Hillary Clinton Picks Up Needed Momentum and Obama Continues to Deal With the Wright Fallout

This is a rush transcript from "The Beltway Boys", May 3, 2008, that has been edited for clarity.

FRED BARNES, FOX CO-HOST: Coming up on "The Beltway Boys," Hillary Clinton picks up needed momentum headed into the primaries in Indiana and North Carolina.

MORT KONDRACKE, FOX CO-HOST: All this as Barack Obama continues to deal with the fallout from Jeremiah Wright's latest rant.

BARNES: Straight talk? We'll take a closer look at the politics behind McCain's push for a gas tax holiday.

KONDRACKE: Is the worst behind us in terms of the economy? We'll tell you how we could be on the road to recovery.

BARNES: That's all coming up on "The Beltway Boys." But first the headlines.

(NEWS BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D), PRESIDENTIAL CANDIDATE: I can no more disown him than I can disown the black community.

Obviously, whatever relationship I had with Reverend Wright has changed as a consequence of this.

(END VIDEO CLIP)

BARNES: I'm Fred Barnes.

KONDRACKE: And I'm Mort Kondracke. And we're "The Beltway Boys."

Well, the hot story of the week is fall from grace. There's been good news and bad news for both Barack Obama and Hillary Clinton this week. But the most dramatic thing was the bad news for Obama. Following his loss in Pennsylvania where it was largely because he lost the white working class vote, we have the resurfacing of his pyrotechnic pastor, Jeremiah Wright, who not only defended and repeated the charge that the United States was responsible for what happened on 9/11, it was the chicken coming home to roost.

But he also said when Obama denounced it in a Philadelphia speech, way back, that he was only political posturing. I think that's what caused Barack Obama to make that statement our relationship is severed. But it has taken a toll on Obama even despite the fact that he made a statement.

The latest "FOX News" poll show that is Obama's favorable rating has dropped since February and his unfavorite rating has jumped 9 percentage points while Hillary has opened a 10 point lead over Obama on the question of who has a better chance to beat McCain in the general election.

In addition to that, the race is tightening both in Indiana and North Carolina. She's now ahead in Indiana where he was ahead before. The race is really close in North Carolina.

The good news for him and the bad news for her is that the drift of superdelegates is still going in his direction. He's just 287 delegate votes behind, short of what it takes to get nominated. She's more than 400 behind.

But she — she's undaunted and taking advantage of this Jeremiah Wright situation. Watch what she had to say.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, (D), PRESIDENTIAL CANDIDATE: I take offense at it. I think it's offensive and outrageous. And, you know, I'm going to express my opinion. Others can express theirs. But it is part of, you know, just an atmosphere that we're in today.

(END VIDEO CLIP)

KONDRACKE: And John McCain on the issue too — everybody's taking advantage of Obama and Jeremiah Wright if they possibly can. Watch this.

(BEGIN VIDEO CLIP)

JOHN MCCAIN, (R), PRESIDENTIAL CANDIDATE: I am of the belief that Senator Obama does not reflect the extremist statements that reverend Wright has given. And I have no comments on it. But I also understand why millions of Americans may, as Senator Obama said yesterday, view this as a political issue.

(END VIDEO CLIP)

BARNES: All right. You got Reverend Wright.

KONDRACKE: That's talking it both ways.

BARNES: When Hillary Clinton was asked about it on — when she was on Bill O'Reilly's show, at first she didn't want to talk about it. Didn't take much coaxing to say what we saw in that bite.

She had something else up her sleeve. The whip factor. She doesn't come out and say Barack Obama's a wimp but she is insinuating that. One of the ways she does it, she's demanding they have another debate. It would be the 22nd Democratic presidential debate on television.

Barack Obama had said no and it's clear that she's trying to say he's a wimp for not doing this. Watch this.

(BEGIN VIDEO CLIP)

HILLARY: I am very, very regretful that my opponent will not agree to a debate in North Carolina and I know his supporters say they didn't like the last debate in Philadelphia and the questions were kind of mean and sort of tough. You know, I got to say, tough questions in a debate is nothing like the tough decisions you got to make in the White House.

(END VIDEO CLIP)

BARNES: Speaking of mean, now that she mentioned it. Then of course Hillary Clinton went on Bill O'Reilly's show. and he's got the reputation of being the meanest interrogator on — at least on cable TV. Of course, Obama hasn't gone on. So there's another example.

You know, this is interesting, Mort. As much as I don't like polls, I'm going to cite this one. In our FOX poll, when asked who the word "tough" representatives, 58 percent said Clinton. Only 20 percent said Obama. You know, that's — that's very telling.

