The McLaughlin Group

Host: John McLaughlin

Panel: Pat Buchanan, Author and Columnist; Eleanor Clift, Newsweek; David Rennie, The Economist; Mort Zuckerman, U.S. News & World Report

Taped: Friday, June 7, 2013
Broadcast: Weekend of June 8-9, 2013

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JOHN MCLAUGHLIN: Issue One: Summit Gamesmanship.

THEN-SECRETARY OF STATE HILLARY CLINTON: (From videotape.) Today's China is not the Soviet Union. We are not on the brink of a new cold war in Asia. A thriving China is good for America, and a thriving America is good for China.

MR. MCLAUGHLIN: One year ago, then-Secretary of State Hillary Clinton laid out four principles that would be President Obama's foundation for a U.S.-China relationship.
One, human dignity -- fundamental freedoms that undergird it.

Two, economic system -- open, free and transparent.

Three, disputes -- negotiation and peaceful resolution.

Four, national sovereignty -- respect for the territorial integrity of states.

These concepts are rooted in the belief that the U.S. and China can enjoy a mutually advantageous ongoing relationship.

This week the newly inaugurated Chinese head of state, Xi Jinping, and President Obama convened at Rancho Mirage in California, where they met to hammer out the road ahead for the world's two biggest economies.

A lot has changed for Premier Xi. Six months ago, Xi was named head of China's communist party. And at the same time, President Xi endorsed a book written by Colonel Liu Mingfu, a professor at China's National Defense University. In Colonel Liu's book, "The China Dream," Liu lays out a manifesto that calls for -- get this -- Chinese military supremacy over the United States by 2049, 35 years from now, the 100th anniversary of Chairman Mao's revolution.

Over the past five months, President Xi has repeated his support for the China military supremacy dream, notably in speeches he has given at bases of China's army, China's air force, China's space program and China's missile command.
The Obama administration responded to Xi's passionate nationalism. In February, the U.S. accused China's military of cyberspying and cybersabotage. And a few weeks ago, the Defense Science Board disclosed that Chinese hackers had penetrated 20 top U.S. weapons systems, ranging from the Patriot missile to the F-35 fighter advanced aircraft.

And two weeks ago, a commission headed by two former Obama appointees, Dennis Blair and Jon Huntsman, accused China of intellectual property theft that has cost the U.S. $300 billion annually.

Question: Are U.S.-Chinese relations at this summit at a crucial turning point? Pat Buchanan.

PAT BUCHANAN: I think they are, John. This is not the China that we went to with Richard Nixon in 1972. This is a China that is coming to the United States, I think, to pretty much establish a de facto duopoly of two great powers that basically are going to be dominant in the world. And we're to respect their zone of interest as they respect ours. We are to stay out of some of their disputes with the Japanese and the Philippines.

And the Americans have got some demands too, John. It's not only cybersabotage and cybertheft and all the rest of it. We want the Chinese to stop pushing the Japanese on the Senkaku Islands. And in particular, the United States ran last year the largest trade deficit with any country in history, $305 billion. That's responsible for 6 percent of -- about 6 percent of China's growth, or 60 percent of their growth. And what we want is for them to have their currency be cut loose and rise to its natural level to reduce this imbalance of trade. So there's a lot to talk about in California.


ELEANOR CLIFT: Well, China comes to this summit really as an equal partner. It's the second-largest economy in the world, and it's likely to overtake the U.S. probably within the next five years. And if you look at the new president's approach to office, he spent a lot of time touring all these military installations. And their military expenditures have doubled since 2006.

And I think there's a potential showdown in the Pacific, and I think that's what they're kind of gearing their way to. And I think the president is looking at it as sort of a predatory regime in the sense that the cyberhacking, the stealing of U.S. industrial and economic secrets, and the fact that they're also all over the world trying to, you know, scarf up natural resources.

And so, you know, they're a power player, and they've got some, you know, wonderful aspects to the society. They've brought 300 million people out of poverty. But there are some aspects to the regime that are disturbing.

