eleanor. Do you think he should have been treated as an enemy combatant?

MR. BUCHANAN: Look, this is --

MR. MCLAUGHLIN: Do you think he should have been treated --

MR. BUCHANAN: This is liberalism gone mad.

MS. CLIFT: Did you say that during the Bush administration when they --

MR. BUCHANAN: Eleanor, would you --

MS. CLIFT: -- when they convicted --

MR. MCLAUGHLIN: Hold on, Eleanor. Let Pat finish.

MS. CLIFT: -- over 300 terrorists? MR. MCLAUGHLIN: Let Pat finish.

MR. BUCHANAN: Look, here's a guy that comes in on a -- who tried to blow up 300 people, who's got an underwear bomb on --

MS. CLIFT: We know all that.

MR. BUCHANAN: And every normal guy would say the first thing you do, find out who sent him, who built the bomb, where he trained --

MS. CLIFT: They did.

MR. BUCHANAN: -- who his colleagues are. Instead, according to liberalism, the first thing you do is say --

MS. CLIFT: They did do that. You're lying.

MR. BUCHANAN: -- "You don't have to answer any questions."

MS. CLIFT: That's not true.

MR. BUCHANAN: "Ron Kuby's on the way." (Laughs.)

MS. CLIFT: That is not true. They talked to him under the public-safety rule. And as long as he was cooperating, they were getting the information. And then they put in place the proper procedures according to our Constitution.

MR. MCLAUGHLIN: Let Mort in.

MS. CLIFT: You're all going to shred the Constitution?

MR. MCLAUGHLIN: Eleanor, hold on. Hold on.

MR. ZUCKERMAN: I just want to say one thing. Seven former heads of the CIA came out against Holder's view that a group of CIA operatives should be tried a second time after they had been cleared by the U.S. attorney from Virginia. This was a number of years later. They all came out against it. And he is now putting them to trial.

It is undermining the morale of the very agency that we need. And I have to say, I find that outrageous. So I do not understand what it's about. I don't care what names you give it -- liberalism, God knows what. It doesn't matter. I am concerned pragmatically --

MR. MCLAUGHLIN: Exit question --

MR. ZUCKERMAN: -- that we have the capacity to fight terrorism.

MR. MCLAUGHLIN: This cuts to the heart of the matter. Is General Holder carrying out Obama's wishes, yes or no? Pat Buchanan.

MR. BUCHANAN: They are on all fours. They agree. He should not be fired. But I'll tell you this, John -- MR. MCLAUGHLIN: But was he carrying out what Obama --

MR. BUCHANAN: He's doing what Obama wants. And both of them are incompetent to manage a war on terror.

MR. MCLAUGHLIN: Eleanor, yes or no?

MS. CLIFT: They are both managing a war on terrorism without undermining our Constitution. They were --

MR. MCLAUGHLIN: Are they following Obama's wishes in these regards?

MS. CLIFT: Yes.

MR. MCLAUGHLIN: KSM trial in New York?

MS. CLIFT: Yes, yes, except I think the White House wishes that Holder could have foreseen the political problems, particularly around the trial in New York. But --

MS. CROWLEY: The attorney general --

MS. CLIFT: -- the New York officials initially welcomed that trial and then changed their minds after Monica and her pals on the right --

MS. CROWLEY: My pals on the right?

MR. MCLAUGHLIN: (Laughs.)

MS. CLIFT: -- basically created a firestorm.

MS. CROWLEY: My pals on the right --

MR. MCLAUGHLIN: Quickly.

MS. CROWLEY: Eleanor, 80 percent of the --

MS. CLIFT: Such power, Monica.

MR. MCLAUGHLIN: Is he following up what the president wants?

MS. CROWLEY: I would like to think I had that much power.

MR. MCLAUGHLIN: Is he fulfilling --

MS. CROWLEY: But 80 percent of the American people do not want --

MR. MCLAUGHLIN: Is the president calling the shots on these big issues? MS. CROWLEY: Of course he is. The attorney general is not freelancing these decisions. It's the commander in chief -- irresponsible.

MR. ZUCKERMAN: However, Eric Holder did make the decision to have Khalid Sheikh Mohammed tried in New York without, I'm told, Obama's prior approval. I don't think that will happen again.

