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The McLaughlin Group Host: John McLaughlin Panel: Pat Buchanan, MSNBC; Eleanor Clift, Newsweek; Rich Lowry, National Review; Mort Zuckerman, U.S. News & World Report Taped: Friday, January 27, 2012 Broadcast: Weekend of January 28-29, 2012

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JOHN MCLAUGHLIN: Issue One: The Real Super Bowl.

FORMER MASSACHUSETTS GOVERNOR MITT ROMNEY (R): (From videotape.) The speaker was given an opportunity to be the leader of our party in 1994. And at the end of four years, he had to resign in disgrace.

FORMER HOUSE SPEAKER NEWT GINGRICH (R-GA): (From videotape.) I am the only speaker up to that point since the 1920s who had led the Republican Party to three consecutive victories. By the way, in 2006, when you chaired the Governors Association, we lost governorships.

MR. MCLAUGHLIN: GOP front runners Mitt Romney and Newt Gingrich are facing off to win Florida's Republican primary this coming Tuesday, January 31. Florida is the bellwether state. GOP primaries and caucuses are on the calendar through June, but Florida is the de facto determinator.

Newt Gingrich has at least one reason for optimism. Gingrich received a $15 million donation from Sheldon Adelson, a Vegas casino mogul. Speaker Gingrich, on "Face the Nation" on Sunday, identified his political conservatism as the same as that of Ronald Reagan, and that philosophy will carry him to victory.

MR. GINGRICH: (From videotape.) I just think a clear Reagan conservative has a much better chance of defeating him than somebody who comes out of a Massachusetts moderate background.

MR. MCLAUGHLIN: Reagan conservatism essentially means three things: A robust foreign policy, less government regulation and fewer taxes. The problem is that Speaker Gingrich was far from being a supporter of President Ronald Reagan. The current issue of the influential, skillfully edited National Review published this week this 1980s quote from Gingrich: "Measured against the scale and momentum of the Soviet empire's challenge, the Reagan administration has failed, is failing, and, without a dramatic change in strategy, will continue to fail. President Reagan is clearly failing," unquote.

Mr. Gingrich also deplored President Reagan's 1985 meeting with Soviet Premier Mikhail Gorbachev in Reykjavik, Iceland. He said it was, quote, "the most dangerous summit for the West since Adolf Hitler met with Neville Chamberlain in 1938 in Munich," unquote.

Question: Has Newt Gingrich overstated his role in the Reagan administration? Pat Buchanan.

PAT BUCHANAN: First, John, that's an outrageous comment about Reykjavik, where I was with Ronald Reagan right down there in Hofdi House. And Reagan --

MR. MCLAUGHLIN: What comment?

MR. BUCHANAN: The comment that this thing -- to compare this thing to Munich was outrageous.

MR. MCLAUGHLIN: You mean Gingrich's comment.

MR. BUCHANAN: Gingrich's comments. But let me say this. Look, in the Reagan White House, Newt Gingrich was considered, quite frankly, by a lot of folks to be something of a political opportunist and who was not trusted and who would play no role whatsoever. He was a Rockefeller Republican in the great Goldwater-Rockefeller battle, where conservatism really came of age.

I do think this, though. Newt has been pounded mercilessly. He's had people he worked with basically turn on him and dump on him down there in Florida, which somehow, I think, may have had some role in the fact that the great fighter and battler of South Carolina had no fight in him whatsoever in the Monday and Thursday debates in Florida. He let Mitt Romney punch him silly. And he has lost all his momentum.

And John, I'm not going to make any predictions, because I thought the battle of South Carolina would win Florida, but it is Romney that is surging. And it looks like Romney may win Florida. If he does, it is all over.

MR. MCLAUGHLIN: Eleanor.

ELEANOR CLIFT: Well, Gingrich was a back bencher during the Reagan years, and he was more of a thorn in their side. But there is a video clip of Nancy Reagan in 1995, after Gingrich had led the Republicans to power in Washington, saying the torch has been passed from Ronnie to Newt. So he has some claims on that era.

