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MR. MCLAUGHLIN: Issue One: "Obamacare" Unconstitutional?

KEN CUCCINELLI (Virginia attorney general): (From videotape.) We know this case is really not just about health insurance. It's about liberty and it's about the outer boundaries of the constitutional power.

MR. MCLAUGHLIN: The big winner this week: Ken Cuccinelli, attorney general, Virginia. The big loser: Barack Obama, president, U.S. And federal District Court Judge Henry Hudson ruled that part of President Obama's health-care plan, now law, is unconstitutional. That unconstitutional provision is known in bureaucratic argot as the individual mandate. The individual mandate mandates that all Americans carry health- care insurance or they get fined. That fine ranges from $750 per individual to $2,250 per household -- big money. The Obama administration pinned its hopes of making health insurance obligatory on the U.S. Constitution and its commerce clause. Quote: "The Congress shall have power to regulate commerce with foreign nations and among the several states and with the Indian tribes," unquote -- Article I, Section 8, Clause 3.

Mr. Obama argues that the health-insurance costs for the uninsured are passed on to the insured, impacting the entire national market.

ATTY GEN. CUCCINELLI: It goes beyond the power that Congress has under the commerce clause of the Constitution.

MR. MCLAUGHLIN: AG Cuccinelli says the commerce clause has never empowered the government to force anyone to buy health insurance. And federal District Court Judge Henry Hudson agrees. He ruled that the mandate, quote, "exceeds the constitutional boundaries of congressional power," unquote.

Mr. Obama says no big deal. Rough issues always get a rough ride.

PRESIDENT BARACK OBAMA: (From videotape.) That's the nature of these things. You know, when Social Security was passed, there were all kinds of lawsuits. When the Civil Rights Act was passed and the Voting Rights Act was passed, there were all kinds of lawsuits.

MR. MCLAUGHLIN: Question: Is this case now on the bullet train to the Supreme Court, Pat?

MR. BUCHANAN: It certainly is. And frankly, I think it ought to be expedited and they ought to skip the appellate court, because it's going to the Supreme Court. It's a critical issue.

Cuccinelli has latched on to this one issue John, that individual mandate requiring people to buy something that they don't want to buy. And he said this is really outside the realm of the Constitution of the United States. I think that's the strongest point.

If this goes down on that point, I think the whole "Obamacare" goes down. And I think Cuccinelli stepped outside the group of other attorneys general to do this, John. And he is a former graduate or he is a graduate of Gonzaga High School, John, the attorney general of Virginia, and he's on the fast track to higher office.

MR. MCLAUGHLIN: That hiring is going to be slowed down if there's uncertainty about this situation. That's going to affect the unemployment rate. MS. CLIFT: Well, first of all, I think even if the Supreme Court strikes the employer mandate -- and I think that's not at all certain, because I think there are valid arguments that purchasing health insurance should be mandated because of the impact that it has on everybody else. If we all have to pay for the free riders, you know, that's not fair either. So I think there are constitutional arguments on both sides.

There have been two other federal judges that have upheld the mandate. So this is one judge. And Judge Henry Hudson happens to be a stakeholder in a political consulting firm that advises candidates on how to run against health-care reform. So he's hardly got an unbiased view here.

And there's another lawsuit coming up in Virginia which is going to challenge him. The president is right. There's going to be assaults on this law. The Congress is going to fight it over the next two years. But as the benefits kick in, you're also going to be fighting against public opinion, which I believe is going to overwhelmingly support this law eventually, just like it has Medicare and Social Security.

MS. CROWLEY: Well, those public-support numbers have gone nowhere but down since the debate over "Obamacare" began. In fact, this week a new ABC News/Washington Post poll shows it at an all-time low, support for "Obamacare" at 43 percent.

Eleanor mentioned two federal judges that upheld the constitutionality of the individual mandate. However, in both of those cases, neither one of those cases came out of a state-based lawsuit. They were individual lawsuits. This judge, Henry Hudson, that ruled this week that it was unconstitutional, came out of the first state-based lawsuit.

