Copyright (c) 2010 by Federal News Service, Inc., Ste. 500 1000 Vermont Avenue, NW, Washington, DC 20005, USA. Federal News Service is a private firm not affiliated with the federal government. No portion of this transcript may be copied, sold or retransmitted without the written authority of Federal News Service, Inc. Copyright is not claimed as to any part of the original work prepared by a United States government officer or employee as a part of that person's official duties. For information on subscribing to the FNS Internet Service, please visit or call(202)347-1400

MR. MCLAUGHLIN: Issue One: Obama Shake Out.

President Obama is shaking out his staff. Number one economic advisor Larry Summers is leaving his post after a little more than a year and a half. Dr. Summers is the director of Mr. Obama's National Economic Council. Summers was the chief architect of the United States response to the global financial crisis that is still hurting the U.S. And last year's $787 billion stimulus program was largely Summers' idea, and he defended it.

LAWRENCE SUMMERS (director, National Economic Council): (From videotape.) I think the stimulus has had a significant impact -- tens of thousands of teachers and cops across the country, $53 billion delivered to American families, 3,000 projects underway; that the calculations suggest that its impact is only going to increase, that we're also seeing 200,000 mortgages have already been relieved. It's going to be 500,000 by November 1st. So I think we're on the right track.

MR. MCLAUGHLIN: Dr. Summers is the third high-profile member of President Obama's economic team to quit before the end of the president's first two years in office.

Budget Director Peter Orszag was the first to leave, in July. Christina Romer, chair of the Council of Economic Advisors, was next. The White House is also expecting Chief of Staff Rahm Emanuel to leave the White House to run for mayor of Chicago. If Rahm Emanuel leaves, he will be the fourth of President Obama's closest advisors to have left since July.

Question: After 20 months, is this presidential staff turnover normal? Pat Buchanan.

MR. BUCHANAN: This is not terribly unusual if you've got a presidency in a little bit of trouble, John. When you came into the White House in '71, John Connally came in at Treasury. Dave Kennedy was out. Nixon closed the gold window, let the dollar float. He sent Arthur Burns to the Federal Reserve. They gunned the money supply to $23 billion deficits. And he won 49 states. That was enormously dramatic in terms of a change.

This is nothing like that. I mean, Rahm has gone out there because there's an opening for mayor's office, and secondly, because he's really been hammered and they've had a bad time. But I don't think this is extraordinarily unusual. I don't see any signs of panic here.

MR. MCLAUGHLIN: Nixon had a Vietnam War on his hands.

MR. BUCHANAN: Well, Nixon -- our election was somewhat disappointing. And he took that big move, took out his -- John Connally was Lyndon Johnson's man, the governor of Texas who had taken Texas away from him, and moved him into Treasury. That is a big, big --

MR. MCLAUGHLIN: How long did Connally serve?

MR. BUCHANAN: Two years, until he went out and became the chairman of --

MR. MCLAUGHLIN: Well, this is not even two years. It's a year and a half.

MR. BUCHANAN: No, no. He served for two years, then became chairman of Democrats for Nixon. MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: It's not unusual at the midway point -- and we're getting to the midway point -- to have a changing of the top personalities of burnout jobs. What is a little unusual here is that they're announcing it before the midterms so that the exit after the midterms won't look necessarily tied to the disaster, if a disaster unfolds.

I must say, nobody's going to miss Larry Summers. He was part of the culture that created the crisis that we had. And I don't think that he ever had much credibility certainly with the left of the party and with ordinary people. And the prescriptions that he put in place basically rescued Wall Street and the banks but didn't do much for average folks.

MR. MCLAUGHLIN: Is that the culture you're talking about?

MS. CLIFT: Yes. And Timothy Geithner, who is now -- remains the thin reed that we're all leaning on, I think at one point said, "We saved the economy, but we lost the American people." And he's right about that.

MR. MCLAUGHLIN: Michelle, welcome.

MS. BERNARD: Thank you. Good to be back.

MR. MCLAUGHLIN: What do you think of this question?

MS. BERNARD: I don't think it's unusual at all. Larry Summers allegedly is leaving because he doesn't want to give up his tenure at Harvard. So, you know, they said he will serve through the end of the year. We are getting closer to the midterm -- you know, the midpoint of the president's first term in office. And this is what you see happen. People leave.

