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JOHN MCLAUGHLIN: Issue One: Israel Versus Iran.

ISRAELI PRIME MINISTER BENJAMIN NETANYAHU (through interpreter): (From videotape.) Iran, who stands behind these attacks, is the biggest terror exporter in the world.

MR. MCLAUGHLIN: Israeli Prime Minister Benjamin Netanyahu this week accused Iran of being the biggest terror exporter in the world. On Monday, terrorist bombers attacked the Israeli embassies in New Delhi, India and Tbilisi, Georgia, the land mass between the Caspian and the Black Sea, hugging Russia; then another terrorist bombing attack in Bangkok, Thailand. Iran denies that it bombed the Israeli embassies.

The question is, what is the likelihood of an Israeli military strike on Iran? George Friedman, founder of the global intelligence firm Stratfor, says that the likelihood of an Israeli strike on Iranian nuclear facilities is a, quote-unquote, "one in four chance."

Here's why.

One: Extreme difficulty. Quote: "Such an attack would involve Israeli air sorties of over 1,000 miles, coordinated with missile attacks from Israeli submarines. Ship-launched missiles can't carry payloads of bunker-busting bombs necessary for much of the task. Iran's anti-missile defense system is anything but Mickey Mouse," unquote.

Civilian casualties in Israel. Quote: "Likely rocket and missile attacks from Hezbollah and Hamas in Gaza could be higher than expected. There will be no lightning victory achieved such as during 1967's Six-Day War," unquote.

Three: Crippling oil prices. Quote: "An Israeli attack would prompt Iran to try to close down sea traffic in the Persian Gulf at its southern choke point, the Strait of Hormuz, where some 20 percent of global oil production passes. Oil prices would be likely to spike vertiginously and cripple global economic growth," unquote.

Four: No U.S. assistance. Quote: "To be successful, the action would require U.S. assistance, and that aid is unlikely to be forthcoming, especially in an election year," unquote.

Five: Fear of annihilation. Quote: "Even if Iran succeeds in building some kind of nuclear arsenal, the Islamic republic faces immediate annihilation if any of the weapons are ever used," unquote.

Question: Let's assume that Prime Minister Netanyahu picks up the phone and calls up President Obama and asks whether his defense secretary -- that's the Israeli defense secretary -- can call U.S. Defense Secretary Panetta to discuss prudent military action against Iran. What do you think Commander in Chief Obama would say to him on the phone -- go ahead and have your guy call my secretary of defense and let them discuss it? Do you think he would say that?

PAT BUCHANAN: I think Obama would say to the prime minister, sir, we do not want you attacking Iran. And if you do attack Iran, the United States is not going to back you up here. We don't want a war. We think our sanctions are working. We don't think they have decided to build a bomb. They don't have a bomb. We think we've got time. We know your concerns. But do not attack Iran.

The thing that Netanyahu wants, John, is Israel's got a very powerful military, but they cannot take out these installations themselves. What's going to happen -- what Netanyahu wants, if he's got to start it, bring the United States in, because what you've got to take out is their anti-ship missiles, their antiaircraft, their air force, their navy, their offensive missiles, their nuclear sites. And frankly, I think, in order to stop the long-range nuclear program, you've got to take down the regime. And even we are not prepared to do that.

MR. MCLAUGHLIN: Eleanor.

ELEANOR CLIFT: I agree with most of what Pat just said. And I would commend you for that setup, because I think there's a lot of loose talk that makes it seem like it would be very easy for Israel to undermine the nuclear --

MR. MCLAUGHLIN: As they did in Syria.

MS. CLIFT: Right, exactly, when the best-case scenario is that they would probably set it back maybe three to five years. And they would inflame the ordinary people there, who see nuclear possession as sort of their God-given right. They would feel that way if they were assaulted from the outside.

I do think, though, that Secretary Panetta has probably had conversations with Ehud Barak, the Israeli defense minister. And each side knows where each side stands. And I think what the Israelis are gambling is that there could be a window before the election where this --

MR. MCLAUGHLIN: Our election?

