The McLaughlin Group

Host: John McLaughlin

Pat Buchanan, Author and Columnist;
Eleanor Clift, Newsweek;
Susan Ferrechio, Washington Examiner;
Mort Zuckerman, U.S. News & World Report

Taped: Friday, November 30, 2012
Broadcast: Weekend of December 1-2, 2012

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JOHN MCLAUGHLIN: Issue One: Palestine Recognized.

MAHMOUD ABBAS (Palestinian president): (From videotape, through interpreter): Palestine comes today to the general assembly because it believes in peace and because its people, as proven in past days, are in desperate need of it.

MR. MCLAUGHLIN: Palestinians this week won a diplomatic victory at the U.N. One hundred thirty-eight out of 193 member states voted to upgrade the recognition of Palestine so that it now may be identified as an independent state.
This recognition does not resolve issues such as the status of Jerusalem, the details of borders, security, and refugee claims. Technically speaking, the Palestinians have nonmember state status.

This does not sit well with the White House.

SUSAN RICE (U.S. ambassador to the United Nations): (From videotape.) Today's unfortunate and counterproductive resolution places further obstacles in the path to peace. That is why the United States voted against it.

MR. MCLAUGHLIN: Question: Is this a moral or a practical victory for the Palestinians? Pat Buchanan.

PAT BUCHANAN: It's clearly a political and diplomatic victory, John, but we knew it was coming. Just as the Gaza war demonstrated basically the overwhelming military superiority of the Israelis, using American weapons and technology in the region, I think this vote demonstrates the total isolation of the United States and Israel in the diplomatic community on the Palestinian issue.

John, we only had one major country vote with us and Israel, and that was Canada. And so right now we are unable to be an honest broker in the Middle East because we don't even talk to Hamas or Hezbollah or Iran.

Now, the reason the West Bank Palestinians went to the U.N. with this, John, is they've lost enormous prestige to Hamas, which, while they got beaten badly militarily, stood up and defied the Israelis and defied them, said don't invade and we're ready to do battle with you.

I think the -- it has moved the peace process, if possible, even further away from resolution.


ELEANOR CLIFT: Well, it's hugely symbolic for the Palestinians. And it comes, you know, 65 years to the day from when the general assembly first recognized the division of territory between a Jewish state and an Arab state.

And I do not blame the Palestinians for wanting to grab what kind of recognition they can get. And I think the U.S. and Israel lost some of the traditional allies who would vote for them. They voted with the Palestinians because they want to try to boost Mahmoud Abbas, who's the leader of the Palestinians in the West Bank, who's seen as losing out in credibility and status to Hamas. So it was an effort to try to promote the more moderate wing of the Palestinians.

But the down side of this is it could very well just lead into the never-ending downward spiral in the Middle East. If the Israelis are already retaliating by announcing they're going to build more settlements, which I believe are illegal in the West Bank, then the Palestinians may well want to take their grievances to the International Criminal Court. And if they do that, I think Secretary of State Clinton has said they would risk having U.S. aid cut off.

So there are a lot of negative consequences that this could kick off. But I think the Palestinians deserve a moment to celebrate this recognition.

MR. MCLAUGHLIN: Susan Ferrechio.

SUSAN FERRECHIO: Well, just bouncing off what Eleanor just said, say this is not a great thing. Everybody agrees that this could again take away a tool for negotiating peace. That's off the table now. Things could spiral downward from here.

So you have to ask what role the U.S. played in all this. There may be a question about whether we should have threatened, if they were given this new status, that we would not send money to the U.N.

I think -- I've heard various conservatives suggest that the United States should have taken a much stronger stance against this, not just voting no, but saying if we're going to go for this, then we're going to withhold our money. We have to start using a little more influence on the situation instead of just voting no and standing by and watching the situation get more and more out of control.

MR. MCLAUGHLIN: So the balance of power between the Palestinians and the Israelis has not been affected by this decision at all. However, the Palestinians argue that the upgrade will allow them to join other U.N. agencies as well as the International Criminal Court, a prospect that has alarmed Israel and that may give the Palestinians greater political leverage. They hope that yesterday's vote will bolster their position in negotiations with Israel and strengthen the fragile position of Abbas himself.
Well, what about that, opening up the door in the International Criminal Court and prosecuting -- trying to prosecute Israel?