This week we also had another round of arguments in Florida. That case concerns 20 states' attorneys general. The judge in that case, Roger Vinson, has indicated that this is a huge expansion of government and expansion of Congress's authority to require an American, as a basic condition of living in this country, to buy a good or a service.

And I have to tell you, John, it's generally not good for a president to have his centerpiece legislation questioned on constitutional grounds. And that's why every other major piece of social legislation -- Social Security, civil rights, Medicare -- spent years percolating through the political process and so on, so that by the time voting commenced in the Congress, all of these issues were vetted and it had huge bipartisan and public support.

"Obamacare" has had none of that.

MR. MCLAUGHLIN: Mort, what are the economics of this? What are the economics of the pool being larger versus the pool being smaller? If people are compelled to buy insurance, what does that do to the pool and what does it do to the economy, and what does it do to hiring?

MR. ZUCKERMAN: Well, it's going to make the -- if this piece of it gets ruled to be unconstitutional, it's going to make the cost of health care for those people who are going to be covered go up dramatically, because the costs will not be spread, which was the whole purpose of this thing was to try and keep those costs down.

Now, that is going to have a big effect on -- well, in the first place, health care already has a big effect on the willingness of people to hire. When that health-care bill did go through, it really stopped a lot of people who didn't want to take on the risks and the costs of the new health-care program. It's going to have an even greater effect at a time when employment is such a critical issue. So until this uncertainty is eliminated from that equation, I think it's going to adversely affect employment.

MR. BUCHANAN: That's another --

MR. MCLAUGHLIN: What's in the public interest?

MR. BUCHANAN: Take it to the Supreme Court now.

MR. MCLAUGHLIN: What's in the public interest, to get that poll (sic) bigger -- get the pool bigger?

MR. ZUCKERMAN: In that sense, in the sense that it will lower the overall average cost of health care, yes.

MR. MCLAUGHLIN: Does it mean unnecessary MRIs and other practices, unnecessary exams, a multiplication of those, because the pool is bigger? Do you follow me?

MR. ZUCKERMAN: Well, not necessarily. I mean, it's possible that it does. We already have a system in which there is inadequate control over a lot of these -- MS. CLIFT: As --


MR. ZUCKERMAN: Just a minute -- a lot of these health-care expenses.

MR. MCLAUGHLIN: Work that into your exit-question answer.

Exit question: In his post-election news conference, president Obama said he didn't want to, quote, "relitigate" health care. Will he get his wish, yes or no? Pat Buchanan.

MR. BUCHANAN: No, he's not going to get his wish. And John, the very fact you and Mort are arguing about the details of what's going to happen, this ought to be expedited right up to the Supreme Court, because, as Monica said, you have a state versus the federal government. That should go straight up.


MS. CLIFT: Well, I'm in favor of the judicial process. And just because you think the conservative majority is going to rule --

MR. BUCHANAN: It's going to get there, Eleanor. Why not do it now?

MS. CLIFT: It's going to get there, but why eliminate the interim steps where other people get to argue it back and forth?

MR. BUCHANAN: Because it's going there anyhow.

MR. ZUCKERMAN: Everything is going to be suspended until the Supreme Court rules.

MS. CLIFT: I want to point out that candidate Barack Obama did not support the mandate. Hillary Clinton did, and he often criticized her for it. And his position was that if you make the premiums affordable, you can get enough people in the pool. This is still a private insurance market, and the insurance companies are out there. They want all this business. And nobody has come up with an answer. For somebody who gets sick and can't pay it, they have their freedom to not have health insurance, but who pays the bills?

MS. CROWLEY: Well, it's a great irony that now Barack Obama is in the position of defending Hillary Clinton's position on the individual mandate.

Look, ultimately it is going to be decided in the Supreme Court. The outstanding question about that is whether the newest member of the Supreme Court, Elena Kagan, will recuse herself, because as solicitor general she was arguing on behalf of "Obamacare". The way the composition of the court is right now, Anthony Kennedy would be the swing vote.


