This is a rush transcript from "The Beltway Boys", August 2, 2008, that has been edited for clarity.
FRED BARNES, FOX CO-HOST: Coming up, John McCain accuses Barack Obama of playing the race card. Obama says McCain's taking the low road.
MORT KONDRACKE, FOX CO-HOST: McCain is also trying to make an issue of Obama's, quote, unquote, "celebrity status."
BARNES: Congress flies the coop without addressing sky-high gas prices. While you pay at the pump, will they pay at the polls?
KONDRACKE: And another congressional Republican in hot water. What gives?
All that, plus the reckless VP speculation, coming up on "The Beltway Boys," right now.
(BEGIN VIDEO CLIP)
AD ANNOUNCER: He's the biggest celebrity in the world, but, is he ready to lead?
(END VIDEO CLIP)
KONDRACKE: I'm Mort Kondracke.
BARNES: And I'm Fred Barnes. And we're "The Beltway Boys".
KONDRACKE: Our hot story of the week is called "celebrity." And that is not a French word, C-E-L-E-B. And that, of course, what...
BARNES: I get it. I get it.
KONDRACKE: OK. It's the John McCain ad, making the point — it's kind of dumb, you know, with Paris Hilton and Britney Spears and all that. And John McCain has another web ad which makes Barack Obama out to be the Moses or the Messiah or something like that along the same theme.
But to be serious, I mean, the biggest question in this entire campaign is, is Obama fit to lead? It's the biggest question around. And McCain is significantly ahead on that, according to the polls I have seen. He's ahead as the stronger leader. He's ahead as the commander-in-chief. And Obama is seen as pretty risky.
Now some of the McCain ads have been a little low blow. And McCain ought to do more on the positive side, but you can hardly blame him for trying to keep stuff going to raise doubts about Obama's fitness, because that's the issue.
Here is the Obama response to that. Watch.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: He's practicing the politics of the past. John McCain. His attacks on Barack Obama, not true, false, baloney, the low road, baseless. John McCain, same old politics, same failed policies.
(END VIDEO CLIP)
KONDRACKE: This is a standard Democratic line, election in, election out. Whenever any Republican goes negative in the slightest way, it's a smear or it's sliming or stuff like that.
Now, some of the McCain ads, as I said, have been low blow, I think. The idea that Obama would rather lose a war than lose an election, the idea that he'd rather play basketball than go visit wounded troops and stuff like that, those were distortions.
But Obama also accused McCain of planning a 100 years war in Iraq. That's also a distortion.
BARNES: Yes, but the lowest blow of all was Obama's insinuation several days ago that McCain was using racist tactics against, in other words, Obama's own race, against Obama, racist tactics. Here's what Obama said.
(BEGIN VIDEO CLIP)
OBAMA: What they're going to try to do is make you scared of me. You know, oh, he's not patriotic enough. He's got a funny name. He doesn't look like all those other presidents on those dollar bills, you know.
(LAUGHTER, CHEERS)
(END VIDEO CLIP)
BARNES: I don't know why they're cheering that exactly, but look, this is something that Obama said repeatedly. And I think everybody, everybody knew what he was getting at there. Even John McCain knew. Listen to what McCain said.
(BEGIN VIDEO CLIP)
MCCAIN: It's very clear what his comments imply. I mean, anyone who looks at those and previous comments that he has made, and so I think it's very clear that he has. I'm very disappointed, and again, I repeat, it won't be any part of my campaign.
(END VIDEO CLIP)
BARNES: It hasn't been at all, either. I think when he said previous comments, he was referring to one a month ago that Obama made in Jacksonville, Florida, where he used that same configuration, they're going to say I'm risky and I have a funny name and so on, and they're going to tell you I'm black. So it's clear what that dollar bill stuff, you know, they're going to tell you I don't look like the guys on the dollar bill. What he was getting at, he was obviously — it was — they're using a racial pitch here. And that is another hearty Democratic perennial. You know, they're always saying that Republicans are racist or they're, you know, Willie Horton and all that stuff, they're using racial insinuations or tactics.
And the truth is, I don't think that's worked in the past, the Democratic complaint, an accusation of racism, and I don't think it's working now. And actually this week, I think was probably Obama's — McCain's best week of the entire campaign. You know, in that Gallup daily tracking poll we always look at, Obama dropped nine points.
