This is a rush transcript from "The Beltway Boys", July 12, 2008, that has been edited for clarity.

FRED BARNES, FOX CO-HOST: Coming up on "The Beltway Boys," could Jesse Jackson's crude remark about Barack Obama actually help Obama's campaign? We say yes and we'll tell you why.

JUAN WILLIAMS, FOX GUEST CO-HOST: John McCain struggles with his economic message and with the GOP base.

BARNES: Iran flexes its muscles with two days of missile tests. We'll have the reaction.

WILLIAMS: And what's up with the Obamas putting their kids voluntarily on an entertainment show?

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

(FOX NEWS BREAK)

BARNES: I'm Fred Barnes.

WILLIAMS: I'm Juan Williams, in for Mort Kondracke. And tonight, we're "The Beltway Boys."

BARNES: June, before you get to the first hot story, there's a sad, sad story. That's the death of Tony Snow at 53. We both knew him extraordinarily well. I got a call from Mort, who said he's heartsick over Tony's death. When I think of Tony, I think of him doing things you and I could only dream of in journalism. He was a great editorial writer and political commentator and reporter. Then he went off as a TV anchor and host of a Sunday show.

WILLIAMS: Right.

BANRES: It's just amazing, his career.

WILLIAMS: Fred, he's my friend. You know, the kind of guy that we'd go to the Orioles, and people would see us and say, what are you two doing sitting together, you know. Tony — I remember he went through a period where his house caught on fire in Virginia. You know what? He didn't have — he though this was an opportunity to enjoy, but also more family time. Bought a place out in Maryland, spent more time with Jill and the kids. This is the guy you would want to know. And from the bottom of my heart, true love to him and his family. It's tough, someone at 53 to leave us like that. A great guy.

BARNES: A sad day.

WILLIAMS: Back to the reality, the grind of Washington life and American politics, Fred.

Hot story number one tonight, Jackson versus Obama. Fred, here's the sound bite that started the feud.

(BEGIN VIDEO CLIP)

JESSE JACKSON, RAINBOW PUSH COALITION: See. Barack been, um, talking down to black people on this faith based — Barack, he's talking down to black people.

(END VIDEO CLIP)

WILLIAMS: Fred, you know what? He went on. He went on. Let me tell you, FOX was very careful, not wanting to offend anybody. He went on to suggest Barack Obama was deserving of being castrated. That was a personal — it's so revealing. Whispering, whispering. It's personal. That came from the heart of Jesse Jackson. You know what was the event that caused Jesse Jackson to say that Barack Obama deserved to become a eunuch? It was that he was talking about the need for fathers to be responsible. He was talking about the need for churches to be involved.

Here's Barack Obama talking about the substance of this political fight.

(BEGIN VIDEO CLIP)

BARACK OBAMA, (D), PRESIENTIAL CANDIDATE: What makes you a man is not the ability to have a child. Any fool can have a child. That doesn't make you a father. It's the courage to raise the child that makes you a father.

(END VIDEO CLIP)

WILLIAMS: So Barack Obama wasn't talking down to anybody. He was talking on a peer level to black people in a serious way. That's not talking down. The only thing worthy about being talking down here is Jesse Jackson's influence and his political standing in this country. I think it's on the wan. Obviously, Barack Obama does too.

You're not talking down to someone if you say, wait a second, a core of the white children in the country are born out of wedlock and that's a shame, half of the Hispanics, 70 percent of the black kids. That's family dysfunction. That's not talking down. That's talking seriously. It's not talking down to say the faith-based initiative is important for the church, a major institution in the black community. We should be involved in supporting them if they deliver social services to those in need. That's not talking down. But Jackson comes to a mind-set that everybody is pointing fingers at the government or the man and saying you're guilty and you should owe me. Barack Obama is not that guy. Jesse Jackson, you've got to remember, Fred, in the midst of the Jena Six protest situation, said that Barack Obama was acting like a white man.

BARNES: I remember that.

WILLIAMS: Why? Because he wouldn't go down there and pretend to be some protest leader, get involved in something he knew little about. And Jesse Jackson said that's acting like you're white. This is all about Jesse Jackson wanting Barack Obama to fit into his old time mold of what a black leader is. And Barack Obama, let me tell you, is running for president. It's a different game.

BARNES: It is a different game. No question about it. Jesse Jackson as a protest leader, Barack Obama is a national leader. He may be the leading black politician in the country, but above and beyond any question of race, he's a national leader. He's the Democratic nominee, probably going to be elected president. It's a different thing entirely.