MS. CROWLEY: If he goes with the liberals and it's a 4-4, assuming Kagan recuses herself, then the judgment of the lower court would stand.

MR. MCLAUGHLIN: Obama's not going to get his wishes. He has to relitigate this.

MR. ZUCKERMAN: No way. I mean, that's just a fanciful notion. You have legislation like this which, for the first time, mandates people not necessarily into activity, but from inactivity. And that's one of the -- it may sound like a slight difference, but it's a great difference in law. All of this is going to be litigated at the Supreme Court level. And until then, everything is going to be suspended. It's just in the nature of it.

MR. MCLAUGHLIN: As the legal eagles would say, this is just getting ripe for relitigation.

Issue Two: Coming Out.

PRESIDENT OBAMA: (From videotape.) This year I will work with Congress and our military to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are.

MR. MCLAUGHLIN: President Obama is one step closer to achieving his goal -- the repeal of the U.S. military policy of "don't ask, don't tell." "Don't ask, don't tell" mandates that homosexuals serving in the Army, Navy, Marines or Coast Guard stay in the closet -- don't ask and don't tell.

This week the House of Representatives voted to overturn "don't ask, don't tell." The policy started in 1993, 17 years ago. The head of the Joint Chiefs of Staff says this about the policy.

ADM. MICHAEL MULLEN (chairman, Joint Chiefs of Staff): (From videotape.) It is my personal belief that allowing gays and lesbians to serve openly would be the right thing to do.

MR. MCLAUGHLIN: Besides Admiral Mullen, other top-level military brass want to see "don't ask, don't tell" repealed. Defense Secretary Robert Gates himself feels the same way. Secretary Gates ordered a review on the policy, which began 10 months ago, in March. Mr. Gates wants to know what risk a repeal on the policy will pose.

Here is what has been concluded. Quote: "The risk of repeal of 'don't ask, don't tell' to overall military effectiveness is low," unquote. But some Republicans, notably Arizona Senator John McCain, are opposed to the repeal. They say that it would weaken our national security.

SEN. JOHN MCCAIN (R-AZ): (From videotape.) Numerous military leaders tell me that "don't ask, don't tell" is working and that we should not change it now. I agree.

MR. MCLAUGHLIN: American citizens as a whole support repeal. Over 75 percent of Americans believe that gays in the military should not have to hide their sexuality.

Question: What are the arguments against repealing "don't ask, don't tell"? Pat.

MR. BUCHANAN: Well, the arguments against it, John, they come from folks like the commandant of the Marine Corps. It is you are trying to impose the values of Fire Island on Parris Island. These are 19-year-old Marines. They're very macho guys. Many of them are Christian traditionalists. And you've got these secular values. And you bring open homosexuals into the barracks with these guys, it'll be hellish.

One Marine commandant said very simply, "Would moving homosexuals into the barracks with my Marines enhance the fighting effectiveness, the cohesion and the morale of our Marine units? I don't believe it would. Why change something that is working?" The Marine Corps is the finest unit in the world, or one of them, and it works. Why impose outside values on them?

MS. CLIFT: I'm tempted to say wouldn't these Christian traditionalists feel better if they knew who was gay as opposed to wondering if somebody was gay?

Look, society has moved on this issue a great deal. You have the Defense secretary. You have the chairman of the Joint Chiefs. You have numbers of polls throughout. I grant you, the Marines are the most resistant. But even there, there's a plurality, I think, in support of this repeal.

And this repeal is coming. If it's not done by the Congress, it will be done by the courts. And if it's imposed by the courts, which now are seen as somewhat illegitimate because they're so politicized, the public and everybody has a much more difficult time accepting it. So this should be legislated, and I believe that it is being legislated.

MR. MCLAUGHLIN: This is the figure I have for the Marine Corps troops -- 59.7 percent said repealing "don't ask, don't tell" would have a detrimental effect on them when deployed in combat. Does that give you pause? MS. CLIFT: I think there's plenty of evidence, polling evidence and anecdotal evidence, that in the foxholes, people are not worried about people's sexual orientation.