Now, nine is a lot. That is outside the margin of error. And you know, we can look again at Karl Rove's picture of the electoral map and how the states go, and for the second week in a row, Obama's lead over McCain in electoral votes is dwindling. Ohio and Florida remain tossups, with Colorado joining the tossup group, and Obama leading with 263 votes to McCain's 283. The first time in a month that Obama has been under 270. That's — not much under 270, but it's a change.
KONDRACKE: And McCain is closing the gap in three swing states. The latest Quinnipiac survey shows that Obama is up 46-44 in Florida. He had a four-point lead in mid-June. An Ohio poll — the Ohio poll shows 46-44 Obama. The Democrats led there with 6 last month. And in Pennsylvania, Obama is ahead by seven points, as you can see, but his lead used to be 12.
I mean, it's quite clear to me that he did not get a bounce from his European trip.
And there's one last point. Obama keeps saying, look, let's have a serious debate about the big issues. Well, there are big issues in this campaign, and to some extent they're being debated, but not directly. Energy, the surge, you know, how long to stay in Iraq, all that stuff, the economy, that's, you know, it's a gigantic issue, taxes.
If Obama wants to debate, what he ought to do is agree to these face- to-face town hall meetings with McCain and let's see them go at each other, you know, one on one. And I don't know why he won't. And I think that the press ought to be demanding that he do.
BARNES: I agree. The press should do that. And to my surprise, the press, which is still I think basically pro-Obama, is starting to hold Obama accountable for some of the things he says.
I mean, there was great skepticism in the press of his downgrading of the importance of the surge in Iraq. I don't think many reporters bought the original excuse of his campaign that, oh, that stuff about the dollar bill and so on, that was to show — that was about the fact that Obama hasn't spent as much time in Washington as those people on the dollar bill. I mean, nobody bought that. And I think there are a lot — the people in the media are upset because just the sort of high handedness of Obama pretending like he's already been elected president.
And here's where I think the race stands, Mort. All the big forces at loose here in 2008 favor the Democrats, whether it's the economy or whether it's just the cycle, the political cycle, or whether it's the stain that Republicans have on themselves, which means Obama has to be the favorite. But the race is really tied at the moment, and if Obama can't find a way to make — to appeal to the voters outside the educated, middle-class elite in America — he appeals to them very well...
KONDRACKE: Upper (inaudible) class elite.
BARNES: Yes, upper middle class elite in America, then what, then they'll lose.
KONDRACKE: My read is that the public, the swing voters especially say, I don't have to decide now. It's only August, you know. I'll make up my mind. I want more evidence. And the crucial — at some point, like in 1980, they will make — something will gel, maybe through the debate or something else — and it will be decided.
Now, the it I think entirely depends on is Obama fit to be president.
BARNES: All right. Coming up, Congress punts on energy. And the tale of two teams. We will take a look at the men who are thought to be on Obama and McCain's short lists for VP.
(COMMERCIAL BREAK)
KONDRACKE: Welcome back to "The Beltway Boys." We're looking at our "Ups and Downs" for the week.
Down, Harry Reid and Nancy Pelosi. The Democratic leadership blocked every vote on oil drilling this week. And they are now officially enjoying their summer vacation while ordinary Americans feel this begun of high gas prices.
Here's Harry Reid.
(BEGIN VIDEO CLIP)
SEN. HARRY REID, (R), NEVADA: I don't know what poll numbers you are looking at, frankly. The American people are clearly in favor of doing things that's good for the environment and economy.
(END VIDEO CLIP)
BARNES: Well, I can show Harry Reid some polls that indicate he's on the wrong side of this drilling question. And the latest FOX poll, which is reflected in other polls, shows the overwhelming majority are in favor of more drilling. They're in favor of ways to reduce dependence on foreign oil. They want to increase offshore drilling. They want to drill in ANWR. They want speed up — they want to reduce the speed limit to 55 miles per hour. There's not as many of those. I'm against that. And things they don't like, they don't want to ration gas. They don't want another federal tax.
The truth is that Harry Reid and Nancy Pelosi are, I think, not only on the wrong side of politics, but the wrong side of history. And I can't believe they are doing this, because Republicans were issueless until the gas prices got high. And Democrats refused do anything about lifting the ban on offshore drilling or in the Rockies or in ANWR. And the lengths to which they go to do this are incredible, shutting down Congress early, earlier than they planned. Stopping all of the appropriations process because Republicans may try to tack some drilling amendment onto an appropriations bill.