MR. MCLAUGHLIN: What do you think about that, David?

DAVID RENNIE: Well, I used to be based in Beijing as a reporter for four years, and I think that the single biggest thing is that the Chinese think it's their turn to be back as a major power. They have a huge population.

I think that there's a benign explanation and a worrying explanation for everything that we now see. The benign one is that Xi Jinping, the new president, has to guard his nationalist flank. He's going to do some tough economic reforms, so he needs the army on his side. He needs young sort of Internet-savvy Chinese nationalists on his side. But actually, he's not planning a direct confrontation.

The worrying explanation is that actually they're biding their time, building their strength, until, as that book would suggest, they can actually challenge the U.S. And the problem is that either one of those two explanations could be true. And right now it would look, as it does now, whether either one of those explanations is true. We don't know yet which path they're headed down. But there's a benign explanation too, that they don't want a direct confrontation with America.


MORT ZUCKERMAN: Well, I agree with that. They don't want, in my judgment, a direct confrontation with America. What they want is to accelerate, even from the current levels, the growth of their economy. That, it seems to me, is the driving force.

I agree that they also want to keep the military happy, but that is the principal focus of the leadership of China. And, by and large, it's been their principal focus for three or four decades. Every time that I have been there, that's all the conversation is about.

And I've met with the military both times, and they support that, by the way, because they also know they need that kind of high- quality, high-tech world in order to be able to be the kind of world power that the military would like them to be.

MR. MCLAUGHLIN: Have you seen the extent to which China is buying into American businesses?

MR. ZUCKERMAN: I've seen some of it. I don't think that this is going to be their major, shall we say, investment. They are -- they're taking a lot of our trade secrets and our technology back to China. And that's a part of what they want to be able to do.

MR. MCLAUGHLIN: Quickly, Pat. I want to get into the economic snapshot that we have received this week from the Department of Labor, but go ahead.

MR. BUCHANAN: They have a trillion dollars in American dollars stored away. Why wouldn't they buy Smithfield ham, come over and buy American vital assets? John, they built up $3 trillion in trade surpluses at our expense, and they're coming in to buy the United States.

But they've got several terrible problems. They have an ethno- national problem with the Uighurs and Tibetans. They have a religious problem with the Christians there and the Falun Gong. Their basic ideology -- communism, Marxism, Leninism -- has no pull on the young people there. They could very well face -- and, of course, they've got a tremendous dichotomy between poor and rich. They could very well face a kind of Arab spring of their own, a Tiananmen Square future.

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

MR. BUCHANAN: And they've got to be very worried about that, because the communist party is a party of yesterday, but it's the party that rules China.


MS. CLIFT: Well, that's why they haven't --


David, what's the story on China and Tibet? Tibet seems to have disappeared from the horizon. It used to be quite prominent out there for a period of time because it had some active supporters in the United States, notably one who's in motion pictures whose name happens to escape me. What is the status of --

MR. BUCHANAN: Richard Gere.

MR. RENNIE: Richard Gere.

MR. MCLAUGHLIN: Richard Gere. What's the status of Tibet today?

MR. RENNIE: The status is that China is about to have the world's largest economy, so we're not going to argue very much about Tibet. But to do him credit, Barack Obama, the president, still does see the dalai lama when the dalai lama comes to America.

MR. MCLAUGHLIN: Is that the extent of it?

MR. RENNIE: Well, a lot of European leaders no longer see the dalai lama. I mean, you know, the Chinese have --

MR. MCLAUGHLIN: We do not raise the question --

MR. RENNIE: You know, we have other fish to fry.

MR. MCLAUGHLIN: -- of the dalai lama in any public forum. As far as we're concerned, it's a settled matter --

MR. RENNIE: Look --

MR. MCLAUGHLIN: -- that Tibet is part of China.