But that's not the -- that's not his problem; is he Reagan enough. He's been intellectually and ideologically promiscuous throughout his political career. So there's all this stuff out there. He can get hit from the left, the middle, from every side. And the Republican establishment and conservatives have landed on him.

And I must say, that period that you just featured in the setup, Newt wasn't the only conservative who thought Reagan wasn't being tough enough on either the Soviets; he wasn't funding the contras enough. That was not an unusual position for a true conservative to hold at that time.

MR. MCLAUGHLIN: Meanwhile, Reagan was working closely with Tip O'Neill in the House -- the leadership of Bob Michel.

MORT ZUCKERMAN: Right.

MR. MCLAUGHLIN: Do you remember those days?

MR. ZUCKERMAN: Right.

MS. CLIFT: Good old days, we call them. (Laughs.)

MR. MCLAUGHLIN: What can you tell us, Rich?

RICH LOWRY: If the question is who was more Reaganite, Newt or Mitt Romney, it's not even a close question. But the question is, was Newt exaggerating the extent of his cooperation with Ronald Reagan? There's no question about that either, because exaggeration is what Newt does. And what he did through force of will and personality after New Hampshire, he made this into -- sound like the kind of fight that every conservative in the country is familiar with and thrills to, a fight between a conservative and a moderate. And he rode this wave out of South Carolina, out of those amazing debates. And it feels now as if the fever has broken. As Pat referred to, he couldn't replicate those performances down in Florida. The first audience was mostly silent. The second audience was somewhat pro-Romney. He felt tired. He felt worn down. He felt unprepared.

And the fact is, he's one guy out there fighting a vast machine that is just dumping millions of dollars on his head every single day.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: Well, you know, there is a huge difference between Gingrich and Reagan. Reagan had the ability, as he did with Tip O'Neill, the speaker of the House, to do a complete reform program of Social Security. You think about what that would be like today if we had somebody who could reach across the aisle the way Reagan did.

This is not Gingrich. Gingrich does not reach across the aisle. He's throwing, you know, fire and water and everything else at the other people, including within his own party. So he's more destructive. Reagan was not destructive in that way.

MS. CLIFT: Yeah, but he --

MR. ZUCKERMAN: So I think they're not comparable at all.

MS. CLIFT: But he actually did reach across the aisle and worked with Bill Clinton when he was speaker. And so I think you have to give him credit for that.

MR. LOWRY: And they were very close to their own big deal on Social Security.

MS. CLIFT: But he's not -- but he's not sunny like Reagan.

MR. LOWRY: No, that's --

MS. CLIFT: Reagan had a sunny, optimistic personality. Newt has big ideas, and some of them I like. And I like the fact that he thinks we ought to inspire young people to get interested in math and science and all of that. And Romney's been making fun of him. But there's just so many ways you can attack Newt Gingrich. It's just -- he's a walking target.

MR. ZUCKERMAN: Right.

MR. LOWRY: Well, you get close to his core and his substance, and he's basically a center-right guy like Mitt Romney. It's his style and his affect and his tone, where he's this fearsome partisan --

MS. CLIFT: Bombast.

MR. LOWRY: -- provocateur.

MR. BUCHANAN: John, I don't think he has a core. I don't think he has a fundamental ideological and political core. I think, look, he moved. He was a Rockefeller Republican. He comes up -- I remember meeting him in `78 when he came to town. You know, he's knocking Reagan.

Let me tell you about one, the South Africa sanctions bill. Reagan believed that sanctions on South Africa would cripple the economy that the Africans would inherit. So it was a tough decision. Reagan vetoed it. And he scored points off us by, you know, voting for the sanctions and doing that.

I don't think he has an ideological core. I think he moves from one issue to another and another. And the Republican Party, because it is conservative, he's mostly there.

MR. MCLAUGHLIN: The --

MS. CLIFT: You could be talking about Mitt Romney. Everything you just said is true of Mitt Romney as well.

MR. BUCHANAN: He lives in Massachusetts, and that's a very difficult place. (Laughs.)

MS. CLIFT: (Laughs.)

MR. LOWRY: About that speech on the contras that we opened the show with, it's a criticism from the right, but it's mostly a criticism from above. It is Newt Gingrich saying I am smarter than everyone else in this town, including Ronald Reagan.