MS. CLIFT: -- before our election -- where this president might not be willing to stand up to the Israelis, which, if he gets re- elected, then they know they won't get any help.

I would think that Pat is right, though, that this president sees all the down sides and he understands that the sanctions are squeezing them. The rial, their currency, has lost half its value; hyperinflation. The sanctions are tighter than they have ever been. The Europeans are not going to import oil. So you've got to give that time to work.

MR. MCLAUGHLIN: Do you think -- what do you think of this?

RICH LOWRY: Well, I think they're right. President Obama does not want the Israelis to attack. But there are differences in viewpoint here. The Israelis consider this an existential threat. It's not such a threat to us. And the Israelis see the window for them acting on their own perhaps to delay this program closing, and they would really not entrust President Obama in 2013 or Mitt Romney or Rick Santorum. They probably could trust Rick Santorum to take care of the problem, but the others they would have doubts about. So they want to do it themselves.

Now, if they're really -- if they feel there's no other alternative -- but the Stratfor setup is correct. This would be at the very far end of their capability.

And the question is how much damage could they do? And would it be worth potential down sides?

Now, I don't think the Iranians would close the Strait of Hormuz or attack our interests in the Gulf.

MR. MCLAUGHLIN: Why?

MR. LOWRY: Because then they bring us into it. And at the very least, they're going to lose --

MR. MCLAUGHLIN: They can't do it without us.

MR. LOWRY: -- their navy and a huge part of their military.

MR. MCLAUGHLIN: The proposition is that they can't do it without us.

MR. LOWRY: They can do something. The question is, can they do enough? And you're right. It's not Iraq. It's not --

MR. MCLAUGHLIN: You know what the spread-out is of nuclear reactors. They have about seven. It goes from the northern part of the country up near -- what's the name of the body of water up there?

MR. BUCHANAN: Black Sea.

MR. MCLAUGHLIN: The Black Sea, all the way down --

MR. LOWRY: It's a big task. But, John, look, they -- look at this regime that has, in effect, been at war with them for decades, that they don't consider highly rational, that they consider willing to do anything -- attack diplomats overseas, sponsor terrorism. And this is a risk they don't want to take.

MR. MCLAUGHLIN: I think it's the Caspian up there, by the way, the Caspian to the Black Sea. That's the --

MR. BUCHANAN: The Caspian is further east.

MR. MCLAUGHLIN: Yeah.

Mort.

MORT ZUCKERMAN: Well, I mean, I do think that this is seen by the Israelis as an existential threat, and this is something they're just not willing to live with. They don't feel that the United States is going to be supportive, even though they would like the United States to be supportive.

But that is a country whose ethic has been captured in a phrase "Never Again," which means they're not going to risk what they see as another holocaust that might befall Israel. It's a very small country. They'll be very vulnerable. The Iranians have made it absolutely clear that they intend to do whatever they can to damage the Israelis. This is the kind of threat the Israelis cannot live with, period.

MR. BUCHANAN: Mort, the -- look, Israel --

MR. MCLAUGHLIN: You heard the damage that can be inflicted on Israelis.

MR. BUCHANAN: Israel --

MR. ZUCKERMAN: Yes, of course, but what is worse for the Israelis -- to take the risk of making this attack or to live with --

MR. MCLAUGHLIN: Do you think --

MR. ZUCKERMAN: -- an Iran with nuclear weapons that could destroy Israel? They won't accept that.

MR. MCLAUGHLIN: I cannot comment on that single-page piece which he managed to pack so much in, which is in the current issue of Barron's. But what is one of the other points he makes that's very consequential --

MR. BUCHANAN: Well, John --

MR. MCLAUGHLIN: -- that --

MR. LOWRY: Oil. Gas prices.

MR. BUCHANAN: John, Israel is --

MR. MCLAUGHLIN: Well, it is, of course, the gas prices over here, but that's kind of a secondary consideration.

MR. BUCHANAN: Sure.

MS. CLIFT: But it would postpone --

MR. MCLAUGHLIN: But this window of opportunity that they have -- he seems to feel -- Stratfor seems to feel that it's inevitable that they're going to have the bomb. And then he says so what? Then they're going to have some serious things to talk about. But he doesn't mean the bomb, because the Iranians know that if they use the bomb, it will be immediate annihilation. Do you follow me?