MS. CLIFT: Why don't you read the numbers --

MR. MCLAUGHLIN: I'm giving you --

MS. CLIFT: Why don't you read the numbers from the other military services? There are plenty of numbers that support --

MR. MCLAUGHLIN: Rank and file?

MS. CLIFT: Yes. They support this repeal.

MR. MCLAUGHLIN: Why do you think the Marines take that view if the other services do not? And what happens if schisms because of sexual orientation between some members of a squad or even a minority and others presents a breakdown of unit morale and cohesion?

MS. CLIFT: I wonder what the polls were when Harry Truman ordered desegregation.

MR. BUCHANAN: He did that in peacetime.

MS. CROWLEY: Yeah, the poll that you cited about the Marines polled -- the only group that really matters and the only opinion group that really matters here, and that is the soldiers and the Marines on the front lines. That was a frontline poll that showed 60 percent of Marines on the front lines, in combat now in Iraq and Afghanistan --


MS. CROWLEY: -- say it would affect unit cohesion and combat effectiveness. There was an Army poll of Army soldiers on the front lines, not quite as high, but about 50 percent also do not favor repeal.

Look, the military opinion about this, the soldiers who are rank and file, who are not on the front lines, as well as top commanders, it's a very mixed bag in terms of opinion on this. But I think when you look at those that really matter, that are going to have to deal with this on a minute-by-minute basis, when they are in the foxhole, by and large they oppose repeal.

MR. MCLAUGHLIN: Mort, before I turn to you on this, I want to put this list up here. The world speaks.

At least 25 other countries allow full freedom of sexual preference in the armed forces: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Israel, Italy, Lithuania, Luxembourg, the Netherlands, New Zealand, Norway, Slovenia, South Africa, Spain, Sweden, Switzerland, United Kingdom, Uruguay.

Does that tell you anything beyond the fact that those countries --

MR. ZUCKERMAN: Yeah, I think it does tell you. I think those countries are just as concerned about the effectiveness of their military as we are, and I think clearly they have a different conclusion. And frankly, I would accept the judgment of Bob Gates and the chief of staff, Admiral Mullen, on these matters. I mean, I'm sure there are going to be some instances where it has deleterious effects, but overall I think it's the right judgment.

MR. MCLAUGHLIN: Did you see that Israel is on that list?

MR. ZUCKERMAN: I sure did. But that's just Reform and Orthodox.

MR. BUCHANAN: John, this is a multicultural society.

MR. MCLAUGHLIN: Reform and Orthodox?

MR. ZUCKERMAN: No, no. I'm just kidding. I'm just kidding.


MR. BUCHANAN: John, this is a multicultural society; there's no doubt about it. The multiculturalists, in effect, won. But there is one culture, basically, as I said, the Fire Island, and there's an entirely different culture.


MR. BUCHANAN: You impose one from outside on the other and you're looking for trouble.

MR. MCLAUGHLIN: Do you think --

MR. BUCHANAN: And Marines do very well without this.

MR. MCLAUGHLIN: Do you think time is on your side or on the side of the combat --

MR. BUCHANAN: I don't think --

MR. MCLAUGHLIN: -- Marines, who are polling 59 percent?

MR. BUCHANAN: John, I don't think time is on the side of western civilization, if you want to know. (Laughs.)

MR. MCLAUGHLIN: You do not? You don't think time is on the side of -- MR. BUCHANAN: I think this battle may be won like a lot of the others, and I think society is going downhill.

MR. MCLAUGHLIN: Exit question.

Is the "don't ask, don't tell" policy outdated? Yes or no.

MR. BUCHANAN: I think they ought to retain it. I don't even think they should have put that in to begin with.

MS. CLIFT: It's way outdated. And Pat, gay people live in lots of places other than Fire Island. (Laughs.)

MS. CROWLEY: There are legitimate arguments on both sides of this issue. However, the military is a wholly separate kind of institution. They are trained to fight and kill the enemy if necessary, and it's not particularly the best place for social engineering.

MR. MCLAUGHLIN: Do you think it should be repealed?

MR. ZUCKERMAN: I do. I really do.


