This is a rush transcript from "FOX News Watch," March 22, 2008. This copy may not be in its final form and may be updated.

JON SCOTT, FOX HOST: This week on "FOX News Watch," Barack Obama tackles race and his ties to his former pastor. How did it play in the media?

The press pour over Hillary's White House records. Anything there?

The credit crisis is big news after the Bear Stearns' buyout. What don't you know about this story?

Plus, America marks five years of the war in Iraq, but are the media mostly ignoring it.

And Chris Matthews nearly takes out Ellen with his dancing moves.

First the headlines, then us.

(NEWS BREAK)

SCOTT: On the panel this week, Monica Crowley, syndicated radio talk show host; Rich Lowry, editor of the "National Review;" Kirsten Powers, columnist and "FOX News" analyst; and David Corn, Washington bureau chief for "Mother Jones" magazine.

I'm Jon Scott. "FOX News Watch" is on right now.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENTIAL CANDIDATE: I confess that, if all I knew of Reverend Wright, the sermons that have run in an endless loop on the television sets and YouTube, if Trinity United Church of Christ conformed to the caricatures being peddled by some commentators, there is no doubt I would react in much the same way.

(END VIDEO CLIP)

SCOTT: Barack Obama on Tuesday lashing out of the media for its selective use of sound bites from his former pastor, Reverend Jeremiah Wright. The candidate was forced to give a major speech after his ties to Wright were questioned.

It seems to me, Rich, that a big part what he wanted to do was to stop the play of those sound bites. In fact, on "FOX news" channel, we put out the edict, no more clips of Reverend Wright after he gave that speech. Did he succeed in his goal?

RICH LOWRY, NATIONAL REVIEW EDITOR: Yeah. Look, he was in political trouble with the Wright controversy so he went to his base, which was the media. There was zero chance of Barack Obama giving a unifying speech about race wouldn't get rave reviews. I think Chris Matthews had shivers running up both his legs this time. He's been compared to FDR and Lincoln and every great order in the history of the world.

And he's defined in that speech any continued discussion, or tried to define discussion of the Wright controversy is out of bounds and divisive. And I think he did make progress in his case.

DAVID CORN, WASHINGTON BUREAU CHIEF, "MOTHER JONES" MAGAZINE: What he did was, he took lemons and tried to make lemonade. I think he came up with champagne at the end of that. The speech, I thought, was unique and daring.

We have not seen a politician on the right or left be so honest and frank in discussing black anger, black racial resentment and white anger and white racial resentments and talked about where they both come from in an attempt to understand where we are racially. Not to excuse either side or either side's excesses. And try to push the country forward. He did it — Rich is right — under duress politically. But I think it was a home run in terms with dealing with the big issue. And the press is right to cover it.

MONICA CROWLEY, SYNDICATED RADIO TALK SHOW HOST: I think Barack Obama saw that at some point during his campaign woe have to give this kind of speech. I don't think he wanted to give this early in the campaign. I think his thinking was he would wrap up the Democratic nomination and then give a really unifying speech that could carry him into the general election.

The press forced him into giving this speech this early. He did the best he could with it. What's interesting was how the press handled the speech and depending whether or not certain outlets were invested already in the success of Barack Obama, that told us how they were going to cover it.

For example, the "New York Times" very invested in the guy even though they endorsed Hillary Clinton, they wrote a soaring editorial about him. Other media outlets that were a bit more skeptical about his experience and ability to do the job, raised additional questions.

SCOTT: Perhaps it shouldn't be surprising the "New York Times," "Washington Post" loved it. Outlets like the "Weekly Standard" and Rich Lowry's "National Review" didn't think much of this speech.
Did he succeed? I mean, was it about ending the questions over Reverend Wright or was it about unifying the country?

KIRSTEN POWERS, COLUMNIST AND FOX NEWS ANALYST: I think it was about ending the questions about Reverend Wright. This was a crisis. We watched him deal with the campaign crisis where he had to come out and try to convince people that he doesn't share the views of this person and this is not what he represents and to try to move beyond it. The last thing he wants is to have to continue to have this conversation. He's a post-racial candidate. Once he has to get into these kinds of conversations, that takes away that patina.

CORN: The media did cover by and large within the context of the right controversy. There was a piece on CNN saying is he a secret divider because he attends Wright's church. The speech was long. Within 24 hours, at least 1.2 million had gone to YouTube — I don't know how many to his site.

SCOTT: People have seen it.