MR. ZUCKERMAN: Well, yes and no. OK, the real issue, from the Israeli point of view, is that they are building this facility near the mountain of Qom, where they will literally, if they get all of their various nuclear facilities there, the Israelis will not be able to do anything about it. So that is the window that will be shutting on them.

MR. MCLAUGHLIN: You understand --

MR. ZUCKERMAN: And therefore --

MR. MCLAUGHLIN: -- that they have nuclear plants all the way down from the Caspian, all the way down --

MR. BUCHANAN: Nuclear facilities.

MR. MCLAUGHLIN: -- the length of their country.

MR. ZUCKERMAN: But they have to transform --

MR. MCLAUGHLIN: They have about seven nuclear plants.

MR. BUCHANAN: They're not plants, John.

MR. ZUCKERMAN: They're not nuclear plants. The fissionable material is going to be developed, and it's only going to be developed --

MR. BUCHANAN: They've got Natanz and Fordo -- Natanz and Fordo. Right now Israel is the existential threat to Iran.

MR. LOWRY: (Laughs.)

MR. BUCHANAN: Iran is no existential threat --

MR. LOWRY: Israel is going to destroy Iran?

MR. BUCHANAN: They've got 200 to 300 nuclear weapons.

MR. LOWRY: Oh, come on.

MR. BUCHANAN: And if the Iranians develop and build a bomb -- I don't think they're going to, but if they do, Israel will put those 200 weapons on a hair trigger. I don't believe the Iranians are as nuts as everybody else says. They haven't fought anybody since when, John?

MS. CLIFT: Right. And --

MR. ZUCKERMAN: Excuse me. In the Iranian war --

MR. MCLAUGHLIN: Go ahead.

MS. CLIFT: And if the Israelis do attack, it doesn't end the existential threat --

MR. MCLAUGHLIN: No, it doesn't.

MS. CLIFT: -- as they see it. It postpones it. And in the meantime, you have Iran retaliating with all kinds of terrorist attacks. The setup that you showed, that's just a hint of what they can do.

MR. MCLAUGHLIN: Well, the other --

MS. CLIFT: And that can rapidly get out of hand. And that can certainly affect us in this country as well.

MR. MCLAUGHLIN: Even if there was a nuclear response by Israel or a nuclear attack -- call it what you will -- they will -- Iran will continue to have a massive conventional army and they will have the public fervor for some kind of action, hostile action, against Israel that will be immense. There's that consequence too.

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: And they have -- they will have a conventional military.

MR. ZUCKERMAN: But --

MR. MCLAUGHLIN: And a big conventional military.

MR. ZUCKERMAN: Yes. But let's face it. You just have to watch what Iran has been doing and what they have been saying. You cannot diminish the extent of that threat to Israel. They're not threatening Iraq anymore. But I just would point out, in the war with Iraq, they had 100,000 kids to clear up the bomb sites on the ground, and they died. They were willing to do that. You have a level of radicalism and religious fervor in that country that makes normal calculations --

MR. MCLAUGHLIN: All right, exit question.

MR. LOWRY: They're a state sponsor of terror.

MS. CLIFT: And you have a protest movement that's on the opposite side.

MR. MCLAUGHLIN: Exit question.

MR. ZUCKERMAN: What's that?

MS. CLIFT: You have a protest movement on the opposite side.

MR. MCLAUGHLIN: What are the odds of an Israeli military strike on Iran right now? Pat.

MR. BUCHANAN: I would say one in five, not one in three or one in four. I just don't think they're going to do it because I don't think they can succeed. And I don't think they're confident that the United States is going to back them up. And you don't wound a snake. You kill it.

MR. MCLAUGHLIN: Will the United States, in fact, disapprove? And could that lead --

MR. BUCHANAN: Obama --

MR. MCLAUGHLIN: Could that lead to an entente versus a detente?