MR. MCLAUGHLIN: Issue Three: Making Nice with the Taliban?

PRESIDENT OBAMA: (From videotape.) We will pursue the following objectives within Afghanistan: We must deny al Qaeda a safe haven; we must reverse the Taliban's momentum and deny it the ability to overthrow the government; and we must strengthen the capacity of Afghanistan's security forces and government.

MR. MCLAUGHLIN: Roughly two months have elapsed since President Obama delivered his sobering speech on Afghanistan. During that speech, Mr. Obama described the Taliban organization and how the U.S. is fighting the Taliban and helping Afghanistan to fight the Taliban.

Nearly 1,000 U.S. soldiers have been killed in Afghanistan. The war has lasted for eight years and has cost the U.S. $345 billion. We are currently spending over $100 million a day in Afghanistan. We are also trying to train Afghanistan's soldiers, but progress on that front has been disappointing.

LT. GEN. BILL CALDWELL (U.S. Army): (From videotape.) There has been poor retention, there has been high attrition, and there has been low recruitment. And if you put those three factors together, you cannot sustain a military force.

MR. MCLAUGHLIN: Meanwhile, Hamid Karzai, president of Afghanistan, has been meeting with the Taliban to work out a deal wherein the Taliban will lay down its arms. The United Nations also is involved in that effort. In January, the Taliban met secretly with a U.N. representative in Dubai to discuss a deal.

The human toll: U.S. military dead in Iraq, Afghanistan and Pakistan is 5,370. The total U.S. military wounded: 41,112.

Question: Is Afghanistan an unsolvable problem if we rely solely on military force? In other words, is a negotiated agreement with the Taliban the only realistic solution? I ask you, Mort.

MR. ZUCKERMAN: Yes, I actually think Afghanistan is an insoluble problem if we only try and use American military force. I literally do not think that there's any way that we're going to change that society. Most of the people are illiterate. We have virtually no real connection with them. At the very most, we're going to be able to keep a lid on this for a short period of time.

I think we've got to find a political alternative, and the political alternative is some kind of negotiated deal with the Taliban. I have no idea whether we can pull anything off that works, but I do know that we're spending $100 billion a year now with the additional troops in that country, and we're not going to have very much to show for it.

MR. MCLAUGHLIN: The al Qaeda has penetrated some of Taliban, but the Taliban is not al Qaeda. You know that.

MR. BUCHANAN: John, there's only 100 -- according to the generals, there's only 100 -- or, excuse me -- al Qaeda in Afghanistan, and we're fighting the Taliban. But let me say this. Look at that $345 billion. Imagine what the United States could have done, frankly, for Middle East peace, for our own internal security in this country.

But the generals, but the generals, John, McChrystal and Petraeus, are themselves saying there's no military solution here. They're talking about working with the Taliban. McChrystal said the Taliban are part of the fabric of Afghanistan. Karzai himself is moving much more advanced even toward Omar, Mullah Omar. So I think we are moving toward a negotiated settlement that'll get us out of there.

MR. MCLAUGHLIN: Let me ask Eleanor this. Is there a larger issue here, and that's the issue put forth by the Cabinet officer of the military, Gates, Bob Gates? Bob Gates says we want to bring the problem of terrorism to them, and we therefore have troops all over the world. But we're bringing it to them in Afghanistan. Is that doctrine fundamentally flawed?

MS. CLIFT: Well, that was the same thing they said in Iraq, and eventually it took hold, and that is that whatever government structure is installed there has to want to defeat the terrorists more than we do. And I think that has happened in Iraq. And I think in Afghanistan the problem is that the people, they don't like the government and they don't like the Taliban, and they're sort of -- they're kind of up for grabs.

MS. CROWLEY: There's one point we're missing.

MS. CLIFT: And the administration is having some effect actually paying people for their loyalty.

MR. MCLAUGHLIN: Bye-bye.

END.

-- people undermine it with the fear of imaginary deficit. MS. CROWLEY: Imaginary?

MS. CLIFT: Imaginary deficit fears.

MS. CROWLEY: One-point-six trillion is not imaginary.

MS. CLIFT: What were you saying when Bush was in office?

MR. MCLAUGHLIN: All right, can we --

MR. BUCHANAN: Obama is betting on the public sector. Ronald Reagan bet on the private sector.

MS. CROWLEY: Correct.

