Obama Tries to Put Pastor Controversy Behind Him, Fed Moves Quickly to Shore Up Jittery Markets, McCain Tries to Look Presidential on the World Stage

This is a rush transcript from "The Beltway Boys", March 22, 2008, that has been edited for clarity.

MORT KONDRACKE, FOX CO-HOST: Coming up on "The Beltway Boys," Barack Obama tries to put the controversy surrounding his pastor behind him but the damage may already be done.

FRED BARNES, FOX CO-HOST: The Fed moves quickly to shore up jittery markets but will it be enough to stave off a recession?

KONDRACKE: John McCain tries to look presidential on the world stage. We'll tell you why his trip did not go quite as planned.

BARNES: Another New York governor, another sex scandal. What's with these guys?

KONDRACKE: "The Beltway Boys" up next, after the headlines.



BARACK OBAMA, (D), PRESIDENTIAL CANDIDATE: I have already condemned, in unequivocal terms, the statements of Reverend Wright that caused controversy and in some cases pain. For some, nagging questions remain.


BARNES: I'm Fred Barnes.

KONDRACKE: And I'm Mort Kondracke. We're "The Beltway Boys." And nagging questions do remain.

The first top story is big talk. That's a reference to the speech itself in which Obama delivered in Philadelphia and what it said about his entire candidacy. His pastor, Jeremiah Wright, turns out to be a black bigot who blamed America for what happened on 9/11.

Here's what Obama has said over a period of time about his church and his pastor. You'll note the story shifts. Watch.


OBAMA: I don't think that my church is actually particularly controversial.

None of these statements were ones that I had heard myself personally in the pews.

Did I ever hear him make remarks that could be considered controversial while I sat in the church? Yes. Did I strongly disagree with many of his political views? Absolutely.


KONDRACKE: The problem is that there is no instance that we know of where he ever intervened with Pastor Wright to object to what he was saying about America being U.S. and KKK and all the rest and god damn America and all the rest of it. Let alone, leaving the church which, frankly, I would do if I heard that coming from the pulpit.

Barack Obama has become the front runner for the Democratic nomination through inspiring rhetoric and a promise that he's going to unite the country, get us beyond a racial divide and beyond our partisan divides.

The problem is that here's he's been in this church for 20 years, a church based on black resentment. He has the most liberal voting record in the entire United States Senate. His platform is one of populism, which is not designed to get Republicans to come aboard quickly. And there is not a single instance in his Senate career where he has ever formed a bipartisan coalition that has solved any big problems. So far as I can see, the campaign really is a lot of big talk.

BARNES: I'm not going to count you as a Barack Obama delegate, particularly after that. I haven't always been immune to the power of Obama's speeches and I don't think you have either. But I was on this one because I think there are a couple problems with it. You mentioned one. He had been in the church all this time.

And, look, as a churchgoer and you as a churchgoer know that if you don't like the sermons of the preacher, maybe one or two might be OK, but over and over again, one a racist, anti-American. You or I would get up and leave. I'm still surprised he didn't take a hike. Or at least complain bitterly to the preacher himself, Reverend Wright.

But there's another problem as well. Obama credits himself with being a man of great judgment. He always cites he was early against the — ahead of everybody else in opposing the Iraq war. But sitting on the pews in this church for 20 years without doing anything to complain or confront these wild statements and sermons by Reverend Wright is, I think, 20 years of bad judgment. And he adds to that in his speech by using these analogies. He tries to downplay, I think, these hateful statements by Reverend Wright by pairing them or likening them to much less objectionable statements, including his grandmother.

He tried to explain the grandmother analogy this way. Watch.


OBAMA: The point I was making was not that my grandmother harbors any racial animosity, she doesn't. But she is a typical white person who, you know, if she sees somebody on street that she doesn't know. There's a reaction that's been bred into our experiences, that don't go away. And that sometimes come out in the wrong way.


BARNES: You know, I think some of these polls now are very, very telling. And one of the reasons is it's the grandmother thing that lingers. That's going to be the sound bite we remember from this.

KONDRACKE: Yeah. Let's look at the political text. Most of the media gushed over this speech as if it was the most significant statement on the American race relations since Dr. Martin Luther King's speech in '63, the I have a dream speech.

When you ask voters the reaction, the latest FOX News polls shows that when asked if Obama shares the views of Reverend Wright, Democrats and Independents said no. But 35 percent of all those surveyed said the relationship raises doubts about Obama. And that's true of 26 percent of Democrats and 27 percent of Independents. As you can see the poll also shows a racial divide, 40 percent of whites say that it raises doubts while 2 percent of blacks say that it does.

Now, Obama is almost certain to lose Pennsylvania. He was behind as it was. And I think this is going to sink any chance that is he had. The remarkable thing is that he is — that the race is narrowing in North Carolina, which was a state that he was supposed to win handily. A heavily black state.

