This is a rush transcript from "On the Record ," February 27, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Is Obama spreading panic? That's the title of Dick Morris's new column. In it, Dick criticizes President Obama for not doing enough to stop global panic about the economy. Whether or not you agree with Dick Morris, it is true the president has used very ominous language talking about our economy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You don't need to hear another list of statistics to know that our economy is in crisis...

-- And the coming years will transform the American economy amidst brutal and unyielding depression.

And even if your neighbor hasn't been hit by foreclosures, you're likely feeling the effects of this crisis in other ways.

The situation we face could not be more serious. I don't have to tell you that. We've inherited an economic crisis as deep and as dire as any since the Great Depression.

Doing little or nothing at all will result in even greater deficits, even greater job loss, even greater loss of income and even greater loss of confidence.

(END VIDEO CLIP)

VAN SUSTEREN: Dick Morris is the author of "Fleeced." He joins us live from the Study (ph) Hotel at Yale in New Haven, Connecticut. Dick, I know how important it is that the president instill a sense of enthusiasm or optimism in us as we go out into the economy so that we can stimulate it. On the other hand, we don't want him to lie to us and say that it's great. It's not. The Dow dropped 119 or something today. It's bad. What do you want him to do?

DICK MORRIS, "FLEECED" AUTHOR: Well, the more that he talks about how bad it is, the more he makes it bad. And it isn't that I don't think he's not doing -- he's not doing enough to make us feel confident. His deliberate strategy, in my judgment, from the time he got elected until now has been to magnify our fears of crisis so that he can get his stimulus package passed and his socialization of health care and his huge tax increases. That's what he wants to do.

And this is not a means to an end, that is the end. And by making us feel that the world is falling apart and the sky is caving in, he does two things. First of all, he assures that it is. And second, he makes sure he can get his programs passed.

VAN SUSTEREN: So are you saying that it's not just about economic recovery but it's about an ideology, as well, and he's sort of wrapping the pessimism around the economic recovery issue in an effort to achieve a particular ideology?

MORRIS: Couldn't have said it better. Exactly true. Yes. Precisely. You could never get $800 billion through Congress of deficit spending, increasing the deficit from $400 to $1.2 in one day. You could never get these trillion dollars of tax hikes through. Clinton tried to get medical care through government through, and he couldn't do it. But you can if you convince everybody that they're all going to drop dead unless you succeed at it.

And what he's done is that everybody who has a job now is worried about losing it. Everyone who has a home now is worried about losing it. And as a result, nobody's spending money and he is transforming a recession into a depression, a downturn into a crash, and a disaster into a catastrophe.

VAN SUSTEREN: Isn't that what he told every single American, though, I'm going to give you change? And when he's talking about change, wasn't he talking about ideology? And isn't he, whether you like it or not, delivering on what he told every single person for the last two years he was going to do?

MORRIS: Yes. Absolutely. This guy is keeping every single campaign promise he's ever made. And frankly, I think we've finally found a man of principle, who would rather see his program adopted than get reelected. The problem is it's entirely in the wrong direction.

You know, Lyndon Johnson's hallmark, Greta, was the war on poverty. Barack Obama's hallmark is the war on prosperity.

VAN SUSTEREN: So now what? I mean, so -- let's say you and I are having this conversation a year from now. What do you predict is going to be the situation? I mean, I take it we're either going to be singing great praises that he's a brilliant man or what a fool and look what he's done to us. Which one is it going to be, and how do we know?

MORRIS: B. It's going to be what a fool we've been, what a fool he was because, look, everything that he hoped to accomplish in the stimulus package he is vitiating, repealing, blocking by his tax package. He's going to people and saying, Please have confidence. Please spend money. Please make investments. Please act like everything's going to be great. But in 18 months, you're going to fall off a cliff and I'm going to take every dime you have. I feel a little bit like a hog being encourage to eat, knowing that he's tomorrow's breakfast.

VAN SUSTEREN: Dick, if you'll stand by, we have much more with you in just two minutes.