CORN: So people have seen it. The media's not used to dealing with such depths. We do things in quick sound bites. There was a lot more to the speech. It was multidimensional. It may not be good politically but...

LOWRY: It's the double standard though. If you imagine a white politician giving this kind of speech about a hateful right-winged pastor that was his mentor for 20 years with the media so easily buying these kinds of excuses and comparisons that Obama had. Wright is like Geraldine Ferraro, he's like my poor grandmother. The answer is no.

SCOTT: John McCain hasn't had an answer for his endorsements from Wright.

(CROSSTALK)

CROWLEY: That's a whole different kind of relationship.

LOWRY: ...17 years.

POWERS: This is a double standard that's going on with conservatives though. It's only if you sat in the pews that it matters. But if you say things anti-Islam, like you have coming out of people who support John McCain, if you have things anti-gay, having people blaming 9/11 on gays and feminists, as long as you're not sitting in the pew, it's OK.

SCOTT: And Monica, Monica, Obama has built a big part of his appeal and frankly criticizes Hillary Clinton about judgment. That's the question. Being affiliated with that church 20 years speaks to his judgment.

CROWLEY: Right. And this is the difference between what Kirsten was raising and this particular situation and also how the media's covering it. Do I think every presidential candidate has to answer for every wacko who comes out of woodwork and says I'm for him? Of course, not. But the fact that Obama had this close personal relationship with this pastor in addition to sitting in the pews 20 years and absorbing what he has to say and then pretending — not pretending...

POWERS: It's not every wacko that comes out though.

I'm sorry, Monica. It's not every wacko that comes out of the woodwork. These are people...

(CROSSTALK)

POWERS: No. Bob Jones University, Pat Robertson, Falwell.

(CROSSTALK)

CROWLEY: The Republican Party, no — hold on - the Republican Party is closely aligned...

(CROSSTALK)

SCOTT: We are going to post...

POWERS: .... people that just come out of the woodwork.

(LAUGHTER)

CROWLEY: The relationship is a different thing.

(LAUGHTER)

SCOTT: The conversation goes on.

(LAUGHTER)

SCOTT: It's going to be posted on foxnews.com. You can listen to this battle go on.
We'll be back in two minutes to talk more about the White House race and this.
ANNOUNCER: Thousands of documents from Hillary's days in the White House. What did the press uncover as they poured over her records? Next, on "News Watch."

(COMMERCIAL BREAK)

SCOTT: Hillary Clinton continued campaigning this week as many in the media focus on her past. 11,000 documents — her years as first lady — released by the Clinton Library. The release came from a Freedom of Information request and a lawsuit threat.

David, I'm sure you read every single one of those 11,000 pages.

CORN: Oh, yeah. I'm real bleary eyed.

SCOTT: Does it give us — does it say anything about the content of that 3 a.m. phone call ad to see the lady's schedule?

CORN: I don't think on the schedule there were 3 a.m. phone calls for foreign policy crisis. These are documents, you know, there was a much halabaloo about this to begin with. But they're pretty routine. They say who she met with. Doesn't ever say what they really talked about. There's no agenda items. A lot of the stuff the journalists find juicy, personal meetings, political meetings are not there. Not because of the Hillary Clinton campaign, but because of the archives. They routinely take this stuff out. I've spoken to people at the archives and they've gone by the numbers on this so people can't point to this as an example of Clinton's secrecy.

SCOTT: Is there anything in there that makes her look different from any other former first lady?

CORN: The health care stuff. There's a lot in the first two years, meetings of health care matters, very detailed matters and extensive meetings. After that she seems to have what seems to be the more formal routine duties of a first lady. Very extensive, but still...

LOWRY: I'm sure all the redacted bits of when she was secretly running Clinton foreign policy for eight years. After health care, the sort of typical first lady schedule.

CROWLEY: Except a lot of dot dot dots in a lot of this. Big redacted sections for security purposes or whatever.

But the most damaging thing for her is the initial story out of the box after the release of these 11,000 pages is that she was in the White House many times when her husband was carrying on with Monica Lewinsky downstairs. They were in Washington, D.C., in the White House together. I think it's unhelpful for Hillary for the country to be reminded of all the baggage that goes along with Bill and Hillary Clinton.

SCOTT: You don't think they already...

CROWLEY: They do, but I don't think it's in her interest to have the country reminded this is what you're going to get, once again, if you elect her president.

SCOTT: And she has been advocating her experience in her campaign against Barack Obama. Does this do anything to support that or maybe shoot it down?