And, quite frankly, the president needs people like Larry Summers to leave. He has been terribly unpopular, as Eleanor said. The American public, whether we are talking about small businesses, big business, the middle class or people who live in underserved communities, are very, very unhappy with the state of the economy. Many people blame that on Larry Summers. Many people blame it on the president being tone deaf. But this is a time -- if you're going to clean house, do it now and do it before disaster strikes in November.

MR. MCLAUGHLIN: Do you think if unemployment were down around 6 percent that these people would be leaving?


MR. MCLAUGHLIN: In other words, do we have an economy now that would justify their staying, from the point of view of their personal careers? MR. ZUCKERMAN: No, look, Larry Summers advocated a much larger stimulus package than the $800 billion. He advocated $1,300,000,000,000, as did Christina Romer. Okay, that was not accepted politically. That was not Larry Summers' fault. Larry Summers is a brilliant macroeconomist, maybe the best one in the country. And it's unfair to look at what happened to that stimulus program, which was politicized to such an extraordinary degree, both by the Congress and by the White House.

That's why that program was not nearly as effective as it should have been.

As far as Rahm Emanuel, there is clearly going to be an opportunity that nobody expected, which is that Mayor Daley, who'd been the mayor of Chicago for 20 years -- fulfilling a family obligation, of course -- (laughter) -- he announced he's going to resign.

MR. MCLAUGHLIN: Summers just got back from a trip to Beijing, and he saw Wen Bao (sic) over there -- Wen Jiabao. And he tried to get Wen Jiabao to monetarize (sic) his money the proper way instead of what he's doing with it. And that didn't work. Do you think there's any connection between that failure to get Wen Jiabao -- (inaudible)? In fact, the president himself met with him.


MR. MCLAUGHLIN: Do you want to talk about that?

MR. ZUCKERMAN: Well, the whole -- the main issue here, as far as we are concerned, the United States economy is concerned, is that the yen (sic/means yuan) is kept at an artificially low level.

MR. MCLAUGHLIN: What does that do to us?

MR. ZUCKERMAN: Okay, and what that means is their exports are more competitive and our exports are less competitive in China. So what that means to us is that we have fewer jobs. We have fewer manufactured goods manufactured at home because --

MR. BUCHANAN: John, that's --

MR. ZUCKERMAN: -- they can do them more cheaply.

MR. MCLAUGHLIN: There's also --

MR. ZUCKERMAN: That's not the only reason, by the way, why we're having trouble, but that's one of the reasons.

MR. BUCHANAN: It's the trade -- MR. MCLAUGHLIN: There's also the flight of business over to China to produce.

MR. ZUCKERMAN: That's correct.

MR. MCLAUGHLIN: And that yields a big return on their money.

MR. ZUCKERMAN: But that's not the only reason. The other reason, frankly, is that the Chinese -- look, just to pick one example, okay, we were the first country to manufacture computers. There are 166,000 people who work in the computer industry today in the United States. There are a million and a half of them who work in Asia. We've lost the ability to scale up.

MS. CLIFT: Yeah, but --

MR. ZUCKERMAN: Just a minute.

MR. MCLAUGHLIN: Hold on. I want to --

MR. ZUCKERMAN: That has nothing to do with the yen (sic/means yuan) or --

MS. CLIFT: Yeah, but --

MR. MCLAUGHLIN: I want to know if this conversation that took place between the president, which is written up by Sanger in Friday's New York Times, by the way --

MR. BUCHANAN: Obama's saying --

MR. MCLAUGHLIN: -- very well, and I noticed he got it and he put it on the front page.

MR. BUCHANAN: John, Obama is saying it's the Renminbi, the Chinese currency.

MR. ZUCKERMAN: Renminbi.

MR. MCLAUGHLIN: He's saying this --

MR. BUCHANAN: He's saying, in effect -- he's saying, in effect, "Look, you've got to let your currency float and rise up in value, because you're sucking our industry" --


MR. BUCHANAN: -- "our jobs" --


MR. BUCHANAN: -- "our technology out. We're running a trade deficit with you, the biggest in the world. And if you don't do it, the Congress of the United States is going to put tariffs on Chinese goods."

MR. MCLAUGHLIN: What do you think of that action on --

MR. BUCHANAN: That should have been done 20 years ago.

MR. MCLAUGHLIN: All right.

MS. CLIFT: Well --

MR. MCLAUGHLIN: In other words, "We can take some action against you that you're not going to like."