MORT ZUCKERMAN; That certainly may be one of his objectives. But I think what really it was all about is what Pat and Eleanor was really -- were really referring to, which is that he has lost such a huge amount of political standing and status within the Palestinian community. Hamas has really taken over as sort of the edge of the sword against the Israelis. And this is a major political victory for them.

It is not going to help them. It's not going to change anything on the ground. In fact, it's going to make it even more difficult for the Palestinians to do what they would like to do on the ground. It's not going to make it easier for the negotiations with the Israelis to take place, because the Israelis have an agreement called the Oslo Accords in which both sides agreed that they will not take any steps, political steps, that will change the nature of the outstanding issues. And this is in violation, therefore, of the Oslo Accords.

So it's going to make it even more difficult, particularly when you're going to have a government that is going to be a right-of- center government in Israel.

MR. MCLAUGHLIN: What's going to happen?

MR. ZUCKERMAN: What is going to happen? I mean, there's going to be an election, as you know, in Israel in January, I think the 22nd.

MR. MCLAUGHLIN: Who is that?

MR. ZUCKERMAN: Well, all the parties will be running. And right now it looks like there is going to be a reformulation of the parties. Bibi Netanyahu, who runs the Likud Party, has now incorporated Lieberman, who had -- now the foreign minister, still will be the foreign minister. So they're going to merge one party.

The purpose of it, frankly, is that the largest party -- and they will likely be the largest party -- gets the chance to form the government.

There's one wild card in all of this, which is Ehud Olmert, the former prime minister. I believe he was going to run. I don't know if he is going to run now. But I still believe he will run. And he will be a major force. And he may not get the number of mandates or parliamentary seats that Likud, Bibi's party, and Lieberman's party will get. But he'll be a major factor. He's a very credible political figure. He's very, very intelligent, manages politics very well, and manages foreign policy. So he'll have a big role if he runs.

MS. CLIFT: Look --

MR. MCLAUGHLIN: Didn't he want to give the Palestinians the opportunity to develop a state?

MR. ZUCKERMAN: Yes, for sure. He tried very hard. Ehud Olmert tried very, very hard to negotiate a settlement with the Palestinians.

MR. MCLAUGHLIN: What body of land was he talking about?

MR. ZUCKERMAN: Well, it's not a question of what body of land. It's just the borders on the west side, where the --

MR. MCLAUGHLIN: The West Bank.

MR. ZUCKERMAN: Yeah, the West Bank.

MR. MCLAUGHLIN: How big is the West Bank?

MR. ZUCKERMAN: I don't know the exact side, but it's enough to --

MR. MCLAUGHLIN: The West Bank is the size of Delaware.

MR. ZUCKERMAN: Yeah, well, nobody is larger than Delaware. And the Israelis are larger than not even Delaware.

MR. MCLAUGHLIN: If the West Bank became a state --


MR. MCLAUGHLIN: -- and it were given to the Palestinians --

MR. BUCHANAN: What would you do with Gaza? Look, Gaza and the Palestinians --

MR. ZUCKERMAN: Gaza is --

MR. MCLAUGHLIN: Well, before we get to Gaza, let's just settle this other piece --

MR. ZUCKERMAN: Yeah, Gaza is a separate issue.

MR. MCLAUGHLIN: -- because that's the big piece.

MR. BUCHANAN: You're not going to get --

MR. MCLAUGHLIN: Gaza is --

MR. BUCHANAN: John, let me tell you --

MR. MCLAUGHLIN: That is also part of --

MR. BUCHANAN: -- why you're not going to get a state on the West Bank. It's because the Israelis now have, if you include East Jerusalem, about 600,000 settlers on the West Bank. It's Judea and Samaria to Netanyahu. He didn't want to give up Gaza, which very few Israelis claim. He didn't want to pull out of --

MR. MCLAUGHLIN: I'm not saying it's likely. I'm not saying it's likely.

MR. BUCHANAN: It's not going to happen, John.

MR. ZUCKERMAN: I don't agree with that.

MR. BUCHANAN: Why waste -- why waste time, energy and resources?

