This is a partial transcript from "The O'Reilly Factor," August 9, 2004 that has been edited for clarity.
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BILL O'REILLY, HOST: "Personal story" segment tonight, as you may know, The New York Times has bitterly attacked the Fox News channel as being irresponsible and partisan. Ironically, these are the same charges I've leveled at that newspaper.
A couple of weeks ago, after another ridiculous anti-Fox News article, actually, it was a movie review, I called the editors of The Times out, saying I would debate them anywhere, any time. They did not answer the call, hiding under their desks.
However, NBC's Tim Russert (search) heard the call and set up a debate between Paul Krugman, perhaps the most anti-Bush columnist at The Times, although it's hard to tell, and me, your humble correspondent. We began speaking about economic policy.
O'REILLY: You know, Mr. Krugman is a smart guy. But Mr. Krugman was absolutely dead 100 percent wrong in his columns two years ago when he predicted the Bush tax cuts would lead to a deeper recession. You can read his book and see how wrong he was.
PAUL KRUGMAN, NEW YORK TIMES COLUMNIST: Actually, you can't read it. I never said that. I said that it would...
O'REILLY: In column, after column, after column, you made the point in your book, OK, that these cuts — these tax cuts were going to be disastrous for the economy.
O'REILLY: They haven't been.
KRUGMAN: I'm sorry, that's a lie.
O'REILLY: No, it's not a lie.
KRUGMAN: It's a lie. I said they were ineffective at job creation. And if you look at the...
O'REILLY: Ineffective at job creation, what is that, semantics now?
KRUGMAN: No, it means that...
O'REILLY: The economy is based on job creation. And you're saying it's ineffective. Don't call me a liar, pal. That's what you do all the time, and I'm not going to sit here and take it.
KRUGMAN: No, I'm sorry. You just...
O'REILLY: Ineffective? You can — that's the biggest bunch of ... in the world..
KRUGMAN: Find a place where I said that they were going to cause a recession. Find a place where I say it.
O'REILLY: You said — look, you want to call it ineffective in job creation? What is a recession? A recession is when the GNP...
O'REILLY: ...goes backward. Everybody knows it's going forward.
O'REILLY: Pounded, column after column. Disastrous to the economy.
O'REILLY: Tax cuts, disastrous. It hasn't been.
KRUGMAN: No. I said the tax cuts were not going to be effective at creating jobs, and the job creation record is lousy.
O'REILLY: And you were wrong.
KRUGMAN: It is the worst...
TIM RUSSERT, NBC NEWS ANCHOR: There has been a net loss of jobs.
KRUGMAN: There has been a net loss of jobs.
RUSSERT: In the Bush administration.
KRUGMAN: In the Bush administration.
O'REILLY: 9/11, did it not happen? Did it not happen?
KRUGMAN: Again, 2002 economic report of the president, they said we were going to be 7 million jobs of where we now are.
O'REILLY: OK, again, I'm not defending them.
KRUGMAN: The job creation over the last 10 months at 1.5 million, which the Bushies boast about, that is a slower pace of job creation than ...
O'REILLY: You've got 5.6 percent unemployment rate here. In the state of Florida, which is one of the states that's going to be the election ... you've got over 60 percent saying the economy is good or excellent. It's a state by state situation. All right? And I'm just tired of this stuff. If you think it's bad, fine.
KRUGMAN: You know...
O'REILLY: And if Bush made a mistake in his estimation of job creation, you're probably right.
O'REILLY: But you paint Armageddon, so does your newspaper, and it's baloney.
KRUGMAN: OK, you know, this is not your show. You can't cut my mike. Look...
O'REILLY: Another cheap shot. You know, you're a cheap shot artist and you know it.
KRUGMAN: All right, the United States is the lowest taxed advanced country by far.
O'REILLY: Yes, because we're not a socialist country.
KRUGMAN: Oh, God...
O'REILLY: And when did the R&D blow and get into the '90's, the go-go '90s, it happened when Reagan cut taxes. All right?
KRUGMAN: I love this.
O'REILLY: All the corporations started R&D. I don't care whether you believe it or not. You're a quasi socialist. You want a big government creating jobs. I want the private sector to create jobs. There is a difference.
KRUGMAN: Reagan's '81 tax cut credited for the prosperity in 1999...
O'REILLY: When do you think all that R&D took place?
O'REILLY: OK, when did the R&D that led to all of the technological advances take place, sir? When did it take place?
KRUGMAN: Actually, a lot of it in the '90's. They were right at the...
O'REILLY: Oh, sure.
RUSSERT: You said the only thing good in Ronald Reagan's administration was Lyndon Johnson's policies?
KRUGMAN: If you're willing to give Ronald Reagan credit for good things that happened 18 years later, then credit for good things that happened under Ronald Reagan...
O'REILLY: Call any corporation...
KRUGMAN: ...go to Lyndon Johnson.
O'REILLY: Call any corporation — any high-tech corporation in Silicon Valley (search) and just ask them when their R&D ramped up and when their machinery that has led the world, the United States and the world, when it started getting — they will all tell you it happened during the Reagan administration when corporate taxes were cut. There was more income to devote to that.
I mean, look, see, what Krugman wants is the government to run the economy. Kerry's going to create 10 million jobs or 30 million, whatever he's going to do. What I want is the private sector to drive the economy. There's a fundamental difference between him, Mr. Entitlement, and me, Mr. self reliance. That's it.