KONDRACKE: Yeah, I think you love polls when they make a point that you want to make. And that's a perfectly good one. I like polls.

On O'Reilly also, she used the word "fighter" or "I'm a fighter" about ten times. That's how she wants to be identified as opposed to Obama whose whole theme is we've got to stop fighting. That's a theme that I agree with in terms of policy, but it doesn't help you win elections.

His problem is that in the process, he comes off like Mike Dukakis. You know, kind of weak. And even when he was denouncing what Jeremiah Wright had said it was more in sorrow than in anger.

What I think Obama's got to do is start taking the fight to Clinton. Really punching away at her on the issue, for example, of just who contributed all that money to Bill Clinton's library foundation. And what about the fact that 60 percent of the American people think she's dishonest? Those are issues that will return.

If she gets the nomination, they will be back to rendering her less electable.

BARNES: I don't know why anybody thinks she's not truthful, Mort.

KONDRACKE: But here's the bottom line. I think if she wins Indiana and North Carolina, or even if she wins Indiana big and almost wins North Carolina, it's going to create at least a freeze on the superdelegate drift to Obama and maybe even go back in her direction.

BARNES: Well, no, I think, you know, for that to happen, for there to be the superdelegates to stop going to Obama and start going predominantly to her, she's going to have to win in Indiana and North Carolina. I think it will take at least that.

As we've seen so far, there have been a number — I don't have the exact number — but a few superdelegates that endorsed Hillary, have gone to Obama. I don't think there's been a single one who had initially endorsed Barack Obama who then went to Hillary Clinton but obviously she'd like to see it.

The latest, as James Cashier would call them, Judas, leaving Hillary and endorsing Obama, with Joe Andrews of Indiana, a former Democratic national chairman. And he said he was doing this because he thought Obama had handle the Reverend Wright issue so well, which is obviously not true. He handled it poorly. And he also thought Obama is such a standup guy for rejecting the idea of a gas tax holiday, which is really a small issue actually.

Here's why I think he switched. One, he thinks Obama's going to win the nomination. But second, he thinks if Obama doesn't get the nomination, a lot of people will think it was stolen from him and it will split the party. And it's best for the Democratic Party to nominate Obama at this point.

Coming up, our Major Garrett gives us a preview of all the important primaries in Indiana and North Carolina. Stay with us.

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys."

As we mentioned, voters in Indiana and North Carolina head to the polls Tuesday in the next round of Democratic primaries, that seemingly endless process. You can see on your screen the number of delegates up for grabs.

Joining us with a preview is our own Major Garrett.

Hi, Major.

MAJOR GARRETT, FOX NEWS CORRESPONDENT: Hello, guys. How are you?

BARNES: Good. Major, the conventional wisdom has it Hillary Clinton will win Indiana by a little bit and Barack Obama will win more comfortably in North Carolina. Is there any reason to doubt that conventional wisdom?

GARRETT: I think there is. I think the better conventional wisdom, and it's only mine, so I would say Major's wisdom, is that Hillary Clinton stands a chance to win in Indiana 7 to 9 points. The reason I say that is if you look at Obama's numbers in Indiana, they're mired in the low 40s. Hillary won by 9 in Pennsylvania, 10 in Ohio.

North Carolina is closing. How much is not clear. But the Clinton campaign spent Friday there. They're there today, two days in a row. They wouldn't be there if they didn't believe there was something on the grouped worth harvesting. They believe in eastern North Carolina and western North Carolina, places where there are white rural Democrats, they can get those votes and they can eat into Obama.

What's the magic number is North Carolina? There's a huge expectations game being played here. My personal number is 7 to 8 for Hillary Clinton. Anything in that range or lower, it's a moral victory for her. Anything above that, Obama will have held on but not impressed too many people.

KONDRACKE: So if that's the way it works out, if the major prognosis is correct, what does that do to the superdelegate situation? They've been sliding toward Obama, but do they stop or do they slide back to Hillary?

GARRETT: I think what the superdelegates were trying to say this previous week is it doesn't matter what happens in North Carolina and Indiana. But I think there's a flaw to that argument.

This is undoubtedly the last chance Barack Obama has. If he can succeed winning in both places to shut this race down. If he wins in Indiana, North Carolina, basically superdelegates will say we got that break through for Obama that we've been waiting for since March 4th. It happened. Let's line up with Obama. He's going to be the nominee.

None of the math works for Hillary Clinton. It's over. A split where she does well in Indiana and better than expected in North Carolina muddles all that, not only mathematically as far as delegates and popular vote, but the overall political trajectory. And that's what Hillary has right now. Political trajectory is in her favor.