MR. MCLAUGHLIN: Well, that means that the Palestinians will
never have their own state.

MR. ZUCKERMAN: That is not the case.

MR. BUCHANAN: I think the --

MR. ZUCKERMAN: Pat, that is not the case. I can tell you that from direct personal knowledge. The Israelis and this government, the Bibi Netanyahu government, was prepared to negotiate with the West Bank being the Palestinian state.


MR. BUCHANAN: Why do they keep building?

MS. CLIFT: The operative word there is "was." (Laughs.)

MR. BUCHANAN: Why do they keep building and building and building?

MR. ZUCKERMAN: Because the Palestinians won't even meet with them on this.

MR. BUCHANAN: But they're taking more and more land. They're putting peace --

MR. ZUCKERMAN: I'm not going to argue that, OK?

MR. BUCHANAN: -- further and further off.

MR. ZUCKERMAN: That is their -- it is their way of putting pressure on the Palestinians, just as this is the Palestinian way of putting pressure on the Israelis.

MR. BUCHANAN: Do you really believe they'll pull back --

MR. MCLAUGHLIN: That was Olmert's position. Are you telling me that Netanyahu is willing to talk to the Palestinians about that?

MR. BUCHANAN: Talk, of course.

MR. ZUCKERMAN: Absolutely.




MS. CLIFT: Everybody will talk.

MR. MCLAUGHLIN: I think you're making news here.

MS. CLIFT: Action -- where's the action?

MR. BUCHANAN: Talk. They've been talking for 20 years.

MS. CLIFT: Right.

MR. MCLAUGHLIN: Exit question: Does the U.N. vote to grant the Palestinians observer status advance or impede the prospects for peace talks between Israel and the Palestinians?

MR. BUCHANAN: It moves them closer to death.

MS. CLIFT: Everything in the Middle East is a potential opportunity. You have a president embarking on his second term. Peace in the Middle East is traditionally a second-term project. For Bill Clinton, it was in the waning days of his second term. I have not -- I'm not as gloomy as Pat.

MR. MCLAUGHLIN: What did you think of the position of the U.S. representative to the United Nations?

MS. CLIFT: She's a diplomat and she spoke the U.S. position. She was doing her job.

MR. MCLAUGHLIN: Do you think it's Obama's position?

MS. CLIFT: Of course it's Obama's position.

MR. MCLAUGHLIN: In his heart?


MS. CLIFT: I don't think --


MS. CLIFT: -- it's in his heart necessarily.

MR. BUCHANAN: Obama wants peace, John.

MS. CLIFT: He wants peace. He tried in his first two years. He was rebuffed. There may be another opportunity here in his second term.

MR. MCLAUGHLIN: What do you think, Susan?

MS. FERRECHIO: I think this is going to make it harder for them to achieve peace, and I think it gives a tool for the Palestinians on this criminal court to -- I don't know -- use some leverage against the Israelis that are certainly not going to make things more palatable between both sides.

MR. MCLAUGHLIN: Where is public opinion on the raging conflict in Gaza of a couple of weeks ago -- conflict with Israel?

MR. BUCHANAN: Whose public opinion, John. In the Arab world, Hamas has been elevated enormously. That's why Abu Mazen had to do this. If he'd backed down, he would have been an Uncle Tom among the Palestinians.

MS. CLIFT: That's right.

MR. BUCHANAN: He would have been finished.

MS. CLIFT: And there's a recognition even on the part of the Israelis --

MR. BUCHANAN: Even the Americans know that.

MS. CLIFT: -- that this had to happen, and the U.S.

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

MS. CLIFT: So everybody's going through their formalities here.

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

MS. CLIFT: But, you know --

MR. BUCHANAN: It's very sad, John, to be honest.

MS. CLIFT: -- it's spinning out like you had to.


MR. ZUCKERMAN: Well, listen, I mean, the real issue is that neither the U.S. government, frankly, has been very helpful in terms of getting the negotiations going. The real issue is whether or not they're going to be able to have private negotiations, not public dialogue. And that has not yet been -- neither party has been at that place at the same time. I'll put it that way.

MR. MCLAUGHLIN: Susan Rice said the right thing.

MR. ZUCKERMAN: Yes. Of course she did -- absolutely.

