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updated 10/12/2008 12:34:03 PM ET 2008-10-12T16:34:03

MR. TOM BROKAW:  Our issues this Sunday:  U.S. stocks continue their free fall, the financial crisis spreads across the globe.  Do the presidential candidates have viable plans to solve the financial meltdown?  How do their economic proposals stack up?  The campaigns square off.  For Senator Obama, former chairman and CEO of Goldman Sachs, New Jersey Governor Jon Corzine. And for Senator McCain, former director of the Office of Management and Budget and former Ohio Congressman Rob Portman.

Then, Wall Street is getting a bailout, but how are Americans faring on Main Street?  McCain attacks Obama's character.  How will it all impact voters when they head to the polls in just 23 days?  Our political roundtable weighs in: Erin Burnett, anchor of CNBC's "Street Signs" and co-anchor of CNBC's "Squawk on the Street"; Paul Gigot, The Wall Street Journal's editorial page editor; John Harwood of CNBC and The New York Times; and Ted Koppel, managing editor of The Discovery Channel.

But first, here to talk with us about the race for the White House in the midst of this economic crisis, McCain supporter Rob Portman, who--a former Ohio congressman; and Obama supporter Jon Corzine, the governor of New Jersey.

Welcome to both of you, obviously.  The financial representatives of 20 countries were here this weekend.  They discussed the crisis, but apparently they went home without doing anything specific.  Same time, Secretary of the Treasury Hank Paulson has announced that the United States will now start investing in banks.  This is changing at warp speed every day.  But I think the fundamental question for the American people is this:  Is the economy going to get worse before it gets better?

GOV. JON CORZINE (D-NJ):  The answer to that has to be, unfortunately, yes. When you have destruction of value that we've seen, $8 trillion from the high of the stock market a year ago, 4 trillion in the last 10 days, people understand that they've lost protection of their retirement savings and other things, and that erodes confidence.  And so they're going to spend less and be a little less proactive about how they go out and spend scarce dollars.  And that's going to hurt the economy, slows production, has an unfortunate negative impact that I think has yet to be fully appreciated in the real economy.  We've seen, obviously, the decline in homes, but now I think you're going to see rising levels of unemployment, unfortunately, and that, that's, that's a real problem as we go ahead in the months ahead.

MR. BROKAW:  Congressman, do you see any light at the end of the tunnel?

FMR. REP. ROB PORTMAN (R-OH):  I do.  It depends on what we do, Tom.  I agree with what Jon said about the crisis in confidence as well as the financial crisis.  But if we move and move quickly, I think we can pull out of this and relatively quickly.  I think the, the issue that has been underlying so much of this is the housing market.  And one reason that Senator McCain has focused on this home resurgence plan, which says let's get these people out from under their mortgages, people who are under water on their mortgages, this is going to be necessary for us to hit rock bottom for us to come back up.  So I hope that that $700 billion gets out, but that it gets out in the right way.  And I know you talked a moment ago about equity infusions in some of these financial institutions.  That may be where some of it ought to go, but the focus, John McCain is saying, and I think he's right, is to stabilize these housing prices.  Until we do that, I think it's going to be tough to see the economy get back on its feet.  So I think the answer is, yeah, we're going to be in for some tough times for a little while, but it can be more quickly righted, we can get this economy back on track more quickly if we deal directly with the housing crisis, as Senator McCain has talked about.

GOV. CORZINE:  Well, I agree with the idea that we ought to stabilize housing prices.  I don't agree with the idea that we ought to be bailing out the banks that made the loans, as I think Rob would recognize on Tuesday night when Senator McCain talked about a program to bail out the mortgages.  That, that sounded good, that was part of the $700 billion program to start with.  On Tuesday, he came out with a program that said that we're going to pay the full value for those mortgages, bailing out the banks that actually made those loans.  I think that's a horrible idea.  The taxpayers will end up underwriting it.  What we need to do is restructure mortgages.  There's a couple of ways to do that, change the bankruptcy laws or you could actually buy mortgages at their market value today and then go in and restructure them with the individuals.  And yes, we ought to be stabilizing housing prices.  I think actually we could even buy houses, like they did back in the--in the '30s under the RFC program, the Reconstruction Finance Corporation.  But the way that Senator McCain has done it is sort of really messed up on how it would actually impact folks.

MR. BROKAW:  Congressman, let me just...

FMR. REP. PORTMAN:  Yeah.

MR. BROKAW:  You're not getting a lot of support from some very conservative publications.  If I could just share with you what The National Review had to say.  They said, "McCain's plan is a full bailout for lenders, and it cannot do much more than the Frank-Dodd bill," which is another kind of housing relief bill, "without letting ruthless borrowers and other reckless types off the hook.  It is time to acknowledge that the government has gone as far as it can without creating a level of moral hazard that is unacceptable.  Give Frank-Dodd," that's the other housing bill, "and the Paulson plan time to work."

FMR. REP. PORTMAN:  Yeah, well, I think they're wrong.  And they're wrong because there are conditions attached to it so that it's not focused on the lenders.  It's focused on the people who are under water on their mortgages, where their house value is not equal to their mortgage.  And it doesn't just affect those people, by the way, who are in this situation, it affects whole neighborhoods.  People don't want to have foreclosures next door to them because it's going to affect the price of their home.  So again, you know, we can, we can do a lot of different things with the 700 billion, including the guarantees and the loans that are talked about, some of which may be a good idea because it helps to be sure the taxpayers get paid back, but until we deal with the housing crisis, it's going to be very tough for us to write this economy.  And your question was about the economy.  You know, people are not as much interested in what happens on Wall Street as they are what happens in their neighborhood and on Main Street.  And until we get the housing crisis contained, it's going to be a very difficult.  And I think there's where John McCain's right.  And so, you know, to get an answer to your question, we can get this economy back on track and, over the long term, we need to do a lot more in terms of energy policy, tax policy, health care and so on.  But we can't do it until we get the housing crisis contained.