MS. CLIFT: Yeah, but --

MR. ZUCKERMAN: Wait a minute.

MS. CLIFT: You take that action --

MR. ZUCKERMAN: The last thing you want to have is a trade war.

MS. CLIFT: My turn now.

MR. ZUCKERMAN: The last thing you want --

MS. CLIFT: My turn now.

MR. MCLAUGHLIN: All right, let Eleanor in.

MS. CLIFT: If you take that action, you invite a response back.

MR. ZUCKERMAN: That's right.

MS. CLIFT: But to get back to the beginning topic here about the next Treasury secretary, this is an opportunity for the president. This is not only somebody -- not Treasury secretary; it's actually advisor. We still have Geithner. But it's an opportunity also to send a signal to the world about attitudes about international economics. It's not just about putting people back to work.

So Summers, fairly or unfairly, is seen as a symbol of policies that didn't go far and aren't really working. So who you put in place sends signals, not only to this nation, but to the world.

MS. BERNARD: John --

(Cross talk.)

MR. MCLAUGHLIN: What do you think about Obama leaning heavily on Wen Jiabao? Or do you?

MR. ZUCKERMAN: Look, it's a very important -- MS. BERNARD: Look, the United States appears as if, any day now, we are going to become a wholly owned subsidiary of China. This is very important.

The president really has to think very closely about how -- what China does with how its dollar affects our economy, in conjunction with all of the people, all of the economic advisors who have left the White House. He's got to get good people in there and turn this economy around on an international level as well as --

MR. MCLAUGHLIN: Do you think that --

MR. ZUCKERMAN: China has a long way to go before they're a threat to the United States. They affect our trade balances. They affect some of our manufacturing jobs. Their per capita income is $6,000. Ours is $46,000.

MR. MCLAUGHLIN: Earlier --

MR. BUCHANAN: They affect us --

MR. MCLAUGHLIN: Wait a minute. Earlier on this program, I read a piece from the front page of the Financial Times about Jeffrey Immelt. Jeffrey Immelt said flat out he thought that China did not want anyone else to succeed. It was a damning quote.

MR. BUCHANAN: China --

MR. MCLAUGHLIN: You remember that.

MR. ZUCKERMAN: Yes, I remember that very well. I'm not sure that is the case. Look, the Chinese are very, shall we say, focused on their own economic well-being, which is perfectly understandable.

MR. MCLAUGHLIN: But that depends upon their competition with the other. If the other does not succeed, they go up.

MR. ZUCKERMAN: That's right.



MR. BUCHANAN: John, they're economic nationalists. They are -- everything they do is for China. They hold the value of their currency down because it sucks jobs and plants into China. MR. MCLAUGHLIN: We are agreed that Summers' job, the job in itself, is an important job, is it not?

MR. ZUCKERMAN: Yes, it is.

MR. MCLAUGHLIN: He's head of the national -- the economic advisors to the president.


MR. MCLAUGHLIN: Who's going to take his place?

MR. BUCHANAN: Look, I'll tell you, I hope it's some guy with real-world experience and not simply academic experience.

MS. CLIFT: Well, the name --

MR. MCLAUGHLIN: Do you think Jeffrey Immelt will take his place?


MR. ZUCKERMAN: No, I don't think Jeffrey Immelt would.

MS. CLIFT: The names that --

MR. ZUCKERMAN: But somebody like Jeffrey Immelt would be the right person.

MS. CLIFT: The names they're floating -- the names they're floating are CEO types and also Laura Tyson, who was in the Clinton White House.


MR. BUCHANAN: Free trader -- perfect.

MR. MCLAUGHLIN: Immelt was the one that spoke to the predatory practices of China. Why don't they put him in there?

MR. ZUCKERMAN: Well, who knows? Somebody like that --

MS. BERNARD: He might not want the job. They might offer it to him. He might not want the job.

MR. BUCHANAN: He's got a good job.

MS. BERNARD: He's got a great -- I don't know -- I have absolutely --

MR. ZUCKERMAN: He couldn't handle the higher pay in the White House. (Laughter.) But let me just say one. Okay, one of the signals they have to send is not to China. It's to the American business community. And therefore, I think it would be useful if they found an American businessman who had a good sense of macroeconomic policy.

I'll give you an example. I mean, Bob Rubin was the perfect example of somebody who could bring both policy and an understanding of it.