MR. MCLAUGHLIN: Quickly.

MS. CROWLEY: And if Eleanor appreciates the Reagan model, then she'll appreciate the tax cuts that Reagan put in place to alleviate the recession that he faced. I think we are looking at a jobless recovery here for an extended period of time, because we're not just dealing with the immediate problems of consumer confidence. We're dealing with real structural problems in the economy.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: Look, frankly, nobody quite knows, because it's an unprecedented kind of recession caused by a financial crisis.

MR. MCLAUGHLIN: What's your intuition?

MR. ZUCKERMAN: My intuition is we're not going to improve our jobless problems. And I'll say one other thing, though. I've got to say this. I don't agree that it didn't accomplish anything, frankly. It did, I think, prevent this economy from sliding into a much, much worse recession. It's just it didn't have -- we wasted so much money and we drew -- we exhausted the political capital that Obama had in order to --

MR. MCLAUGHLIN: No, he inherited TARP. TARP was undertaken under George Bush.

MR. ZUCKERMAN: That's correct.

MR. MCLAUGHLIN: But the stimulus, you say, was productive.

MR. ZUCKERMAN: Yes, I do --

MR. MCLAUGHLIN: Okay, I agree with you on both points.

Issue Two: Holdering On. SEN. LAMAR ALEXANDER (R-TN): (From videotape.) He's doing a better job of interrogating CIA employees than he is of interrogating terrorists. Perhaps he should step down.

MR. MCLAUGHLIN: Attorney General Eric Holder appears to be in hot water. He is under fire from both sides of the aisle for his policies on terrorists and terrorism, and the call for his ouster seems to be growing.

Here are the raps against Holder: One, investigating the CIA, whether the agency denied the civil rights of 9/11 principals Khalid Sheikh Mohammed, KSM, and Abu Zubaydah. Many regard this investigation as a vicious witch hunt.

Two, civilian trial for KSM in New York City. General Holder wanted KSM put on trial in Manhattan, just blocks from the 9/11 atrocity. The White House scrapped the plan but is now trying to relocate the trial to some other city.

Three, Mirandizing the enemy. General Holder issued Miranda rights, primarily the right to remain silent when interrogated by the FBI and other law-enforcement authorities, to the would-be bomber, 23- year-old Umar Abdulmutallab. He did stay silent for six weeks but is now cooperating -- gushing, in fact.

Rap number four: Undermining the Justice Department, allegedly. General Holder populated the Justice Department with lawyers who previously had defended terrorist suspects like Neal Katyal, who represented the driver of Osama bin Laden.

SEN. CHARLES GRASSLEY (R-IA): (From videotape.) There are attorneys at the Justice Department working on this issue who either represented Guantanamo detainees or worked for groups who advocated for them. This prior representation, I think, creates conflict-of- interest problems for these individuals.

MR. MCLAUGHLIN: Question: Senator Lamar Alexander and Senator Chuck Grassley appear to want Holder to go because he's soft on terrorism. Should Obama ask for Holder's resignation? Monica.

MS. CROWLEY: Yes, but he won't, because Holder is merely carrying out President Obama's approach to this war, which is essentially to treat it as a law-enforcement operation and not as a war. What we have now is reality intruding on this administration, and now we have them approaching this whole war in total chaos. They put out a series of bad decisions, again, based on treating it as a law-enforcement issue, bringing Khalid Sheikh Mohammed to New York, matriculating these terrorists into the civilian justice system. And now they're being forced, step by step, to walk the cat back.

You cannot prosecute a war like this out of total chaos, and that's what you have. And the reason now that Holder is backing off on New York City, maybe even on civilian trials for Khalid Sheikh Mohammed and the others, is because Democrats like Senator Dianne Feinstein, the head of the Senate Intelligence Committee, have said this is not a good idea. You have Republicans and Democrats in the Congress moving now to take away the money for any civilian trials for these folks. So now you have an administration in chaos. And, believe me, the American people see the chaos, and so does the enemy.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's not an administration in chaos, and Holder's job is safe. He has treated the terrorist, the underwear bomber, just like other terrorists captured on U.S. soil were treated under President Bush. Richard Reid, the shoe bomber, was Mirandized in five minutes.

