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The McLaughlin Group

Host: John McLaughlin

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

Taped: Friday, June 21, 2013
Broadcast: Weekend of June 22-23, 2013

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JOHN MCLAUGHLIN: Issue One: Syrian Rumble.

PRESIDENT BARACK OBAMA: (From videotape.) We do have differing perspectives on the problem, but we share an interest in reducing the violence, securing chemical weapons and ensuring that they're neither used nor are they subject to proliferation, and that we want to try to resolve the issue through political means if possible.

RUSSIAN PRESIDENT VLADIMIR PUTIN: (From videotape; interpretation provided by Mr. McLaughlin.) Our opinions do not coincide, but all of us have the intention to stop the violence in Syria, to stop the growth of victims, and to solve the situation peacefully.

MR. MCLAUGHLIN: The G-8, or Group of Eight, consists of Russia, the U.S., the U.K., Germany, France, Italy, Canada and Japan. G-8 leaders, notably Russia's Vladimir Putin and President Obama, met in Northern Ireland for a two-day summit this week.

One major sticking point: The civil war in Syria has taken at least 93,000 lives. The G-8 leaders concluded their conference with an agreement to seek a negotiated peace in Syria by bringing together the warring factions to peace talks in Geneva.

There was also consensus for a government in Syria to include, quote, "top leadership that inspires public confidence," unquote. In addition to supporting a peace process, G-8 leaders pledged $1.5 billion to aid Syrian refugees and condemn the use of chemical weapons and human rights abuses committed by both sides in the conflict.

Question: Did anything that happened at the G-8 make it more likely that Syrian President Assad will actively take part in the Geneva talks to end the fighting? Pat Buchanan.

PAT BUCHANAN: I think Assad's ready to go to the Geneva talks. It's the rebels that are not, John, because they're getting whipped.

Here's the situation. Putin has his one last naval base at Tartus. His one last ally is Syria. He is serious about maintaining that ally, as are the Iranians, as is Hezbollah. They are winning the war now. It's the rebels who are in retreat.

And Barack Obama is timidly putting one toe in the water and one toe out. But the serious parties here, those groups I've described, they are on the verge of winning the war over an extended period of time. They're delighted to come to talks. And the rebels won't, because they're losing.

MR. MCLAUGHLIN: Eleanor --

ELEANOR CLIFT: Well, I --

MR. MCLAUGHLIN: -- the president, our president, wants Assad out. And Putin wants Assad to stay. Did you notice anything in these developments that would indicate there's a resolution of that --

MS. CLIFT: Well, there's a little bit --

MR. MCLAUGHLIN: -- conflict?

MS. CLIFT: -- of wiggle room on the part of the U.S. I think the U.S. is basically now saying, you know, we don't want the whole Assad regime to go; we just want Assad to move aside.

MR. MCLAUGHLIN: Meaning the military can stay --

MS. CLIFT: Well, yeah. The military --

MR. MCLAUGHLIN: -- to preserve order.

MS. CLIFT: -- the government. In other words, they don't want to do what they did in Iraq, where you dismantle an entire government and you create chaos. And so --

MR. MCLAUGHLIN: And that was disastrous.

MS. CLIFT: Yes, exactly. And so I think the U.S. has given some ground. But Pat is right when he says this war is going to be decided, it looks like, militarily. And at the G-8 summit, there was no appetite for escalating the allies' involvement. There was no talk, really serious talk, about a no-fly zone or any of that stuff that's been talked about in this country.

So I think the possibility of more military involvement looks less likely today than it did even a week ago. And peace conferences occur when one side is either clearly winning, which may happen soon, or both sides are militarily exhausted, which is what happened after Bosnia. So we may get a peace conference this summer, and I think that's good. But it may not necessarily vindicate the side that the U.S. is supporting.

MR. MCLAUGHLIN: That seems quite reasonable on what you've just heard. Do you subscribe to what you've just heard?

SUSAN FERRECHIO: Well, I agree with Pat that just sticking our toe in is not going to help the U.S. side of this, that there's too much at stake for Putin with Syria and that he was, you know, frankly, defiant about it last week.