MR. MCLAUGHLIN: I can't find any difficulty with any of these views. However, there is an AP photograph of the two candidates together, and I think it speaks for itself. I mean, there is Gingrich smiling at Romney and they're greeting each other. And that's the American way and --

MR. BUCHANAN: It's Michael Corleone's way. (Laughter.)

MR. MCLAUGHLIN: Exit question: Who wins Florida, Pat Buchanan?

MR. BUCHANAN: I'm going to say Mitt Romney and contradict what I said last week.

MS. CLIFT: I'm going to go agree with Pat and underscore what I said last week. MR. BUCHANAN: (Laughs.)

MS. CLIFT: And we'll be calling Romney the comeback kid.

MR. LOWRY: I said Romney very narrowly last week. I'll say Romney perhaps by double digits this week.

MR. ZUCKERMAN: Yeah, I think Romney will win decisively. And that'll be -- that'll transform the entire Republican nomination race.

MR. MCLAUGHLIN: Well, I said decisively a win for Romney last week, so I think I'm ahead of --

MR. ZUCKERMAN: I agree with that.

MR. MCLAUGHLIN: Issue Two: Is the Union growing stronger?

PRESIDENT BARACK OBAMA: (From videotape.) The state of our Union is getting stronger. In the last 22 months, businesses have created more than 3 million jobs. (Applause.) Last year, they created the most jobs since 2005. American manufacturers are hiring again, creating jobs for the first time since the late 1990s.

MR. MCLAUGHLIN: President Obama delivered his State of the Union report, called for by the U.S. Constitution. It lasted 65 minutes. It was composed of some 7,000 words. The overall theme of the address is national recovery.

Economic data appear to contradict the president's rosy view. There are almost 2 million fewer jobs than when he took office, and the Federal Reserve this week predicted that the U.S. economy for 2012, this year, would grow at a rate of 2.7 percent, widely seen as anemic.

Question: What were President Obama's political objectives with this speech? Eleanor Clift.

MS. CLIFT: Well, first of all, I think he rebutted the theme of his likely opponent, Mitt Romney, saying that America is a nation in decline. And I think he came back with an optimistic view, and particularly in terms of foreign policy and how we're regarded around the world. And he really wears the role of commander in chief well, and he has some significant successes. So I thought that was good.

He also wanted to frame the coming election as one that's going to talk about fairness, the wealth gap, not to punish the risk but to open up opportunities for more people to succeed. And all of the discussion about Romney's taxes has really revealed to the American people how the tax system in particular is rigged against them.

So that's a good theme; and then rebuilding America with a focus on manufacturing, which, coincidentally, affects the swath of midwestern industrial states that he would like to win and where there are voters that he hasn't done well connecting with. You could call them the Hillary voters.

It was a very well-constructed and --delivered speech.

MR. MCLAUGHLIN: Pat, he declared that he's going to be tenacious. He's going to stay the course. Secondly, he declared that he's going to be supportive of the middle class.

MR. BUCHANAN: Right. That's the key here, John.

MR. MCLAUGHLIN: And thirdly, he's going to blame the Congress for any inaction. Those are his three objectives.

MR. BUCHANAN: I think there are a lot of political objectives. It was an outstanding political speech. I mean, when you open up and say bin Laden is dead, the boys and girls are home from Iraq and General Motors is selling more cars than anybody else, it's a good opening.

Secondly, John, when he went on trade and talked about manufacturing and that we were going to crack down on the Chinese, we're going to give tax breaks to companies that build here, manufacture here, and put tax penalties on those that export jobs, talked about regulation, that was a very centrist speech.

He's touching all the Republican key issues in the primaries. He's going to run in the center. And I think -- politically, I thought it was an extraordinarily effective speech. There was very little in it that I could find anything that angered me at all in the whole speech.

MR. MCLAUGHLIN: Really?

MR. BUCHANAN: Exactly.

MR. LOWRY: He's got to try harder, Pat. (Laughs.)

MR. BUCHANAN: (Laughs.)

MR. MCLAUGHLIN: OK, let's see --

MS. CLIFT: Welcome aboard. (Laughs.)