Apparently they did get information out of -- I'm not going to try to pronounce his name -- out of the Detroit airplane bomber in the first 50 minutes. Then he shut down. And the FBI went to his homeland, spoke to his family, brought them back. He is now cooperating. And the belief is that they got more out of him through the respect that his family has for the American justice system as opposed to putting him before a military tribunal.

MR. BUCHANAN: This is --

MR. MCLAUGHLIN: Do you think --

MS. CLIFT: And the other side --

MR. MCLAUGHLIN: Okay, we got the point, Eleanor. Do you think he should have been treated as an enemy combatant?

MR. BUCHANAN: Look, this is --

MR. MCLAUGHLIN: Do you think he should have been treated --

MR. BUCHANAN: This is liberalism gone mad.

MS. CLIFT: Did you say that during the Bush administration when they --

MR. BUCHANAN: Eleanor, would you --

MS. CLIFT: -- when they convicted --

MR. MCLAUGHLIN: Hold on, Eleanor. Let Pat finish.

MS. CLIFT: -- over 300 terrorists? MR. MCLAUGHLIN: Let Pat finish.

MR. BUCHANAN: Look, here's a guy that comes in on a -- who tried to blow up 300 people, who's got an underwear bomb on --

MS. CLIFT: We know all that.

MR. BUCHANAN: And every normal guy would say the first thing you do, find out who sent him, who built the bomb, where he trained --

MS. CLIFT: They did.

MR. BUCHANAN: -- who his colleagues are. Instead, according to liberalism, the first thing you do is say --

MS. CLIFT: They did do that. You're lying.

MR. BUCHANAN: -- "You don't have to answer any questions."

MS. CLIFT: That's not true.

MR. BUCHANAN: "Ron Kuby's on the way." (Laughs.)

MS. CLIFT: That is not true. They talked to him under the public-safety rule. And as long as he was cooperating, they were getting the information. And then they put in place the proper procedures according to our Constitution.

MR. MCLAUGHLIN: Let Mort in.

MS. CLIFT: You're all going to shred the Constitution?

MR. MCLAUGHLIN: Eleanor, hold on. Hold on.

MR. ZUCKERMAN: I just want to say one thing. Seven former heads of the CIA came out against Holder's view that a group of CIA operatives should be tried a second time after they had been cleared by the U.S. attorney from Virginia. This was a number of years later. They all came out against it. And he is now putting them to trial.

It is undermining the morale of the very agency that we need. And I have to say, I find that outrageous. So I do not understand what it's about. I don't care what names you give it -- liberalism, God knows what. It doesn't matter. I am concerned pragmatically --

MR. MCLAUGHLIN: Exit question --

MR. ZUCKERMAN: -- that we have the capacity to fight terrorism.

MR. MCLAUGHLIN: This cuts to the heart of the matter. Is General Holder carrying out Obama's wishes, yes or no? Pat Buchanan.

MR. BUCHANAN: They are on all fours. They agree. He should not be fired. But I'll tell you this, John -- MR. MCLAUGHLIN: But was he carrying out what Obama --

MR. BUCHANAN: He's doing what Obama wants. And both of them are incompetent to manage a war on terror.

MR. MCLAUGHLIN: Eleanor, yes or no?

MS. CLIFT: They are both managing a war on terrorism without undermining our Constitution. They were --

MR. MCLAUGHLIN: Are they following Obama's wishes in these regards?

MS. CLIFT: Yes.

MR. MCLAUGHLIN: KSM trial in New York?

MS. CLIFT: Yes, yes, except I think the White House wishes that Holder could have foreseen the political problems, particularly around the trial in New York. But --

MS. CROWLEY: The attorney general --

MS. CLIFT: -- the New York officials initially welcomed that trial and then changed their minds after Monica and her pals on the right --

MS. CROWLEY: My pals on the right?

MR. MCLAUGHLIN: (Laughs.)

MS. CLIFT: -- basically created a firestorm.

MS. CROWLEY: My pals on the right --

MR. MCLAUGHLIN: Quickly.

MS. CROWLEY: Eleanor, 80 percent of the --

MS. CLIFT: Such power, Monica.

MR. MCLAUGHLIN: Is he following up what the president wants?

MS. CROWLEY: I would like to think I had that much power.