MR. RENNIE: There are lots of things that we should raise. There are lots of appalling things to do with human rights. But the only thing I would say about -- Pat saw a vision of two sort of countries camped out like armies across trenches facing each other. You know, we do actually have a lot of money to be made with China. You know, we in the West -- America, Britain, my country -- we're desperate for growth. We're drowning in debt. We need new jobs. We need new growth.

Now, this deal that Pat was talking about, where the Chinese have come in and bought this big ham and pork company in the U.S. this week, or put the bid in, it's the largest ever Chinese investment. It makes perfect sense.

MR. MCLAUGHLIN: Yeah, there's --

MR. RENNIE: America eats less pork. The Chinese are eating more pork.

MR. MCLAUGHLIN: Isn't it --

MR. RENNIE: America's very good at making pork.

MR. MCLAUGHLIN: Isn't it remarkable --

MR. RENNIE: So what's the problem?

MR. MCLAUGHLIN: -- that China can even be governed? Because you're talking about --

MR. BUCHANAN: It's globalism versus nationalism.

MR. MCLAUGHLIN: Just a moment. We're talking about a billion, 250 million people.

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

MR. MCLAUGHLIN: We have 310 million in the United States.

MR. RENNIE: Mm-hmm. (Acknowledging.)
MR. MCLAUGHLIN: How is it doing that? How is it able to do that? And it has Mongolia on a border. What about the other --

MR. RENNIE: Well, the big deal, as everyone knows, is that they've hollowed out their ideology. As Pat says -- he's right -- that Marxist Leninism is no longer the game. The deal is we will let you get rich. We will let you have color TVs, travel abroad, air conditioning, send your kids to college, if you don't touch us in the political realm.

MR. MCLAUGHLIN: All right --

MR. RENNIE: They've got to keep getting rich --

MR. MCLAUGHLIN: There's one more item --

MR. RENNIE: -- or the game will stop.

MR. MCLAUGHLIN: -- that's been in the news, and that is the widespread depression among women in China, possibly due to the fact that they were limited to the number of children they could bear, one or -- I think it was one, wasn't it, for a period of time?

MR. RENNIE: For many people, yeah.

MR. MCLAUGHLIN: Now, what about that story about depression? And there's also widespread poverty. In other words, there's a breach in classes. There are about three billionaires. Forbes's total is that, right?

MR. RENNIE: It's a very tough country. It's a very -- Mort has visited.

It's a very tough country, very stressful place to live. But --
MR. ZUCKERMAN: And what is particularly stressful for the average Chinese is that the elites of the Chinese communist party and the military are making huge amounts of money. They're given all sorts of opportunities, shall we say, not given to everybody else. And that, if there's anything, is going to what, I think, undermine them if they aren't careful.

MS. CLIFT: Well, that's why --

MR. MCLAUGHLIN: If you were a betting man, would you not bet on China to become the leading country in the world within a matter of, say, 50 years?


MR. MCLAUGHLIN: You would not?

MR. ZUCKERMAN: No, I would not.


MR. MCLAUGHLIN: Well, what is -- you know, why wouldn't you?

MR. ZUCKERMAN: Because I think the culture --

MS. CLIFT: Because they've got challenges.

MR. ZUCKERMAN: If we have -- they have a lot of challenges. And frankly, in my judgment, the United States, if it's properly led, will continue to be the leading economic power in the world.

MS. CLIFT: Well, that's why everyone --

MR. MCLAUGHLIN: Do you think that's a long shot, what he just said? Hold on.

MR. BUCHANAN: They are feared, and in many cases hated, by their neighbors. You take Vietnam. You take -- the Russians are concerned. They're pushing the -- they're pushing the Japanese.

MS. CLIFT: Yeah, but they can dominate all those --

MR. BUCHANAN: They're pushing the Vietnamese.

MS. CLIFT: They can dominate all those neighbors, and that's what they've been doing.