MR. BROKAW:  Well, let me ask you about, The Politico is reporting this morning that Senator McCain is going to unveil a new economic plan, that he's working on something this weekend.  Among the measures being considered are tax cuts, perhaps temporary, for capital gains and dividends, the officials said.  "The market is the focus," a McCain adviser told Politico.  "You want to stop the fleeing from the market.  No more bailout money is being contemplated," the adviser said.  "We've written a check to everyone in sight. We're not in that game." Is that an accurate reflection of what's going on in the campaign?

FMR. REP. PORTMAN:  I don't know, but what I do know is raising capital gains right now and raising dividend taxes, as Senator Obama has proposed, is exactly the wrong prescription.  You know, Jon used to be in this Wall Street world, he may disagree with me.  But, my gosh, when the market has tumbled over 20 percent in the last week, to talk about raising capital gains rates is just exactly the wrong thing.  You want investors to have that confidence that Jon talked about that's missing in the market.  And what John McCain is saying, at a minimum, let's not raise taxes on anybody, including people who have capital gains.  We want to encourage them to invest.  We want to encourage them to get back into the market.

I don't know if they're thinking about doing even more.  I do know that Senator McCain did propose this week something very interesting on 401(k)s and IRAs.  People have seen their values diminish dramatically, and he's saying they shouldn't be forced to pull it out and pay taxes on it at age 70 1/2. That makes a lot of sense.

MR. BROKAW:  Governor.

GOV. CORZINE:  Now is the time for steady leadership.  We can't have a new economic program each morning we wake up.  That's what's been going on. Unfortunately, with regard to how the bailout package was put together and the whole structure in Washington, and it's certainly the case with Senator McCain's various proposals.  This mortgage program that we talked about was included in the Frank-Dodd proposal, it was included in the $700 billion, and there have been changes; but it is still the basic, we ought to help mortgages.  Now we're coming up with a new plan.  What Senator Obama has talked about and is absolutely is essential is make sure that we use thoughtfully this $700 billion, including, by the way, investing in banks. Direct investment will stabilize--they call it recapitalization--stabilize the banks.  Then he has talked about let's make sure that we have middle class tax cuts.  He's been talking about that for months.  Ninety-five percent of the folks, about 90 percent will get tax cuts, 95 will get no increases, including on capital gains above--below $250,000.

And then, what is maybe most important, we need a real economic stimulus. We're in what you call a liquidity trap.  You can, you can, you can lead a horse to water, but it doesn't drink.  Right now nobody has confidence to do things.  We need to be putting demand into the system.  That means infrastructure--build highways, build schools, build our energy system so that we can actually create jobs, get people back to work.

MR. BROKAW:  How do you pay for that?

GOV. CORZINE:  Well, if, if we're going to spend $700 billion bailing out Wall Street, we ought to actually be able to come up with $50 billion--which is what Senator Obama has talked about--on infrastructure and helping states. You know, people like the state of New Jersey are going to end up cutting employment, cutting our expenditures, and decreasing demand.  We need to make sure that we're driving our economy by not cutting back at just at the time we need to do it.

There is talk in Congress of another $150 billion program.  I'd rather take some of the money out of the bailout plan and put it into this.  The fact is is that Congress decided we ought to go from a $700 billion program to a--what was it?--800 and--825 billion.  We can afford it.  We can't afford not to have greater demand on the economy.

MR. BROKAW:  If you were in your old job as director of the OMB, would you say that's a good idea, Congressman?

FMR. REP. PORTMAN:  Well, you know, I would say that we need to be really careful here.  We have a $10 trillion debt now, and Senator Obama is very good at coming up with new ideas, ways to spend the taxpayers' money, when, in fact, it's the spending that is partly responsible for getting us into this situation.  And it's very simple, you know, as we become a debtor country, the value of the dollar as been impaired and it has made everything more expensive.  The reason we've been sending $700 billion a year over to foreign countries to buy their oil is, in part, because the value of the dollar has gone down, in part because we've been irresponsible in our spending.  So just more spending is not going to answer this question.  This is why, again...

GOV. CORZINE:  Tom--oh, go ahead.

FMR. REP. PORTMAN:  Let me just, let me, let me just finish in terms of how to get the economy back on track, because that's ultimately, you know, what people care about.  And Jon was right.  He said the bailout shouldn't just go to Wall Street.  That's what Senator McCain is talking about.  Have it go to your neighborhood banks, the community banks.  Have it go to people who are under water in their mortgages.  Be sure you're providing people tax relief, not raising their taxes.

And, by the way, in terms of middle class tax relief, John McCain's proposal is not George Bush's proposal.  He has a doubling of the exemption, as you know, which goes squarely to the middle class.  He also has this $5,000 refundable tax credit, meaning he has more tax relief for the middle class and for lower income folks than is in the Obama plan.  That's, that's, that's the math.

MR. BROKAW:  So me, if I can here...

FMR. REP. PORTMAN:  So of course you can do that.

MR. BROKAW:  If I, if I...

GOV. CORZINE:  You got to...

FMR. REP. PORTMAN:  But let's not raise taxes on small business and raise capital gains.  It's the wrong thing to do.

GOV. CORZINE:  Every independent analysis shows that Senator Obama's tax cuts for the middle class are about three times what is...

FMR. REP. PORTMAN:  That's because...

GOV. CORZINE:  ...being proposed by the--McCain.

FMR. REP. PORTMAN:  ...they don't go to the root of the fundamental...

GOV. CORZINE:  It is, there, there are other elements that aren't included in Senator Obama's with regard to college support tax credits and other issues. Just working on tax policy, Senator Obama's tax cuts for the middle class, 90 percent of Americans, is three times what Senator McCain is proposing.  And that's the exact same policies that we followed under the Bush administration.

MR. BROKAW:  Before we, if we, if we can, I think across this country right now folks are gathered around the kitchen table trying to determine what they're going to do in the next year--where they're going to have to cut, where they can save money.