MR. BUCHANAN: Obama, the joint chiefs, the intelligence community, none of them wants this war with Iran, and they don't want the Israelis to drag us into one.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Public opinion in Israel is divided. So I agree. I think it's between --

MR. MCLAUGHLIN: What are your odds?

MS. CLIFT: -- between one in four and one in five. I think this person that you had in the setup is pretty on the mark.

MR. MCLAUGHLIN: Rich.

MR. LOWRY: I think it's about a 70 percent chance. It's an intolerable threat. If Iran gets the bomb, you're never going to unravel that. Plus you're going to end up with the Turks with the bomb, Egypt with the bomb, Saudi Arabia with the bomb. If Iran gets the bomb, the odds of a nuclear weapon going off in a conflict in the Middle East increase dramatically.

MR. MCLAUGHLIN: What's wrong with the MAD doctrine, mutually assured destruction, operating on that level?

MR. LOWRY: Even if you assume Iran's not --

MR. MCLAUGHLIN: It's been all right since 1970 --

MR. BUCHANAN: We've lived under it for --

MR. MCLAUGHLIN: -- or 1960.

MR. BUCHANAN: We lived under it for the entire Cold War.

MR. LOWRY: Even if you assume --

MR. MCLAUGHLIN: Right.

MR. LOWRY: Even if you assume Iran's not going to nuke anybody, and they probably won't, it gives them carte blanche for even more of the sort of behavior they've engaged in in the Middle East.

MR. BUCHANAN: But what has North Korea done? What has North Korea done?

MR. LOWRY: And the idea that this is a highly responsible regime --

MR. MCLAUGHLIN: The only nation that has ever used a nuclear bomb --

MR. LOWRY: -- (inaudible) -- killing our guys in Iraq --

MR. MCLAUGHLIN: -- is the United States.

MR. BUCHANAN: North Korea --

MR. ZUCKERMAN: Look, let me -- you have to let me say something.

MR. BUCHANAN: John, North Korea has not done a thing, despite the fact they've got bombs. They haven't intimidated us.

MR. LOWRY: They're isolated.

MR. ZUCKERMAN: They do not have --

MR. BUCHANAN: They haven't intimidated us.

MR. ZUCKERMAN: They do not have an existential threat. South Korea --

MR. MCLAUGHLIN: Who doesn't?

MR. ZUCKERMAN: North Korea. South Korea nor China is going to attack North Korea.

MR. MCLAUGHLIN: Do you think --

MR. ZUCKERMAN: But Iran --

MR. MCLAUGHLIN: -- Israel has an existential threat?

MR. ZUCKERMAN: Absolutely.

MR. MCLAUGHLIN: Why?

MR. ZUCKERMAN: Why? Because this is -- listen to what Iran has been saying and doing, and what they have been doing for terrorist attacks. They're not under threat as a country. Israel is under threat.

(Cross talk.)

MR. MCLAUGHLIN: Wait a minute.

MR. ZUCKERMAN: They're being --

MR. MCLAUGHLIN: Do you remember that nuclear scientist who was knocked off?

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: Who knocked off the nuclear scientist from Iran?

MR. ZUCKERMAN: Of course. But why is that? You know why that's happening -- because they're trying to stop the development of nuclear weapons --

MR. LOWRY: Can you say --

MR. ZUCKERMAN: -- by Iran.

MR. LOWRY: Can you say --

MR. MCLAUGHLIN: What are the odds? What are the odds?

MR. ZUCKERMAN: Me? I think it's at least 50-50.

MR. MCLAUGHLIN: Really?

MR. ZUCKERMAN: Yes, absolutely.

MR. MCLAUGHLIN: I will say one in four.

Issue Two: Brides No More.

Wedding ceremony, bridal music, smiling couples. Forget about it. Today more and more Americans are shunning marriage. The percentage of American adults married today is 51 percent. So says Pew Research Center. That's the lowest rate of married adults ever recorded in any earlier Pew polls. And it doesn't stop there. Those Americans who do marry are waiting longer before they say I do. In 2010, the marriage rate for Americans aged 25 to 34 was 44 percent. Fifty years ago, 1960, 82 percent were married.