MR. MCLAUGHLIN: Do you think --

MS. CLIFT: But I think people are really looking at this new president. He's 59 years old, which is very young by Chinese standards. He's got a wife who's a folk singer, who's a star. He's a true believer in the communist party, but he gets that there's an outside world. His daughter went to Harvard. (Laughs.) So, I mean, you know, I think this is someone that the president can deal with. And we're talking about a summit this weekend. So let's see if they can find --

MR. MCLAUGHLIN: Do you know where --

MS. CLIFT: -- some personal connection.

MR. MCLAUGHLIN: Do you know what the (migrations ?) were of the head of state of China when he was over here? Where did he go first?

MS. CLIFT: He went to Iowa, I know. (Laughs.)

MR. MCLAUGHLIN: He went to Trinidad and Tobago. Oh, you mean before he became --

MR. MCLAUGHLIN: He went to Mexico.

MS. CLIFT: He wants --

MR. MCLAUGHLIN: He went to Trinidad and Tobago --
MS. CLIFT: He wants to see what the rest of the world is like.

MR. MCLAUGHLIN: -- and he handed out contracts at the CARICOM meeting over there to practically every part of this middle hemisphere.

MS. CLIFT: He's the world's banker.

MR. MCLAUGHLIN: Did you see that --

MR. BUCHANAN: He's got a lot of money.

MR. MCLAUGHLIN: I know, but -- I know. Was it also --

MR. BUCHANAN: There's nothing wrong --

MR. MCLAUGHLIN: Was it a spite message to --

MR. BUCHANAN: No, it wasn't.

MR. ZUCKERMAN: No. That's not --

MR. MCLAUGHLIN: -- President Obama? Because Obama went into his backyard when he went where?

MR. RENNIE: Here's the interesting thing.

MR. MCLAUGHLIN: When he went where?

MR. RENNIE: When we messed with the Asians there in our backyard. There's something to that. But here's the thing. If you talk to westerners -- businessmen, diplomats, journalists -- who know China really well, the thing that worries them at the moment, right now, is not China's strengths but China's weaknesses.


MR. RENNIE; And, you know, a China that falls apart chaotically or whose growth rate collapses doesn't do any of us any favors at all.

MR. MCLAUGHLIN: What's the probability of that?

MR. BUCHANAN: Ethno-nationalism is a powerful force, John. Look --

MR. MCLAUGHLIN: What does that mean?

MR. BUCHANAN: That means --

MS. CLIFT: He doesn't want war.

MR. BUCHANAN: -- ethnic groups that would like to break away; the Tibetans, Mongolians, the Uighurs in the west.

MR. RENNIE: (Inaudible.)

MR. MCLAUGHLIN: Who says the Mongolians want to break away?

MR. BUCHANAN: I'm not saying the Mongolians want to break away. They're very small; but the Uighurs in the west. But they have -- look, the problem here is the communist party has an absolute monopoly on power. And when it doesn't succeed, people are going to look to an alternative, and there is none.

MR. MCLAUGHLIN: Where else did he go when he came here? The head of state of China.

MR. ZUCKERMAN: I don't know where he went.

MR. MCLAUGHLIN: He went to -- he went to --


MR. ZUCKERMAN: Oh, yes, Mexico --

MR. MCLAUGHLIN: -- Mexico and what else?

MR. ZUCKERMAN: -- on the way.

MR. BUCHANAN: He went to the Caribbean.

MR. MCLAUGHLIN: What country did he visit down there? Middle America.

MR. RENNIE: Costa Rica.

MR. MCLAUGHLIN: Costa Rica. Who else went to Costa Rica and Mexico? Barack Obama.

MR. RENNIE: They're definitely in America's --

MR. MCLAUGHLIN: What is he doing, following Barack Obama around?

MS. CLIFT: They got a two-for-one deal.

MR. MCLAUGHLIN: He's cut a lot of deals with Mexico.

MR. BUCHANAN: Well, look, the Mexicans have got a real problem, because all their maquiladoras have moved to China.