And Obama, if he doesn't close it out, is not going to win in Kentucky. They understand that. Not going to win in West Virginia. They know that. They'll win in Oregon but will that change the dynamic? No. Then we go all the way to the rest of the calendar. The issue of closure, I think, will come back to Obama if he doesn't do well on Tuesday.

BARNES: Major, as you know the Supreme Court upheld the Indiana law that says, to vote, you have to show a photo I.D. That law is in effect. How will that affect the Democratic primary?

GARRETT: In Indiana, the range of projection models is about 22 or 23 24 percent of the Democratic voter turn out is likely to be African- American, concentrated primarily in Indianapolis and in Gary, Indiana, which of course the Chicago meeting market, expected to be a strong Obama hold and it ought to be.

There's some belief in the Obama campaign that because photo I.D.s are not as prevalent in the African-American community this could have a downward effect on turn out. IF it does, that's advantage Clinton. We just don't know yet. That's the first real test of that law and the Supreme Court ruling in a high stakes primary.

Remember, in both states there are gubernatorial primaries that are going to guide turnout. That's another advantage for both campaigns because they have huge turnout models that will be coming to the polls not just for their race but for down ballot ones as well.

KONDRACKE: Is there any indication that the break, which is kind of a decisive break finally between Barack Obama and Jeremiah Wright, has had any benefit to him at all?

GARRETT: No. I don't think there's any way you can say the Obama campaign believes it benefited by the break with Jeremiah Wright. They believe they've been basically pulled down by this entire saga all week. They hope to close strong. They hope by Sunday and Monday they can be on message and not deal with Jeremiah Wright.

But Barack Obama's going to be on "Meet the Press" for the full hour on Sunday. He's going to get asked about Jeremiah Wright. So that hope is basically obliterated. They're going to have to deal with this and try to figure out some way to finish strong outside of the arc of the Jeremiah Wright debate. and that won't be easy.

KONDRACKE: OK, Major, thanks so much.

Coming up, is John McCain giving us straight talk with his proposal for a gas tax holiday? We do not think so. And we'll tell you why next.

(COMMERCIAL BREAK)

KONDRACKE: Welcome back to "The Beltway Boys." It's time for the "Ups and Downs."

Down: Senator John McCain. He's known for his quote, unquote "straight talk." That is, telling people what they don't want to hear. But his proposal for a gas tax holiday smacks of pandering. Here's McCain trying to defend it. Watch.

(BEGIN VIDEO CLIP)

MCCAIN: Is this a panacea? Is this addressing our dependence on foreign oil and the rising cost of gasoline in America? Of course not. But it's a nice little break for Americans, particularly lower-income Americans.

(END VIDEO CLIP)

KONDRACKE: You know, I mean, the idea that John McCain, the budget cutter and the deficit talk and stuff like that dribbling out little bits of money, it's kind of disappointing.

But Hillary Clinton is for it, too. And Barack Obama has an ad going denouncing it. Watch.

(BEGIN VIDEO CLIP)

AD NARRATOR: Another negative ad from Hillary Clinton. But here's what she's not saying. "USA Today" calls her three-month gas tax holiday political pandering. It's an election engineer gimmick, saving Hoosiers just pennies a day.

(END VIDEO CLIP)

KONDRACKE: Obama's exactly right. One, if the prices do go down, it would save people maybe $70 over the summer. Secondly, it takes money out of the trust fund that finances roads and bridges, highway trust fund. And, third, even if the price goes down — if the price does go down — and it may not go down at all, in fact, the price of gasoline — it will cause people to drive more. The more they drive, the more demand there will be and the price will go back up again. This thing is just a non-starter from the beginning. And the politicians who are for it ought to be ashamed of themselves.

BARNES: But, you know, what it is, Mort, it's a puny issue. It's a small issue and it doesn't amount to much. And I think McCain's made a mistake.

On the other hand, here's what nobody's saying. Fossil fuels, mainly oil and coal, are going to be what we need for at least the next 20 years. There's a huge demand for them. What is Barack Obama proposing to do about increasing the supply? We know the demand's up from India, China, other developing countries. Is he proposing anything? No. I think he's for a new windfall tax as Hillary Clinton is.

Mort, when you tax something, you get less of it. When you subsidize, you get more of it. What you want to do is open up areas where oil companies can explore domestically so we'll reduce our energy dependence from Saudi Arabia.

KONDRACKE: You don't need to subsidize oil and natural gas companies, which we're doing right now.