KRUGMAN: Look, the basic fact is the tax cuts that we've had, which is the stuff that I want to roll back — I mean, I don't even want to roll back the middle tax class cuts, which are a small change. But the Bush tax cuts, the total amount of tax cuts for people earning more than a million a year, that's 0.13 percent of the population, are larger than the total tax cut for the bottom 60 percent to families. Basically everybody earning less than $50,000 a year.
So these people that you're saying are suffering under the burden of taxes got nothing from Bush. And it's people like you or me, if I sell more books than I have so far, who are the prime beneficiaries. So you know, this is bait and switch. This is not the real story. And you take a look, you take a look at anything I've written about economics, and I'm not a socialist. You know, that's a slander.
O'REILLY: I said quasi.
KRUGMAN: Well, that's a wonderful — then you're a quasi murderer. I mean, what...
O'REILLY: I'm a quasi murderer?
KRUGMAN: Well, quasi is a pretty open thing.
O'REILLY: That's ridiculous. All right...
KRUGMAN: I'm nowhere close to that. I've got...
O'REILLY: How do we define where we both are in this?
RUSSERT: Let me go to Iraq. Mr. Krugman said — you wrote this. "Mr. Bush's war on terror has played with eerie perfection into Usama bin Laden's hands."
KRUGMAN: We had Arabic-speaking special forces hunting for Usama in the mountains of Afghanistan. We pulled them off to go into Iraq. And instead, we sent our Special Forces, who are trained — who are Spanish-speaking, who are trained to go chasing drug lords in Colombia and sent them to Afghanistan, because we needed those soldiers for Iraq. Boy, you know, talk about giving them exactly what they wanted.
O'REILLY: Look, the Iraq war was a big screw-up, all right? I think everything — every clear-thinking person in the country knows it was. First of all, weapons of mass destruction did not materialize, which was the primary motivator for the war. All right?
Mr. Krugman and his left wing pals throw around the lie. Oh, they lied. Do you believe Bush lied, by the way, about weapons of mass destruction? You're still pumping that drum?
KRUGMAN: I've never actually said the word "lie."
O'REILLY: No, you're clever in your rhetorical...
KRUGMAN: Well, so is Bush, you know. One of the things about his speeches...
O'REILLY: Do you believe he lied or not?
KRUGMAN: I believe he knew what he wanted to hear, and people found a way to ...
O'REILLY: All right, so you're not going to call him a liar, though.
KRUGMAN: Not on that.
O'REILLY: Krugman's opinion on this is not irrational, all right. The tactical war against terror might not have been well served by the Iraq adventure. That's a legitimate debate, OK. What I object to is the lying charges, the slander and defamation that comes out of the Krugman wing, if you want to call it, of the social landscape. Don't give me that.
Who are you appearing with today in your book signing? You're appearing with Stuart Smalley (search), the biggest character assassinator in the country.
KRUGMAN: The guy you compared to Goebbels.
O'REILLY: You are in with the most vile form of defamation in this country. You are pandering to it, and I resent it, sir.
KRUGMAN: Well, we resent you too.
O'REILLY: Yeah, I know you do. And you know what you'll do about the resentment? You'll lie about me and attack me personally. That's what you'll do.
KRUGMAN: Let's watch that, OK. As I say, it's kind of hard to have a reasonable discussion here.
O'REILLY: I think it's reasonable. Russert would throw me out of here if it wasn't.
KRUGMAN: Would he? I don't think so.
RUSSERT: "Fahrenheit 9/11," — you wrote this — "it performs an essential service. It tells essential truths about leaders who exploited a national tragedy for political gain." That's a very serious charge.
KRUGMAN: I don't see how anybody looking at this can say otherwise. I mean, right from the beginning, we had, first, people around Bush, and then Bush himself using the war on terror as a club with which to bludgeon the other side.
RUSSERT: Do you believe "Fahrenheit 9/11" performs an essential service?
O'REILLY: Yeah, for Fidel Castro — broadcast it nationwide in Cuba. You know, for Hezbollah, who wants to distribute it throughout the Middle East. You know, I mean, look, this is "Triumph of the Will," that's what it is, the Nazi propaganda movie. That's what "9/11" is. It's cut and paste — show Bush as a corruptor and reinforce all of Krugman's paranoid delusions.
I don't know how any responsible journalist could actually say that propaganda is valuable. I just don't know how anybody could do it, and that's...
KRUGMAN: Well ... Fox News entirely.
O'REILLY: Yeah, OK, another cheap shot by the way.
KRUGMAN: No, it isn't.
O'REILLY: Yes, it is. Look, you may not like Fox News, but that is a cheap shot. And if you don't know what the definition is, I'll give it to you later.
RUSSERT: Let me talk about another movie, "Outfoxed." What do you think of that?
KRUGMAN: You know, it's a... basically, this is a guy who let his VCR... they did a lot of taping of Fox News and they produced a pretty... a kind of picture that you couldn't do on your own. It's a very cheaply made, very, you know... but it gives you a pictures of a network that is very much a propaganda arm. And, you know, we can go through that lots of ways...
RUSSERT: Of whom?
KRUGMAN: Of the right, of the Republican Party, or just like Rupert Murdoch (search).
RUSSERT: So the broadcasters and journalists on Fox News take marching orders?
KRUGMAN: Of course they do. I mean, if your fantasy was that there was a memo every morning that told you how we're going to cover the news so as to slant it, your fantasy would be right. We've now got copies of the memo.
O'REILLY: All right, well, look, Mr. Krugman lives in a world of his own. He embraces propaganda of the worst kind, and that's why I have very little regard for his professional analysis.
O'REILLY: And that's true. I have very little regard for him, in every way. Thanks to Tim Russert for setting up that exposition.
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