GOV. CORZINE:  Right.

MR. BROKAW:  We know that's going on in Main Street.  Small independent banks are figuring out who they can loan money to safely.  States, cities, everyone is trying to develop a set of priorities.  Here's what happened the other night at the debate when I asked the two candidates about their priorities. Let's listen to that for a moment.

(Videotape, Tuesday)

MR. BROKAW:  Health care, energy, and entitlement reform--Social Security and Medicare--in what order would you put them in terms of priorities?

SEN. JOHN McCAIN (R-AZ):  I, I think you can work on all three at once, Tom.

SEN. BARACK OBAMA (D-IL):  We're going to have to prioritize, just like a family has to prioritize.  Now, I've listed the things that I think have to be at the top of the list.  Energy we have to deal with today.  Health care is priority number two, because that broken health care system is bad not only for families, but it's making our businesses less competitive.  And number three, we've got to deal with education.

(End videotape)

MR. BROKAW:  That response--or nonresponse, depending on your point of view--brought this from the dean of political columnists in Washington, David Broder:  "John McCain and Barack Obama have been asked twice--once in the Mississippi debate and again on Tuesday night--what their priorities would be. McCain flat-out refused to choose, arguing that the United States can do it all.  Obama mentioned energy, health care and education but did not acknowledge that he might have to choose among them.  ...  It was a stunning rejection of reality," according to David Broder.

Don't you think the American public wants more candor and is prepared to hear someone say, "Look, there's going to be no gain unless we go through some pain," Congressman?

FMR. REP. PORTMAN:  Well, first of all, John McCain was answering a question which was about health care and energy and entitlements, and absolutely we need to move forward on all three of those.  He...

MR. BROKAW:  At once?

FMR. REP. PORTMAN:  Well, of course.  I mean, and, and you can.  He's talked about the, the commission which--Blue Ribbon Commission, which is necessary to deal with the Medicare problem.  He talked about that later.  Of course we need to move forward aggressively on energy independence, including starting to drill right now.  Of course we need to move forward on being sure that the health care costs are contained.  What he did not say in response to that answer, because you didn't ask him, was that he believes we do need to make choices.  And he said it later in the debate when he talked about a spending freeze.  This is a tough approach.  Again, having been in the position of looking at this budget, John McCain is saying let's put everything under the microscope and, and not do it with a scalpel, but do it with a hatchet, a scalpel and, in some cases, you need to eliminate programs altogether.  And so he is--you know, he is giving people straight talk on that.  This is tough medicine.  We haven't done that in the Bush administration, we didn't do it in the Clinton administration.  It's time to tighten our belt at the federal government level just as you said homeowners are doing it, families are doing it all around America.

MR. BROKAW:  Governor Corzine.

GOV. CORZINE:  States are doing it, I assure you we have.

FMR. REP. PORTMAN:  And states are doing.

GOV. CORZINE:  We actually cut our budget...

FMR. REP. PORTMAN:  Because they have a balanced budget requirement.

GOV. CORZINE:  Yeah, we have a requirement.

Senator Obama's been very clear...

FMR. REP. PORTMAN:  But that's what we should do at the federal level.

GOV. CORZINE:  ...about that you may have to slow down some of the things that you want to bring in.  I heard that in the, the debate before you ask the question, and that's, that's realistic.  We may not be able to do everything we want to do on education as fast as we want to do.  But the first two that Senator Obama talked about, on energy and health care, if we don't fix those, our problems and imbalances in this economy get worse.  We want to create jobs right now.  Greening jobs, converting into alternative energies and conservation, are actually going to create jobs which actually increase revenues if we have more people working.

Health care, we have a universal health care system right now.  It's in our emergency rooms.  People go there, they get care, and we, at the state level, have to pay it through reimbursement for the, the charity care that we all have.  That can't keep going on.  It's broken.  And so we have to deal with that now.  Senator Obama has a much better, on almost every evaluative merit basis, health care system that will get people fully insured over the next--we can't stop on that.  Otherwise, we're going to end up going broke in different places.  We're just changing who's, who's going broke.

FMR. REP. PORTMAN:  Tom...

MR. BROKAW:  Isn't there going to be a new reality about health care in the next year or so?  Because as corporations look to cut back, the primary cost that they have outside of doing business is in health care.  So isn't that monster...

FMR. REP. PORTMAN:  Absolutely.

MR. BROKAW:  ...going to grow even more, Congressman Portman?

FMR. REP. PORTMAN:  Yeah, absolutely.  Yeah.

MR. BROKAW:  And you're probably going to have to retool your plan as well.

FMR. REP. PORTMAN:  Well, the McCain plan is very targeted toward reducing the costs of the health care system--the cost to families, the cost to companies, the cost to our economy--and the Obama plan is not.  With all due respect, they are very different plans.  But the independent evaluations that I've seen, including one last week, shows that the McCain plan will cover about the same number of uninsured--in fact, this particular analysis said a few million more people--but it will reduce costs.  That's the key.  If you just turn a government plan into the, the Obama approach, which is to say, `We're going to have more government involvement,' you're not going to get at the cost issue.  And what the McCain plan does is it creates competition that will reduce costs, as well as providing $5,000 track--tax credit to everybody who has health care, including those who have employer coverage, and to folks who're uninsured, to cover more people.  So if you're going to get at the economic issue in health care, which is the, which is the increased cost, the McCain plan actually works better.

MR. BROKAW:  I have a feeling...

GOV. CORZINE:  It will, it will give a $5,000 tax credit.  But for a family of four, most health insurance policies are about $12,000 a year.  The second thing is...

FMR. REP. PORTMAN:  It's $5800.