MR. MCLAUGHLIN: What's a maquiladora?

MR. BUCHANAN: That's one of those plants and factories that moved down from here because --

MR. MCLAUGHLIN: They're right on the border. Maquiladora means the border between Mexico and the United States.

MR. BUCHANAN: The NAFTA -- because of NAFTA. Why do you think we've lost all this manufacturing, John?

MR. MCLAUGHLIN: This conversation is not really all that satisfying. You know why?


MR. MCLAUGHLIN: Because we haven't even begun to touch the immensity of this subject.

MR. ZUCKERMAN: Well, look --

MS. CLIFT: Well, there'll be other opportunities --

MR. MCLAUGHLIN: Clearly, if there is a battle going on on who is going to be number one in the world, it's going to be China or the United States.

MR. ZUCKERMAN: Well, as I say, I believe --

MR. MCLAUGHLIN: There's no other player, unless Russia --

MR. ZUCKERMAN: I agree. No, there's no other player. Russia
isn't even close.

MR. MCLAUGHLIN: Russia is three times bigger than China.


MR. BUCHANAN: Russia's losing population. It's 140 million. It's --

MR. MCLAUGHLIN: So what. You've been singing that song for about five years now.

MR. BUCHANAN: OK, but it's going to lose --

MR. MCLAUGHLIN: They've stabilized over there.

MR. BUCHANAN: They're going to lose the far east of Russia by mid-century, and I'll bet you it belongs to China.

MR. MCLAUGHLIN: Issue Two: Phone Records Seized.

ATTORNEY GENERAL ERIC HOLDER: (From videotape.) Members of Congress have been fully briefed as these issues, matters, have been under way. I'm not really comfortable in saying an awful lot more about that.

MR. MCLAUGHLIN: A top-secret court order from the semi-covert U.S. Foreign Intelligence Surveillance Court requires that Verizon, one of the U.S.'s largest phone companies, provide telephone records of all telephone calls within the United States and from foreign locations of tens of millions of American customers on a, quote- unquote, "ongoing daily basis" to the National Security Agency, or NSA.

The NSA is the nation's cryptologic intelligence service. The NSA, along with its counterpart, the Central Security Service, or CSS, employs America's top code makers and code breakers. And both agencies report to the office of James Clapper, the director of national intelligence, at the White House.

This April 2012 order could be the largest surveillance order known to have been issued. It is lawful under an application of Section 215 of the Patriot Act. The NSA is not allowed to listen in on phone calls. It does allow the NSA to collect the phone numbers of every caller and recipient, the unique serial number of phones involved, the time and duration of each phone call, and potentially the location of both the caller and the recipient.

Question: How disturbing is this news? Is it Orwellian, Big Brother watching? Is it an invasion of privacy, huge scale? Eleanor Clift.

MS. CLIFT: There's a lot of alarmist rhetoric on both the left and the right. But, in fact, this has been going on for the last several years. It began in the Bush administration. This president basically took the same program, made some important differences. He put it under the rule of law that the requests have to go through this special secret court, the FISA court. This administration does brief the relevant congressional committees. So I don't think there's any serious question that this is either illegal or unconstitutional.

And then news also broke that there's another program called PRISM, which collects data from Internet users overseas, and also scoops up some U.S. information. And so you have the civil liberties community very upset. And I'm glad they're out there at the barricades, but I think these programs have justified themselves. You've got Republicans and Democrats on the Hill defending them. And I think the president probably has to do a better job of explaining what's in place.


MS. CLIFT: But we're trying to catch up with the world, where social media has exploded.


MS. CLIFT: And the terrorists are all over the chat rooms and so forth. So if you're going to monitor communication, you can't leave out the Internet.

MR. MCLAUGHLIN: Yeah. You hear that apologia for this type of interposition --

MS. CLIFT: (Laughs.) I think Mort's on my side, probably.

MR. MCLAUGHLIN: -- into your affairs, Mort? She did a good job, didn't she?

