This is a partial transcript from The Beltway Boys, November 1, 2003, that has been edited for clarity.

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FRED BARNES, CO-HOST: Mort, the hot story of the week, the very hot story of the week, the very, very hot story is blowout, the 7.2 percent increase in economic growth over the third quarter.

This means, Mort, and you're going to have to concede it this time, that the Bush expansion is on, and it is blazing. Not just consumer spending, business investment over 11 percent, which means job personal income, after-tax personal income up 7.2 percent.

Well, this 7 percent growth can't be sustained over the subsequent quarters. But what it means is, it's probably a 4 or 4 percent, which we're going to see, perhaps as far as the eye can see, but at least well into 2004.

Now, as you might guess, there are political winners and losers in a big event like this, and I'm going to start with the winners.

One is obviously President Bush (search), who said tax cuts would work, and they are. Another is supply-siders, particularly their economists, who provided empirical evidence that tax cuts would work. Another is Democrat Zell Miller (search). Even before Bush was sworn in as president, he had met Bush and agreed to co-sponsor his first tax cut, and he also did with the second one. He was right.

And then there's Alan Greenspan (search), the head of the Federal Reserve, who had a very accommodating monetary policy that abetted, that helped the tax cuts and the economy.

Now, the losers. You know who the biggest loser is? New York Times hysterical columnist Paul Krugman, who has written a book about The Great Unraveling that Bush has supposedly caused by his economic policy. The only unraveling is by Paul Krugman himself.

Nancy Pelosi, the Democratic leader in the House of Representatives gave a characteristically whiny response. Then we have the Democratic presidential candidates, Mort, all of whom have said over and over again, the way we improve the economy is to raise taxes, for which there's no empirical evidence, that's for sure.

And then there's the press, which remains stupidly opposed to tax cuts, always attacking them. I hope they get some wisdom this time, but I don't think they will.

Now, look at what Nancy Pelosi says and see what you think.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), MINORITY LEADER: Today's announcement that the GDP had increased is, of course, welcome news. However, it does not change the fact that far too many Americans are out of work. Mr. President, where are the jobs?

The American people will not settle for, nor should the Republicans celebrate, a jobless recovery.

(END VIDEO CLIP)

MORT KONDRACKE, CO-HOST: Well, one, 7.2 percent is fantastic. Two, this will not be a jobless recovery if growth continues at 4 to 5 percent. And it's going to be deeply embarrassing to the Democrats, who said that the tax cuts would not produce a, would not -- they said it would destroy the economy.

And, you know, if Iraq works out OK, I would say, and the economy keeps blazing along, you know, Bush is well on his way to, to winning the, the 2004 election.

But, you knew there had to be a but, this is not supply- side economics.

It's only supply-side, supply-side economics only works...if it brings back the kind of surpluses that we were expected to have before this whole thing started.

I mean, what this is, is Keynesianism. It's big tax cuts, plus big spending, produces big deficits, produces growth, produces jobs, in a short-term, in a short-term recovery.

And, you know, and as I said, we'll have to see what happens in the long run.

BARNES: Mort, that is so grudging.

KONDRACKE: Yes, well, anyway...

BARNES: Anyway, go ahead, go ahead,

KONDRACKE: ... let's see what happens. OK.

The other hot story is Ramadan Tet, and what I'm referring to is Ramadan (search), the holiest month in all of Islam, which, of course, our enemies in Iraq are celebrating by committing murder and bombings.

And their purpose here is to repeat what the communists in Vietnam did in the Tet offensive of 1968, where it demoralized Americans and certainly, you know, convinced the Vietnamese that they were losing.

And, you know, what, Saddam Hussein and his gang and, and Usama bin Laden's people hope to do is that George Bush, hope that George Bush...will not respond, will respond the way Lyndon Johnson did...by keeping quiet, or by not saying, Hey, we won this thing. Instead, they've got George Bush saying this.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The terrorists rely on the death of innocent people to create the conditions of fear that therefore will cause people to lose their will. That's their strategy. And it's a pretty clear strategy to me. And this country will stay the course. We'll do our job.

(END VIDEO CLIP)

KONDRACKE: Now, the Democrats, are all saying that the Bush policy has failed, quote, unquote, "failed." I mean, their problem is that to the extent that they have a positive policy, it is to rely on the United Nations (search) and international institutions and foreigners to come in and help us out.

One, the foreigners are not coming. And two, these bombings against the Red Cross and previously against the United Nations, what happens?

BARNES: Yes.

KONDRACKE: Those institutions bug out. They're not dependable.

Bush is saying, We are not leaving, and that's got to be American policy.

BARNES: Yes, he's standing tall, Democrats aren't. Listen to Tom Daschle here, his response.

(BEGIN VIDEO CLIP)

SEN. TOM DASCHLE (D-SD), MINORITY LEADER: If this is progress, I don't know how much more progress we can take. I would also say that there is a growing credibility gap between what is said and what is being done.

(END VIDEO CLIP)

BARNES: You know, he sounds a little like Walter Cronkite did after the Tet Offensive, and Cronkite, who got very nervous and upset about it and meant America was losing and so on turned out to be very, very wrong.

Now, public opinion is not riding with Tom Daschle. When you look at the new FOX News poll, it says 62 percent of Americans say finishing the job in Iraq is the right thing to do. That's the Bush position. Thirty-two percent, it's bringing the troops home. That's -- well, that's not quite the Democratic position, but it, they're getting there.

And that same FOX poll shows Iraq being by far the issue that may make President Bush politically vulnerable in 2004. It may be a bigger issue than the economy, with the economy booming.

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