Now, the question is will this whole flack raise enough questions about his electability to cause superdelegates to abandon him and go to Hillary Clinton. So far, it hasn't happened.

BARNES: So true. In the opposite direction, we saw Bill Richardson, the governor of New Mexico, a superdelegate, endorse Obama at a moment when Obama needed that endorsement given the scandal over Reverend Wright.

Look at this. That is Gallop's daily tracking poll. Last Thursday when clips of Reverend Wright's sermons being broadcast everywhere, Obama was leading Clinton by six points. Obama is now trailing Clinton by 5 points. And, you know, that is a significant shift. And I don't think anything could have caused it other than the whole Reverend Wright business.

Now, look, Hillary Clinton has a chance to gain from this. She's way behind. She's 740,000 popular votes behind, what, 130, 140 delegates behind. She can pass him on the popular vote — and I think she has a chance of doing that now. Not a great chance, but a chance — then she can argue with the superdelegates, tell them I have a majority of the Democratic vote, I'm the one who is popular and you should nominate me.

If they do, I think there will be hell to pay from Democrats. The Obama people will be infuriated. You'll have a split party and that can lead to only one thing — President McCain.

KONDRACKE: This is a gift to McCain, no question about it.

Hillary's chances of capturing the nomination were diminished. Neither Michigan nor Florida is having a re-do.

Coming up, John McCain takes a spin on the world stage but it was a much publicized gaff that got all the headlines. We'll have the fallout next.


BARNES: Welcome back to "The Beltway Boys."

Let's check out our "Ups and Downs" for the week.

Up: The presumptive — I hate that word — the presumptive Republican nominee, John McCain. While Obama and Clinton were duking it out here at home, McCain was meeting with various heads of state on an overseas trip, including to Iraq where he met with President Maliki.

But it was this so-called gaff that stole all the headlines. Watch.


JOHN MCCAIN, (R), PRESIDENTIAL CANDIDATE: It's common knowledge and been reported in the media that al-Qaeda is going back into Iran and receiving training and are coming back into Iraq from Iran - I'm sorry, the Iranians are training extremists, not al-Qaeda. I'm sorry.


KONDRACKE: Unfortunately, the media covered that as if that was the whole trip. Some of the media made it out to be that he's old and doddering. The McCain campaign said he corrected himself instantly. Didn't try to defend himself and cover it up or anything like that in contrast to the record of the Bush administration where the president and Dick Cheney rarely admit mistakes.

So over the past week McCain actually is gaining some ground. Our FOX poll shows that he has a slight edge, one point over Barack Obama in head- to-head matchup. And he's behind Hillary by 3 points.

Check out McCain's lead among Independents, who are crucial in this race. He beats Obama 45-37 and Hillary 47-31.

BARNES: Independents are what this election is about. Why Republicans are lucky to have McCain because he appeals to Independents in a way many conservative Republicans don't.

About Bush and Cheney, that was another gratuitous shot. Utterly gratuitous.

Oddly enough, as conditions on the ground in Iraq get better and better, Hillary Rodham Clinton is moving to the left of Obama in being the most anti-war, get the troops out fast candidate. In her speeches now, she has this thing on the podium that says — what, ready to bring our troops home? And she seems to be...

KONDRACKE: Day one. Day one.

BARNES: How could I forget? Day one.

And there was this interesting thing that happened on the conference call. You know, the way the campaigns operate now, Mort.

KONDRACKE: I was listening. I was listening.

BARNES: And in this conference calls to reporter and, in your case, commentators and analysts, the question was: what about if — she says she's going to start this on day one or whatever, what if the conditions on the ground change? The question was asked of Howard Wolfson, who's a close advisor and the press secretary to the campaign — was asked by Michael Dobbs of the Washington Post. Here it is, starting with Dobbs' question.


MICHAEL DOBBS, WASHINGTON POST: My question is not whether this is her plan, but whether she is going to stick to it regardless?

HOWARD WOLFSON, CLINTON CAMPAIGN PRESS SECRETARY: Michael, you're asking a question — it's Howard Wolfson — you're asking a question. I'm giving you a one-word answer so we can be clear about it. The answer is yes.


BARNES: Yes. That was pretty unequivocal. This is utterly ridiculous to say whatever the conditions are in Iraq, whether troops are needed or not, whether they're needed there to assure stability as we move toward the national election in Iraq in 2009. It makes Obama sound like, on Iraq, Mr. Careful, in comparison. It's sort of an amazing turn around because we expected it.

Correct me if I'm wrong, at the beginning of the campaign, Hillary was the one who seemed a little more responsible on Iraq than Obama.


BARNES: But now, just the opposite.

KONDRACKE: Exactly so. And Obama is saying that he will not go for precipitous withdrawal.

OK, up: Fed Chairman Ben Bernanke. From engineering the Bear Stearns fire sale to drastically cutting interest rates, the Fed is showing its willingness to act boldly to assure a jittery Market. And President Bush, this week, says the government is willing to do even more. Watch.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We obviously will continue to monitor the situation. And when need be, we'll act decisively in a way that continues to bring order to the financial markets.