So why is marriage becoming increasingly passe?

Item: Divorces. The divorce rate in America has long been 50 percent. One out of two marriages fails.

Item: Economy. Today Americans wait until they have a firm financial footing, like graduated from college, on a payroll, before walking down the aisle.

Item: No stigma. Americans today are less likely to turn up their noses on those who live alone or cohabit.

D'VERA COHN (Pew researcher): (From videotape.) People have a lot of options in their lives now. Society doesn't disapprove of you if you live alone or if you live with an unmarried partner.

MR. MCLAUGHLIN: Now, hold on, D'Vera. The number of children born out of wedlock has gone up. There's a troubling correlation -- more unmarried people having more children out of wedlock. Today the percentage of Americans born out of wedlock is -- get this -- 40 percent.

Question: Does it strike you as ironic that, just as heterosexual interest in marriage is apparently on the wane, gay and lesbian interest in marriage is waxing rhapsodic? Rich.

MR. LOWRY: Yes, that is -- (laughs) -- an irony. And when they say that marriage died, they'll put it on the heterosexuals, who have done a very good job of destroying it as an institution. In 1970 you had about 10 percent illegitimacy rate. Now it's 40, 42 percent.

And another thing that people miss, it's particularly eroding among the middle and the working class. If you look at marriage rates among the upper class, it's basically the same as it was in 1960. It's eroding in the middle and in the working class, which adds to the economic pressure and is creating a real crisis of the working class.

MR. MCLAUGHLIN: Do you know who supports you on that?

MR. LOWRY: Who's that?

MR. MCLAUGHLIN: Charles Murray.

MR. BUCHANAN: Murray.

MR. MCLAUGHLIN: Who is Charles Murray?

MR. LOWRY: He is a scholar at AEI who just wrote a book called "Coming Apart" about this very class division, which is not just economic. It's social and cultural.

MR. MCLAUGHLIN: He makes the same point that you just made. Do you think --

MR. LOWRY: He does.

MR. MCLAUGHLIN: -- you should notify him of that --

MR. LOWRY: (Laughs.)

MR. MCLAUGHLIN: -- that without knowing it, you made --

MR. LOWRY: I read his book.

MR. MCLAUGHLIN: -- the same point, which is some kind of a corroboration, an innocent corroboration --

MR. LOWRY: Charles Murray and a scholar --

MR. MCLAUGHLIN: -- of his findings?

MR. BUCHANAN: John --

MR. LOWRY: -- at the University of Virginia, Brad Wilcox, have been on this for a long time.

MR. BUCHANAN: It is, John, the triumph of the counterculture; that's right. Among working-class white folks, the illegitimacy rate is way over 40 -- is over 40 percent. Among Hispanics, all Hispanics, it's 51. Among African-Americans, it's 71 percent. Among the poor, it is pandemic.

The values of the counterculture with regard to family and marriage and divorce and premarital sex and all of these things are triumphing, frankly, in the culture and in society, and we're seeing the consequences of it now. Some of us feel it means coming apart, disintegrating.

MR. MCLAUGHLIN: Do you think --

MS. CLIFT: Can the --

MR. MCLAUGHLIN: Wait a minute, Eleanor.

MS. CLIFT: Can the counterculture speak here?

MR. MCLAUGHLIN: I want to ask Pat -- I want to ask Pat a question.

Do you think the state should be involved in marriages? Why do we have the requirement a registration is needed for the state?

MR. BUCHANAN: I think the Judeo-Christian idea of a family and children is of enormous benefit to the entire society and it can form that society on the basis of its values, and it did. Unfortunately the values are changing; there's no doubt about it. When California -- of course, they defeated gay marriage out there -- but legislatures are passing it.

MR. MCLAUGHLIN: Yeah. On the abstract level, is there any reason why marriage should be related to the state and you would have to sign a book if you want a license to get married?

MS. CLIFT: Because children --

MR. BUCHANAN: I think --

MR. MCLAUGHLIN: Wait a minute, Eleanor.

MR. BUCHANAN: Children -- there are various rights involved of married couples. There's also children involved, obligations and duties. So yes.