GOV. CORZINE:  ...it's going to put, it's going to put taxes on the health care benefits that people receive from the corporations.  Every estimate I've seen is 20 million people would be uninsured under the McCain plan.  What we are doing in the Obama proposal is building on what is working in the system, making sure that children's health insurance is provided to every child.  Then using the systems that we already have, the private health care system, to build on it to get everybody insured.  And if there's fallout, then offer the same thing that you and I have, when you were a congressman and I was a senator, available to the people that are left out of the system.  I think that works.  I think it is affordable, and it is unaffordable to continue doing what we're doing now because what we're doing is going into the emergency room.  It's costing a fortune.  It's the worst health care in the world.

MR. BROKAW:  Let me, let me recommend that our viewers go to the respective Web sites of these two campaigns...

FMR. REP. PORTMAN:  Yeah.

MR. BROKAW:  ...to get a real picture of what their health care plans are.

GOV. CORZINE:  Sure.

MR. BROKAW:  Can we turn now to the tone of the campaign, which has gotten a lot of attention in the last 48 hours or so?  There was an exchange, very spirited exchange in Minnesota over the weekend.  We want to share, first of all, one of the ads that Senator McCain has been adding, which might have created--helped create a climate that existed in Minnesota.  So let's take a look at the ad first, and then what was going on when the senator had a town hall meeting.

(Videotape from political ad)

Narrator:  Obama's blind ambition.  When convenient, he worked with terrorist Bill Ayers.  When discovered, he lied.  Obama:  blind ambition, bad judgment.

(End videotape)

(Videotape, Friday, town hall meeting):

Unidentified Man:  We're scared.  We're scared of an Obama presidency.  And I'll, I'll tell you why.  I'm concerned about, you know, someone that cohorts with domestic terrorists such as Ayers.

SEN. McCAIN:  Thank you.  First of all, I want to be president of the United States, and obviously, I do not want Senator Obama to be.  But I have to tell you, I have to tell you he is a decent person and a person that you do not have to be scared as president of the United States.  Now, I just, now I just, now, now look.  I, I--if I didn't think I wouldn't be one heck of a lot better president, I wouldn't be running, OK?

Unidentified Woman:  I've got to ask you a question.  I do not believe in--I can't trust Obama.

SEN. McCAIN:  I got it.

Woman:  I, I have read about him, and he's not, he's not, he's a--he's an Arab.  He is not...

SEN. McCAIN:  No, ma'am.

Woman:  No?

SEN. McCAIN:  No, ma'am.  No, ma'am.  No, ma'am.  He's a, he's a decent family man, citizen, that I just happen to have disagreements with on, on fundamental issues and that's what this campaign is all about.  He's not. Thank you.

(End videotape)

MR. BROKAW:  And the reaction of Senator Obama to the defense that he received from Senator McCain was this in Philadelphia on Saturday:

(Videotape)

SEN. OBAMA:  I want to acknowledge that Senator McCain tried to tone down the rhetoric in his town hall meeting yesterday.  I appreciated his reminder that we can disagree while still being respectful of each other.

(End videotape)

MR. BROKAW:  Congressman Portman, has this gone too far in terms of the attacks on Senator Obama and his association with Bill Ayers in Chicago? Governor Palin has gone so far as to say he's palling around with a terrorist. Is that a really fair characterization in your judgment?

FMR. REP. PORTMAN:  Well, I think what they've focused on is two things, one is Senator Obama's judgment and second is his truthfulness.  I, I saw yesterday there had been nine different explanations about his relationship with Bill Ayers and, and when he met him and who he thought he was and so on. And so that's the issue, is his judgment and his truthfulness.  In terms of this campaign, as we get toward, you know, the last few weeks here, it's heated up, there's no question, on both sides.  And Senator Obama's rallies are, you know, he also inspires the crowd, and they can get pretty rowdy as well.  Having viewed a few of those, those, those rallies, and been at some of the McCain rallies, they are inspiring people, you know, to support their policies and their approach.  That's what rallies are all about.  They cannot control every single individual in that, in that rally and what that person might say.  But no, I, I think if you look at these campaigns...

MR. BROKAW:  You're comfortable with the ads.  You don't think they're too negative.

FMR. REP. PORTMAN:  Well, you know, you look at the negative ads.  Senator Obama has run more negative ads in this campaign than any presidential campaign in history.  Easily.  And far more negative ads than Senator McCain has run, and including ads that directly take on Senator McCain on things like stem cell research in a, in a dishonest way, Social Security, immigration, that are, you know, by independent fact checkers have been found to be absolutely false.  So, Tom, it's going on, on, on the ads, the TV wars on the Obama side.

MR. BROKAW:  And it turns out that the--on the other side there are some real issues as well.  Congressman John Lewis got a lot of attention over the weekend--he's the Atlanta congressman who's a veteran of the civil rights movement--when he said, "Senator McCain and Governor Palin are sowing the seeds of hatred and division.  ...  During another period in the not too distant past, there was a governor of the state of Alabama named George Wallace who also became a presidential candidate.  George Wallace never threw a bomb.  He never fired a gun, but he created the climate and the conditions that encouraged vicious attacks against innocent Americans who were simply trying to exercise their constitutional rights.  ...  They are playing a very dangerous game that disregards the value of the political process and cheapens our entire democracy." Not surprisingly, there was a quick response from the McCain campaign saying, "Congressman John Lewis' comments represent a character attack against Governor Sarah Palin and me that is shocking and beyond the pale.  The notion that legitimate criticism of Senator Obama's record and positions could be compared to Governor George Wallace, his segregationist policies and the violence he provoked is unacceptable and has no place in this campaign." And to that, Senator Obama said he "does not believe that John McCain or his policy criticism is in any way comparable to George Wallace or his segregationist policies.  But John Lewis" he says, "was right to condemn some of the hateful rhetoric that John McCain himself has personally rebuked just last night," and so on and so on.

Let me ask you both a simple question.  In Minnesota, the senator, Norm Coleman, the Republican candidate for re-election, has stopped all negative advertising.  Would that be a good idea for the presidential campaigns in the midst of this financial crisis when the country is so focused on their future?