And I don't think that there's any indication that the U.S. and Russia are going to come together on this thing. Putin's going to hold his ground. We're going to stick our toe in and provide a couple of weapons, and this is going to just continue. I don't think there's -- I think Assad is not going anywhere.

MR. MCLAUGHLIN: Mort.

MORT ZUCKERMAN: Well, I think this is going to be a major defeat for the United States if that is the case. And what we are at risk here is having all of the people and all of the countries who are opposed to us have a major victory here, which will tilt the general support for us against us. And I think that's a major, major problem for us.

You're not just talking about Syria. You're talking about Lebanon. You're talking about Jordan. All of these countries are going to be at risk if we don't. And then we are going to lose whatever places -- place we have in an area that we have been the dominant power in for generations.

MS. FERRECHIO: Yeah, I think you have to look at what message is this is going to send, the ultimate outcome here.

MS. CLIFT: I don't know if these other countries are necessarily at risk if Assad stays in place or his government stays in place. Most of these governments are concerned about continuing stability. I don't know they were necessarily hostile to Assad.

MR. BUCHANAN: Mort's got a very good point here.

MS. CLIFT: This is not a pro -- one more thing. This is not a pro-democracy movement. This is a power struggle.

MR. BUCHANAN: Right. Mort has a good point here, though. The Egyptians want Assad out. The Turks want him out. The Jordanians want him out. Qatar does. The Saudis want him out, and we want him out.

But the people who are serious about keeping him in, they're investing money and troops and blood, and they're winning the war because our side won't make the investment in a victory that the other side will. And that's why the other side, which is serious, is winning the war.

MR. MCLAUGHLIN: If you were giving advice to the president, would you tell him to put --

MR. BUCHANAN: Stay out of this, because you're just putting your toe in. You're putting our prestige in. And we're going to lose. You don't have --

MR. MCLAUGHLIN: Is it a civil war.

MS. FERRECHIO: Right. We're going to lose.

MR. MCLAUGHLIN: Is it a civil war?

MR. BUCHANAN: It's turning into a sectarian war as well. It's a civil, sectarian, ideological --

MR. MCLAUGHLIN: Is Syria a sovereign state?

MR. BUCHANAN: It is a sovereign state, and the Russians --

MR. MCLAUGHLIN: Aren't we supposed to stay out of civil wars in sovereign states?

MR. BUCHANAN: The Russians have every right --

MS. FERRECHIO: (Inaudible.)

MR. MCLAUGHLIN: What?

MR. BUCHANAN: The Russians have every right -- as a sovereign state, they recognize a client state -- to aid the Syrian government, the same right we had to aid Saigon.

MS. CLIFT: And we have every right to stay out of the civil war and say this is not our fight.

MR. BUCHANAN: Exactly.

MS. CLIFT: And I think that's what the president is doing.

(Cross talk.)

MR. MCLAUGHLIN: Don't we have a United Nations to take care of these things?

MR. ZUCKERMAN: John, that is --

MS. CLIFT: I don't think the United Nations --

MR. MCLAUGHLIN: What is this?

MR. ZUCKERMAN: That is --

MS. CLIFT: The United Nations does not have combat troops.

MR. ZUCKERMAN: This is -- that is a hopelessly idealistic view of what is going to resolve this. This is a war. It's going to be resolved on the ground with military strength. The other side is getting considerable support. And we aren't doing (what we did ?). This whole red line over the issue of --

MS. FERRECHIO: Chemical weapons.

MR. ZUCKERMAN: -- chemical weapons, you know, just was a joke. I mean, then everybody knows that we are so late --

MR. MCLAUGHLIN: Leave the army in Syria in place, and let the army in Syria take care of the chemical weapons.

MR. ZUCKERMAN: That's easy to say, but the army is not taking care of chemical weapons. We do not have the military forces there that are going to -- that's going to win. We're going to lose.

MR. BUCHANAN: Where does the president of the United States get the authority to send military forces into action in Syria? There's been no authorization of war.

MS. CLIFT: He's not doing that. He's not doing that.

