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March 23, 2008

Governors Richardson & Rendell on "Fox News Sunday"

Fox News Sunday

CHRIS WALLACE, HOST: I'm Chris Wallace and this is "Fox News Sunday."

Countdown to the Pennsylvania primary -- which campaign has the upper hand? We'll talk strategy with Governor Ed Rendell, who backs Clinton, and New Mexico Governor Bill Richardson, who has just endorsed Obama.

Plus, what does the roller coaster week on Wall Street mean to Main Street? We'll find out from two influential voices on the economy -- Lawrence Summers, who was treasury secretary under President Clinton, and Glenn Hubbard, who ran the Council of Economic Advisors under President Bush.

Then, has Barack Obama's speech on race put the issue to rest?

(BEGIN VIDEO CLIP)

OBAMA: Did I strongly disagree with many of his political views? Absolutely.

(END VIDEO CLIP)

WALLACE: We'll find out from our Sunday panel -- Brit Hume, Jill Zuckman, Bill Kristol and Juan Williams.

And our Power Player of the Week, Mr. Manning goes to Washington, all right now on "Fox News Sunday."

Hello again and happy Easter from Fox News in Washington. Well, with the Pennsylvania primary one month away, here's where we stand in the race for the Democratic nomination.

Barack Obama leads Hillary Clinton in delegates by 121. He's also ahead in the popular vote by almost 750,000, and he also leads in the number of states won. It also seems almost certain there won't be do-over primaries in Florida or Michigan.

For more on the Democratic campaign, we turn to Ed Rendell, governor of Pennsylvania and a Clinton supporter, who joins us from Philadelphia; and from Santa Fe, Bill Richardson, governor of New Mexico, who late this week announced he's backing Obama.

Let's start with the latest flap between the Clinton and Obama campaigns about something that Bill Clinton said on Friday. Take a look. (BEGIN VIDEO CLIP)

B. CLINTON: I think it would be a great thing if we had an election where you had two people who love this country, were devoted to the interests of the country and people could actually ask themself who's right on these issues, instead of all this other stuff that always seems to intrude itself on our politics.

(END VIDEO CLIP)

WALLACE: The Obama campaign sent out one of its top surrogates -- that's retired Air Force General Tony McPeak -- alongside Obama yesterday to accuse Clinton of McCarthyism for questioning Obama's patriotism.

Governor Richardson, as someone who worked for Bill Clinton, do you really think that's what he was trying to do?

RICHARDSON: I don't believe President Clinton was implying that. But the point here, Chris, is that the campaign has gotten too negative -- too many personal attacks, too much negativity that is not resounding with the public.

And John McCain is running around getting support, being international. And this has to stop. I believe the sooner we end this race -- and I'm not suggesting anybody get out, but maybe after the remaining primaries, the 10 primaries that are going to be very important in the days ahead, the Democrats come together and look at who's ahead when it comes to delegates, when it comes to the popular vote, the number of states.

And I just feel the time has come to come together behind a candidate. And this is why I endorse Senator Obama, because I believe he can bring the country together, that he is somebody that can reach across party and ethnic lines...

WALLACE: But, Governor Richardson, let me bring in Governor Rendell at this point. We're going to get later on to the question of how the Democrats are going to resolve this seemingly irresolvable dispute.

But let me ask you, because Governor Richardson says the campaigns are being too negative, was the Obama campaign being too negative in accusing Bill Clinton of McCarthyism?

RENDELL: Of course. I mean, this is -- the Obama campaign tries to have it both ways. They say the campaign's too negative, and they go out and turn an innocent remark -- Bill Clinton was saying what a lot of us feel.

We wish the issues of race and all of this other stuff would be pushed to the background so we could have a discussion of who's got the most experience, who's got the best health care plan, who has the best plan for the economy.

And instead they launch this all-out attack trying to take an inference out of President Clinton's words that no fair person could take. It's an example of the negativity that Governor Richardson is talking about.

If they want to tone it down, don't accuse someone of McCarthyism.

WALLACE: Governor Richardson, how do you respond to that?

RICHARDSON: Well, look. There's been negativity on both sides. And I think it's reached the point where the personal attacks -- the 3:00 a.m. phone call -- you know, Senator Obama is patriotic. He's experienced. He is somebody that can lead this nation.

I was in Portland, Oregon at a rally and just the faces of enthusiasm and hope amongst thousands of people -- close to 12,000 people were there. He's bringing something new to the American political system that is good. And this is why I have endorsed him.