What I was surprised at in particular was the response of two people to this feud between Jackson and Obama. And one of them, of course, was Reverend Jackson's own son, Illinois Congressman Jesse Jackson Jr., who called his father's comment divisive and demeaning. Adding, quote, "I thoroughly reject and repudiate, his," — his father's — "ugly rhetoric. He should keep personal attacks and insults to himself." Jesse Jackson Jr. is more like Obama. He's a Democratic politician with a great future, someone who I think believes I'm a Democrat, have to go along to get along. He's going to be a major figure. But not as a protest leader. Then, Al Sharpton. Juan, I know you're going to tell me that Al Sharpton — this is just a strategic political move. But in this whole question of fatherhood, he sided, not with the Jesse Jackson orthodoxy, he sided with Barack Obama on this. You know, Al Sharpton's been around a long time. People like myself have always been leery of him. but I think he has established himself as an important leader in the Democratic party, in the black community, to have him on your side, on Obama's side — and I consider that the side of not just Obama but Bill Cosby and Juan Williams.

WILLIAMS: You're kind, Fred.

BARNES: It helps to have Sharpton there.

WILLIAMS: I think Sharpton also senses that Jesse Jackson's star is fading and he wants to be the black protest leader. So he's picked a side here. But it is telling, I agree with you on that.

The second thing to say, it's not only Jesse Jackson Jr. that signals a different attitude than his father. You think about it for a second, Duvall Patrick, the governor of Massachusetts, David Paterson, the governor in New York State. You think about the likes of Corey Booker, the mayor of Newark or Harold Ford in Tennessee. You think about Artur Davis down in Alabama. It seems to me — Bobby Jindal in Louisiana. It seems there's a new generation of black and minority politicians coming forward. And they're pushing the likes of Jackson to the side. and Jackson doesn't like it, Fred. No, no, no, not now. I'm not getting enough power, says Jesse.

BARNES: He sure doesn't. You got that right.

WILLIAMS: All right. Coming up, the mushy middle may swoon when John McCain talks about the environment and immigration. But the base isn't. We'll have the fallout next.

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys."

Hot story number two, McCain's muddle. Juan, I suspect you'll agree that the McCain campaign at the moment is not exactly a juggernaut.

WILLIAMS: Oh, no.

BARNES: But on the subject, McCain got a great question from someone who came to his town meeting on Thursday in Belleville, Michigan. Watch this. Great question.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I'm completely committed to not voting for Barack Obama. What I'm trying to do is get to a situation where I'm excited about voting for you. Some of your positions in the past, particularly voting against the Bush tax cuts twice, some of your environmental positions as well have concerned me. We want to take you to the dance. We're just concerned who you're going to go home with.

(END VIDEO CLIP)

BARNES: Good question. What he's talking about is your base, your conservative base, which is the base of the Republican Party. This touches on the McCain campaign. It's a center right campaign. McCain has paid much too much attention to the center, trying to attract new voters.

The truth is, in any presidential campaign, or almost always, the rule is you get more votes and have a better chance of winning an election by activating and mobilizing your base than you do by persuading undecided voters.

Barack Obama doesn't have to worry about this because the Democrat base is activated. They are going to vote. They're out there. They're, behind him.

And they have a chance to win, I think McCain needs to activate and mobilized his base. There are lots of things he can do. He can talk about Iraq. He can talk about spending, holding down spending. I think that helps. Social and cultural issues, there's a lot of things he can do. Talking about global warming and how big a deal that is, and cap the trade, which I think is now a totally discredited way of dealing with global warming, those aren't going to excite the base. But he's got to do it. Otherwise he's going to lose.

His answer to that guy that asked the question was flat and defensive. And I don't think McCain gets it.

WILLIAMS: What struck me was they're trying to develop a message. That campaign looks like it's going down faster than a kid on a water slide in the summer. It's going nowhere and it's going to take a splash. He's trying to develop a strong economic message that would speak to economic anxieties especially among women in America to make himself — because, you know what? To McCain's credit, he's running ahead of a generic Republican right now. He's only 4 or 6 points behind Barack Obama. So we just can't put him down.

But here's the problem. As he's trying to get a message in place, here comes Senator Phil Gramm. You remember Senator Phil Gramm?

BARNES: I remember him.

WILLIAMS: Phil Gramm, from Texas, a man with a PhD in economics, he stands up as co-chair of the McCain campaign and tells the "Washington Times" — here's what Phil Gramm had to say: "You've heard of mental depression? This is a mental recession." Fred, that's what he said. "We have sort of become a nation of whiners." Fred, whiners. So everybody is a chump and a punk who is complaining about the economy, complaining about gas prices, complaining about the home mortgage problem that leads to so many foreclosures, complaining about unemployment. Anybody who does that is a whiner and a complainer. I think, look, you can make the case apparently not as bad as some say.