GOV. CORZINE:  Tom, I, I--first of all, I think that actually is a good idea. I think the first ad you showed, which has lie on it printed several times, is inflammatory by anybody's stretch of imagination.  I don't--you know, I'm not going to say everybody's innocent.  I, you know, I think John Lewis is one of the most remarkable men in American history.  But, you know, I would not want to include this in the debate today since...

MR. BROKAW:  You think he was inappropriate in comparing him to George Wallace?

GOV. CORZINE:  Well, I just think it, I, I just think it is a--it is playing into what I think is the strategy that is going on here about this whole Ayers issue and everything else.  We want to turn the page on economics, because it's not working in the debate for Senator McCain, and get on to something else.  It's a distraction away from the most fundamental debate that we ought to be having in this country is how are we going to put people to work?  How are we going to keep people in their homes?  How are we going to raise the income of the middle class in this country?  These are the things that people are worried about in their lives, and this is a complete distraction.  And in--by the way, the facts, I mean, I don't--you know, if somebody sits on a board where somebody else is on the board, by the way, it's Walter Annenberg's board on school reform, and he picked Mr. Ayers, not Barack Obama.  They happen to be on the same board.  So that's a--that's the classic guilt by association.  It's really fueled...

MR. BROKAW:  Well, what about, what about John Lewis and guilt by association linking him with George Wallace?

GOV. CORZINE:  Yeah, I, I--as I said, I would prefer that we stay talking about what we talked about in the first part of this discussion today.  We've got people that have seen the cost per person go up--of the loss of their equity values almost $30,000.  I mean, this is a huge, huge problem that ought to be the centerpiece, not something that we've turned the page on and we're going to walk away from.  We need steady, thoughtful, careful analysis and presentation of policy so we can make a decision who'll be the best president.

MR. BROKAW:  Final word from Congressman Portman.

FMR. REP. PORTMAN:  Well, no, I, I agree with Jon on the fact that the economy's the key issue, and I totally disagree with him that anybody's turning the page in the McCain campaign.  You saw this in the debate the other night, Tom, where you were there.  Senator McCain focused entirely on struggling families in America and the needs they have in terms of health care, paying their mortgages, staying in their homes at all, their education costs for, for their kids and keeping a job.  And this is what John McCain's going to keep talking about.  He's focused on the economy, how to get us out of the ditch that we're in.  And he's got new innovative policies to do it, and it includes not taxing small businesses, which are the generators of new jobs in his economy, they're going to help us get out of that ditch.  But helping them includes not raising taxes on capital gains, on dividend income as the market's going down.  It includes pro-growth, pro-jobs policies that people are hungering for.  And that's going to be his focus, and that is his intention.

MR. BROKAW:  Final question.  You've been the go-to guy as a stand-in in debate preparation in a number of debates.  You were the stand-in for John McCain as Obama.  But in a Senate race in New York you were the stand-in as Hillary Clinton.  Which was more difficult to characterize, Hillary Clinton or Barack Obama?

FMR. REP. PORTMAN:  You know, I, I think it's, it's hard to say.  Playing Barack Obama's been very interesting, though.  He's a talented politician, you know, there's no question about it.  I also say he's, he's more predictable than some other people who I've had the opportunity to train.  You know, I, I played Joe Lieberman, also, who is more unpredictable and more authentic, I would say, in terms of his policy positions.  So what I've learned, Tom, is a lot about the economic positions of, of Senator Obama, as well as John McCain. And I come out of it more convinced than ever that to really get this economy moving again and to help people that John McCain's got the better approach.

Sometimes, you know, it's tough toward the end of a campaign to focus, as Jon has said, as we should be focused on how we're going to change and help, help, help people in, in their daily lives.  People ought to look.  You said go to the Web sites.  Look at the tax policies.  Look at the health care policies.  Look at the energy independence policies.  Look at how John McCain is focused on trying to get the economy back on track and make your decision on that basis.

MR. BROKAW:  Congressman Portman, Governor Corzine, thank you very much for being with us.

GOV. CORZINE:  Good to be here.

MR. BROKAW:  Twenty-three days until the election.  It's going to be a rapid countdown.

Coming up next, more on the economy and decision in 2008 with our political roundtable--Erin Burnett, Paul Gigot, John Harwood and Ted Koppel--right here on MEET THE PRESS.

(Announcements)

MR. BROKAW:  Our political roundtable on the countdown to Election Day, now just 23 days to go, coming up after this brief station break.

(Announcements)

MR. BROKAW:  Welcome all.  We have Paul Gigot of The Wall Street Journal, Ted Koppel of Discovery Channel, Erin Burnett and John Harwood of CNBC on our roundtable this morning.  We've got a lot to talk about.

Erin, let's begin with you.  As you talk to your sources, what do you think's going to happen tomorrow morning when the markets open here?

MS. ERIN BURNETT:  I think one of the things they're reacting to is what happened this weekend.  You were talking about the G20 meeting as well as the G7.  There's been a lot of criticism about what happened at those meetings, maybe the countries didn't do enough, but big investors that I'm speaking to seem to believe that we got what we needed out of the G7.  They made a strong statement that they're going to do everything they can do.  Countries need individual responses.  So in terms of that, there appears to be more confidence.  There's a little bit more confidence in the fixed-income market. That being said, though, Tom, any given day at this point could be a very sharp move one way or the other.

MR. BROKAW:  No one believes that we've bottomed out.

MS. BURNETT:  Some people do believe that, but that's a dubious term at this point.  Bottoming out--I mean, you could sit right around where we are for quite a while and that would be pretty painful.  But some people are making that call.  It's a pretty courageous call to make right now.

MR. BROKAW:  Let's talk about the politics of all this.  Paul Gigot, let's begin with you.  The McCain campaign.  Here's what Tommy Thompson, the former governor of Wisconsin had to say when he was asked about how the campaign is going--doing.  He, he was asked whether he believes it's going well.  And as you can see, he said, "No, and I don't know anyone who thinks that it is." Would that be your judgment as well?