MR. MCLAUGHLIN: What about Rubin?

MS. BERNARD: No, no.

MR. ZUCKERMAN: I don't know that he would do it. He has his own problems in terms of serving at this point.

MR. MCLAUGHLIN: Would you take the job?

MR. ZUCKERMAN: Would I take the job?


MR. ZUCKERMAN: I'd have to check the salary. (Laughter.)

MS. CLIFT: You know, some people --

MR. MCLAUGHLIN: Well, since when have you been hurting?

MR. ZUCKERMAN: No, no. That's a serious job and would be a very interesting job.

MS. CLIFT: Some people do things for other than salary.

MR. ZUCKERMAN: It's not for me for the --

MR. MCLAUGHLIN: All right. Well, think about it on your flight home tonight in your own plane.

MS. BERNARD: (Laughs.)

MR. MCLAUGHLIN: I think Summers would be -- I think -- what am I trying to say? I think Immelt would be great to replace Summers.


MR. MCLAUGHLIN: Issue Two: Independents Rule?

NICOLE KURAKOWA (Independent Women's Forum): (From videotape.) 2009 was the year of being angry. 2010 is the year of voters at the polls. So I think we're going to see a lot of independents mobilize. We've seen a lot of them through the tea party, through other sources, get out and get active. MR. MCLAUGHLIN: Almost two out of five voters today say that they are neither Democrat nor Republican. They are independent. This is no small number. It could shake up the midterm elections, just five weeks away. Fifty-two percent of independents voted for Obama in the 2008 election. Now they appear to be changing their tune.

The respected pollster, Douglas Schoen, conducted a poll of independent voters, which found that independents are now tilting towards the GOP -- 50 percent Republican, 25 percent Democrat. The same poll says that 48 percent of independent voters view the tea party positively.

The Wall Street Journal, the Los Angeles Times and Politico, among others, reported on the poll, which was underwritten by the Independent Women's Voice, a sister organization of the Independent Women's Forum.

Did I get that right, Michelle?

MS. BERNARD: You got it right.

MR. MCLAUGHLIN: The Voice is the sister organization to the Forum.

MS. BERNARD: Absolutely.

MR. MCLAUGHLIN: And you're head of the Independent Women's Forum.

MS. BERNARD: I'm head of the Independent Women's Forum. Heather Higgins heads the Independent Women's Voice.

Let me tell you why we have independents. I will tell you what our poll told us. One thousand likely voters have told us that, whether you look at Democrats or Republicans, this is a beauty contest and all the contestants are ugly. They don't like Democrats. They don't like Republicans. And for that reason --

MR. BUCHANAN: John, let me get in here.

MS. BERNARD: -- people are unaffiliated.

MR. MCLAUGHLIN: I thought they'd like the Republicans.

MS. BERNARD: They are leaning Republican.

MS. CLIFT: Lots of luck, Pat.

MS. BERNARD: They are leaning Republican.

MR. BUCHANAN: Independents -- MS. BERNARD: They are leaning --

MR. MCLAUGHLIN: All right, let her finish -- leaning Republican.

MS. BERNARD: They are leaning Republican, despite the fact that they don't like Republicans.

MR. MCLAUGHLIN: What does that mean, 60-40 pro-Republican?

MS. BERNARD: They are leaning Republican in large numbers, simply because they feel that the Democratic Party --

MR. MCLAUGHLIN: What's the large number? What's the percentage?

MS. BERNARD: It is over 50 percent.

MR. BUCHANAN: John, every independent --

MR. MCLAUGHLIN: Vote pro-Republican.

MR. BUCHANAN: Every independent, just about, is a former Republican or a former Democrat. Scott Brown won because all those former Democrats were sick of their party. And our guys are winning now because they're sick of the Democratic Party. They were sick of the Republicans in 2008. This rise of the independents is a vote against both national parties --

MS. BERNARD: Absolutely.

MR. BUCHANAN: -- both of which have failed the country in that they can't balance our budget, win our wars, or basically secure our borders.

MS. CLIFT: Right. The independents or "decline to state" are the biggest bloc of voters in the country.

MS. BERNARD: And they're --

MS. CLIFT: And Obama won them in 2008, and now they're leaning Republican, many for the same reason --

MR. MCLAUGHLIN: Why? Why have they turned against Obama?