MR. MCLAUGHLIN: Why didn't you say that in the Vietnam conflict?

MR. BUCHANAN: Because we were supporting a government that asked us to help, and we had a Tonkin Gulf resolution. We got no resolution to go to war in this war.

MR. MCLAUGHLIN: The Tonkin Gulf resolution has been described as a phony resolution.

MR. BUCHANAN: It was voted 88 to 2 by the Senate, and virtually every member of the House voted for it.

MS. CLIFT: Right. But it was phony. It was phony.

MR. MCLAUGHLIN: It still has been attacked as being unworthy.

MS. CLIFT: It was --

MR. BUCHANAN: But it was the authorization.

MS. CLIFT: -- an excuse to go into a war that the president at that time thought he wanted to get into. I imagine if Lyndon Johnson were alive today, he'd wish he'd made the other decision. And the president is trying to keep us out of this war, and --

MR. BUCHANAN: I think he --

MS. CLIFT: -- history will judge --

MR. MCLAUGHLIN: Susan, haven't we --

MS. CLIFT: -- whether that's the right decision or the wrong decision.

MR. MCLAUGHLIN: Haven't we had our fill -- haven't we had our fill in this country of war?

MS. FERRECHIO: Well, that's just it. If the president tries to do any more than he's doing right now, you're going to have an absolute --

MR. MCLAUGHLIN: Plus the fact --

MS. FERRECHIO: -- backlash from the public.

MR. MCLAUGHLIN: Plus the fact that sovereignty is sovereignty.

MR. BUCHANAN: Exactly. And the country -- this country doesn't want to get into another war like Afghanistan and Iraq. And that's what he's tiptoeing into.

MR. MCLAUGHLIN: There are circumstances when the sovereignty can be invaded, when it is such a disastrous situation.

MR. BUCHANAN: But it ought to be declared by the Congress of the United States.

MR. MCLAUGHLIN: Absolutely.

OK, the G-8 speaks to the world economy.

At the summit, the G-8 leaders issued a cautious assessment of the global economy. In a statement, the G-8 warned that, quote, "global economic prospects remain weak, though downside risks have reduced, thanks in part to significant policy actions taken," unquote, in the U.S., the Eurozone and Japan.

Overall, the message from the G-8 leaders depicted the year ahead, 2014, as a, quote-unquote, "difficult one," with the Eurozone in recession and the American economy still hampered by high unemployment. China did not participate in the discussions since China is not a member of the G-8, although Japan, its neighbor, is.

Why are the economies around the world slowing down? Mort Zuckerman.

MR. ZUCKERMAN: In large part because the economies around the world have accumulated too much debt, and they don't know quite how to get the economies moving. China's rate of growth, which was almost double digits -- 10, 11 percent -- is now down to 6 or 5 percent, and nobody knows where it's going.

Exports, for example, within the European Community are dropping all over the place, virtually every European country. Look at the unemployment rate in Spain. It's 26 percent. You look at Italy, France and Spain. They're all basket cases. They had an absolute orgy of debt, private debt, particularly through retail.

Just to give you one little statistic, the Spanish banks had total real estate lending equal to 109 percent of GDP, just in real estate lending. And real estate has collapsed in these countries because there was a bubble that has burst. That is where we are today.

MR. MCLAUGHLIN: What's the unemployment rate for young people under the age of 28?

MR. BUCHANAN: Fifty --

MR. MCLAUGHLIN: In Spain. It's about 50 percent.

MR. BUCHANAN: Fifty percent, yeah.

MR. ZUCKERMAN: About 50 percent.

MS. CLIFT: Yeah, but austerity --

MR. ZUCKERMAN: (Inaudible.)

MS. CLIFT: Austerity policies --

MS. FERRECHIO: Austerity?

MS. CLIFT: -- are not -- are not digging Europe out of this hole.

MR. MCLAUGHLIN: I want to hear --

MS. CLIFT: They've let up on the austerity --

MR. MCLAUGHLIN: Mort was doing very --

MS. CLIFT: -- which is beginning to help them recover.