MR. PAUL GIGOT:  Well, I think so.  Even within the campaign I'm not sure that they, they really believe that it's going well.  I think there's, you know, they didn't want to run a campaign about the economy as the main issue. They wanted to run a character campaign, an experience campaign.  John McCain, seasoned, somebody who's seen hard times vs.  the rookie, the neophyte, somebody who really hasn't been around.  That's been blown out of the water by events on Wall Street, events in the financial system.  And now John McCain is being forced to play on turf where he is not as comfortable he is--as he is on foreign policy and duty, honor, country.  It's been very tough for him. You've seen the campaign kind of move from idea to idea, and, and especially without a consistent narrative that the American people right now want to hear.  How did we get here?  What happened?  What are you ideas for getting out?  You can't just blame this or that.  Obama blames deregulation.  Well, that's simplistic.  McCain says it's Fannie and Freddie.  Well, that's part of it, but not everything.  You need a larger narrative.

MR. BROKAW:  Do you think the attacks on Obama's character and his association with William Ayers in the past are working?

MR. GIGOT:  I think it's a legitimate issue.  Associations are always a legitimate issue.  It speaks to judgment and character.  But I think in this context, coming as late as it has, I think it's going to look to some people like a distraction more than the central issue of the campaign.  I think McCain has to address the economy.

MR. BROKAW:  All right.  John Harwood, let's just share with our viewers, if we can, the latest Newsweek poll.  In the overall poll, Obama is now up by 11 points, 52 to 41, but here are the interesting internals.  Who's best equipped to deal with health care?  Obama up by 26 percent.  Economy and jobs, 19 percent.  Energy and gas prices, 17 percent.  Wall Street housing crisis, 16 percent.  Taxes and spending, 11 percent.  Social issues--that guns and abortion--7 percent.  The Iraq war, he's even ahead of John McCain on the Iraq war by a percentage point.  The only place where John McCain is leading Barack Obama is who's best equipped to deal with terrorism and national security. With 23 days to go before the campaign, that's a devastating poll for the, for the McCain campaign.

MR. JOHN HARWOOD:  Well, it is.  And it shows again how the strategy of the McCain campaign is at war with events in the world, which are lifting Barack Obama.  John McCain has, as Paul mentioned, wanted to run a character campaign.  Even now, McCain's strategists think their best opportunity of closing this lead--and by the way, the only candidate who has ever closed a mid-October lead approaching this size was Ronald Reagan in 1980 when he was running against Jimmy Carter.  And that was a campaign in which the presidential debate occurred very late.  Once he was seen as a acceptable by the American people, he then moved ahead of Carter.

But the--they're looking at this lead, 11 points in Newsweek, 9 points in the Gallop Track and saying, "How can we knock some people off?" Barack Obama doesn't need any more votes.  He just needs to hold the people he's got.  John McCain's got to dominate the undecided, and he's got to turn some people.  The McCain--I was talking to a McCain adviser the other day who said 1 in 5 white voters is still persuadable.  They're people that we can raise doubts about Barack Obama, and that's why they, they do this Ayers stuff.  They've got to talk about the economy because, as Paul said, it's the issue everybody's thinking about, but it's still not the core of the strategy in the end.

MR. BROKAW:  Mm-hmm.  And, Ted Koppel, I want to ask you about something that Fortune magazine has written.  They say, "A month of historic government intervention shows signs of triggering a political version of climate change, unleashing a new era of class fury that could hurt U.S. companies, business leaders and wealthy investors for years.  A potential calamity, predicts Democratic pollster Doug Schoen." Do you see, in what we're going through, the seeds of some kind of class warfare in this country, Main Street vs.  Wall Street, with a real sense of vengeance?

MR. TED KOPPEL:  In a sense what I see is a, a, an historic change in the way we do business in the country.  One of the things that really has not been mentioned yet is that ours has been a credit card economy for so many years now that much of what has happened over these past years and much of what I think is responsible for the crisis we're in right now is that people at every level--not just in buying their houses, but in buying their cars, in buying their clothes, in buying indeed everything that they purchase--have been encouraged to buy more than they can afford, have been offered credit cards. And then when they can't pay the bills, they end up with 20 percent interest payments, 22 percent interest payments.  That has got to change.

MR. BROKAW:  Do you think the candidates are talking enough about that?

MR. KOPPEL:  No.  I don't think they're talking about it at all.  I don't think they've even dared to address it.  I mean, you know, which political candidate in his right mind is going to tell the American public, "I'm sorry. I'm going to take your Visa card away from you."

MR. GIGOT:  I think...

MR. HARWOOD:  Jimmy Carter tried that, and it didn't work out too well.

MR. KOPPEL:  Yeah.  It didn't work.

MR. GIGOT:  But you know what?  I think at this moment that might be the way to go, particularly if you're John McCain.  I mean, Barack Obama says, "I don't need to do this.  I've got a lead.  I'm going to run out the clock.  I don't need to take any risks." John McCain needs to take--at least to try something.  And if he said, "Look, Barack Obama blames deregulation.  I've been talking about Fannie Mae and Freddie Mac." Now, there's plenty of, of, of, of blame to go around.  But we had a classic credit mania in this country, fed by easy money by the Federal Reserve, turbo charged by government policies.  We're all going to pay a price for it.  I think if he acknowledged that, it might show a maturity and a leadership that the American people might respond to.

MR. HARWOOD:  That would be serious straight talk, but, but risky because, again, you know, I, I've talked to both of the candidates about this.  Is it a problem with us as opposed to...?  And they all tend to go to the greed and corruption on Wall Street or Washington's broken.  It's very, very difficult to look at the voters and say, "You're part of the problem, too."

MR. GIGOT:  Sure.  I mean, and, and, and that is fine for Obama, because he can say it's all Bush's vault.

MR. HARWOOD:  Mm-hmm.

MR. GIGOT:  But McCain's got to do something else.