MR. BUCHANAN: Talking points again. (Laughs.)

MR. MCLAUGHLIN: Issue Two: Adult Leadership.

HOUSE SPEAKER JOHN BOEHNER (R-OH): (From videotape.) Two weeks ago, we had a very productive conversation at the White House. Based on where we stand today, I would say two things. First, despite the claims that the president supports a balanced approach, the Democrats have yet to get serious about real spending cuts.

And secondly, no substantive progress has been made in the talks between the White House and the House over the last two weeks. Listen, this is not a game. Jobs are on the line. The American economy is on the line. And this is a moment for adult leadership.

MR. MCLAUGHLIN: Talks to avert the fiscal cliff turned sour this week after Republicans in Congress rejected what they dubbed a, quote- unquote, "completely unbalanced and unreasonable offer" from the White House.

Question: What was the offer on the table that Speaker Boehner rejected? Susan Ferrechio.

MS. FERRECHIO: The treasury secretary, Tim Geithner, came and offered a plan that had $1.6 trillion in new revenue through tax increases and cuts to Medicare that would amount to about $400 billion. The Republicans basically laughed at this. It also included $50 billion in new stimulus spending, which the Republicans are not friendly to in the first place. So it was a lot of new revenue, very little in cuts.

And Republicans feel like they extended something risky weeks ago when they said they would put revenue on the table through tax increases by closing tax loopholes. So they feel like they put an offer on the table that's outside their comfort zone.

And in return, a few weeks later, Democrats come back with something that they felt was not a serious offer, because they didn't put forward anything risky. They didn't put forward any big cuts. So Republicans are basically saying, hey, look, we're willing to put revenue on the table. Where are the cuts? Where are the cuts? And so everybody walked away.

MS. CLIFT: Outside their comfort zone? Mitt Romney ran on tax reform and closing loopholes. I don't see anything new there. Speaker Boehner says it's not a game, but there's a lot of gamesmanship. These are opening offers. And the president has put out a document that basically would litigate Democratic politics into policy.

And Democrats love it. And Boehner now can work to extract concessions from the Democratic side.


MS. CLIFT: We're just getting into the bargaining here.

MR. BUCHANAN: John, this was --

MS. CLIFT: Wake me when it's over. (Laughs.)

MR. BUCHANAN: This was an offer of contempt. It was a manifestation of contempt for the Republicans to do something like that. And what the Democrats are saying behind it is you Republicans are more afraid of going over the fiscal cliff than we are, and you know it, and that's why we can drive you to the wall. They are seriously mistaken.

What Boehner should do, extend the Bush tax cuts, vote in the House, extend the payroll tax cuts, tell Mr. President, you've got them there. We're not going to have you point a gun to our head and make us violate our principles and raise taxes, which we don't believe will work. We are not that terrified of going over the cliff. You will have to take us, sir, because we're giving you the way out. And then, at that point, I think your negotiating hand is far stronger. And frankly, if you have to, go over the cliff.

MR. MCLAUGHLIN: What's the deadline on this?

MR. BUCHANAN: January 1.

MR. MCLAUGHLIN: I know that, but in order to make it -- what is the real deadline?

MR. BUCHANAN: You've got to get some movement --

MR. MCLAUGHLIN: Is it the --

MR. BUCHANAN: You've got to get movement before --

MR. MCLAUGHLIN: Say, the 13th of December?

MR. BUCHANAN: No, you've got to get real movement before Christmas and get it close to closing the deal by then.

MR. MCLAUGHLIN: A couple of weeks -- one week before Christmas, at least.


MR. MCLAUGHLIN: You've got to get it close to closing it. After Christmas you could close it.

MR. ZUCKERMAN: The House --

MR. MCLAUGHLIN: That's about two weeks from today.

MR. ZUCKERMAN: The House closes down, I think --

MR. BUCHANAN: Four weeks.

MS. FERRECHIO: No, they're going to -- they'll take this thing up to Christmas Eve if they have to.


MR. ZUCKERMAN: Yeah, that's right. That's right.

MS. FERRECHIO: It would be OK.