MR. MCLAUGHLIN: Mort was doing very well on this, and I want to ask Mort this. OK? China's $5 trillion purchasing parity adjusted stimulus are now winding down. Now we are entering the new normal -- low growth, flat wages, high unemployment everywhere. What about China's $5 trillion purchasing stimulus?

MR. ZUCKERMAN: Well, listen, they understand that they're at a different --

MR. MCLAUGHLIN: Five trillion.

MR. ZUCKERMAN: Yes. Well, they have a giant economy. I don't know those exact numbers, because we have difficulty calculating what the Chinese government does.

MR. MCLAUGHLIN: Well, they appear to have a serious problem.

MR. ZUCKERMAN: Yes. They've had a huge investment by the government in the economy. They're building up infrastructure. They're doing whatever they have to do. Right now they, like everybody else --

MR. BUCHANAN: But their problems --

MR. ZUCKERMAN: -- they're not getting -- they're not making foreign sales.

MR. BUCHANAN: Exactly. And they're not making foreign sales because China's Renminbi has gone up. And they're also deeply competitive with these other Asian countries.

MR. ZUCKERMAN: Right.

MR. BUCHANAN: So they no longer have, you know, their employees making 5 percent of what Americans make. As that rises, places like Bangladesh and others become more competitive, and they don't make the exports they used to make.

MR. MCLAUGHLIN: Can't they falsify the Renminbi and solve the problem that way?

MR. BUCHANAN: Well, they've been -- well, they've been -- we've been pushing them to let the Renminbi go to its natural level. If it did, they would have a hellish problem on their hands.

MR. MCLAUGHLIN: How serious is this China phenomenon?

MS. CLIFT: Well, China's slowdown is --

MS. FERRECHIO: It's part of the world economy.

MS. CLIFT: If they catch a cold, the rest of the world gets the flu, basically.

MS. FERRECHIO: Well, people aren't buying their stuff. The economy itself is slowing down. And that's part of the problem.

MR. BUCHANAN: Sure.

MR. MCLAUGHLIN: Exit question, back to Syria: Will there be peace in Syria this year? Yes or no.

MR. BUCHANAN: The only way there'll be peace, if there's a Syrian triumph -- if the Syrian government triumphs in the war. And that's my prediction at the end of the show.

MS. CLIFT: (Laughs.)

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Possibility of a negotiated cease-fire over the summer.

MR. MCLAUGHLIN: Susan.

MS. FERRECHIO: I agree with Eleanor. It would be something negotiated at this point.

MR. MCLAUGHLIN: Mort.

MR. ZUCKERMAN: Assad's forces are clearly on the upswing and they're clearly winning. And if there is a negotiated agreement, it'll be an agreement that acknowledges the defeat of the people whom we are aligned with.

MR. MCLAUGHLIN: The answer is a stalemate continues.

Issue Two: Bernanke Booted?

(Begin videotaped segment.)

CHARLIE ROSE (PBS): Some people would like to see you announce that you are reappointing Ben Bernanke as chairman of the Fed.

PRESIDENT OBAMA: Well, I think Ben Bernanke's done an outstanding job. Ben Bernanke is a little bit like Bob Mueller, the head of the FBI --

MR. ROSE: Yes.

PRESIDENT OBAMA: -- where he's already stayed a lot longer than he wanted or he was supposed to.

(End videotaped segment.)

MR. MCLAUGHLIN: Federal Reserve Chairman Ben Bernanke's second four-year term expires next year. And if President Obama's response in this interview is any indication, Bernanke won't be reappointed.

Mr. Obama's candid comments are being widely interpreted on Wall Street as Bernanke getting the boot. Bernanke's tenure at the Fed has coincided with the deepest economic downturn and most tepid recovery since the U.S. Great Depression of 1929 and the 1930s.

During the recession in 2009, emergency bailouts of Wall Street provoked a strong backlash. This prompted Bernanke to embark on a series of town-hall meetings around the country to repair the Fed's image. The high unemployment rates and the rising income inequality spurred the Occupy Wall Street movement to take to the streets in 2011, protesting the same bailouts.