MR. BROKAW:  Let me just share with you what The Weekly Standard had to say about the McCain campaign and their kind of gyrating positions.  "Such contradictions have become a defining characteristic of the McCain campaign over the last month as his strategists try to find something--anything--that will stop his slide in the polls.  He suspended his campaign and threatened to skip the first presidential debate unless there was an agreement on a bailout plan.  There was no agreement.  He debated anyway.  He said big government caused the current financial mess and then called for more of it.  He called for a federal spending freeze and then proposed having the Treasury buy individual home mortgages at a potential cost of $300 billion." You were very critical of that plan on your editorial page.

MR. GIGOT:  Well it, it, in particular, because it gives the taxpayers loss right up at the top.  It doesn't even do what the--some other previous proposals had done, which is at least give them a haircut.  So I, you know, I, I, that's a sense of the way the campaign has been lurching without a common theme.  And I, and I agree with The Weekly Standard criticism.

MS. BURNETT:  There's one thing that it does do, though, in your point he is trying, because he's behind in the polls, to come up with something, anything. He tried a mortgage bailout plan.  Now he's trying this refinancing.  But one thing it does go to the heart of that perhaps someone could stand up and talk about would be, fundamentally, housing prices need to stop dropping, and we need to look ahead and figure out what's going to happen with the job situation, which is rapidly deteriorating.  And if someone has the courage to stand up and talk directly about that problem, that might be a smart thing to do right now.

MR. BROKAW:  John Harwood, can you name one thing that Barack Obama has done in the last month that would contribute to the resolution of this financial crisis, one idea that he's put on the table?

MR. HARWOOD:  Well, he helped pass the bailout plan in Congress, which John McCain did in the end, too.  That was, when you got to the end stage of that process, both of those guys were acting like leaders in supporting this plan and trying to get it passed.  Barack Obama, lately, has come out with some smaller bore ideas.  Last week he had a small business, you know, tax incentive program.  But, look, he's not president.  John McCain's not president.  One of the problems is that not only the candidates, but the president of the United States, the Treasury secretary and all the smart guys advising them are making up these plans, plays in the sand.  The playbook's not there anymore.  They're, they're drawing it up in the dirt.

MR. KOPPEL:  There is hardly a day, Tom, that goes by that we don't see a new iteration of how we're going to fix this.  I want to add one comment to this before you move on to your next subject.  The winners in this political campaign are going to end up envying the losers because they're going to be stuck with these problems, they're going to have to deal with them, and they haven't begun to address them with the necessary gravitas that they can only bring to bear after the election is over.

MR. BROKAW:  One of the senior economic advisers for Barack Obama said to him, "From a political point of view, the good news is that the economy will be bad until the election.  The bad news is, when you take office, it'll be much worse."

MR. GIGOT:  But I think this would be an historic opportunity for anybody who wins.  I mean, yes, you--we have a lot of difficulties, but if you're coming in, you have the opportunity to help turn it around.  And if you do and if it does--and housing prices are going to bottom out at some point.

MS. BURNETT:  At some point, yes.

MR. GIGOT:  So then you're in a position to be able to take credit for that even if your policies didn't do much to help it, and then you get the political benefit.  So I, I, I think I'd take the victory as opposed to the defeat.

MR. KOPPEL:  On, on the other...

MR. BROKAW:  We haven't talked about Sarah Palin very much in the course of this hour on MEET THE PRESS.  Here's the latest Newsweek poll on Governor Palin, who continues to arouse the faithful wherever she appears in rallies. But last month it was a dead heat in terms of whether she was qualified to be president, 45-46.  As you can see, now it's a very substantial gap. Fifty-five percent of the people say no, she's not qualified; only yes say 39 percent.

So she serves one purpose, Paul Gigot, about getting people out at rallies. But in the end, is she going to be some kind of a drag on the ticket, especially with Troopergate?  Or is that just a speed bump?

MR. GIGOT:  I, I don't think she's going to be a drag on the ticket, because I think, in the end, she's doing, she's doing more to, to--she's done more already to energize Republicans to help McCain, and some of them had a lot of doubts about it.  And, in the end, vice presidents really don't matter to the ticket, particularly in this environment.  The economy and how the two main contenders deal with it is going to dominate everything.  So I think, in the end, she won't play a, a, a meaningful role.

MR. BROKAW:  We don't like to look in the rearview mirror very much, but would another candidate have been better, given the economic circumstances, a Mitt Romney or Rob Portman, for example, who was here today?

MR. GIGOT:  Possibly, possibly.  Although, I don't think either of them would have given the McCain campaign the energy that it really would--that it really got out of that convention.  And then, ultimately, this doesn't matter what a, what a Sarah Palin or a, or a Mitt Romney says about the economy.  It matters what John McCain says about the, the economy; the command that he shows, the, the, the mastery of the subject that he shows or doesn't show.

MR. HARWOOD:  I do think, Tom, that she will provide zero help in reaching swing voters and much less than someone like Rob Portman were he out making the economic argument.  However, as Paul suggested, you can't underestimate the fact that John McCain had significant problems within his base, misgivings and ambivalence within his base.  She has helped with that.

MR. BROKAW:  We have not talked in this hour, as well, about the factor of race, which is on the minds of a lot of people, and what kind of a role it'll play on Election Day.

Ted Koppel, you've been looking at race in America.  You're doing a report on the Discovery Channel called "The Last Lynching," a series of reports.  As you go around the country and take your soundings, do you think race is going to be much of a factor come Election Day?

MR. KOPPEL:  It can't help but be.  It's a question of how much of a factor it's going to be, and it's always hard to track this.  There is, in politics, something that's come to be known as the, as "the Bradley effect," harkening back to a time when then Los Angeles Mayor Tom Bradley, an African-American, was running for governor, who was far ahead in the polls, and then, come Election Day, all of a sudden he loses.  It may be that that is no longer a, a likely comparison, but I must tell you I think--and the events of the last few days I think have underscored this--there continues to be a considerable amount of racism in this country.  Barack Obama has gone to great lengths to avoid letting that be a subject, doing everything he can to avoid making it the subject.  I think John McCain, to his credit, also has tried to avoid making that any element.  But among the voters is it going to be?  You bet it's going to be.  There's a recent Stanford poll which suggests that Obama might get 6 points more were it not for the race issue.

