This is a partial transcript from The Beltway Boys, September 14, that has been edited for clarity. Click here to order the complete transcript.

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MORT KONDRACKE, CO-HOST: Let's go to the Ups and Downs.

DOWN: The Senate

KONDRACKE: The so-called greatest deliberative body can't seem to come to an agreement on homeland security. And despite narrow differences, the rancor on both sides is getting increasingly bitter. Watch this.

(BEGIN VIDEO CLIPS)

SEN. TRENT LOTT (R-MS), MINORITY LEADER: This seems to me to be something that we should be able to do in a bipartisan way, and we should have been able to do very quickly.

This is just the latest victim, the lack of the ability to govern by the Senate Democratic leadership.

DASCHLE: They've made it much more difficult. I don't think there's any doubt about it. They're making it difficult on the floor by not allowing us to proceed on homeland security. But we've got to work through those difficulties, and that's what we're trying to do.

(END VIDEO CLIPS)

KONDRACKE: Look, they're both right. I mean, the fact of the matter is, is that bullheadedness on both sides is blocking this vital piece of legislation to create a department that's going to deal with terrorism.

They are 95 percent there. It is time for the president and Tom Daschle to get together and cut a deal over which federal employees, how many of them, and which federal employees can be uncovered by civil service law and, and get a deal.

I suspect, though, that if there's not a deal reached and this thing goes down, that the Democrats will get the blame, they are in charge of the Senate.

LINDA CHAVEZ, GUEST CO-HOST: Well, and they ought to get the blame, because what's really going on here is the Democrats are, are doing payback to the labor unions that put them in office. This is election time. They need that union money in order to win elections. And they're paying back, because this is all over union rules for federal employees.

And I'll tell you, if he does not get what he wants, I think President Bush will in fact veto this bill.

KONDRACKE: Well, I think that would be a tragedy.

UP: Senator John McCain and Joseph Lieberman

CHAVEZ: They get a big win after the Senate overwhelmingly votes to create an independent commission to study the government's response to the 9/11 attacks. The lopsided vote came one week after the White House dropped its opposition to the plan.

And, by the way, Mort, I think the reason the — they dropped the opposition is, they really have no choice. We had a week of hearings in which we exposed lots of lapses in security, the FBI, NSA, CIA, everybody has a little blame to bear here. And I think it would have looked really bad if the administration had not gone along and supported this, this move.

KONDRACKE: Well, I, I agree with that. But I think we're going to know the — we know the basic outlines of the story. Both the Bush administration and the Clinton administration before it, you know, didn't take terrorism seriously, or seriously enough, and they didn't order the CIA and the other intelligence agencies, the FBI, into war footing, you know.

I just hope that this commission isn't just a finger-pointing blame game and will, will get to the bottom of things that need to be fixed and make sure that things are fixed.

CHAVEZ: And, and Mort, the real danger here is that we'll spend too much time investigating the past. We don't want the FBI out there explaining why it didn't find the guys, bad guys last time. They have to be out there looking for the bad guys this time.

KONDRACKE: Absolutely.

DOWN: The economy as a campaign issue

KONDRACKE: Despite shrinking 401(K)s, the public seems to be fairly upbeat about the state of the economy. A recent Gallup poll shows that 54 percent rate the economy as very or somewhat good, and the latest Fox News poll shows that 47 percent say they vote in November would be an expression of support for the president on the war as opposed to 30 percent, who said it would be in opposition to current economic policies.

Now, I don't think this is the end of the story. This is the week that 401(K) reports go, go out. And Linda, your portfolio has dropped at least 30 percent in the last year. Just think, if you'd been labor secretary, you'd have had to sold — sell all your stock, and you'd still have that money.

CHAVEZ: That's right, I'd be a rich person now instead of the poor person that I am. And I, I happen to agree with you, Mort. I think that this is not an issue that is necessarily going to way — go away. I think it is a danger for the Republicans. I think they do have to worry.

And the problem is, the president, back in the summer, was out there promising he was going to have some economic proposals on the table. We haven't seen any. And Republicans can't win on the economy if they're not out there pushing their own ideas. They're going to lose if it's only about rhetoric, but that goes in the Democrats' favor.

DOWN: Barbra Streisand

KONDRACKE: She's written another one of her infamous memos to congressional Democratic leaders, chock full of unsolicited advice. Her latest missive warns Democrats to resist attack, attacks on Iraq, because, quote unquote, "Saddam Hussein did not start — bomb the World Trade Center."

CHAVEZ: With friends like this, what are the Democrats thinking? I mean, poor Democrats. They're out there, they've got their Hollywood friends out giving them advice on the war.

And by the way, Barbra Streisand can't even spell "Saddam" or "Al Qaeda," and worst of all, the memo was to Dick Gephardt. She didn't even spell "Gephardt" right. So I'm not sure I'd listen to her advice.

KONDRACKE: This story brought to you courtesy of Roll Call's Ed Henry, I might point out, tooting our newspaper's own horn.

And I think that Barbra Streisand doesn't even read the papers, because Dick Gephardt, who she's going to conduct a fund-raiser for this Sunday, is actually one of the president's big supporters.

CHAVEZ: That's right.

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