MR. ZUCKERMAN: She did a very good job.

MR. MCLAUGHLIN: Yeah. She gave a little handshake to the ACLU that are raising their legitimate concern about this.

MS. CLIFT: Right.

MR. MCLAUGHLIN: What do you think?

MR. ZUCKERMAN: There is a legitimate concern, but there is also a legitimate need. And we have, at this stage of the game, to find some way to do our best to try and interdict the kinds of terrorist acts that you just saw in Boston, OK, where, somehow or other, that information was available.
We have -- we're in a very different world now, and we're going to have to do that. If we do it with the right kinds of restrictions, it seems to me we'll be able to live with it. It's not something we like. It's something that is imposed upon us.

MR. MCLAUGHLIN: Well, what about the rest of the world? They're the ones making phone calls in a great many instances. You think they'd like the idea of us --

MR. ZUCKERMAN: Everybody has a choice at this stage of the game. We're doing it. We are -- they are not the ones who are being attacked or are in danger the way we are being attacked and are in danger. We have the right to do it --

MR. MCLAUGHLIN: Do you think --

MR. ZUCKERMAN: -- for our own self-defense.
MR. MCLAUGHLIN: Do you think, while we know that there's no listening -- there's no Big Brother going on to conversations --


MR. MCLAUGHLIN: -- that with the phone numbers, they can retrieve all that and find out, you know, what you are saying --

MS. CLIFT: They have to --

MR. MCLAUGHLIN: -- and where you are and whether you are an enemy of the state, of this country?

MS. CLIFT: But they have to go back to the court. They have to go back to the court.

MR. MCLAUGHLIN: Wait a minute.

MR. ZUCKERMAN: They have to go back to court.

MS. CLIFT: Right.

MR. ZUCKERMAN: They don't have the right to do that. The government would be in deep trouble if they did something --

MR. MCLAUGHLIN: Oh, come, come, come, come, come, come, come.

MR. ZUCKERMAN: -- that was perceived to be illegal.

MR. MCLAUGHLIN: (Inaudible) -- court is going to know about it anyway.

MR. BUCHANAN: Hey, John, there's --

MR. ZUCKERMAN: But this is legal and it is recognized.

MR. BUCHANAN: There's potential for abuse, but there is no reality yet. It's got to be watched very closely.


MR. BUCHANAN: The potential is great.

MR. ZUCKERMAN: Because the danger is great.

MR. BUCHANAN: But I agree with Eleanor. The reality is not.

MR. MCLAUGHLIN: What's The Economist saying about this?

MR. RENNIE: Look, I think that you're right. You know, you have the choice. You say is it shocking or is it an abuse of privacy? Well, you know what? It is an abuse of privacy. But I don't think it shocks anyone. I mean, if you think about it, if someone says to you, did you know that the American government pays attention when someone in New York makes a phone call to a known jihadi in Pakistan, and if that flashes up, they then track it, I kind of assume that that's what the NSA is there for.

MR. ZUCKERMAN: That's right.

MR. RENNIE: I mean, now we've had confirmation --

MR. ZUCKERMAN: They say it's --

MR. RENNIE: -- that that's what they're there for.

MR. MCLAUGHLIN: Well, they may not be talking about their business. They may be talking about their personal lives.

MR. ZUCKERMAN: That's always possible.

MR. RENNIE: But the idea that the NSA -- the idea that the NSA tracks these foreign phone calls and emails is what the NSA is for. I don't think the American public is really shocked --

MR. MCLAUGHLIN: You don't realize the material that is there for a book, and that book will make an enormous amount of money. And that's what makes a lot of people think first before they start thinking of the finer questions of morality.

MR. RENNIE: We all know that there's tradeoff --

MR. ZUCKERMAN: I don't know where that comes from, John.

(Cross talk.)