BARNES: I would.

WILLIAMS: But you wouldn't necessarily say, as John McCain did, if you lost your job, you're a whiner and complainer.

BARNES: I think what Phil Gramm said was true. On the other hand, I think it was higher-end politics. Obviously, not going to give the McCain campaign a big boost. That's for sure. And he probably shouldn't have said it.

The McCain campaign does need a big boost. My colleague and yours, Bill Crystal, has written the McCain campaign seems to diminishing John McCain rather than lifting him up. That's not happened in the Obama campaign, that's for sure. So the campaign needs — has got to make some changes. One we talked about is activating the base. Another is bringing in Mike Murphy, his political consultant, who was helpful to McCain, went around on the Straight Talk Express with him in 2000. I think the good thing about Mike is, one, he's a conservative but, two, he brings out the best in McCain, the lively McCain, the straight talker. All the suits back in headquarters, didn't want him there. They don't want a guy who's going to have McCain's ear probably more than they do.

WILLIAMS: Murphy said he's not going to do it because of the problems in headquarters. I've got to tell you, it would help. John McCain needs to really hone that message and stick to the message and generate some excitement. That's what Murphy would do for him.

BARNES: I agree. I think the McCain campaign needs him badly. At some point down the line, right after the convention, Murphy will be on board.

WILLIAMS: McCain's got to be tough enough to make that call.

BARNES: Make it on his own because, heaven knows, he's going to need a finishing kick to beat the band to win this election.

Coming up, the Obamas thrust their kids into the national spotlight on purpose. And tensions are nearing the boiling point between Iran and Israel. We'll tell if the situation is at the point of no return

(COMMERCIAL BREAK)

BARNES: Welcome back to "The Beltway Boys." Time for our "Ups and Downs."

Down, Iran. Its two-day show of force through the launching of medium and long-range missiles was seen by some as more theory than a real threat.

Here's how the presidential candidates saw it.

(BEGIN VIDEO CLIP)

MCCAIN: The time has now come for effective sanctions on Iran which will then — I believe can have a modifying affect on their very aggressive behavior, not only rhetorically, but in their pursuit of nuclear weapons, as well as this latest missile test. So lines of communication are fine. Action is what's necessary.

OBAMA: Iran is a great threat. We have to make sure we are working with our allies to apply tightening pressure economically on Iran, at the same time as we start engaging in the kind of direct diplomacy that can lead them standing down on issues like nuclear weapons.

(END VIDEO CLIP)

BARNES: You know what I think is the worst thing that can possibly happen to Barack Obama if he's elected president — and I think it will happen — and that is to be presented on January 20, 2009, with a situation where the Iranians are about to go nuclear. I don't think any of these things, even the tough sanctions as John McCain's talking about are going to do any good. The diplomacy that Obama's talking about, soft power, that's been going object for years with the Europeans and the banking community and all of that, putting pressure on the Iranians. Soft power doesn't work. It doesn't work against bad guys. Hasn't worked in Zimbabwe. Hadn't worked in — it just doesn't work when you're dealing with bad guys. They don't respond to economic pressure and things like that because they don't care if it hurts their people. They're going to continue what they're doing.

This was saber rattling by the Iranians. The Iranians made it clear on television these things they were doing with these missile tests. It's clear they can hit in Israel. The Israelis, there's the thought they wanted to do something while President Bush was still in power. I talked to people that have been over there. They're not so sure of that. So I think Barack Obama, if he's elected, may get the hot potato of hot potatoes.

WILLIAMS: What struck me, look, Israel's been conducting tests. The U.S. has a military fleet in the Persian Gulf. The Iranians say they were responding, that they wanted to make it clear they have the military power. What you hear around Washington is, you know what, they may have been putting on a lot of posturing. Those missiles are old missiles. We're not sure what they can do. We're not sure what their capability is at this juncture. Don't overreact.

I got to tell you, the idea they would be on the verge of this kind of action, precipitous action where they would take offensive posture and possibly go after Israel, it's enough to unnerve us all. I agree with you. I think we're, at this moment, for the first time, past the moment of sanction. I don't know exactly what to do. It's not suggesting we need another war, but it's clear that you have got to go and somehow make it clear to Ahmadinejad that it's not in his interest to act.

BARNES: But he thinks it is in his interest to have nukes.