MR. MCLAUGHLIN: Is he fulfilling --

MS. CROWLEY: But 80 percent of the American people do not want --

MR. MCLAUGHLIN: Is the president calling the shots on these big issues? MS. CROWLEY: Of course he is. The attorney general is not freelancing these decisions. It's the commander in chief -- irresponsible.

MR. ZUCKERMAN: However, Eric Holder did make the decision to have Khalid Sheikh Mohammed tried in New York without, I'm told, Obama's prior approval. I don't think that will happen again.

MR. MCLAUGHLIN: Issue Three: Making Nice with the Taliban?

PRESIDENT OBAMA: (From videotape.) We will pursue the following objectives within Afghanistan: We must deny al Qaeda a safe haven; we must reverse the Taliban's momentum and deny it the ability to overthrow the government; and we must strengthen the capacity of Afghanistan's security forces and government.

MR. MCLAUGHLIN: Roughly two months have elapsed since President Obama delivered his sobering speech on Afghanistan. During that speech, Mr. Obama described the Taliban organization and how the U.S. is fighting the Taliban and helping Afghanistan to fight the Taliban.

Nearly 1,000 U.S. soldiers have been killed in Afghanistan. The war has lasted for eight years and has cost the U.S. $345 billion. We are currently spending over $100 million a day in Afghanistan. We are also trying to train Afghanistan's soldiers, but progress on that front has been disappointing.

LT. GEN. BILL CALDWELL (U.S. Army): (From videotape.) There has been poor retention, there has been high attrition, and there has been low recruitment. And if you put those three factors together, you cannot sustain a military force.

MR. MCLAUGHLIN: Meanwhile, Hamid Karzai, president of Afghanistan, has been meeting with the Taliban to work out a deal wherein the Taliban will lay down its arms. The United Nations also is involved in that effort. In January, the Taliban met secretly with a U.N. representative in Dubai to discuss a deal.

The human toll: U.S. military dead in Iraq, Afghanistan and Pakistan is 5,370. The total U.S. military wounded: 41,112.

Question: Is Afghanistan an unsolvable problem if we rely solely on military force? In other words, is a negotiated agreement with the Taliban the only realistic solution? I ask you, Mort.

MR. ZUCKERMAN: Yes, I actually think Afghanistan is an insoluble problem if we only try and use American military force. I literally do not think that there's any way that we're going to change that society. Most of the people are illiterate. We have virtually no real connection with them. At the very most, we're going to be able to keep a lid on this for a short period of time.

I think we've got to find a political alternative, and the political alternative is some kind of negotiated deal with the Taliban. I have no idea whether we can pull anything off that works, but I do know that we're spending $100 billion a year now with the additional troops in that country, and we're not going to have very much to show for it.

MR. MCLAUGHLIN: The al Qaeda has penetrated some of Taliban, but the Taliban is not al Qaeda. You know that.

MR. BUCHANAN: John, there's only 100 -- according to the generals, there's only 100 -- or, excuse me -- al Qaeda in Afghanistan, and we're fighting the Taliban. But let me say this. Look at that $345 billion. Imagine what the United States could have done, frankly, for Middle East peace, for our own internal security in this country.

But the generals, but the generals, John, McChrystal and Petraeus, are themselves saying there's no military solution here. They're talking about working with the Taliban. McChrystal said the Taliban are part of the fabric of Afghanistan. Karzai himself is moving much more advanced even toward Omar, Mullah Omar. So I think we are moving toward a negotiated settlement that'll get us out of there.

MR. MCLAUGHLIN: Let me ask Eleanor this. Is there a larger issue here, and that's the issue put forth by the Cabinet officer of the military, Gates, Bob Gates? Bob Gates says we want to bring the problem of terrorism to them, and we therefore have troops all over the world. But we're bringing it to them in Afghanistan. Is that doctrine fundamentally flawed?

MS. CLIFT: Well, that was the same thing they said in Iraq, and eventually it took hold, and that is that whatever government structure is installed there has to want to defeat the terrorists more than we do. And I think that has happened in Iraq. And I think in Afghanistan the problem is that the people, they don't like the government and they don't like the Taliban, and they're sort of -- they're kind of up for grabs.

MS. CROWLEY: There's one point we're missing.

MS. CLIFT: And the administration is having some effect actually paying people for their loyalty.

MR. MCLAUGHLIN: Bye-bye.

END.