But I think Ed is right. There's too much negativity. My suggestion would be after Pennsylvania, after other primaries -- I mean, it's not just Pennsylvania. That's critically important.

But you've got North Carolina. You've got Oregon coming. You've got Kentucky. You've got many other bigger states. And then the time has come for Democrats to come together and say, "We need to end this. We need to get ready for November. We need to be positive." We have to stop these personal attacks. They're reaching excessive amounts.

WALLACE: Governor Rendell, you told a Pennsylvania newspaper last month -- and let's put it up on the screen -- "You've got conservative whites here, and I think there are some whites who are probably not ready to vote for an African American candidate."

You took some heat for that, sir, but there were several African American officials in your state of Pennsylvania who said you were just being honest. So let me ask you to be honest again.

Do you think that the controversy over Reverend Wright has hurt Obama, especially with those conservative white Reagan Democrats that you were talking about?

RENDELL: Well, first of all, let me also say that Senator Obama said that I was just telling the truth, and he conceded that that was the truth.

Do I think it's done some damage? Maybe some collateral damage, and maybe at the margin, Chris, but I don't think that's what the voters of Pennsylvania are making their decisions about.

They're making their decisions because they like Hillary Clinton. They like the way she's been a fighter. You know, the media has counted her out. They counted her out after Iowa. They counted her out before Super Tuesday. They counted her out before Ohio and Texas.

But the people of Pennsylvania and, I think, the American people like the way she fights back and fights for them. And that's the thing that's resonating in Pennsylvania.

She's not ahead by anywhere from 12 to 26 points in the various polls here because of Reverend Wright. She's ahead because of her own qualifications and because of the affection that the people of Pennsylvania have for her.

WALLACE: Governor Richardson, I want to ask you one other question about your endorsement of Obama this week. And you talk about negativity and attacks. Clinton adviser James Carville accused you of an act of betrayal on holy week.

Here's what he said. "Mr. Richardson's endorsement came right around the anniversary of the day when Judas sold out for 30 pieces of silver, so I think the timing is appropriate." Governor Richardson, that's pretty tough stuff.

RICHARDSON: Well, I'm not going to get in the gutter like that. And you know, that's typical of many of the people around Senator Clinton. They think they have a sense of entitlement to the presidency.

You know, and I got in this race myself. I am very loyal to the Clintons. I served under President Clinton. But I served well. And I served the country well. And he gave me that opportunity.

But you know, Chris, it shouldn't just be Bush, Clinton, Bush, Clinton. You know, what about the rest of us? I got in the race. A lot of other candidates -- Senator Biden, Dodd -- that are qualified and experienced -- you know, Senator Obama representing change.

So I feel that it's important that we bring a new generation of leadership. You know, the American people hate this partisanship, these divisions, snapping at each other as we seem to be doing.

And I think Obama represents this new change of not just bipartisanship, but bringing people together, bringing races together, bringing America's role in the world to be respected again.

The huge message that he would send if he's president, an African American of mixed heritage, of great intelligence and tremendous depth as a human being, the way he handled that race issue, is going to be a great signal for America.

WALLACE: Let me bring Governor Rendell back.

As we've been pointing out, the next big primary is Pennsylvania on April 22nd. And let's put up the latest RealClearPolitics average of recent polls in Pennsylvania. It shows that Clinton is leading Obama by 17 points.

Governor Rendell, is she going to win by that kind of margin, by double digits? And if she does, what does that say about the relative strength of these two nominees going forward?

RENDELL: Well, Chris, she's not going to win by 17 points. Senator Obama is going to outspend us here 2.5 to one, three to one. He's already on television and radio, and he's a formidable campaigner, as we all know.

But I think Senator Clinton is going to win a solid majority. And when you combine that with Ohio, and Texas, and Florida, and Michigan and all of the other key states that we have to win in November, it sends a very important message that if we want to win -- and I think that's what Democrats care most about -- that Hillary Clinton's our best candidate to win.

If you looked at -- more important than even the Pennsylvania polls, if you looked at the polls this week about head-to-heads with McCain versus Clinton and McCain versus Obama, it's stunning news for Democrats.

In Ohio, Senator Clinton's up by six points. Senator Obama is down to Senator McCain by seven. In Missouri and Florida, Senator Clinton is within the margin of error. Senator Obama is behind by double digits.