MR. LOWRY: Society has an interest.

MS. CLIFT: I don't --

MR. MCLAUGHLIN: You want the state to be involved in how the children are reared?

MR. BUCHANAN: No, I want the -- I mean, there's obligations to protect the children. You can't do certain things to them.

MR. MCLAUGHLIN: You mean it could be a (taxed ?) responsibility to take care of a child if a child is born out of wedlock.

MR. BUCHANAN: The society has agreed --

MR. MCLAUGHLIN: Is that what you mean?

MR. BUCHANAN: Society has agreed they're going to be educated, et cetera. You can do it by homeschooling.

MR. MCLAUGHLIN: Can't religious institutions carry that problem?

MR. BUCHANAN: Unfortunately --

MR. MCLAUGHLIN: Why have the state involved at all?

MR. BUCHANAN: Unfortunately --

MS. CLIFT: You get a tax deduction --

MR. MCLAUGHLIN: In theory, you don't need the state involved in a marriage.

MR. BUCHANAN: If you have a religious --

MR. MCLAUGHLIN: It's a private contract between spouse and --

MR. BUCHANAN: True, if we were a Judeo-Christian country like we used to be, yes.

MR. LOWRY: (Laughs.)

MR. MCLAUGHLIN: What are we now, an atheist country?

MR. BUCHANAN: We're a secular/Christian country, and increasingly secular.

MR. MCLAUGHLIN: Are you doing anything about it?

MR. BUCHANAN: Yeah, I just wrote a book. It got me in trouble. (Laughs.)

MS. CLIFT: Can the counterculture speak here? They're so in love with the institution of marriage. There are a lot of enduring relationships that don't have the institution --

MR. MCLAUGHLIN: Right.

MS. CLIFT: -- of marriage.

MR. MCLAUGHLIN: There's cohabitation.

MS. CLIFT: Right. And --

MR. MCLAUGHLIN: What's wrong with that? Are you going to denounce that?

MS. CLIFT: I'm not denouncing that at all.

MR. BUCHANAN: It's called shacking up.

MS. CLIFT: And I do not see a decay in our values. Bring back some of those high-paying manufacturing jobs and you'll see a lot more marriages along the traditional lines that Pat seems to favor.

MR. ZUCKERMAN: You also have a situation where women now can get jobs that enable them to be self-sufficient. They don't have to get married in order to have a reasonable life. That has changed dramatically.

MR. MCLAUGHLIN: Are you saying that women like marriage more than men do?

MR. ZUCKERMAN: No, I'm saying they like their independence just as much as men do, and they now can afford their independence. So they don't have to get married just in order to have a --

MR. MCLAUGHLIN: Interesting point.

MR. ZUCKERMAN: Yes. And that, it seems to me, is a very important --

MR. MCLAUGHLIN: So marriage is, what, disappearing?

MR. ZUCKERMAN: No, it's not disappearing. It's just going to happen later in life for a lot of people, simply because they can live independently.

MR. MCLAUGHLIN: Why bother if everything's going well?

MR. ZUCKERMAN: Because there are a lot of good benefits to being married.

MR. MCLAUGHLIN: Like what?

MR. ZUCKERMAN: Like what? There's a great -- unless I'm mistaken, according to the books I've read, OK, there's companionship.

MR. MCLAUGHLIN: You can have companionship without marriage.

MR. BUCHANAN: I'll tell you, Mort. I'll instruct you. (Laughs.)

MR. MCLAUGHLIN: There's lots of companionship without marriage.

MR. ZUCKERMAN: I don't want to turn this into a personal -- (laughter) -- but there's also an environment in which you want to raise children, OK? And that's one of the things that --

MR. MCLAUGHLIN: You want to -- let him in.

MR. LOWRY: Let me say, on -- sure --

MR. MCLAUGHLIN: All right, let Eleanor in.

MS. CLIFT: The joke about gay marriage is, of course, we're in favor of gay marriage because they deserve every right to be as miserable as everybody else.

MR. MCLAUGHLIN: (Laughs.