MR. MCLAUGHLIN: Let's see how the loyal opposition did.

MR. BUCHANAN: It was centrist like me. (Laughs.)

MR. MCLAUGHLIN: Mitch Daniels, the governor of Indiana. INDIANA GOVERNOR MITCH DANIELS (R): (From videotape.) The president did not cause the economic and fiscal crises that continue in America tonight, but he was elected on a promise to fix them. And he cannot claim that the last three years have made things anything but worse. The percentage of Americans with a job is at the lowest in decades. One in five men of prime working age and nearly half of all persons under 30 did not go to work today.

The president's grand experiment in trickle-down government has held back rather than sped economic recovery. No feature of the Obama presidency has been sadder than its constant efforts to divide us, to curry favor with some Americans by castigating others.

MR. MCLAUGHLIN: Question: Grade Mitch Daniels' handling of the Republican response.

MR. LOWRY: I think it was excellent. He obviously doesn't have a lot of natural stage presence, but there's a lot of substance there. I think there were more memorable lines in about seven or nine minutes than the president had in 70 minutes. And he got to what are generally the big issues facing this country.

I agree with Pat. Tonally, the State of the Union was a centrist speech. It was a Clintonian catalogue of ephemera that's not going to go anywhere in Congress, and it evaded the big issues -- labor force participation abysmally low, the deficit out of control, the debt out of control --

MR. MCLAUGHLIN: That's the state of the Union.

MR. LOWRY: -- entitlements. Yeah. And President Obama didn't address any of that.

MR. MCLAUGHLIN: Mm-hmm. (Acknowledging.)

MR. LOWRY: He said it was minor stuff; and then this Buffett rule, which is ridiculous, which is basically a proposal for doubling capital gains rates, effectively, when you get down on it -- down to it -- at a time when even Democrats in the Senate would be reluctant to do that, and at a time when we're suffering from not enough business investment.

MS. CLIFT: The Buffett rule is not targeted to you, Rich. He's speaking to --

MR. LOWRY: I know. Well, look --

MS. CLIFT: -- a whole other group of folks. (Laughs.)

MR. LOWRY: -- you're going to take the capital gains rate and double it -- MR. BUCHANAN: Which would be to Mort.

MS. CLIFT: Right. (Laughs.)

MR. LOWRY: -- (per slice ?) of investors.

MS. CLIFT: Even Mort would go along with that.

MR. ZUCKERMAN: I answered the call.

MS. CLIFT: Right. (Laughs.)

MR. MCLAUGHLIN: What did you think of the opposition speech, the Republican speech?

MR. ZUCKERMAN: I though it had some very, very good policy stuff in it. I don't -- I agree; I don't think the delivery was exactly inspiring, but it was an intelligent, very intelligent comment. Amongst other things, on the economy, the most important thing that he said, which didn't get much attention, is the complete revision of the tax code, which is the one thing that we absolutely must have if we're going to revive the economy, both the consumer and the business side.

The second thing he said, which again I think was quite interesting, he said, look, the wealthy should start paying for some of the things --

MR. MCLAUGHLIN: Did you --

MR. ZUCKERMAN: -- that they're getting, like Medicare and Medicaid. I mean, these are things which, it seems to me, are quite appropriate.

MR. MCLAUGHLIN: In the Obama speech, did you detect any protectionism? Because he talked about getting tough with and taking incentives for corporations away from sending jobs overseas.

MR. BUCHANAN: Yeah.

MR. ZUCKERMAN: Yeah, but --

MR. MCLAUGHLIN: Was there a little bit of protectionism there?

MR. ZUCKERMAN: No, there was a lot of politics and a little bit of protection in that. Of course, it's an easy thing to say; we're going to send these jobs overseas or take them back here --

MR. MCLAUGHLIN: And we're going to monitor China closely.

MR. ZUCKERMAN: Yeah.

MR. MCLAUGHLIN: (He's going to ?) open up an office to monitor China. MR. ZUCKERMAN: Well, we're all monitoring China. I mean, that is -- to me, that's just nuts. The whole idea here --

MR. MCLAUGHLIN: Is that red meat for --

MR. ZUCKERMAN: Yes. And it's a political speech.