The recession's lingering effects -- 7.6 unemployment, anemic GDP growth, the lowest labor-force participation rate in 30 years, and millions of long-term unemployed -- may have soured President Obama on Fed Chairman Bernanke.

Mr. Obama's eye is now on his presidential legacy. If and when Chairman Bernanke leaves the Fed, his likely successor, by the way, is Janet Yellen, an economist and Federal Reserve governor appointed by Mr. Obama, who tilts in favor of lowering unemployment. The Fed's twin mandate, by the way, is to control inflation and maintain full employment.

What are your impressions, Susan?

MS. FERRECHIO: I think he's going to leave. I think, listening to the president talk, that sounded like someone who is just ready to fire somebody, like "stayed longer than he should have," that's the big signal there.

What it means, though -- what's important about it is if Bernanke's going to leave, he'll have an exit strategy. And that exit strategy will be to stop what he's been doing, which has kept the interest rates really low. So if he ends that program, just as part of his exit strategy you're going to see the markets react. And that's what we have to keep an eye on.

MR. BUCHANAN: He ended -- he's going to end QE3, this purchase of --

MS. FERRECHIO: That's right.

MR. MCLAUGHLIN: QE3 is what?

MR. BUCHANAN: Eighty-five billion dollars a month poured into the economy. He indicated he was going to bring that to an end or bring it down, John. And during the week this week, the market plunged after he said that; must have been five (hundred) or 600 points. And that's the big question. Is the Monopoly money that he pumped into the economy, the $3 trillion -- when they start pulling that back, is this economy going to go head over heels into a second great recession?

MS. CLIFT: Well, Bernanke has said --

MR. MCLAUGHLIN: Hold on, Eleanor.

MS. FERRECHIO: (Inaudible.)

MR. BUCHANAN: Second great recession.

MR. MCLAUGHLIN: Hold on. QE means quantitative easing --

MR. ZUCKERMAN: Quantitative easing.

MR. MCLAUGHLIN: -- three. What's the three?

MR. BUCHANAN: This is the third time he's done it.

MR. MCLAUGHLIN: The third time he's done it.

MR. ZUCKERMAN: Right.

MR. MCLAUGHLIN: Go on from there.

MR. ZUCKERMAN: Let me just say --

MR. MCLAUGHLIN: Hold on, Eleanor.

MR. ZUCKERMAN: -- in the first place, he didn't just put $3 trillion a year. It was $5 trillion over the last four years that he has put into the economy -- $5 trillion in debt that we have accumulated; the national deficits, OK. And he had to fund it. And he financed it through the QE3, QE2, QE1, basically pulling interest rates down to the lowest they've been in my lifetime, and certainly therefore yours, Pat.

MR. BUCHANAN: Right. (Laughs.)

MR. ZUCKERMAN: Now, the only thing I will say there --

MR. MCLAUGHLIN: What did --

MR. ZUCKERMAN: -- is it stimulated the economy to a degree, to the extent that it could. There are other factors that have made this economy and this recovery the weakest it's been.

Let me just give you an illustration. It's not just that we had a 2 percent rate of growth on average over the last four years. It is that it's the lowest rate of growth in the context of the biggest fiscal stimulus and monetary stimulus in our history, and we've been unable to have any kind of breakout, as they call it, and have the economy grow on its own.

MR. MCLAUGHLIN: What is --

MS. CLIFT: Well --

MR. MCLAUGHLIN: Wait a minute. What is Bernanke worried about?

MR. ZUCKERMAN: What is Bernanke worried about? He's got to worry about a collapse of the financial system.

MR. MCLAUGHLIN: He's worried about inflation. He's an inflation hawk. Now, in the light of that, in the light of the conviction of that, and in light of the reality of his conviction, namely that inflation is really worrisome -- stay away from that -- he embarks on the QE program. Do you understand?

MR. ZUCKERMAN: No, no, no, no, no. That was not the -- those were not the connections, John. What he was worried about was the collapse of output.

MR. BUCHANAN: Exactly.