BARNES: You don't need to if you can explore, the Gulf of Mexico, off the Continental Shelf in the Atlantic, in the Pacific. Not doing that is crazy. Not proposing it. Democrats want no increase in oil production. Supply, that's what we need.

Up: Economic growth, up. Sorry. Barely. This week's GDP and job numbers were anemic at best. But were positive signs actually that the country is not slipping into a recession. But of course the debate is still alive and well here in Washington.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY: Although, it is good that the U.S. economy did not contract, by no means is this a rate of growth that we're pleased with.

SEN. CHARLES SCHUMER, (D), NEW YORK: If you factor out the highest 10 percent in income, the remaining 90 percent of Americans are clearly experiencing a recession.

(END VIDEO CLIP)

BARNES: That's crazy because the top 10 percent and the 90 percent, they still experience the same economy. So...

KONDRACKE: Wait a minute. A slowdown hits poor people more than it does rich people.

BARNES: I don't know that that's true or not.

(CROSSTALK)

BARNES: That didn't make any — that made no sense of it. Maybe you're the only person in the interview — in the world that it made sense to.

But the truth is these numbers — when I saw the .6 percent growth, I knew that was a great number. When I saw the jobless claims were down only 20,000 or jobs around 20,000, I thought that was' great number because of what they mean. They mean that the economy's beginning to recover. We didn't have a recession in the first quarter. I don't think we're going to have one in the second quarter either.

The economy's weak. The economy is in a slowdown. The economy's in a downturn. But a recession is something specific. It is two quarters of negative growth and we haven't even seen one yet.

KONDRACKE: If you're right and there's no recession, you and I have a bet that there will be two quarters of negative growth. And I owe you ten bucks if that's right.

BARNES: So far. And we'll see.

KONDRACKE: I will be perfectly happy to be wrong, you know. But I have to say that consumer spending and consumer confidence is way down. Housing starts are still way down. There's still a credit crunch and, you know, this .6 percent growth rate will be revisited. They have to check it out. And it may turn out to be negative after all.

BARNES: Don't get your hopes up.

KONDRACKE: Well, they're not hopes. They're fears, actually.

Down: Speaker of the House Nancy Pelosi. Despite the fact we're not halfway through the calendar year, it seems Nancy Pelosi is content to sit on important legislation until there's a new president in office.

Here's a sample of the unfinished business, immigration reform, social security, reform of the education — no Child Left Behind is not going to pass — energy legislation, health care, Medicare. There's a whole big list.

The fact that over the last month or so, the House of Representatives has been on a schedule where they start meeting, start getting into session late on Tuesday, and they leave early on Thursday. You know, it's hardly any work at all.

Now, what they say they're going to do is next week they're going to start doing housing legislation, which is a good idea. They'll pass a budget, which doesn't mean anything because the appropriations are not going to follow it. The farm bill that they're working on is a pure obscenity. I mean, in a time of astronomically high grain prices, they're going to lavish $18 billion more on in subsidies on rich farmers and so on. I mean, it's not a great performance.

BARNES: No, not at all. And a new FOX poll shows that they're aren't winning many friends. They show that while President Bush's approval rating is low at 32 percent, Congress' — this is a Democratic Congress — is worse off at 22 percent. I don't think we've ever had when the president and Congress — this unpopular at least according to polls.

Don't go anywhere. "The Buzz" is coming up next.

(COMMERCIAL BREAK)

KONDRACKE: What's "The Buzz," Fred?

BARNES: Mort, watch this from the ceremony at the White House a couple of days ago where the president was honoring the Super Bowl champs of the New York Giants.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: They stormed through Tampa Bay and then went into Dallas.

I'm a good sport. We're going to send Jessica Simpson to the Democrat National Convention.

(END VIDEO CLIP)

BARNES: This may not have created a buzz in Washington but it did all over the country because this was a pretty good joke. Jessica Simpson was the girlfriend, I guess still is, of Dallas quarterback Tony Romo. They lost in the playoffs. And the president, of course, would like to send her to jinx the Democrats.

KONDRACKE: Yeah, I got it. By the way, can't the president say Democratic Convention? No.

BARNES: Picky, picky.

KONDRACKE: Picky, picky. I've got to give credit to Frank Rich, the lefty columnist of the "New York Times," for pointing out there was a presidential Republican primary on April 22nd and John McCain lost 27 percent of the Republican vote to Ron Paul and Mike Huckabee. Not good for the unity of the party.

That's all for The Beltway Boys this week. Join us next week when the boys will be back in town.

Watch "The Beltway Boys" Saturday at 6 p.m. ET and Sunday at 1 and 6 a.m. ET

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