It's just crazy, Mort, to lengths to which they'll go. And one of the things it's done, now they left, is prompt Republicans to do a stunt. They have shut down and turned off the lights in the House and C-SPAN is not covering them. And Republicans are still there, giving speeches. Now it is a stunt but sometimes stunts work.
KONDRACKE: Yes. A couple of additional polls. 57 percent favor nuclear power. The Democrats refuse to vote on that as well. But the crucial poll that seems to be — one crucial poll that I think the Democrats ought to pay attention to is their approval rating, 14 percent in the "Gallup poll." it has never been lower. And you know, and the respect for Congress is the lowest of any major institution in America. I mean, this is a huge problem and everybody understands it's a huge problem. And what do they do?
BARNES: Lower than journalists?
(CROSSTALK)
KONDRACKE: Lower than journalists.
BARNES: That's low.
KONDRACKE: Lower than — down there with HMOs.
And why? They will not confront a crucial problem and do what the public wants them to do.
The Republican theory is Harry Reid was blocking votes to protect Barack Obama from having to go down on the Senate floor and cast a — unpopular votes. Nancy Pelosi's motive was stated in an interview with the politico, quote, "I'm trying to save the planet. I will not have the debate trivialized they their Republican excuses for their failed policy. I am not giving this gavel away to anyone."
Now the Democrats think that by tagging Republicans as the party of big oil, and big oil is not very popular, either.
BARNES: True.
KONDRACKE: That that is this end of the argument. But it ain't working because the — you know, Obama used to be ahead of McCain on the energy issue by 25 points. The Quinnipiac poll indicates that in swing states it is one-third Obama, one-third John McCain and one-third undecided. The tide is shifting in the Republican direction.
BARNES: All right. Up, the Tims. Otherwise knows as Republican Governor Tim Pawlenty, of Minnesota, and Democratic Governor Tim Kaine, of Virginia. And we don't know anything. We don't have any inside knowledge but their names have shot up the list of vice presidential potentials for McCain and Obama.
KONDRACKE: If it turns out to be Tim Kaine as Obama's running mate and the decision gets made next week, your co-conspirator of the "Weekly Standard", Bill Kristol, is going to look like a genius. He put it first in play. In any event there are arguments. There are good arguments for Tim Kaine. He's Catholic. He's Virginia. He's — speaks Spanish. And on the other hand, he's doubling down on inexperience. And furthermore, our pal, Larry Sabato, of the University of Virginia, places him in the lowest quintile of all the governors that Sabato has been watching.
BARNES: Yes, I'm a Virginian and I've lived in the state a long time. And I say Kaine's an average governor. He's not particularly popular. I think he generates an enormous amount of indifference, more than anything else.
Now, Pawlenty, Tim Pawlenty I think is John McCain's default vice presidential pick. If, somehow the critics of Mitt Romney, who I think would make the best vice president, or Tom Ridge, the former governor of Pennsylvania, who happens to be pro-choice, and the favorite of some of the McCain advisers — if those guys fade, well, there will be Pawlenty there. And he had advantages and actually has the same ones as Tim Kaine does. He's from a state that you might win if you added them to the ticket. I don't think he'd harm the ticket in any way. But the ability to generate enthusiasm, I think is like Tim Kaine there, too. He lacks it.
KONDRACKE: Yes, well, the evangelicals like either one of them.
Coming up, the economy keeps limping along. And scoop to come on Pakistan. And senate Republicans face a big-time political headache as one of their own is indicted. We'll have the fallout next.
(COMMERCIAL BREAK)
BARNES: Welcome back. We're continuing with the "Ups and Downs" for week.
Up, the economy, barely. You wouldn't know it from all of the doom and gloom media coverage, but there are fresh in occasions the economy is not in a recession.
Check out the latest GDP numbers. Growth was nearly 2 percent last quarter. And that is not great, but that's a vast improvement over the previous two quarters.
And, Mort, you know, the trajectory growing is encouraging. Now we had jobless numbers that jumped to .2 percent, which was certainly not good, but not — frankly I thought they would be worse, the unemployment number.
So, my conclusion is, recession is a recession is still — I always thought it was unlikely. I think it is more unlikely now. A lot of people disagree. Obviously, we're in a slowdown. High gasoline prices and the housing and credit problems, but, I think the best gauge is the stock market.
Now if the stock market collapsed, basically, after the GDP number, for the third — for the second quarter yesterday and today's jobless number, then you'd say the stock market, with bets on the future, thinks the future will be terrible. Now, it didn't generate a huge stock market boom but it didn't collapse, either. So, I think the stock market — well, actually are waiting to see.