WILLIAMS: Down, Barack Obama and Michelle Obama. This week, the couple did a series of interviews with the entertainment magazine show "Access Hollywood." They did it with their kids. And it's got some of us wondering about their motive. Now, Fred, when you bring children into the political arena, you know what happens? People start throwing things. And if you say, oh, my kids are off limits, how dare you say anything about my kids. Then you are a hypocrite. This reminds me what happened with Michelle Obama. Michelle Obama would go out there and say things about first time she's proud to be America. And then, why are you picking on my wife, says Barack Obama. Well, people are picking on your wife because she's saying outrageous things, things they disagree with and they're responding. Same things with the kids. These are darling kids. They don't deserve it. He said it was a mistake by the staff and we were just at a party and things got going and how they got mics and I don't know. Do you believe that, Fred?

BARNES: No.

WILLIAMS: I don't believe it either! I believe he's going after the women's vote. He wants his wife, kids on stage. That's a rookie mistake. If anybody speaks about the kids and the way they're being used — and they're being used as props at that point, it hurts Barack Obama.

BARNES: He has a habit when anything gets criticized he blames it on the staff. They put that in my position paper and I didn't see it and so on. You've heard this many, many times. The truth is that was a huge mistake. I think their motive was clear. They want to show off this very attractive family, very nice kids. If you use them in the campaign, they're not off limits to the press. The press is going to ask about them. Their privacy is going to be invaded and maybe over and over again. This was a mistake that I think can be repaired but they have to keep them out of the press and do what the press always does if you're involved in the campaign.

Up, Nouri al Maliki. The Iraqi prime minister flexed his political muscles this week, all but demanding a timetable for withdrawal of U.S. troops.

You know, Juan, I was encouraged by this. You know why? It shows Maliki is confident in the future of Iraq as a solid, sovereign, stable Democratic country. It doesn't have to have a huge contingent of American troops around forever. That's what his national security advisor said. Obviously, you're going to work out withdrawal here about the United States. But we're going to leave some troops behind. And, you know, that is a good idea. What a great deterrent against Iraq's enemies to have a contingent there like we have in Korea, Germany. They're a deterrent. They are not a force that would invade anybody or fight. I think it will be worked out.

It is good to see Nouri al Maliki acting like a national leader, not some sectarian leader of the Shia. In the last six months, he has really grabbed the reins in Iraq.

WILLIAMS: I think you're overly optimistic. But I must say, I'm so glad to see you coming along. It seems to me, speaking in Washington language, you've matured, Fred. You're maturing.

BARNES: I've grown.

WILLIAMS: Yes, you've grown.

BARNES: Strange things happen.

WILLIAMS: You know what? The Iraqis have said for some time they want Americans out. They want a deadline set. And it's not Maliki that said it. It's what the Iraqi people have said. They want to control their own situation.

BARNES: Of course they do.

WILLIAMS: Here's the thing, why not have a contingent? That's a reasonable step. If we see progress continue in terms of the progress that's been done by the surge, I think we are starting to see some light here at the end of the tunnel. I couldn't agree. Maliki should be doing this. But where is Maliki in terms of making political progress?

BARNES: I'll tell you. You want me to list them all for you? I can list it all for you. Just ask.

WILLIAMS: Have they had elections?

BARNES: They're about to have elections.

WILLIAMS: Oh, just admit it, they haven't had elections. We have been there — come on. BARNES: They've had two national elections, provincial elections this fall. Please, I'll give you the whole list after the show.

WILLIAMS: All right.

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

(COMMERCIAL BREAK)

BARNES: Welcome back. Some final thoughts about our friend Tony Snow.

Mort is out of town but called in with this statement, quote, "I was inspired by his life, his vitality, optimism, decency, enthusiasm and honesty. There was some doubt when he went to the White House whether he'd be chewed up at the podium. But he transformed the atmosphere of the briefing room. He defended Bush forcefully, but won the admiration of the media with his feistiness and good humor."

You know, he changed the nature of the White House press secretary's role. Usually, they're on defense. Tony was on offence, explaining and promoting the presidential policy. I think he helped President Bush enormously and, at the same time, got along well with the press.

WILLIAMS: Let me tell you something. He had me over for lunch one day at the White House. And as we're eating lunch, I said, "Tony, who paid for this?" Because we were eating at the table and we were telling jokes and stuff. He said, "I paid for it." I said, "Tony, you mean the White House didn't pay for lunch?" He said, "No." I said, "Tony, this is ridiculous. I'll pay for it." Because Tony's that kind of guy.

BARNES: But they wouldn't let you pay.

WILLIAMS: That's right.

BARNES: That's all for "The Beltway Boys." Join us next week when the boys are 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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