MS. CLIFT: Because they're mostly angry at the party in power. But they don't like the Republicans. And so the challenge for Obama and the Democrats --

MR. MCLAUGHLIN: Do they like bailouts?

MS. CLIFT: -- is to make this --

MS. BERNARD: They don't like bailouts. MR. ZUCKERMAN: No, they don't.

MR. MCLAUGHLIN: Do they like the stimulus?

MS. CLIFT: They would like bailouts if it were for them.

MR. MCLAUGHLIN: Do they like the stimulus package?



MS. CLIFT: No, they don't like any of the government programs.

MS. BERNARD: They want you to cut taxes. They want you to cut spending.


MS. BERNARD: They do not like this new proposed, you know, stimulus package. They're against it.

MR. ZUCKERMAN: They're against --

MS. CLIFT: But don't touch their Medicare or Social Security.

MR. ZUCKERMAN: Oh, no, no. They're against the health-care program that was passed --

MS. BERNARD: Absolutely.

MR. ZUCKERMAN: -- by incredible numbers.

MR. BUCHANAN: Obamacare.

MR. ZUCKERMAN: They are basically opposed --


MR. ZUCKERMAN: Because they think it's going to raise the cost of health care, and it didn't --

MR. MCLAUGHLIN: What about the fact that it (incorates ?). It (incorates ?). In other words, it obliges you to have health insurance.

MR. BUCHANAN: The individual mandate?

MR. MCLAUGHLIN: The mandate, right. What about the mandate?

MR. BUCHANAN: Libertarians --

(Cross talk.) MR. BUCHANAN: The libertarians are dead against that.

MS. BERNARD: The position is that -- what independents are telling us is that we want to make -- that they want to make their own decisions.

They don't want government making decisions for them. It is just as much value-based --

MS. CLIFT: Well, with health care --

MS. BERNARD: -- as it is dealing with the economy.

MS. CLIFT: -- it's a question of whether the insurance companies make your decisions or many of the benefits have gone into effect this week. You can't get kicked off of your health-care plan if you have --

(Cross talk.)

MR. MCLAUGHLIN: -- anything about deficit spending and the ruinous impact of that, particularly on your voting strength?

MS. CLIFT: No, because I'm recalling all that time you made that an issue when George W. Bush was in power. I don't remember it ever coming up, John. I think the ruinous --

MR. MCLAUGHLIN: Oh, I think I spoke about that almost every other week. (Laughter.) Didn't I, Pat?

Exit question: On a political probability scale, zero to 10 -- zero meaning no likelihood whatsoever, 10 meaning metaphysical certitude -- what is the likelihood that the Democrats will win back a majority of independents -- now they're favoring Republicans -- by Election Day? Zero to 10.

MR. BUCHANAN: It's minus 473 degrees, which is absolute zero, where everything can't move, John.


MR. BUCHANAN: They're not going to get back the independents. It's ridiculous.

MS. CLIFT: I don't think they're going to get back a majority of independents. But we live in such a tumultuous political climate, I'm going to give them a three. (Laughs.) MS. BERNARD: Zero. It's not happening, at least not by November.



MR. ZUCKERMAN: Yeah, certainly not happening by November. And, if anything, it's going to get worse between now and the election.

MR. MCLAUGHLIN: That's too cruel a figure. I will say one. (Laughter.)

Issue Three: Pentagon Feather-Bedding.

We spend too much on national defense -- nearly $700 billion. That's what Secretary of Defense Robert Gates believes and says. He wants to slash $100 billion from the Defense budget over five years. The current Defense budget is almost one fifth of the total U.S. budget, and the total U.S. budget is $3.5 trillion.

DEFENSE SECRETARY ROBERT GATES: (From videotape.) The culture of endless money that has taken hold must be replaced by a culture of savings and restraint.

MR. MCLAUGHLIN: Secretary Gates is practicing what he preaches. He said that last year the department made more than 30 tough choices, canceling or curtailing major weapon systems that were either performing poorly or in excess to real-world needs -- about $330 billion worth.

Besides hardware-heavy, the Pentagon is also personnel-heavy, what Gates calls "brass creep" -- generals and admirals, nearly 1,000 of them; deputy assistant secretaries of Defense, 530. In 1960, there were 78. As for musicians in the military, there are more U.S. military band members than our 6,000 Foreign Service officers.

Chairman of the Joint Chiefs of Staff Admiral Michael Mullen concurs with Secretary Gates on cutbacks.