POWERS: I don't think it does much to support it. They're schedules so there's not enough information there. I don't think there's enough to shoot it down. People are focusing that she was in a meeting about NAFTA. I don't consider that new information.

I worked in the administration. I worked for the U.S. Trade representative. Hillary's story is the truth. The fact of the matter is she was very skeptical about NAFTA.

SCOTT: Her campaign story is that she was sort of a co-president, right?

CORN: Yeah.

LOWRY: He did rely on her a lot for advice, that's true. Basically, her experience argument, when you come down to it, it's not that she was running foreign policy as she's trying to make it out now. She said she was in the pressure cooker eight years and knows what it's like. That's a legitimate argument.

Going to the Monica's thing, one of my favorite details from this is they had a holiday party the day of the impeachment vote. And on the schedule, it says Bill and Hillary share the first dance, parentheses, operational.

(LAUGHTER)

LOWRY: So it's very unlikely they took that option on that day.

CROWLEY: There's another citation too. One of the dates said December 31st, meaning it was New Year's Eve and there was a time during the day when Bill and Hillary were together. And then later, he was with Monica Lewinsky on New Year's Eve. I just don't think that regurgitating this Clinton nightmare is...

POWERS: Wow.

(CROSSTALK)

POWERS: I think people who are fascinated with the Monica stuff are a small group of people and they tend to be conservative. I don't think most Americans are actually that concerned about it.
The other argument is that it doesn't hurt Hillary. Monica Lewinsky didn't hurt Hillary. It helped Hillary. There's no...

CROWLEY: No, but she's now running now alongside Bill. She's let him out of the attic.

LOWRY: Get him back in the attic!

(CROSSTALK AND LAUGHTER)

CORN: ... in the attic. But he still remains far more popular than almost anybody the Republicans can put up this year.

LOWRY: Oh, but it's going down now.

CROWLEY: It's going down. He's starting to be a net drag on her for this very reason.

SCOTT: We're going to take another break. We will be talking here in the studio, as I mentioned before. If you want to see what goes on in these commercial breaks, check us out at foxnews.com/foxnewswatch. Do not miss it. We'll get into another argument over here.

We'll be back in a couple minutes with this.

ANNOUNCER: Credit crisis. The media's full of bad news. Are you getting the real story? And Iraq, five years after it began, has the war been blocked by the press? All next, on "News Watch."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HANK PAULSON, TREASURY SECRETARY: I've got great confidence in our financial market, our financial institutions. Our markets are resilient and flexible. Our institutions are banks and investment banks — are strong. I'm very confident, with the help of the regulators and market participants, we're going to work our way through this.

(END VIDEO CLIP)

SCOTT: Treasury Secretary Hank Paulson.

David, he's been doing the media tour a lot this week trying to calm everybody down and, you know, get the story out there in the media. But have the media been doing the job on this credit crisis?
CORN: You don't expect them to go and say, oh, my god! It's a meltdown! Let me tell ya!

(LAUGHTER)

CORN: The thing is — we were talking about this earlier. Anybody in the media understood this. They'd be out making money somewhere else. If the people involved understood it, it probably wouldn't be happening in the first place.

The "New York Times" has a column by one of its economic reporters this week giving a basic primer of the meltdown, going on in the subprime mortgages. And it was the most e-mailed story I think of the week, if not of the day, for the "New York Times." People saying, uh-huh, finally, I got it! People say did we see the Spitzer thing coming? I think on this, the panic, the psychology, everything going on, reporters who cover this who aren't really deep into business reporting, have no clue about these matters.

SCOTT: A lot of us get wrapped up in hedge funds and a lot of very arcane sort of financial...

LOWRY: That "New York Times" story that David mentioned, that was extremely helpful and well done. It mentioned that Robert Rubin has not heard about some of the financial transactions we're dealing with here.

SCOTT: The former treasury secretary.

LOWRY: Yeah. I think one of the weird disconnects here — because you have a potential meltdown going down in the financial word. And the campaign — it's about Reverend Wright or McCain misspeaking in Iraq. There's a weird disconnect between this extremely important public policy matter and what the political debate is about.

CROWLEY: I think there is that disconnect but I think it's partly due to the fact it is so complex. These are very sophisticated and complicated economic matters. I think a lot of people's eyes glaze over when they hear subprime and credit crunch. The average American, I don't think, is paying attention to the intricacies of the economic crises.

But when it affects them personally — for example, when their mortgage goes from $1,000 a month to $3500 a month and they can't afford it and they've got to figure out a way to deal with it, I think they do look to the media for guidance in terms of how they can go to their lender, and how they can get some help.