Issue Three: No Labels.

No Labels is a name, the name of a bipartisan political group dedicated to compromise, political compromise. The No Labels group also serves as the mouthpiece for independent voters, voters that do not identify themselves as either Democrat nor Republican.

The motto of No Labels is, quote, "Not right, not left -- forward," unquote. The fledgling organization was founded by a duo of established political strategists, Nancy Jacobson and Mark McKinnon. Jacobson is a Democratic fundraiser and former campaign chairwoman for Bill Clinton. McKinnon is a Republican strategist and former political advisor for George W. Bush.

Last Monday, Jacobson and McKinnon scheduled their first summit of the No Labels organization in New York City. Many political high- profilers attended, including Democratic Senator Joe Manchin of West Virginia, independent Governor Charlie Crist of Florida, and former Representative Mike Castle of Delaware, who is, by the way, still a Republican, despite having been trounced by Christine O'Donnell. The No Labels attendees focused on the sturm und drang of American voters because of the gridlock and polarization on Capitol Hill.

Question: Does this organization suggest the viability of a two- party system? Pat, you got that?

MR. BUCHANAN: Yeah. Look, this is a group of elitists, quite frankly, John. This is not a populist grassroots movement like the Perot movement or the tea party movement, where you get millions of people out there. These are a bunch of guys --

MR. MCLAUGHLIN: You ran for president three times, and you had the Reform Party. And, of course, you crashed that to the ground. We haven't heard from that again, right?

MR. BUCHANAN: Well, you started off --

MR. MCLAUGHLIN: I would think that the No Labels idea would appeal to you.

MR. BUCHANAN: No, no. You need --

MR. MCLAUGHLIN: Do you want a third party in the United States?

MR. BUCHANAN: A populist conservative party would sink the Republicans. They should get together. A populist liberal party will sink the Democrats. But both of those are grassroots movements. They're people from the ground up. With due respect to Mr. Bloomberg, he's top-down all the way.

MS. CLIFT: Well, I think this group, they're looking at the success of the tea party. And the tea party was a populist movement, but it was also encouraged by a lot of corporate types; Dick Armey, former Republican leader. So it wasn't entirely the grassroots. And I think they're hoping, through the Internet, that they can play on the frustration of people in both parties with the political process as it is. They have a lot of money. But it strikes me that they're probably not going to go very far.

(Cross talk.)

MR. ZUCKERMAN: They're not going to go very far, without question. I mean, this is not a populist movement, as Pat says. And I think they're going to --

MR. MCLAUGHLIN: But you said the same thing about the tea party.

MR. ZUCKERMAN: No, no, no. Let me just say something about the tea party. I've really looked a lot more into the tea party. That is not just -- it's a much broader-gauged movement, and it's not -- it's based on a very fundamental fact in this country, which is the real concern nationally over the basic fiscal direction of this country. There's a huge issue that a lot of people are worried about. And that's the first thing that brought them all together.

MR. MCLAUGHLIN: Issue Four: Fed's Dead, Baby.

BEN BERNANKE (chairman, Federal Reserve Board of Governors): The Fed's independence is critical. The central bank needs to be able to make policy without short-term political concerns.

MR. MCLAUGHLIN: The Fed's independence critical? Yes. The Fed's condition critical? Maybe.

The Federal Reserve Bank is almost 100 years old. It was created as the U.S. national bank. The Fed has three main duties: One, manage U.S. money and U.S. credit; two, service the entire private U.S. banking and financial system; three, manage the 12 regional Fed banks.

Because the Fed oversees the most powerful economy in the world, it bears the responsibility of being the most powerful bank in the world. The Fed is also the most powerful because it is totally autonomous. It answers to nobody. It reports quadrennially to Congress, but it is not subject to its purse strings. The Fed spends on itself what it says it needs.

The Fed's chairman defends his unique autonomy.

MR. BERNANKE: (From videotape.) In order to do what's best for the economy, we do all of our analysis, we do all of our policy decisions, based on what we think the economy needs, not based on when the election is or what political conditions are.