KONDRACKE: Well, I am amazed at the resilience of this economy in view of the housing crisis and the credit crunch and all of that. But, this is not doing Republicans any good because people feel, and have felt that the economy is worse than it looks in the numbers because their wages have not risen and their prices — prices of everything have gone up. And as you say, the media has been making it worse than it is, in the numbers as well.
Down, Senate Republicans. The most senior of all GOP Senators, Ted Stevens, of Alaska, goes on trial in September on seven counts of concealing more than a quarter million dollars of home renovations. All this right before the November elections, and digging an already digging a hole deeper for Republicans.
BARNES: When you are a party with a soiled reputation, as Republicans have, this doesn't help. I think it is obvious. And the only hope for Stevens now is if he's acquitted at his trial, which is scheduled to begin on September 24th and will take some weeks — if he's acquitted before the November 4th election — I mean, that is assuming he wins the Republican nomination, that will help a lot. Losing Alaska though is a lot more likely. And when you put that on top of the states where Republicans are behind, in new Hampshire and Virginia, and in new Mexico, and other states where they did a close — Minnesota, Oregon, Colorado — Republicans are threatened with getting into the situation, where they will not be able to muster votes to have a filibuster to block liberal legislation.
The only good news is Louisiana where their candidate, John Kennedy, appears to be running ahead of Democratic Senator Mary Landrieu.
KONDRACKE: Stevens has two things going for him. One — that's all. One is he has Vernon Sullivan as his lawyer who, I believe, has never lost a case like this. And two, that — is the word knowingly. Did he knowingly falsify his financial disclosure statement? That may be a little more difficult to prove than it looks.
BARNES: Yes.
Down, Pakistan. The new allegations that its own intelligence service has been in cahoots with Islamic militants and the U.S. is coming come down hard to the government to clean up its act.
KONDRACKE: Finally, two huge CIA dumps this week indicating what you read. And this places a lot of pressure hope to brand-new Democratic government of Pakistan to bring the ISI, this intelligence service, to heel. And instead of doing that, they have been defending the ISI, even though the prime minister and his entire party know that the ISI has been in cahoots with the Taliban and with al Qaeda for years and years and years. At least elements of it have.
Now, the scoop is there is a third shoe to drop. And this is going to really force action or a least a crisis in Pakistan, and that is the CIA knows that the elements of the ISI were involved in the assassination of Benazir Bhutto. Now this is something which, if it comes out, is going to force action. I mean, the dominant party of the country cannot have their — evidence against their own intelligence service on their former leader - - killing their former leader and not act, seems to me.
BARNES: That is amazing. And since you just proved that it has come out, they'll have to crack down on the ISI. They have promised the Bush administration, when Prime Minister Gilani was here this week — if I pronounced his name correctly — Gilani — that, well, they wouldn't just talk, talk, talk and they finally act against the terrorists. And it's not just the terrorists. And there's all sorts of terrorists. It's not just the Taliban and al Qaeda in the northwest provinces of Pakistan. It is terrorists who want to overthrow the government of Pakistan as well. So it would serve them, a crack down there as well. And if they don't, I think the U.S. government is going to.
KONDRACKE: Yes, the one glitch here is that you have a brand new Democratic government, seven months in office, fragile, and the administration is putting more heat on this government, because of what is going on in Afghanistan, than it ever put on Pervez Musharraf, the military dictator, who is still in office.
BARNES: Afghanistan is more important now than it was.
KONDRACKE: Right.
Don't move a muscle. "The Buzz" is coming up next.
(COMMERCIAL BREAK)
BARNES: What is the buzz, Mort?
KONDRACKE: Barack Obama unveiled on Friday, in Florida, what I think is the killer question of the election. And that is, are you better off now than you were eight years ago. And that was the question that Ronald Reagan used to such great effect in 1980 against Jimmy Carter. The fact is that by every measure, except CEO pay, Americans are not better off than they were when — before George Bush became president.
BARNES: So we need higher taxes, more regulation and less trade, which is his solution? Yes, I know, but he has a specific solution.
KONDRACKE: Change. Change. It's change. Specific change.
BARNES: Look, here's what Republicans need to do on the whole energy question. Not just say they are for drilling, but they need to point out they're for all the stuff Democrats are for. Let's explore wind, solar, tidal power and all that. But in the meantime, for the next 20, 30 years or forever, we need oil and gas. Let's exploit that offshore, the Rockies and ANWR. They need to make that point clear.
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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