The media hasn't been all that helpful because the media has been essentially up here on this level talking about Hank Paulson and the president and the candidates, whether or not they are dealing with it. And they're not dealing with the specifics and every day Americans and what they're dealing with.

SCOTT: Let's go to another topic, that there are accusations the media hasn't been covering.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: The surge is working. And as a return on our success in Iraq we've begun bringing some of our troops home. The surge has done more than turn the situation in Iraq around. It has opened the door to a major strategic victory in the broader war on terror.

(END VIDEO CLIP)

SCOTT: President Bush on Wednesday marking five years since the U.S.- led invasion of Iraq began.

Rich, you have been to Iraq, I guess a couple times, right?

LOWRY: I've been a couple times in the last six months. What I'm struck by is just how hideously complex it is and how dynamic it is. It's changing almost every day. Even if the coverage here were perfect, I don't think people get a full sense what's going on there.

SCOTT: But the sense is that when the surge was announced, there were all these stories about how dangerous the country was and it was out of control and nobody was going to be able to get a handle on it. Then the surge seemed to work. Violence gets tamped down and all of a sudden the story goes away from the press. Why is that?

CORN: I don't think the story's gone away. What's happened though...

SCOTT: But Iraq doesn't get the coverage it got a year ago.

CORN: There's far less coverage. But reporters still are not able to travel freely outside the Green Zone to do the story. That tells you what's going on in Iraq.

The speech that we just showed, the "New York Post" put that on page 14. Long after the story about Howard Stern's friend's missing dog. It's not the liberal media that's bearing the story. The public seems to have turned off from this. I don't think there's enough coverage of what's going on in Iraq. The things that Rich has seen, politically, militarily. We only hear about Iraq now when things blow up.

SCOTT: I guess that's the point, that when things calm down, it seems to disappear from the headlines. Am I right?

(CROSSTALK)

POWERS: But isn't that the nature of the media? The media tends to like — it bleeds, it leads. They like to cover things that are bad for the most part. I think that that's the reality.
I mean, I'm at FOX all the time and I don't see a lot of stories about Iraq either. It's something that frankly doesn't make people feel very good. The country, for the most part, even if they are saying the surge, may have worked, are still overwhelmingly not happy about the war. And it's not something that...

CORN: But the surge is an ongoing process. It hasn't worked. We're not ready to pull out. We're not really to get back to the pre-surge levels. And in fact, violence has leveled off to 2005 levels. That's hardly a victory. Hooray, that's hardly a victory.

CROWLEY: Look, for many years, I was immersed in the left-wing media. And I saw it first and foremost. And they could not wait to cover the bad news. They could not wait to cover the daily violence. I think a lot of these left wing media outlets are so invested in the story line of Iraq as a failure they don't have an interest in covering the things Rich is talking about. In the daily...
CORN: Well, who are you talking about? Who are you talking about?

(CROSSTALK)

CORN: The "Washington Post" editorializes in favor of this war. The "Washington Post" is in favor of this war. Are you saying — what are you talking about?

LOWRY: Monica's right. If you look at the prison scandal, there's been documentaries. There's been books, just volumes of news prints devoted to it. I don't think the story of the success of the surge, obviously not complete success — but we've succeeded in really tamping down a civil war and avoiding disaster. That's not the whole story. That story has not been told the way it should be.

CORN: This story is not over yet. If the story was over you could have people leaving the Green Zone and report on it.

LOWRY: You can report on it after a year.

CROWLEY: Actually, they should be reporting on what's happening now. You're absolutely right, that the story is not over, but there's been tremendous and significant progress that's been made in a whole variety of areas, not just security but also political. And it's not being reported.

SCOTT: I hate to say it, but we have to take one more break. When we come back...

ANNOUNCER: Look out, Ellen. Chris Matthews has his dancing shoes on. Next, on "News Watch."

(COMMERCIAL BREAK)

SCOTT: What is it about dancing and MSNBC. First came Tucker Carlson and his stint on "Dancing with the Stars." Chief White House Correspondent David Gregory has also grooved on the "Today Show." And this week, we had this now classic footage of host Chris Matthews.

Ellen barely survived that encounter.

Somehow, the words "Keep your day job" come to mind.

That's all the time we have for time this week. Thanks to Kirsten Powers, Monica Crowley, Rich Lowry and David Corn. I'm Jon Scott. Thanks for watching. Stay with FOX for the latest news and more.

For more information and exclusive content related to "FOX News Watch" go to www.foxnews.com/foxnewswatch

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