MR. ZUCKERMAN: Look, this is exactly the wrong way to accomplish anything. And I thought the president was wrong several weeks ago when he went public with what his offer was, drawing red lines and saying we are not going to do this. As a result of that, Boehner went public and he drew red lines.

If you want to get something done on something as difficult and as delicate as this politically, you do it privately. You meet with people privately so that you don't put everybody into a position where they get locked in. I think this is the worst way of doing it, and the president is responsible for it.

MS. CLIFT: Oh, it's the best way --

MR. MCLAUGHLIN: What is the --

MS. CLIFT: It's the best way of doing it.

MR. ZUCKERMAN: You think so.

MS. CLIFT: You're watching --

MR. ZUCKERMAN: That's not the way to get anything done.

MS. CLIFT: You're watching the cracks on the Republican side. They're running away from Grover Norquist.

MR. BUCHANAN: They're coming back together, Eleanor, because --

MS. CLIFT: You have a Republican in the House saying --

MR. ZUCKERMAN: The most unifying thing --

MR. BUCHANAN: Exactly.

MR. ZUCKERMAN: -- for the Republican Party is Barack --

MR. MCLAUGHLIN: Eleanor --

MS. CLIFT: We had an election, fellows, remember?

MR. ZUCKERMAN: Yes, I do remember.


MS. FERRECHIO: And that's not what Eleanor is saying.

MS. CLIFT: No, no, no. We had an election.

MR. MCLAUGHLIN: We have to avoid a recession, right?


MR. BUCHANAN: Who has to avoid it?


MR. BUCHANAN: Obama's got to -- Obama's got to avoid it too. That's the point.

MS. CLIFT: The Republicans are the ones that will get --


MR. BUCHANAN: Because if he takes us over the cliff, it's his economy, his second term --

MR. MCLAUGHLIN: This is his second term.

MR. BUCHANAN: -- his presidency.

MR. MCLAUGHLIN: It's his presidency.

MR. BUCHANAN: The presidency's on the line.

MS. FERRECHIO: Do you think he wants to start his second term --

MR. MCLAUGHLIN: Do you think he'll take the rap for it in the history books?

MR. BUCHANAN: Oh, sure --

MR. ZUCKERMAN: Yeah, for sure.

MR. BUCHANAN: -- if he takes us over --

MR. MCLAUGHLIN: I want to get back to the idea of what
could produce a recession. What set of events, between now and, say, a week before Christmas?

MR. ZUCKERMAN: OK, if, by recession, you mean an economy that is shrinking rather than growing very slowly, if the fiscal cliff --

MR. MCLAUGHLIN: That's what I mean.

MR. ZUCKERMAN: If we go over the fiscal cliff, it is estimated it'll take 4 percent GDP. We presently have, at the moment, 2 percent growth. That means we'll be a negative 2 percent. That would be considered to be a recession.

MS. FERRECHIO: And unemployment will go up to over 9 percent.


MR. MCLAUGHLIN: What's the --

MR. ZUCKERMAN: But the unemployment is way above 9 percent. That is a totally phony number.

MS. FERRECHIO: That number would go up even more, though.

MR. ZUCKERMAN: The unemployment rate is 15 to 20 percent.

MR. MCLAUGHLIN: Give me a couple of elements of the series of steps that could be taken to meet the cliff crisis, that would lead to a recession?

MR. ZUCKERMAN: Oh, just any one of them. I mean, what the cliff crisis will do, OK, is basically cause a decline in GDP because of its costs.

MR. MCLAUGHLIN: It would increase spending.

MR. BUCHANAN: Well, look, John, you'll have $100 billion cut in spending in the first year, and the largest tax increase in history will hit on January 1.

MS. CLIFT: The fiscal cliff is a --

MR. ZUCKERMAN: A trillion, 600 billion dollar increase in taxes.

MS. CLIFT: -- is a man-made creation.

MR. MCLAUGHLIN: Tax hikes would be a direct disincentive to growth.

MR. ZUCKERMAN: Of course. Look, it would be a disincentive on many levels, because it would --

MR. MCLAUGHLIN: Would it produce a recession?

MR. BUCHANAN: You'd have a panic before January.

MR. ZUCKERMAN: It would tell the entire world --

MR. BUCHANAN: You'd have a panic of sales of stocks and bonds before January.