ADM. MICHAEL MULLEN (chairman, Joint Chiefs of Staff): (From videotape.) One of the things that Secretary Gates is addressing, and I think rightfully so, is the whole issue of what he calls brass creep, and over the last decade. And I think, again, that's something that we need to look at not just on the military side. There's a big civilian part of the creep which has occurred as well.

MR. MCLAUGHLIN: Question: Why are Mullen and Gates singing the praises of frugality? I ask you, Mort. Didn't you serve on some commission with regard to military spending?

MR. ZUCKERMAN: Yes, I was on the Defense Administration Board, in effect. We looked at the management -- the Defense Management Board. MR. MCLAUGHLIN: Under Rummy?

MR. ZUCKERMAN: Yeah, under Rumsfeld. And he did a very good job of trying to get costs under control. The politics of it are very difficult, because every extra base, every -- we make our own glasses for the military.

MR. MCLAUGHLIN: You mean, the states figure in this too.

MR. ZUCKERMAN: The states. And the congressmen and the senators --


MR. ZUCKERMAN: -- they all focus on it. This is patronage. And we are now at a point where you can't afford it. There's also extra military equipment that we don't need that is, in a sense, forced upon us by the states where they manufacture it. So there's a huge amount of waste in it.

MR. MCLAUGHLIN: So Congress is clawing at the budget of the Pentagon.

MR. ZUCKERMAN: Absolutely.

MR. BUCHANAN: Hey, John, you know where you get the money?

MR. MCLAUGHLIN: Individually. What?

MR. BUCHANAN: You've got 700 to 1,000 foreign bases. What's going to happen, American troops are going to start coming home from Korea and Okinawa and northern Europe, and, quite frankly, because we can't afford it. And the other cost is these two wars we've got going. And eventually this whole thing is coming down.

MR. MCLAUGHLIN: Wait a minute, Pat. The Iraq war is winding down. Secondly, Afghanistan has a terminal date on it.


MR. MCLAUGHLIN: This flows into --

MR. BUCHANAN: What I'm saying is --

MR. MCLAUGHLIN: -- (a pattern ?). It's now time to do it. We can decrease the size of the military.

MR. BUCHANAN: I agree with you that they ought to do it. The empire is coming down.

MS. CLIFT: Well, yeah, but the money that fuels the empire is not coming down. Secretary Gates has taken some, I think, bold stands here, trying to chip away at the gold-plated military culture and some of these weapon systems that have -- are very expensive and have no relation to modern warfare.

But, you know, Dwight Eisenhower, who had a lot more credibility than the Defense secretary -- although I think Gates is a class act -- Eisenhower couldn't tame the military-industrial complex. And I think the chances of any of these cuts going through, especially with the new Republican Congress, are minimal.

MR. MCLAUGHLIN: Michelle, do you think that there's any other factor in play here? For example, what are they -- what is the military primarily concerned about? They're primarily concerned about terrorism, are they not?

MS. BERNARD: Well, they -- it depends on who the president is. I mean, we -- you know, they are dealing with the war in Iraq, the war in Afghanistan, with military bases all over the world. I think that what Gates is suggesting here is important, but we also want to make sure that we don't put the country in a position where our armed forces are in any type of danger whatsoever.

MR. MCLAUGHLIN: Is China back --

MS. BERNARD: But when you talk about modern warfare, for example, a report said that in 2001 the people in Afghanistan sent out a request for horse (feed ?). There was a time where people said, "We're in modern warfare. We don't need horses. We don't need a cavalry." Well, our men in Afghanistan are taking the war to the Afghans and trying to protect people on horses. You've got to be careful.

MR. MCLAUGHLIN: Is China back in play here, namely --

MR. BUCHANAN: China --

MR. MCLAUGHLIN: -- the South China Sea?

MR. BUCHANAN: Yeah, China is back in play in terms of naval power. But Dwight Eisenhower, whom you mentioned, told Jack Kennedy, "Bring the troops home, all of them from Europe, 300,000. Otherwise you'll have dependencies." That's what we've got.

MR. MCLAUGHLIN: What did he also warn against?

MS. CLIFT: Well --

MR. BUCHANAN: The military-industrial complex.

MR. MCLAUGHLIN: The military-industrial complex, meaning there's money to be made out there. Issue Four: Velma and Barack.