MR. BROKAW:  We want to share a--just a clip from your documentary on the Discovery Channel.  This is an unique approach, both the person who's talking and the take on race.  And let's just run that, and then you can explain to us what we've just seen here.

MR. KOPPEL:  Sure.

(Videotape, Discovery Channel documentary)

MR. KOPPEL:  James "Tiger" Knowles, whom we can't show you and whose voice we've altered electronically, has a unique perspective on the Democratic Party's nomination of Barack Obama as its candidate for president of the United States.

MR. JAMES KNOWLES:  People need to vote for him because of his ideas and, and the veracity that he displays in what he does and not because he's African-American.  Because if they do that--and I don't care what color the voter is, that has nothing to do with it.  But if he's voted for strictly because he's African-American, then in a twisted way, we're taking a step backwards.

(End videotape)

MR. BROKAW:  Who's Tiger Knowles?

MR. KOPPEL:  This is a fairly bland statement until you realize that Tiger Knowles was a member of the Ku Klux Klan who has just spent 20 years in prison and is still in a federal witness protection program because he participated with another young Klansman in what we refer to as the "last lynching," a lynching that took place in Mobile, Alabama, in 1981.  And Tiger Knowles ultimately turned state's evidence against the, the other man who was, I think, the only white man who was executed during the 20th century for killing a black man.  But he was a Klansman, ex-Klansman.

MR. BROKAW:  Paul Gigot, do you think race is going to be much of a factor on Election Day?

MR. GIGOT:  I, I hope not.  I mean, obviously it's a--such an important part of our history, and, and it's with us always, so it will to some extent.  I've talked to a lot of people who were participants in the, in that campaign, the Bradley campaign, who think that was, that effect was overstated at the time. That was a while ago.  I hope we've made progress since then.  And, and to just your point on McCain, you know, a lot of people within his campaign or supporters are saying, "Why don't you use the Reverend Jeremiah Wright as an issue?" And McCain has refused to do that, in part, because I think he doesn't want to bring race into this whole issue.

MS. BURNETT:  What accounts for the poll that you just showed, which shows 17 to 19 percent of people favoring Obama in a lot of the issues, and yet when it comes down to the overall poll, you're looking at 11 percent?  I mean, it does appear that there's something.  Now, it could be questions about leadership, it could be something else that gives people concern about voting for Barack Obama.

MR. GIGOT:  He is an unknown.

MS. BURNETT:  But, but you have to wonder if maybe there is some sort of a reticence because of race.  Nobody wants to admit it to themselves even.

MR. BROKAW:  All right.  Let--for the two of you, as we begin to wrap up here, let me ask you whether the greater fault line is Main Street vs.  Wall Street, rather than race?

MS. BURNETT:  I think Main Street is, is the most significant issue. It--when it comes to this crisis, Tom, I, I believe that we are getting what we need out of Washington.  It's going to take time, it's going to be painful, but we're getting what we need.  When it comes to Main Street, you brought up the credit cards, that is the most important thing.  People are going to be in for a long period of pain, and unless we address a rapidly growing jobs--jobless rate, we're going to have a very significant problem for the next several years.

MR. BROKAW:  John Harwood.

MR. HARWOOD:  I think there's no question the economy is much more powerful in this election than race is.  I don't think we can dismiss the factor of race.  This is the first time we've run this experiment on a national level for president of the United States.  But I do think that the dominance of economic concerns is so deep in this election that there's no getting around that, and it's a huge plus for Barack Obama right now.

MR. BROKAW:  Final question, and we just have a moment.  You have to say yes or no.  Do you expect us--an October surprise of some kind?  Erin?

MS. BURNETT:  October surprise?  Yes.

MR. HARWOOD:  I think we've had the October surprise, and it's the financial meltdown.

MR. GIGOT:  Yeah, I...

MR. BROKAW:  Paul Gigot.

MR. GIGOT:  Yeah, I agree with John.

MR. BROKAW:  And Paul--Ted Koppel?

MR. KOPPEL:  Who, who am I to disagree with such distinguished colleagues?

MS. BURNETT:  Oh, I think we're going to have another one, and maybe it's even a positive one, and that would truly be the big surprise.

MR. GIGOT:  Bless you.

MR. BROKAW:  There are some people in the Obama campaign who believe that there's a concerted effort under way to get Osama bin Laden before Election Day and bring him out of captivity, dead or alive, in some fashion.  But...

MR. GIGOT:  You're thinking...

MR. HARWOOD:  I think the Kerry campaign thought they were going to do that four years ago.

MR. BROKAW:  That's the nature of politics this days.

MS. BURNETT:  (Unintelligible)

MR. GIGOT:  I'm all for that if they do it.

MR. BROKAW:  Who could complain?  Ted Koppel, Paul Gigot, Mr. Harwood, Ms. Burnett, thank you very much for being with us this morning.

Oh, also I want to remind you that you can catch Ted Koppel's critical look at race in America, his Discovery Channel special entitled "The Last Lynching." It premieres tomorrow night at 10 Eastern on Discovery.  I'll be right back.

(Announcements)

MR. BROKAW:  We'd like to remind you to watch Monday night on "NBC Nightly News with Brian Williams," conversations with JFK, newly discovered audiotapes of an unguarded JFK just months before he became president.  He talks candidly about his life, politics and his own health.  The tapes will air for the first time anywhere Monday on "NBC Nightly News." And, of course, Brian will have continuing coverage of the financial crisis.

That's all for today, we'll be back next week because, if it's Sunday, it's MEET THE PRESS.


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