MR. MCLAUGHLIN: Since you're on your feet here, give us a snapshot. Watch this -- a U.S. economy snapshot.
Friday the Labor Department reported that the U.S. economy added 175,000 jobs in May, but the unemployment percentage increased; more unemployment -- get that -- by one tenth of 1 percent. It now stands at 7.6 instead of 7.7.
What do you think of the state of the economy?

MR. ZUCKERMAN: I think it was a very modest step. We still have not broken out in the sense that we're really making an impact on the huge number of unemployed people that we have, and underemployed people. It's 24 million people in this country who basically are unemployed or underemployed or have given up looking for a job. We are barely making it. We need 300,000 jobs a month --

MR. MCLAUGHLIN: If you were --

MR. ZUCKERMAN: -- at a minimum, OK?

MR. MCLAUGHLIN: OK. If you were president --

MR. ZUCKERMAN: And that's as far as we're getting --

MR. MCLAUGHLIN: If you were president --

MR. ZUCKERMAN: Just a minute.


MR. ZUCKERMAN: That's all we're getting with the largest fiscal and monetary stimulus in our history. If that's it, we're still in trouble.

MR. MCLAUGHLIN: You are a successful man by some standards. If you were president today, what action would you take? Quickly. I'll give you about 10 seconds.

MR. ZUCKERMAN: I would have a much larger infrastructure program, particularly to tie together our airports. At least if we're going to spend a trillion dollars, we have something to show for it.

MS. CLIFT: Yeah. We need to get the Republicans --

MR. MCLAUGHLIN: What do you mean, tie together our airports?

MS. CLIFT: -- to go along with that.

MR. ZUCKERMAN: The way we did with the interstate highway system in the second half of the last century --


MR. ZUCKERMAN: -- and with the railroads before.

MR. BUCHANAN: (Inaudible.)

MR. ZUCKERMAN: There are all kinds of things that we could do --

MR. MCLAUGHLIN: They were infrastructure projects.

MR. ZUCKERMAN: That's right.

MR. MCLAUGHLIN: You sound like the secretary of state before he became secretary of state.

MR. ZUCKERMAN: Listen, I think the secretary of state --

MR. MCLAUGHLIN: Massive infrastructure.

MR. ZUCKERMAN: -- believe it or not, was right.

MR. MCLAUGHLIN: Issue Three: Tea Party Tales.

BECKY GERRITSON (Wetumpka, Alabama tea party): (From videotape.) The demands for information in the questionnaire shocked me.

KEVIN KOOKOGEY (Linchpins of Liberty): (From videotape.) Because I could not get status, everything effectively stopped. And since May 2011, I have been dormant, not only out of the inability to raise money, but out of abject fear that the government had a target on my back.

SUE MARTINEK (Coalition for Life of Iowa): (From videotape.) We never thought we would have to defend our prayer activities.

MR. MCLAUGHLIN: The leaders of conservative American organizations testified before Congress this week on how they were treated by the IRS, describing what they underwent when applying for a 501(c)(4) tax exemption, including the IRS's intrusive and (defining ?) questions and red tape and endless delays.

Many say this inappropriate scrutiny by the IRS of tea party conservatives and other grassroots conservative groups is demeaning. It dates back to March of 2010, three years and three months ago. The recently disclosed scandal forced the resignation of Steven Miller, the head of the Internal Revenue Service. His successor, Daniel Werfel, went before Congress this week, where he apologized and pledged to two separate committees to restore the public's trust.

DANIEL WERFEL (acting IRS commissioner): (From videotape.) My primary mission is to restore that trust. But I think it has to start with a recognition that the trust has been violated.

MR. MCLAUGHLIN: This admission of culpability and show of contrition helped clear the air. But the IRS is now feeling the heat from yet another Treasury Department inspector general report, revealing spending by the agency between 2010 and 2012 in the amount of $50 million on conferences for IRS employees.

The money spent included leadership-building videos, including this one showing IRS employees line dancing, and this one, a spoof on the cult TV classic "Star Trek," acted out by IRS employees.