)

MS. CLIFT: So I think that kind of puts it in perspective.

MR. LOWRY: Cohabitation, that's the key point.

MR. MCLAUGHLIN: Quickly.

MR. LOWRY: Actually, the divorce revolution has receded somewhat and has gone back to the levels of around 1970. Cohabitation has radically increased.

MR. MCLAUGHLIN: No, no. That's right.

MR. LOWRY: It has -- and it's not --

MR. MCLAUGHLIN: The only reason why divorce -- because they're not married to start with.

MR. LOWRY: Right. And those relationships --

MR. MCLAUGHLIN: They're cohabiting.

MR. LOWRY: They aren't as stable and they aren't good for (the children ?).

MR. MCLAUGHLIN: OK. Issue Three: The Obama Budget, 2013.

PRESIDENT BARACK OBAMA: (From videotape.) Today we're releasing the details of that blueprint in the form of next year's budget. But the main idea in the budget is this. At a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track.

MR. MCLAUGHLIN: President Obama this week unveiled his 2013 budget -- October 1, 2012 to September 30, 2013. Spending for this 2013 fiscal year under the Obama plan is $3.8 trillion -- the most expensive federal budget on record. Of that $3.8 trillion, $2.9 trillion will come from U.S. taxpayers -- income taxes, payroll taxes, corporate taxes, sales taxes. They are federal taxes. That leaves a gap of $900 billion, a gap that will be filled by borrowing $900 billion from lenders, notably the PRC, the People's Republic of China.

Republican Senator Tom (sic/means John) Barrasso says this.

SENATOR JOHN BARRASSO (R-WY): (From videotape.) Somebody asked me if this budget was dead on arrival. I said, no, no, it's not dead on arrival. It's debt on arrival.

MR. MCLAUGHLIN: Very cutesy, Tom (sic). The Obama budget also includes a plan to reduce the nation's debt. It now stands at $15.4 trillion. He's doing it by taxing the wealthy.

Item: Income tax hike. Income taxes for households that make $250,000 a year or more will jump from 35 percent to 39.6 percent.

Item: Buffett tax hike. Those who make more than $1 million a year will be taxed at a rate of 30 percent or more -- the Buffett rule; Warren Buffett, that is.

Mort, do you want to comment on the budget? (Laughter.)

MR. ZUCKERMAN: Do I want to comment on the budget?

MR. MCLAUGHLIN: Can you pull yourself together?

MR. ZUCKERMAN: This is going to be more than $900 billion in terms of deficits, OK? It's going to be way above that, because there are assumptions in there as to the amount of taxes that are going to -- that we will be raising, according to his budget, that will never happen.

So this is a budget in which we're going to add immensely to our budget deficit and immensely to our overall deficit. And this is not necessarily going to do anything about the economy. It may save it from going down a little bit more, but it's not the way to solve the problems we have. We're not dealing with any of the major issues that this economy --

MR. LOWRY: And also Keynesian --

MR. MCLAUGHLIN: Wait a minute. Let's review some numbers here. The public debt right now is about $15.4 trillion --

MR. ZUCKERMAN: That's right.

MR. MCLAUGHLIN: Trillion dollars. That's our debt.

MR. ZUCKERMAN: That's our debt.

MR. MCLAUGHLIN: We're carrying that debt and we're paying the interest on a lot of that debt which is being held by the Chinese.

MR. ZUCKERMAN: That's right.

MR. MCLAUGHLIN: What's the interest that we're paying them? Do you know?

MR. ZUCKERMAN: The total -- it's got to be -- you're talking about --

MR. BUCHANAN: The Chinese have got over a billion dollars of -- a trillion dollars of the debt themselves, and (they're owed ?) $3.2 trillion in reserves.

MR. MCLAUGHLIN: What do you think the interest is we're paying to the Chinese --

MR. BUCHANAN: I would guess --

MR. MCLAUGHLIN: -- on their carrying a good portion of our debt?

MR. BUCHANAN: I would guess the United States is paying the Chinese between $40 (billion) and $50 billion a year on that debt. They probably got it at 4 or 5 percent.