MR. ZUCKERMAN: Right. It would tell the entire world --

MS. FERRECHIO: You already see that.


MR. ZUCKERMAN: -- that we do not have a functional government.

MR. MCLAUGHLIN: OK, on Thursday President Obama invited Mitt Romney to the White House for lunch. There's a picture of these two giants.

MR. BUCHANAN: (Laughs.)

MR. MCLAUGHLIN: Now, do you know what was served for lunch, Susan Ferrechio?

MS. FERRECHIO: Yes. It was white bean chili --

MS. CLIFT: No, white turkey.

MS. FERRECHIO: White turkey chili and southwestern salad.

MS. CLIFT: Southwestern chicken salad.

MR. BUCHANAN: You're both --

MR. MCLAUGHLIN: OK, so the emphasis was on poultry, right?

MS. CLIFT: Right.

MR. MCLAUGHLIN: It was not on beef --


MR. MCLAUGHLIN: -- because when they kill the bird, that's what the --

MS. FERRECHIO: Wait. Was it meatless Monday or --

MR. MCLAUGHLIN: -- that's what the --

MR. BUCHANAN: They're both wrong, John.

MR. MCLAUGHLIN: -- animal rights -- (inaudible).


MR. MCLAUGHLIN: So they figured by going with the bird now,
since the animal rights people --

MR. BUCHANAN: I'll tell you the bird it was.

MS. CLIFT: You're reading more into that --

MR. BUCHANAN: I'll tell you what the bird was. It was crow and humble pie. (Laughter.) And Mitt --

MR. MCLAUGHLIN: Very cute. But let me get back to my point.

MR. BUCHANAN: And Mitt ate most of it. (Laughs.)

MR. MCLAUGHLIN: Let me get back to my point. What is that group called, the animal --




MS. FERRECHIO: People for the Ethical Treatment of Animals.

MR. MCLAUGHLIN: People for the --

MS. FERRECHIO: Ethical Treatment of Animals.

MR. BUCHANAN: Ethical Treatment of Animals.


MS. FERRECHIO: Ethical Treatment of Animals.

MR. MCLAUGHLIN: Ethical Treatment of Animals.

MR. ZUCKERMAN: Politicians should be politicians for the ethical treatment of animals.

MR. MCLAUGHLIN: So they were on the scene while we were killing the birds for turkey. And they said you should not kill the birds in the first place.


MR. MCLAUGHLIN: And then the birds suddenly became from two birds to one bird, because Obama --

MR. BUCHANAN: They euthanized one.

MR. MCLAUGHLIN: Apparently somebody made a mistake, because one network said that Obama chose between the two birds the one that would live and the one that would die.

MR. ZUCKERMAN: That's what we call the lesser of two birds.

MS. CLIFT: Both birds --

MS. FERRECHIO: They both get pardoned.

MR. MCLAUGHLIN: Where is -- is this a southern vote that they're looking for?

MR. ZUCKERMAN: I don't have the vaguest idea.

MS. CLIFT: You know, John --

MR. MCLAUGHLIN: Where is the beef grown? Where do the birds come from?

MS. CLIFT: John, sometimes it's just lunch.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: They had lunch.

MR. BUCHANAN: They were created, John. (Laughs.)

MS. CLIFT: It was a nice -- it was a nice --

MR. BUCHANAN: You don't believe in evolution, do you? They were created.

MR. MCLAUGHLIN: There was deliberately not any beef on the menu for the meeting of these two guys and having lunch together.

Exit question. President Obama said Mitt Romney had some good ideas that they discussed. What did they discuss?
MR. BUCHANAN: What they discussed, John, was I think he probably asked Mitt if he could give him a little bit of help in the problems he's got on the fiscal cliff.

MR. MCLAUGHLIN: Did he offer him anything?

MR. BUCHANAN: No, I don't think he did offer him anything, not any substantive --

MR. MCLAUGHLIN: Did Mitt want anything?

MR. BUCHANAN: No. And it would be ill-advised for Mitt to take anything.

MR. MCLAUGHLIN: Did he want anything?