BARNES: He had a green tie.

KONDRACKE: He says that in the long run, things are fine in the economy. The problem is the short run where they're pretty scary. There's a crisis of confidence in the financial markets, which is what Bernanke tried to shore up. Nobody wants to lend any money. Home values are sinking and people feel less wealthy, so they're not going to spends, and that's going to make the recession even deeper.

You have the sense what Bernanke was trying to prevent was a total meltdown of the market. And so he intervened quite creatively and strongly. The problem is, by cutting interest rates so low, he may spur inflation. And he certainly will help make the dollar even weaker, which is, you know, a long run danger to the economy, too.

BARNES: My, my. What a doomsayer you have become, Mort.

I don't think it's going to be that bad, but I think we agree on Bernanke. To my surprise, he is a much bolder guy than I ever expected.

And, look, the administration and the Federal Reserve are not going to let financial markets collapse. But you are too gloomy. Right now this is a huge problem. I don't mean to diminish it in financial markets. In the real economy things look better. There are not layoffs. Less hiring but not big layoffs. There's not excess production capacity. There's not big inventories and so on that will stop production.

And remember, in the deep recession in the early Reagan years, 7 percent unemployment to 11. Now it's gone from 4.8 to 5 percent. It may get a little worse but, chances are, we're not going to have a deep recession.

Coming up, fallout from the State Department's snooping scandal. And New Yorkers thought the drama was behind them. Well, we now know that it didn't turn out that way. We'll talk about it next.


KONDRACKE: Welcome back to "The Beltway Boys."

We're continuing with this week's "Ups and Downs."

Down: The State Department. It came to light this week that passport files from all presidential candidates were breached by some contract workers causing big time embarrassment.

BARNES: This isn't a major scandal. It's not Watergate. You're going to get a whole lot of this wild and woolly scared stuff from some people.



But it is inexcusable and it is totally unnecessary. I don't see how the State Department, after having this problem before, could let it happen. It isn't a major breach of privacy.

There's no indication that somehow this — these people looked at it for any reason other than curiosity. They weren't going to try to blackmail the candidates or try to use whatever information they might find politically against them. But I think the gravity of it is suggested by the phone calls that Condoleezza Rice, the secretary of state, immediately made to Obama, McCain and to Hillary as well.

KONDRACKE: The fact that all three presidential candidates had their files breached is an indication that it wasn't a political spying. But you can never tell in the days of YouTube what might end up on the Internet and so on. The fact that this happened with Bill Clinton in 1992 — in that case it was a real State Department employee — suggests that every time there is an election, there ought to be a message sent to the State Department, leave those files alone. I think the contractor in this case ought to be sacked.

BARNES: I agree. But I'm going to move on.

Now, New York's new governor, David Paterson. Not only did he admit to several extra marital affairs, turns out he used a campaign credit card to pay for a hotel room for one of his trysts. That revelation came just two days after he denied breaking any laws. Watch.


DAVID PATERSON, GOVERNOR OF NEW YORK: I betrayed a commitment to my wife several years ago. And I do not feel I betrayed my commitment to the citizens of New York State. I haven't broken any laws. I don't think I violated my oath of office. I saw this as a private matter. But both of us committed acts of infidelity.


KONDRACKE: He's outing his wife too.

BARNES: He's a lucky guy though. His sins her loom smaller than those of his predecessor, Eliot Spitzer, who resigned as governor. Of course, Paterson took over.

This is enough that Paterson's going to be a half-term governor and won't run for re-election, paving the way for New York Attorney General Andrew Cuomo, who is Mario Cuomo's son, running in 2010.

KONDRACKE: I don't know what's up with these New Yorkers. I don't see why Eliot Spitzer is forced out for hiring a prostitute and this guy used campaign money to have trips with various women, many women over time. By the way, I say the next governor is Mike Bloomberg.

BARNES: It could be. I was born in New York but I only lived there about six months. I guess I didn't catch whatever that virus is.

Don't move a muscle. "The Buzz" is coming up next.


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

BARNES: "The Buzz" is, inside the Bush administration there's a disagreement over how seriously to take Barack Obama and Hillary Clinton and their promises, if elected president, to get out of Iraq as quickly as possible. Some believe that, if one of them's elected president, they'll look at the facts on the ground and respond responsibly.

On the other hand, there are others, and I agree with these people, that think they are, particularly Hillary Clinton now, and Obama before, are locking themselves in so tightly to rapid withdrawal that that's what they'll do no matter what.

KONDRACKE: I agree with the first group. Anyway, I keep track of vice presidential suggestions. A long shot one for John McCain, former Idaho governor and now Interior Secretary Dirk Kempthorne.

BARNES: I thought you had one last week, too. Who was that? I can't remember.


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

You did have one.

KONDRACKE: I did have one.

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

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