MS. CLIFT: And we've been paying the Chinese interest for long before Barack Obama took office.

MR. ZUCKERMAN: But not nearly as much.

MS. CLIFT: This is a budget that --

MR. ZUCKERMAN: Not nearly as much.

MS. CLIFT: Excuse me. This is a budget that is not going to pass, because the Republicans wouldn't pass anything he proposes anyway. It is a setting out of a particular vision, and that vision is that you can't drastically cut a deficit before you invigorate the economy or you're going to look at a lost decade. So he has his priorities right.

He brings the deficit down over the long term and he puts some critical --

MR. LOWRY: No, no, no. Look --

MS. CLIFT: -- investments in --

MR. LOWRY: Hold on.

MS. CLIFT: You all oppose it. You all oppose it, but --

MR. MCLAUGHLIN: Let me ask you --

MR. LOWRY: Can I address this? Let me address this.

MR. MCLAUGHLIN: I want to ask you one --

MS. CLIFT: Excuse me. It's going to do --

MR. LOWRY: Keynesian --

MS. CLIFT: -- a lot better as a vision --

MR. LOWRY: Classic --

MS. CLIFT: -- on the campaign trail than the Republicans --

MR. LOWRY: Eleanor, let me just say one word. Can I say one word, two words, three words?

MS. CLIFT: -- and whatever you're about --

MR. MCLAUGHLIN: All right, let him in. Let Rich in.

MR. LOWRY: The classic Keynesian believes you spend in a recession and then you cut when times are better. This is 10 years when growth is assumed to be pretty healthy, but spending at the end of it will be 23 percent of GDP.

MS. CLIFT: Now we're saying growth is healthy? The economy is back?

MR. LOWRY: This isn't a Keynesian budget. It's a flat-out tax- and-spend big-government liberal budget.

MR. MCLAUGHLIN: I want to know -- I want to know who the head of state is --

MS. CLIFT: That's flat-out Republican rhetoric.

MR. MCLAUGHLIN: Who's the head of state in the U.K.

MR. BUCHANAN: Cameron.

MR. ZUCKERMAN: Cameron.

MR. MCLAUGHLIN: Cameron. Do you know what --

MR. BUCHANAN: Head of state is the queen.

MR. MCLAUGHLIN: Do you know what Cameron is --

MR. BUCHANAN: He's the head of government.

MR. MCLAUGHLIN: -- straining to do? Do you know what he's straining to do? He's straining to get rid of --

MR. BUCHANAN: This is Eleanor's --

MR. MCLAUGHLIN: -- his deficit.

MR. BUCHANAN: This is Eleanor's point.

MR. MCLAUGHLIN: He's straining to -- wait a minute. Let me tell you what --

MR. BUCHANAN: I know what he's doing.

MR. MCLAUGHLIN: Let me tell you what another head of state is doing.

MR. BUCHANAN: He's practicing -- (inaudible).

MR. LOWRY: (Laughs.)

MR. MCLAUGHLIN: He's got a relatively small national debt, and he's straining to get rid of it. He thinks any national debt is bad and ruinous.

MR. BUCHANAN: It's --

MR. MCLAUGHLIN: We've got a $15.3 trillion debt.

MR. BUCHANAN: It makes Eleanor's point. There are two points of view. The European view right now is austerity on the Greeks and the Spanish and in Britain austerity. But they're not growing, and so the debt to GDP is continuing to grow. The other side is the Obama side -- spend and --

MR. MCLAUGHLIN: Are you edified by the fact that Cameron is trying to get rid of the debt?

MS. CLIFT: No.

MR. BUCHANAN: But it's not working.

MR. MCLAUGHLIN: Mitt Romney wins Michigan -- yes or no?

MR. BUCHANAN: Yes. He will carpet-bomb Santorum.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Yes, but not by enough to eliminate Santorum.

MR. LOWRY: Yes, thanks to the negative ads.

MR. ZUCKERMAN: Yes, and he will drive to the polls in an American car.

MR. MCLAUGHLIN: I said before, yes, and he will.

Bye-bye.

END.