MR. ZUCKERMAN: We had a major decline in the economy.

MR. MCLAUGHLIN: Did we have any inflation?

MR. BUCHANAN: No.

MR. ZUCKERMAN: No. We had very little --

MR. MCLAUGHLIN: Is inflation a killer?

MR. ZUCKERMAN: We're all opposed to inflation. But we are not -- that's not the risk.

MS. CLIFT: No, but --

MR. ZUCKERMAN: The risk is the whole economy comes apart now, and you would have a situation where you could really have a major, major downturn --

MR. MCLAUGHLIN: Mort, inflation --

MR. ZUCKERMAN: -- from where we are today.

MR. MCLAUGHLIN: -- can unravel the economy.

MR. ZUCKERMAN: Oh, I agree. But that's not the threat now.

MS. CLIFT: Right, but we're not seeing any inflation.

MR. MCLAUGHLIN: It's not the threat now because he has pumped all this money in. But the money has to stop.

MR. BUCHANAN: (Inaudible.)

MR. MCLAUGHLIN: You see how it's connected?

MR. ZUCKERMAN: Yes, it is connected. But right now the issue is to try and get the economy to grow. We have 24 million people --

MR. MCLAUGHLIN: What do you want to do?

MR. ZUCKERMAN: -- 24 million -- just a moment -- 24 million people in this country who are either out of work or have given up looking for work or are working part-time, and they want to work --

MR. MCLAUGHLIN: I know. It's terrible.

MR. ZUCKERMAN: That is awful. That's the worst numbers we've seen since the Great Depression.

MS. CLIFT: And that's --

MR. ZUCKERMAN: What Bernanke did was to prevent another great depression.

MS. CLIFT: And that's --

MR. MCLAUGHLIN: The woman he's putting in can accept and live with a 2 percent --

MS. CLIFT: That's right.

MR. MCLAUGHLIN: -- inflation rate.

MS. CLIFT: And that's the tension that --

MR. MCLAUGHLIN: I want to stay on this inflation point.

MR. ZUCKERMAN: Well, when you have this much excess capacity in the economy, where we are producing about 6 percent less than what we could -- that's the lowest level of production -- you don't have a problem of inflation.

MR. MCLAUGHLIN: Let's put you in as the, you know, imaginative head of the Fed. What would you do now?

MR. ZUCKERMAN: I would not change the policies in terms of as he's suggesting, because I think the economy is too weak to do that. I would wait and see -- till we see --

MR. BUCHANAN: He would continue --

MR. MCLAUGHLIN: Let him finish.

MR. ZUCKERMAN: I would wait --

MR. BUCHANAN: You would continue QE3.

MR. ZUCKERMAN: I would wait --

MR. MCLAUGHLIN: Let him finish.

MR. ZUCKERMAN: I would continue QE3, as Pat was saying. And I would continue that until we saw a rate of growth in the economy --

MR. MCLAUGHLIN: All right.

MR. ZUCKERMAN: -- that got up to between 3 and 4 percent.

MR. MCLAUGHLIN: Let's hear it for QE3.

MS. CLIFT: And Bernanke's not going to discontinue QE3 either. He has said he's not going to pull the supports out from the economy until we hit six and a half percent unemployment. And we're nowhere near that.

MS. FERRECHIO: (Inaudible.)

MS. CLIFT: Excuse me, Susan.

MS. FERRECHIO: (Inaudible.)

MS. CLIFT: And there's been a tension throughout his term over what you said. Do you worry more about inflation or do you worry more about unemployment? You have a president who worries more about unemployment. And it's his prerogative now to try something new. It's not to say that Bernanke has done a bad job, but he has been in there for two terms. And I think the president is definitely signaling --

MR. MCLAUGHLIN: What about the --

MS. CLIFT: -- and I'm sure Bernanke knows he's at the end of the road.

MR. BUCHANAN: Bernanke --

MR. MCLAUGHLIN: Wait a minute. Wait a minute. Did Bernanke think of unemployment too? And was a 6.5 percent figure on unemployment something that he projected? And did that result in his view of QE3?