And coming up, the very latest on the ground right here in Florida in the 5-year-old Haleigh Cummings disappearance. You are going to the house where on February 9, little Haleigh vanished. And Haleigh's her mother goes "On the Record."

Plus, former House Speaker Newt Gingrich rallies his troops at the conservative CPAC conference. One of the Speaker's main messages about the Democrats? How dumb do they think we are? That's what he says. You'll hear that coming up.

(COMMERCIAL BREAK)

Watch Greta's interview with Dick Morris

VAN SUSTEREN: We continue now with Dick Morris. Dick, I want to talk political strategy with you for a second. Does President Obama worry about the fact that he's gotten a letter this week from Senator Byrd, a member of his own party, a Democrat, saying, You're trying to, you know, grab power? He's got Speaker Pelosi, who's very powerful in his party, as well, saying, You're not doing enough about pulling the troops home from Iraq. Seems like there's sort of rumblings in the -- among his troops. Does that make any difference to him politically?

MORRIS: Not really. It would if he were more passive. But the danger is that you -- if you're like Bush and you don't ever suggest anything big and you waste your second term, your party begins to lose discipline and focus. But Obama is keeping them focused, and any liberal couldn't be happier with his tax and spending plans. So I think -- I don't think he faces any serious problem within his own party.

VAN SUSTEREN: Well, he's made -- I mean, I don't know how this is all going to play out, but he certainly has made rather dramatic changes. I mean -- I mean, these packages are giant. I don't know if it's to meet a serious -- I mean, it is a serious problem. I don't know if it's the answer or not. But it certainly is huge. It's significant.

MORRIS: Yes. It's enormous. Let me just give you one example of how these are working at cross purposes. He wants people to buy more homes because it all started with the real estate thing, so what he's doing is he's saying, I'll help you bail out of your mortgage and help you avoid foreclosure and stretch it out and lower the rates. And my hope is that you're going to go ahead and buy new homes. And I'm going to put a tax credit in to make it easier for you to buy new homes if you're a first-time home buyer. And then I'm going to take over the banks, in effect, in the hopes that they make loans for more homes. Great.

And then he eliminates the tax deduction for new homes, or cuts it back by 30 percent. And most of the money that's spent in construction is at high-end homes. You cannot declare war on 30 percent of the economy and hope to improve the economy. It's like telling people the morale -- beatings will continue until the morale improves. I saw a sign at somebody's workstation that said that. He's vilifying the bankers. Some of them are figuratively being carted away in handcuffs and perhaps soon will literally be carted away. He's criticizing the daylights out of them for the loans they made, and then hoping that they make new loans and then telling the people who are going to borrow them they can't deduct the mortgage interest. It's at total cross purposes.

VAN SUSTEREN: Has he done anything that's completely stunned you, that caught you off guard?

MORRIS: Yes. His repeal of some of those deductions is unbelievable. He just gives the states $100 billion or $150 billion so they don't raise taxes that much. Then he says if you're making more than $200,000 a year, you can't deduct the taxes that you're paying, or you can only deduct 70 percent of it. So what he in effect does is he does a federally passed state tax increase.

And look, politically, 2 or 3 or 4 percent of the vote isn't enough to get you in trouble because you got 96 percent that aren't feeling it. But economically, they can kill you! They're a third of the national income. They're a third of the spending. And if declare war on them and you say, Man, I am going to soak you, those folks are not going to turn around and reward you with extra spending and investment. They're going to do just what the stock market's doing, run for cover.

VAN SUSTEREN: And we had -- we had another bad day on the stock market, but we keep hoping that Monday's going to be...

MORRIS: Lost 17...

VAN SUSTEREN: ... different.

MORRIS: It's lost 17 percent of its value since the first of the year. I believe -- and I predicted this in the book "Fleeced" -- that Obama's policies would be so anti-prosperity that he would induce a stock market crash. And while he's not responsible for the one in October, he sure is responsible for January and February.

VAN SUSTEREN: Dick we got to go. Thank you.


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