If you want to know whether it's a political speech --

MR. BUCHANAN: It's economic nationalism, John -- economic nationalism. And it goes right to Ohio, Indiana, Michigan and all them. What he's saying is -- those people detest NAFTA. And so he's --

MR. MCLAUGHLIN: So he's playing all the right notes. He's playing all the right notes.

(Cross talk.)

MR. MCLAUGHLIN: Exit question: Assign a letter grade, A to F, of the State of the Union address.

MR. BUCHANAN: I'm going to give it A for politics, John, and I'm going to give it about a C for substance. He ain't going to do it.

MS. CLIFT: He gets an A for politics and substance. If you're a voter out there --

MR. BUCHANAN: (Laughs.)

MS. CLIFT: -- and you think --

MR. LOWRY: What, are you a Harvard professor with this grade inflation? (Laughs.)

MS. CLIFT: Excuse me --

MR. BUCHANAN: You're marking on a high curve here, Eleanor. (Laughs.)

MS. CLIFT: -- excuse me -- and you think that you should reward companies for shipping their jobs away and punish them if they stay in this country, reversing that makes common sense.

MR. LOWRY: So you're in favor of cutting --

MS. CLIFT: There was a lot of --

MR. LOWRY: -- the corporate tax rate now, Eleanor? MS. CLIFT: There was a lot of common --

MR. MCLAUGHLIN: Quickly, quickly.

MS. CLIFT: There was a lot of common sense in that speech.

MR. LOWRY: It's a B+ for politics and a D on substance.

MR. ZUCKERMAN: Yeah, I think it was a D on substance. I still give it an A- for politics.

MR. MCLAUGHLIN: I think --

MR. ZUCKERMAN: Amongst other things, 65 minutes, I thought, was a bit long for me.

MR. MCLAUGHLIN: I think it was not a State of the Union address. I think it was a state of the budget address --

MR. ZUCKERMAN: I think it was a state of politics address.

MR. MCLAUGHLIN: -- with a little bit of Cicero at the end.

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: But there were no big concepts in there.

MR. LOWRY: But John, he didn't grapple with the budget.

MR. MCLAUGHLIN: And I -- therefore, I don't think he's worth much more than a B-.

Issue Three: Mystery Salute.

PRESIDENT OBAMA: (From videotape.) Good job tonight. Good job tonight.

MR. MCLAUGHLIN: It was at first a mystery why President Obama, on his way to the SOU lectern, congratulated Defense Secretary Leon Panetta last Tuesday night. The verbal high five, it turns out, to Mr. Panetta was to salute him on the masterful rescue of two Danish aid workers, Jessica Buchanan, a U.S. citizen, and Paul Thisted, a citizen of Denmark. Buchanan and Thisted had been held hostages in Somalia for three months, since October the 25th.

Earlier, Mr. Obama had received intelligence of Ms. Buchanan's whereabouts and word that her health was failing. He then set in motion the process of rescue, authorizing the mission to go forward. He did so on Monday night, almost 24 hours before the State of the Union. On Tuesday afternoon, 20 members of a SEAL team -- Seal Team 6, in fact, the same SEAL team that executed Osama bin Laden -- the team parachuted from an Air Force carrier onto the area where the hostages were being held. The SEALs killed all nine Somalis first and then rescued the two hostages.

This occurred two hours before the State of the Union address. Mr. Obama received word that both Buchanan and Thisted had been rescued. The president then relayed the news to the father of Jessica Buchanan that his daughter was safe and notified Danish authorities to pass on the good news.

Exit question: On a political impact scale, zero to 10, zero meaning zero political impact, 10 meaning metaphysical impact, what's the political impact of this dramatic SEAL rescue of President Obama's --

MR. BUCHANAN: I would say four or five right now, John. But these things fade very, very rapidly. And I think -- I would say in two months it will fade to almost zero.

MS. CLIFT: Well, they fade rapidly. There could be more of these rescue attempts. And it certainly does speak well of our military, the way they can perform. And if this had gone awry, we'd be having a very different discussion here about the State of the Union. So I give this president a lot of credit for taking risks that he needs to take in international affairs.