MR. BUCHANAN: I mean, contrary to what you've been saying, Bernanke is worried about inflation, but less worried than he is about a collapse in the economy. That is why he took the risk of putting in the $3 trillion or $5 trillion and pumping it into the economy, saying he will accept a certain degree of inflation in order to get the economy moving.

MS. CLIFT: Right. And we haven't even seen that amount of inflation yet.

MR. MCLAUGHLIN: Susan.

MS. CLIFT: So inflation's fears seem to be overrated.

MR. BUCHANAN: We haven't seen that much movement either.

MR. MCLAUGHLIN: I want to hear what Susan has to say.

MS. FERRECHIO: I think he's on the way out, and I think he's going to have an exit strategy, and it's going to be ending the QE -- the quantitative easing, as you said. And when that happens, you're going to see interest rates go up. You're going to see the housing market react.

MR. MCLAUGHLIN: (Inaudible.)

MS. FERRECHIO: That's a big part of the economy, of whatever little bit of economic recovery we've had, has been associated with the housing market, the health of the housing market.

MR. BUCHANAN: His reputation is really on the line, because all this stuff -- this overhang of all this debt, all this money he's got out there, could come back to bite you, especially, John --

MR. ZUCKERMAN: That's right. That is true.

MR. BUCHANAN: -- when you saw a 500-point drop in the Dow --

MR. MCLAUGHLIN: Janet Yellen has --

MR. BUCHANAN: -- when he's just made a statement.

MR. MCLAUGHLIN: Janet Yellen as head of the Fed -- do any of you have any thoughts on her? Or shall we just abandon that until it becomes a reality?

MR. BUCHANAN: I think the Janet Fed will be more responsive to the president.

MS. CLIFT: I think the Janet Fed will worry more about unemployment than inflation.

MR. MCLAUGHLIN: What do you think?

MS. FERRECHIO: I think that's one of the reasons why Bernanke is on his way out, that he wants to put her in.

MR. ZUCKERMAN: I think, without question, Janet --

MR. MCLAUGHLIN: Who, Bernanke?

MR. ZUCKERMAN: -- Janet Yellen will take whatever monetary policy she feels to get this economy moving again. She's worried much more about unemployment than she is about inflation, which is very low.

MR. MCLAUGHLIN: Does Bernanke favor Janet?

MR. ZUCKERMAN: This I don't know. I don't think he -- I don't think he has a position --

MR. MCLAUGHLIN: Janet's on his board.

MR. ZUCKERMAN: I know. But this is a presidential choice, and that's --

MR. MCLAUGHLIN: I mean in her thinking.

MR. ZUCKERMAN: I suspect he'd be comfortable with her --

MS. CLIFT: And whatever exit strategy --

MR. MCLAUGHLIN: She's less uncomfortable with inflation than he is.

MR. ZUCKERMAN: Yes.

MR. MCLAUGHLIN: Issue Three: The Empire Strikes Back.

GENERAL KEITH ALEXANDER (NSA director): (From videotape.) These programs are critical to the intelligence community's ability to protect our nation and our allies' security. They assist the intelligence community efforts to connect the dots.

MR. MCLAUGHLIN: General Keith Alexander is the director of the National Security Agency, the NSA. This week he testified before Congress and defended the surveillance sweeps conducted by the NSA.

Edward Snowden, a 29-year-old former NSA employee, now in asylum in Hong Kong, leaked details on how extensively the U.S. government conducts surveillance, notably monitoring the, quote-unquote, "metadata" of Verizon, an American phone company, and accessing practically everything that passes along the networks of U.S. Internet companies.

NSA chief Alexander defends the surveillance program. He says that they helped stop more than 50 terrorist attacks around the world, including 10 here in the U.S., one of which was a plot to blow up the New York Stock Exchange; also another plot by a group in San Diego convicted of sending money to al-Shabaab, the Somalia-based al-Qaida terrorist group operating on the Horn of Africa, an ultra-strategic route.

The Obama administration defends the surveillance program as an indispensable matter of national security.