The scene: A Washington, D.C. town-hall meeting held Monday of this week. President Obama takes questions from the audience. A remarkable exchange occurs.

(Begin videotaped segment.)

VELMA HART: I am a chief financial officer for a veterans- service organization and vets here in Washington. I'm also a mother. I'm a wife. I'm an American veteran. And I'm one of your middle- class Americans. And quite frankly, I'm exhausted. I'm exhausted of defending you, defending your administration, defending the mantle of change that I voted for --


MS. HART: -- and deeply disappointed with where we are right now. I've been told that I voted for a man who said he was going to change things in a meaningful way for the middle class. I'm one of those people. And I'm waiting, sir. I'm waiting. I don't feel it yet. And I thought, while it wouldn't be in great measure, I would feel it in some small measure.

I have two children in private school, and the financial recession has taken an enormous toll on my family. My husband and I joked for years that we thought we were well beyond the hot-dogs-and- beans era of our lives.


MS. HART: But quite frankly, it's starting to knock on our door and ring true that that might be where we're headed again. And quite frankly, Mr. President, I need you to answer this honestly. Is this my new reality?

PRESIDENT OBAMA: What I am saying is that we're moving in the right direction. And if we are able to keep our eye on our long-term goal, which is making sure that every family out there, if they're middle class, that they can, you know, pay their bills, have the security of health insurance, retire with dignity and respect, send their kids to college; if they're not yet in the middle class, that there are ladders there to get into the middle class if people work hard and get an education and apply themselves, that's our goal.

(End videotaped segment.)

MR. MCLAUGHLIN: Question: Why do Velma and people like her feel helpless while the political and business elite think everything is coming out roses? I ask you. MS. BERNARD: You know, this is -- that exchange was absolutely extraordinary, particularly if you -- you know, people don't like to talk about it, but if you look at the aspect of race in this, you know, people went into 2008 believing that African-Americans supported Barack Obama simply because he was black. And people have always assumed, going into 2012, he's going to get 100 percent of the black vote.

So for an African-American woman to go out during this town-hall meeting and publicly question the nation's first African-American president about what is happening within her family, not just as a black family but in terms of all Americans, and then you look at the fact that the unemployment rate for the majority of the country is hovering around 10 percent and in the African-American community it's 17 percent, it makes me wonder what's happening with Barack Obama within the black community. What is his support going to look like in 2012? You don't have a lot of people talking about it, but I think that is critical.

MR. MCLAUGHLIN: Do you think the black community should be proud of this kind of reaction of this black woman?

MS. BERNARD: No, I don't think it's a matter of whether or not the black community should be proud. I think that it is instructive for people who believe that Barack Obama will have the black vote simply because he's black.

MS. CLIFT: Well, in follow-up interviews --

MR. MCLAUGHLIN: You mean that when push comes to shove, he may not have the kind of black strength that he had going into --

MS. BERNARD: In 2008 --

MR. BUCHANAN: Hey, John --

MS. BERNARD: -- because people want jobs more than they want a black president.

MR. MCLAUGHLIN: There's something very ennobling about what she's saying.

MS. CLIFT: That took a lot of -- that took a lot of courage. And she was spot on, because she expressed what a lot of this president's supporters are saying and feeling. But she went on in subsequent interviews to say she continues to back the president. But what happens is if you have this lack of enthusiasm, people stay home. And that's what they're looking at in this.

MR. MCLAUGHLIN: Do you think --

MR. BUCHANAN: John -- MS. CLIFT: And so I think this makes it personal.

MR. BUCHANAN: This was a stab in the heart of Barack Obama. This is an authentic woman who, as you say, was really simpatico with him, defended him, probably loved him, probably was crying at the inaugural. And then she tells him this. He's got to go to back to that White House, I think, and feel very wounded.

MR. MCLAUGHLIN: True or false: Majority Leader Harry Reid will be defeated by Sharron Angle for his Senate seat this fall. Yes or no?

MR. BUCHANAN: You betcha.

MR. MCLAUGHLIN: He'll be defeated.

MS. CLIFT: He will not be defeated.

MR. MCLAUGHLIN: He will not be defeated.

MS. BERNARD: He'll be defeated.

MR. MCLAUGHLIN: He'll be defeated.

MR. ZUCKERMAN: He will not be defeated.

MR. MCLAUGHLIN: He will be defeated. (Laughter.)