MR. MCLAUGHLIN: Well, Chairman Bernanke, tell that to Texas Congressman Ron Paul. For over 30 years, the libertarian Republican and two-time presidential candidate has argued the Fed is far too autonomous, too powerful. Paul also says Fed policies and Fed freedom cause financial bubbles that bring down the economy.

In two weeks, Congressman Ron Paul will be Chairman Ron Paul, chairman of the House Subcommittee on Domestic Monetary Policy, which includes in its oversight the Fed. Incoming Chairman Paul intends to use his new position to push legislation that would, for the first time, coerce the Fed to open its books to Congress; indeed, to Chairman Paul's Monetary Policy Subcommittee.

REP. RON PAUL (R-TX): (From videotape.) It's the atrocious nature of the fact that the Fed is a government unto itself. I think there is so much more to learn. And I'm very delighted that the people want to know more about the Fed.

MR. MCLAUGHLIN: Question: In what ways does Congress exercise power over the Federal Reserve? Monica Crowley. MS. CROWLEY: Well, the Fed is independent. The chairman of the Fed does have to report, as you pointed out, every quarter to the Congress. But it is an autonomous institution, and rightfully so. Ron Paul --

MR. MCLAUGHLIN: The only one in the U.S. government?

MS. CROWLEY: The only one in the U.S. government that doesn't have strict congressional oversight over it. Now, Ron Paul is going to be chairing this subcommittee. Bernanke is going to be testifying in front of him, and that's going to be some very interesting C-SPAN viewing, because there are going to be a lot of fireworks.

Ron Paul believes that the Fed should be disclosing what it's doing. Ron Paul has gone out there saying that the Fed is helping to destroy the U.S. currency, the dollar. And he thinks that the currency devaluation is a very serious problem; potential inflation. There are going to be a lot of questions for Bernanke.

MR. BUCHANAN: But Ron Paul is right. When the Fed was formed, John, a $20 gold piece and a $20 bill were worth the same. Now you need 70 $20 bills to buy one $20 gold piece. That's what's happened to the currency.

The second thing is Milton Friedman proved and got a Nobel prize for proving it was the Federal Reserve, not Smoot-Hawley, that was responsible for the Great Depression, the huge bubble that popped and exploded on the American economy after the Roaring Twenties.

MR. MCLAUGHLIN: The secretary of the Treasury is Tim Geithner. Tim Geithner and Bernanke are the best of pals, even though neither one of them really moves in social circles in Washington, D.C. It's kind of an odd couple, but they have coupled. And they are the ones that are really engineering U.S. finance and economic policy. Does that make you comfortable?

MR. ZUCKERMAN: It sure does, compared to the alternatives. Tim Geithner was involved with the Federal Reserve Bank of New York, which is how he worked with Bernanke. But I will say this. The Federal Reserve System saved this economy and saved the financial system in the last several years.

The whole banking system was frozen for various reasons, including a huge amount of bad loans. You couldn't get money into our economy through the banking system because they wouldn't make loans, simply because they didn't know how bad --

MR. MCLAUGHLIN: So you're comfortable. Are you comfortable with the independence, the autonomy of the Fed?

MR. ZUCKERMAN: Absolutely. I would support it under any condition. MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: Barack Obama will demand that the Israelis come forward with their own peace plan, now that his plan has just fallen apart.


MS. CLIFT: The Tea Party Caucus in the House has 43 members. They've elected 41 new members. And they're all going to get their hearts broken as they've come up against all the forces in Washington, the same forces that Barack Obama came up against.

MS. CROWLEY: The first two bills that Speaker Boehner will propose on the House floor, H.R. 1 and H.R. 2, will be making all the tax rates permanent and the repeal of "Obamacare".

MR. MCLAUGHLIN: Five seconds, Mort.

MR. ZUCKERMAN: I don't believe Mike Bloomberg is going to run for the presidency of the United States.

MR. MCLAUGHLIN: Wow. Boy, I hope that changes.

Outgoing Brazilian President Lula De Silva will announce his candidacy for U.N. secretary general next year.