MS. FERRECHIO: I think it was -- it's a tradition for the two sides to meet at a lunch, a post-election lunch. But I really don't think anything meaningful is going to come out of it, and I don't think Mitt Romney will be involved in Obama -- his administration in any way.

MS. CLIFT: No --

MR. MCLAUGHLIN: What about a presidential commission? There are a lot of those out there. You remember --

MS. FERRECHIO: I say don't hold your breath.


MS. FERRECHIO: I think that's the end of their relationship.

MR. MCLAUGHLIN: A presidential commission sounds better than it is, correct?


MR. BUCHANAN: It doesn't sound better for Mitt.

MR. MCLAUGHLIN: What -- for Mitt?

MR. BUCHANAN: (Laughs.)

MR. MCLAUGHLIN: Mitt doesn't want anything, correct?


MS. CLIFT: I think it would be nice --


MS. CLIFT: It would be nice if Governor Romney were some sort of a conduit to the business community, people like Mort. But I don't expect that's going to happen either.

MR. MCLAUGHLIN: Well, Mort may have some competition, because Mitt has already rented space --

MS. CLIFT: His sons.

MR. MCLAUGHLIN: -- in Boston.

MR. BUCHANAN: His sons have.

MR. ZUCKERMAN: I know. I know. He was -- it was a big lease, and we were really competing for it, John.

MR. BUCHANAN: (Laughs.)

MR. ZUCKERMAN: I think it may have been one office.

MR. MCLAUGHLIN: Are you being sarcastic?


MR. MCLAUGHLIN: You don't like Mitt.

MR. ZUCKERMAN: I like him a lot.

MR. MCLAUGHLIN: Did you vote for him?

MR. ZUCKERMAN: I did. And we endorsed him in the Daily News.

MR. MCLAUGHLIN: Oh, did you?

MR. ZUCKERMAN: Yeah -- first time we endorsed a Republican.

MR. MCLAUGHLIN: What would you tell Obama to use Mitt for?

MR. ZUCKERMAN: There's no role that he could really play. I would tell Obama to listen to some of the economists who understand what's going on in the business world, which is terrible. And our economy is so fragile, and he doesn't talk to any of the people who really understand what's going on.

MR. MCLAUGHLIN: Issue Three: Consumer Paradox.

'Tis the seat for retailers to be jolly? Well, many were on Black Friday, the day after Thanksgiving, when the holiday shopping spree began. On Black Friday weekend, almost 140 million Americans shopped at stores or online. Total weekend spending reached $59 billion. The average shopper spent $423, up from $398 last year.

Then there's Cyber Monday, the Monday following Black Friday weekend, when consumers are drawn to the Internet for deals and discounts online. This Cyber Monday, shoppers bought the most items online ever, with $1.47 billion spent.

Then there was the Powerball lottery this week, with its all-time record-breaking biggest jackpot ever, a whopping $587 million -- more than half a billion.

Question: The U.S. is still in an economic recovery. But consumer spending remains high. Is this a paradox? And is it also lunacy?

MR. ZUCKERMAN: It's neither. It has a real problem. It's not true. It's true that consumer spending is up a small amount, but in real terms, the economy is growing at the lowest rate. We have a $25 billion deficit every single week, and we can't get the economy to grow at more than 2 percent.

The numbers here are a little bit misleading in terms of the growth of the economy, because eight tenths of 1 percent of the 2.7 percent they call is from inventory buildup. And there's another part of it, without going into it. So we're still growing at a rate lower than 2 percent, with the biggest fiscal stimulus and the biggest monetary stimulus we've ever had. So there's something wrong with the economy. It is not working.

MR. MCLAUGHLIN: Do you think that this is in a recovery mode, but it's losing steam?

MR. ZUCKERMAN: Well, it seems to be -- it seems to be losing steam. And we're going to lose more steam, because a lot of these particular policies are going to run out. But the fact is that we are in -- we're in the third or fourth year of a major --


MR. ZUCKERMAN: -- slowdown in the economy.

MR. BUCHANAN: But consumers --

MR. MCLAUGHLIN: I see a 3 percent deficiency or deficit of growth this year.

MR. ZUCKERMAN: You mean, coming up we're going to have a 3 percent growth rate?



MR. BUCHANAN: That would be a recession.