PRESIDENT OBAMA: (From videotape.) My concern has always been not that we shouldn't do intelligence gathering to prevent terrorism, but rather are we setting up a systems of checks and balances?

MR. MCLAUGHLIN: Question: The U.S. government has decided in secret that intrusions on the privacy of U.S. citizens are legal and worth the tradeoff for greater security. Is this decision debatable? Susan Ferrechio.

MS. FERRECHIO: Absolutely. And it should be debated. I know this week that General Alexander was defending it. But I think it just raises more questions. What are they going to do with this data? Who can legally have access to it? Eventually can any lawyer have access to it for some criminal case, a divorce case? There are all kinds of legal questions raised by this. How many are having their calls listened to? He wasn't clear at all.

They talked about this whole metadata. Go ask anybody on the street if they even understand what that is. People are just saying, well, I'm on the Internet all the time, on my cell phone. I have to, you know, have the expectation that somebody's listening. I think the question is, what's going to happen with this information? Nobody has really answered that question yet.

MS. CLIFT: Well, thanks to Mr. Snowden, I think there is going to be more transparency about the existence of these programs. But nobody's sitting there listening to everybody's phone conversations.

MS. FERRECHIO: I don't think that's clear. I don't think that's clear.

MS. CLIFT: And it's the burden of responsibility on the government, I think, to explain more. And the president is feeling the heat. On Friday he met for the first time with his -- I think it's his privacy and civil liberties accountability board, which was created in 2004, never functioned; reconstituted in 2007, never met. And so, I mean, I think now --

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

MS. CLIFT: -- we're having the debate that we should have had probably 10 years ago.

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

MS. CLIFT: And we have the luxury of having it now, because we feel pretty damn safe, as opposed to the way we felt right after 9/11.

MR. MCLAUGHLIN: Pat.

MR. BUCHANAN: One of the reasons that Barack Obama has plunged in the polls, John -- he's down to about 45 or 44 approval, and I think his disapproval is up around 53 or 54 -- is because he's lost the support of a lot of idealistic young people who thought he was somewhat different when it came to all these things about surveillance and the rest, and he's hurt bad. And I agree with Susan to this extent. We've really got to have this debate, and we have to determine and set limits and write them into law --

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

MR. BUCHANAN: -- and find the balance between security and privacy. And this has no doubt raised that particular debate. But quite frankly, the United States -- all this information exists, and a lot of us lean toward the fact that with warrants, the government ought to be able to get it if they've got to.

MR. MCLAUGHLIN: Snowden is not the first one to blow the whistle on this. Three have been written up in USA today. I saw the feature on Monday of this week of three who were expelled after 20 years or so having served in that position that Snowden held. And they were innocent and they are innocent, and their grievances are for Americans to read about. So we ought to hold off on judging Snowden. Do you agree with that?

MR. ZUCKERMAN: No, I do not. I do think what Snowden did is definitely detrimental to the security of this American country. And by that I mean if 50 terrorist attacks were, in one form or another, deterred or exposed, just think of what this country would be like if you had one major terrorist attack like you had in Boston every month in this country. It would change the whole tenor of life in this country.

So it is absolutely critical for the government to put in enough security measures to block these. And that's what we're going to be facing, and it's going to be a very, very challenging time. But we must find a way to make sure that terrorist attacks --

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

MR. ZUCKERMAN: -- do not become, you know, the regular fare of what this country is going to have to deal with.

MR. MCLAUGHLIN: Well stated, and we'll meditate on that, Mort.

MR. ZUCKERMAN: Thank you.

MS. CLIFT: OK.

MR. MCLAUGHLIN: Forced prediction. The unemployment rate is 7.6 percent. It will drop to 7 percent by December 31. Yes or no?

MR. BUCHANAN: Dream on.

MR. MCLAUGHLIN: Yes or no?

MS. CLIFT: By next spring.

MR. MCLAUGHLIN: Yes or no?

MS. FERRECHIO: Not a chance.

MR. ZUCKERMAN: No.

MR. MCLAUGHLIN: Yes or no?

Answer: Yes.

Bye-bye.

(C) 2013 Federal News Service

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