In Massachusetts, Senator Obama is even. Senator Clinton's up by 14. And in New Jersey, Senator Obama is behind by two and Senator Clinton's up by 11.

We have to be concerned about who's going to win. We've got two great candidates, and Senator Clinton will make history around the world, too.

There are women in every country in this world that have been oppressed and would love to see an American woman president just as it would be a great message to see an African American president.

WALLACE: Governor Rendell, let me follow up on this question of the race, because for all the talk about Reverend Wright and even the talk about Bill Richardson's endorsement, a lot of people think the really big news this week was the fact that Michigan is now following Florida in deciding not to hold a re-vote.

Given all of that, isn't it impossible now for Clinton to beat Obama in the popular vote and the pledged delegates when all the voting is done in early June?

RENDELL: Well, sure. And again, it shows the inconsistency...

WALLACE: Sure, you're saying it's impossible.

RENDELL: It's very difficult, but it shows an inconsistency in the Obama campaign. First, they say the superdelegates should reflect the will of the people of their states.

Well, we have Senator Kennedy and Senator Kerry saying they're going to vote for Obama even though Senator Clinton won by 13 points in Massachusetts.

Governor Richardson, who I respect -- and I reject James Carville's comment. Bill Richardson did what he thinks is right for the country. I disagree with him, but I reject James Carville's comment. The voters of New Mexico chose Senator Clinton. If we follow the Obama line, Bill Richardson should be for Senator Clinton.

RICHARDSON: Yes, but, Eddie, by half a percent. Come on.

RENDELL: Bill, it doesn't matter. Senator Kennedy and Senator Kerry said they are voting for...

RICHARDSON: Well, it does matter.

RENDELL: They said they're voting for Senator Obama, and Senator Clinton clocked Obama in Massachusetts.

The second inconsistency, Chris, is...

RICHARDSON: Hey, Chris, could I have a word?

WALLACE: Yes.

RENDELL: The second inconsistency -- and this is very important...

WALLACE: All right. Real quick, Governor Rendell, because I want to bring in Governor Richardson.

RENDELL: The second inconsistency is the Obama folks say, "Let the popular vote count. Let that determine who wins." Well, we're disenfranchising voters in Michigan and Florida.

If you have do-over elections, Michigan, Florida and Pennsylvania, Senator Clinton can and would, in my judgment, win the popular vote.

WALLACE: All right. Let's just agree, though, because it seems that both of you do agree with Florida and Michigan almost certainly out now that at the end of the primaries in early June, Obama is going to lead in popular vote and is going to lead in pledged delegates.

Governor Richardson, you said several times that's the point when we've got to settle this thing. But do you settle it based simply on who leads in those numbers, or do you settle it on an independent judgment, as you made, about who would be the best and, yes, who would be the strongest candidate to win back the White House?

RICHARDSON: Well, you've got to base it on the fact who wins more popular votes, who wins more states. Obama's won 30 states. I think he's going to take many of the 10 states that are remaining. He's got a delegate lead. He's picking up in superdelegates.

I think it reaches a point where the leaders of the party, the voters in the Democratic Party, have to see that this bloodletting that would go between the last primary and the convention is not serving us well. I mean, it gets negative proportionately more every single day.

The best thing to do is unite around the candidate, start our message nationally, and make sure that we get a lot of healing done. A lot of healing needs to take place between Senators Clinton and Obama.

And Senator Clinton has run a magnificent race. I agree with Eddie Rendell. I mean, she may win Pennsylvania. But the reality is that proportionately, numerically, I don't think Senator Obama's lead can be overtaken. And then I believe it's the responsibility...

WALLACE: Governor, let me bring in Governor Rendell.

If it's right -- and you seem to agree that Obama will lead -- wouldn't there be a bloodletting if this thing continues on through June, July and August? Particularly, what does it say about the Democratic Party?

What are you going to be saying, especially to African Americans, if the predominantly overwhelmingly white superdelegates decide, "No, we're going to give the nomination to Hillary Clinton even though Obama leads in popular vote and pledged delegates?"

RENDELL: Well, again, let's take a look at popular vote. The popular vote is 750 now, but let's assume because of Pennsylvania, and West Virginia, and Kentucky, and states where Senator Clinton has a big lead -- let's assume it's less than a half a million out of 55 million, 60 million cast.

Let's assume the delegate lead is 3 percent or 4 percent of the total delegates. Then I think the superdelegates -- and the Obama folks are always saying, "Let's play by the rules."