MR. ZUCKERMAN: Yeah. This year it's -- literally, in the first quarter, it was 1.7 percent growth. The second quarter was 1.3 percent. We're now -- overall we're going to be less than 2 percent.

MR. BUCHANAN: But John --

MR. ZUCKERMAN: The third quarter --

MR. MCLAUGHLIN: Where do I get this 3 percent decline in growth this year?

MR. ZUCKERMAN: Oh, no, the decline --

MR. BUCHANAN: That would be -- a 3 percent decline in GDP would be a recession, John.


MR. BUCHANAN: The point is, consumer debt has diminished by something like 20 percent in the last four years, so there's some measure of confidence. You know, the amazing figure -- 150,000 FBI clearances for guns purchased on Black Friday alone, the highest number of guns purchased in U.S. history in any single day. It beat the record set last year. You should do a segment, John, next week on secession.

MS. CLIFT: Right. Well, I was just going to say, those are the folks who want secession. And 40,000 people signed a petition in Texas --


MS. CLIFT: -- which sounds like a lot, but we have a country of over 300 million.

MR. BUCHANAN: A hundred and sixteen thousand.

MS. CLIFT: I say let them go.

MR. BUCHANAN: A hundred and sixteen thousand. (Laughs.)

MR. MCLAUGHLIN: Susan, you've got to fight your way --

MS. FERRECHIO: So -- but getting back to spending, though, going out and buying a flat screen at Target or doing some Christmas shopping is really not a great indicator of the nation's economic health. Jobless numbers are still high --

MR. ZUCKERMAN: Very high.

MS. FERRECHIO: -- and rising month to month. The housing prices are stuck. Housing starts are down. You know, Europe is economically crumbling. All these very ominous signs for the economy overseas and here doesn't make me feel very confident --

MS. CLIFT: You know --

MS. FERRECHIO: -- that things are really improving, even though --

MR. MCLAUGHLIN: Did you see --

MS. FERRECHIO: -- people are storming the doors at Wal-Mart.

MS. CLIFT: Americans --

MR. MCLAUGHLIN: Did you feel better when you saw Joe Biden at Costco --


MR. MCLAUGHLIN: -- buying a 32-inch --

MS. FERRECHIO: No, I didn't, because --

MR. MCLAUGHLIN: -- television set?

MS. FERRECHIO: -- he bought -- he renewed his membership the day before.

MR. BUCHANAN: It's a screen.

MR. MCLAUGHLIN: He does the gold card. He says I've been a gold member. I'm a gold member because I've been here for so many years.

MS. FERRECHIO: He renewed his membership the day before.


MS. FERRECHIO: And then -- his membership had lapsed. And Costco was a big supporter of Obama, so he had to return the favor by doing some Christmas shopping there.

MS. CLIFT: Well, Costco is also a great company, and they just opened the first store in the District of Columbia. So we Washingtonians are very happy about it. I must say that that --

MR. MCLAUGHLIN: Well, I don't know whether you can speak -- I live in Washington. I haven't declared my happiness.

MS. CLIFT: Well, I don't think you're a regular Costco goer. But I must say, whenever I feel happy --

MR. BUCHANAN: John's over at Nordstrom's.

MS. CLIFT: Whenever I feel happy --

MR. MCLAUGHLIN: Oh, I (know ?) my bargains.

MR. BUCHANAN: (Laughs.)

MS. CLIFT: Whenever I feel happy about the results of the election or that the economy is picking up, I know where to come --

MR. BUCHANAN: Neiman Marcus, John. (Laughs.)

MS. CLIFT: -- to feel gloomy.

MR. MCLAUGHLIN: Predictions. Pat.

MR. BUCHANAN: The U.S. will be drawn into the Syrian war.


MS. CLIFT: Mr. Smith will be coming back to Washington. Filibuster reform is on the way.

MR. MCLAUGHLIN: Susan Ferrechio.

MS. FERRECHIO: The Democrats are going to start offering some more serious cuts in the fiscal cliff negotiations.


MR. ZUCKERMAN: France is going to be the next country in Europe that's going to threaten the whole economy of the European common market.

MR. MCLAUGHLIN: President Obama will nominate John Kerry to be secretary of state.


(C) 2012 Federal News Service