MR. LOWRY: I'd say it's a one or two, John, because it does very marginally augment the sense that President Obama is tough and willing to order these raids. But ultimately no one cares about Somali hostages, I'm afraid to say.

MR. MCLAUGHLIN: But he put it together.

MS. CLIFT: They care about Americans.

MR. LOWRY: (Inaudible.)

MS. CLIFT: They care about Americans who are kidnapped abroad.

MR. ZUCKERMAN: It was really fascinating to realize how they did this. You know, they landed in helicopters. They walked for two miles.

MR. BUCHANAN: They parachuted in.

MR. ZUCKERMAN: Yeah -- no --

MR. BUCHANAN: They parachuted in. Then the helicopters -- these guys parachuted in in the night and then they walked.

MR. ZUCKERMAN: Right. Well, OK. MR. BUCHANAN: (Laughs.)

MS. CLIFT: The drama helped --

MR. LOWRY: Are you sure they didn't run?

MR. BUCHANAN: (Laughs.) They jogged. (Laughs.)

MR. LOWRY: Yeah. (Laughs.

)

MR. ZUCKERMAN: You know, they took this -- it was a brilliant operation, you know. And it tells you something about the Navy SEALs. And we have developed Special Forces capability under this administration that I think are quite unique.

MR. MCLAUGHLIN: I think it said a lot about Obama. I think it says that he has fortitude and he's willing to take a real chance with this. And it worked perfectly.

MR. ZUCKERMAN: Yeah, absolutely.

MR. MCLAUGHLIN: It worked perfectly. I'm going to give him an A+.

MR. BUCHANAN: And he's associated with something that's really positive.

MR. MCLAUGHLIN: Right. Right.

MR. BUCHANAN: There's no down side to what these fellows did.

MR. MCLAUGHLIN: Americans love that.

MR. BUCHANAN: Sure. They love that stuff.

MR. MCLAUGHLIN: And, you know, it was incredible.

Issue Four: Investments Versus Wages.

MR. ROMNEY: (From videotape.) My income comes overwhelmingly from investments made in the past.

MR. MCLAUGHLIN: The operative word is, of course, investments. Republican presidential contender Mitt Romney was asked last week what tax rate he was paying on his investments. His answer --

MR. ROMNEY: (From videotape.) It's probably closer to the 15 percent rate than anything.

MR. MCLAUGHLIN: Why is Mitt Romney paying a 15 percent tax rate on his investments? Because his big money comes from investments -- stocks, bonds, real estate. They earn. It does not come as salary or fees, as in doctors' fees or lawyers' fees. The investments sit there by themselves, earn money; no work involved.

The Internal Revenue Service, the IRS, stipulates that investments for all Americans are still taxed. The tax bracket rate for investments is 15 percent; no work involved, but there is risk. Lehman Brothers risked. Lehman went under, big-time. So to cover your risk in your investments, the IRS says 15 percent is the investment rate to cover any risk of any kind of stocks, bonds, real estate, et cetera.

Now, Mr. Romney's income -- the word income covers all revenue gained in the calendar year involving work, commonly known as salary, or as in a fee, as in doctors' fees, lawyers' fees, lecturer fees. The IRS says that salaries or fees are taxed during the calendar year for which taxes are paid; that is, during the calendar year. The tax is 35 percent.

Now, yearly Mr. Romney gives a lot of speeches. He collects lecture fees. Last year, 2011, he gave lectures for which he received fees that amounted to -- get this -- $375,000. That $375,000 has been taxed by the IRS already at 35 percent, which is the highest of the six tax brackets the IRS has created -- 35, 33, 28, 25, 15 and 10 percent. And it's for all Americans who earned -- that is, worked for this money, as opposed to money from investments, because there is still risk.

I'm turning to you, Mort, for obvious reasons -- (laughter) -- with your billions. Do you move your income into investments to collect -- to pay a 15 percent tax rather than the tax for fees or work that you've done --

MR. ZUCKERMAN: This is salary. Salaries, it's called.

MR. MCLAUGHLIN: Salary, right; wages, wages.