On Thursday, Mr. Spock himself was beamed up to the Hill. His real name is Faris Fink.

FARIS FINK (IRS Small Business and Self-Employed Division): (From videotape.) In hindsight, many of the expenses that were incurred in this 2010 conference should have been more closely scrutinized or not incurred at all.

MR. MCLAUGHLIN: Question: Is this IRS scandal waxing or waning? And is scandal a justified word to describe what has taken place? Or is this too much to do about little?

MR. BUCHANAN: No, it's a legitimate scandal, John, and it --

MR. MCLAUGHLIN: Why, because of the amount of money spent?

MR. BUCHANAN: Because things were done wrong and nastily and partisan --

MR. MCLAUGHLIN: You're talking about --

MR. BUCHANAN: -- and maybe illegally.

MR. MCLAUGHLIN: You're talking about monetary expenditure.

MR. BUCHANAN: No, no, I'm not talking about that nonsense. What I'm talking about is what the IRS was doing. You had 88 people out there working on the tea party unfairly and unjustly.

It's metastasizing. It's going to spread, I believe, into Treasury. And it may jump into the White House. It's not going to get to the president. But when that IRS commissioner had 178 trips to the White House, you're telling me he didn't talk to any political guy? He didn't mention --

MR. MCLAUGHLIN: What's the point?

MR. BUCHANAN: The point is, I think they might have mentioned it --

MR. MCLAUGHLIN: No, the point on the White House -- that he must have talked to --

MR. BUCHANAN: He must have mentioned it.

MR. MCLAUGHLIN: Did the president know about it?

MR. BUCHANAN: No, I think the president is clean. But I wouldn't be --

MR. MCLAUGHLIN: Why is he clean?

MR. BUCHANAN: Because I -- the president said he didn't hear about it --

MR. MCLAUGHLIN: Hey, the president has described --

MR. BUCHANAN: -- till May 10th.

MR. MCLAUGHLIN: -- the IRS as an independent body.

MR. BUCHANAN: The president --

MR. MCLAUGHLIN: It's not an independent body.

MR. BUCHANAN: The president --

MR. MCLAUGHLIN: It reports to the executive branch, and he's head of the executive branch.


MR. MCLAUGHLIN: Did you hear me?

MR. BUCHANAN: The problem --

MR. MCLAUGHLIN: Did you hear me on that?

MR. BUCHANAN: I heard it. The problem --

MR. MCLAUGHLIN: Do you think it's an independent body?

MR. BUCHANAN: I believe so. (Laughs.) Look, the president's --

MR. MCLAUGHLIN: No, not in its behavior but in its structure.

MR. BUCHANAN: Let me tell you the president's job of --

MS. CLIFT: It's a semi-independent body.

MR. BUCHANAN: He created a climate that caused, I think, a lot of people to say the tea party people are enemies of the country, and whatever we do to them is a good thing.

MR. MCLAUGHLIN: Predictions. Pat. Keep it short.

MR. BUCHANAN: Big Brother government will be the Republican issue in 2014.


MS. CLIFT: Democrat Ed Markey wins the special election for the Senate seat in Massachusetts.



MR. RENNIE: You're going to see a tidal wave of Chinese investment in America, and that's going to cause a stink.

MR. MCLAUGHLIN: Over here?


MR. MCLAUGHLIN: Interesting.

MR. ZUCKERMAN: The relatively weak economy is going to cause the Federal Reserve to continue their easy-money policies for a good period of time, at least through another year.

MR. MCLAUGHLIN: Good idea? Good idea?

MR. ZUCKERMAN: Good idea? Yes.

MR. MCLAUGHLIN: I predict that within two decades, voting in presidential elections will not be optional. It will be mandatory.

The McLaughlin Group remembers Frank Lautenberg, New Jersey Democratic senator, who died this week. He was the Senate's last World War II vet and one of nature's noblemen. Our thoughts and prayers are with his family and loved ones. May he rest in peace.

(C) 2013 Federal News Service