MR. BUCHANAN: Wages.

MR. ZUCKERMAN: Wages. Call it what you will; hourly wages.

MR. MCLAUGHLIN: What do you --

MR. ZUCKERMAN: You can't shift this around without basically getting into --

MR. MCLAUGHLIN: Well, you can buy bonds. You can buy stock.

MR. ZUCKERMAN: Oh, yeah. But the purpose of that is to incentivize people to save money, to have investment funds. That's -- it's been like that forever, OK, because we need that kind. And your regular income you pay at a regular -- MR. MCLAUGHLIN: Why does the government take such an interest in having investment funds?

MR. ZUCKERMAN: Because that's critical to the growth of our economy.

MR. MCLAUGHLIN: OK. Now, that's -- that's a seminal statement you just made, because I don't think people understand it.

MR. ZUCKERMAN: I think, in the way that --

MR. MCLAUGHLIN: It's very important to have a good stock market, is it not?

MR. ZUCKERMAN: Absolutely.

MR. MCLAUGHLIN: It's good for the economy. It builds the economy.

MR. ZUCKERMAN: Absolutely.

MR. MCLAUGHLIN: We become richer as a nation.

MR. ZUCKERMAN: And we also need good capital markets, good finance markets; that is, debt. We need both equity and debt, in a sense, to grow the economy and stimulate the economy --

MR. BUCHANAN: Hey, John --

MR. ZUCKERMAN: -- through expansion of the basic capacity in the economy.

MR. BUCHANAN: John, the interest on municipal bonds is taxed at zero. I've got some municipal bonds in Virginia. The dividends --

MR. MCLAUGHLIN: Now, wait a minute.

MR. BUCHANAN: Hold it. Dividends are taxed at 15 percent. Capital gains are taxed, and carried interest. Wages and salaries go all the way up to 35 percent. It's understandable for -- one reason is you put your money in, say, stock and you leave it there for 30 or 40 years, and the real -- it may not grow in value; simply it grows in inflation. That's why they don't tax it at 35.

MR. MCLAUGHLIN: The only exception -- and they get no tax -- they don't get taxed at all -- are the munis, the municipal bonds.

MR. BUCHANAN: Bonds. That's --

MR. MCLAUGHLIN: Is that true?

MR. ZUCKERMAN: That's right. MR. MCLAUGHLIN: Is that the only thing you can buy that has no tax?

MR. ZUCKERMAN: That's right.

MR. BUCHANAN: That's the only one I know of. That's the only one I know of.

MR. ZUCKERMAN: That's right.

MS. CLIFT: Yeah, but capital gains has not always been at 15 percent. You know, when Reagan came to town, the marginal rates were very high, and he got money as a movie actor, so he wanted to bring those down, which he did. When the Bushes came into office, they wanted to reduce capital gains because a lot of their money came from investment income.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: The 15 percent -- the 15 percent we arrived at when W. Bush was in office. And it has not always been that low. And I'd like to know why Mitt Romney has to have so many bank accounts in so many places around the world.

MR. BUCHANAN: It's a blind trust.

MS. CLIFT: Is he just diversifying? (Laughs.) You know, Senator --

MR. MCLAUGHLIN: Well, wait a minute. What's the meaning of that? I don't understand.

MS. CLIFT: The meaning of that is --

MR. MCLAUGHLIN: Are they checking accounts?

MS. CLIFT: Well, he has accounts in -- had an account in -- a Swiss bank account. He has accounts in the Cayman Islands.

MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: After Sudan and Ethiopia, Nigeria will be the next great African country to break in half.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Obama will get political attraction on the Buffett rule.

MR. MCLAUGHLIN: Rich. MR. LOWRY: If Romney is the nominee, the veep finalists will be Rob Portman of Ohio and Bob McConnell of Virginia.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: The New England -- the New York Giants will beat the New England Patriots this Sunday in the Super Bowl.

MR. BUCHANAN: It's next Sunday after this.

MR. MCLAUGHLIN: Scotland will effectively get out of the U.K. union.

Gabby Giffords, you look great. Stay strong. Get well. Come back. We need you. I speak for the Group.

Bye-bye.

END.