Well, the superdelegates have been the rules in this party for conventions not just this year, but for many years. Reason? Because the superdelegates are supposed to exercise their judgment as to who's the strongest candidate to win in November.

We have to take back the White House, whether it's Senator Obama or Senator Clinton.

WALLACE: And what about this talk, Governor Rendell, of a bloodletting?

RENDELL: Well, first of all -- and another thing I love -- Bill talks about the number of states that have been won. Well, in November we have something called the electoral college. You don't become president by winning the most states.

You become president by winning the states with the most electoral votes. Senator Clinton has a 65-vote, 70-vote lead in states carried in terms of electoral votes. So there's arguments to be made on both sides.

We have two great candidates. Our job is to nominate the one who has the best chance to win.

WALLACE: Gentlemen...

RENDELL: I want to ask Bill -- Bill, does it bother you that Senator Obama is behind in New Jersey and even in Massachusetts?

WALLACE: All right. I usually ask the questions here.

But, Governor Richardson, take 30 seconds to answer it, and then we're going to have to say goodbye.

RICHARDSON: Well, look. I think polls after polls and the American people -- they want change. They want a new president that is going to shift the direction internationally and domestically.

And Barack Obama is clearly the strongest candidate nationally. I don't know what polls Governor Rendell is looking at. I see that Senator Obama is the strongest candidate nationally.

WALLACE: Guys, we're going to keep the satellite linked up, and you can...

RICHARDSON: And right now, Senator Obama is...

WALLACE: We're going to keep the satellite linked up and the two of you can continue to argue about this during the commercial.

RENDELL: Survey USA and Erasmus (ph), and you can look it up, Bill.

WALLACE: All right. There you go.

RENDELL: You can look it up.

WALLACE: Gentlemen, Governor Rendell, Governor Richardson, we want to thank you both. Thank you both for advocating so strongly on behalf of your candidates, and thank you for sharing part of your holiday with us.

WALLACE: Up next, we'll ask two of the country's top experts what to do about the struggling economy.

But first, we want to tell you that we once again invited Senator Obama to come on the program and he once again turned us down. So the "Obama Watch" rolls on. Here's how many days, hours and so on it's been since Obama promised us he would come on "Fox News Sunday."

(COMMERCIAL BREAK)

WALLACE: With wild swings in the stock market this week, we want to continue our discussion about the troubled economy.

Joining us from Boston, Lawrence Summers, who was treasury secretary under President Clinton, and from New York, Glenn Hubbard, who ran the Council of Economic Advisors under President Bush.

Gentlemen, let's start with a brief assessment from each of you about the state of the economy at this moment.

Mr. Hubbard, how bad is it? How widespread is the problem? And how long do you see it continuing?

HUBBARD: Well, we've clearly downshifted in the past year from GDP growing about 3 percent to probably 1 percent to 1.5 percent for this year. The labor market has begun to deteriorate. The credit crunch is a very big deal for the economy. I expect it to subtract more than a percentage point from GDP growth this year.

Having said all that, I do expect a recovery in the latter part of this year fueled in no small part from monetary policy actions and fiscal policy actions.

WALLACE: Mr. Summers, relatively speaking, are you that optimistic?

SUMMERS: I'm a bit less optimistic. I think it's very likely that we're in recession right now. I think it's a certainty that we're in something that's going to feel like a recession to most people. I hope that it will be easily contained and we'll see a return to expansion.

I don't think after all that's happened in the financial markets we can be certain that that's the case. I'm glad to see that policy now seems to be responding to more aggressiveness after many months when policy was behind the curve. WALLACE: Well, let's pick up on that, because the big news this past week, of course, was the Federal Reserve's intervention to prevent the collapse of Bear Stearns, including the commitment of a loan of up to $30 billion to guarantee risky mortgage securities.

Mr. Hubbard, did we pass some kind of important threshold in terms of government intervention this week?

HUBBARD: Well, I think we did. This is new territory for the fed. In the heat of a battle with systemic risk, it may be important territory to pass, but it is a change.

I think what it heralds is more fed involvement outside the banking system, which probably requires a change in our regulatory apparatus. Arguably, the treasury should be more involved here.

WALLACE: Mr. Summers, any concern -- it seems not, because you were applauding more aggressive action, but any concern at all about the government becoming the lender of last resort on Wall Street?

SUMMERS: Sure. You've got to be concerned. And it's got to be coupled with an approach that focuses on regulation to prevent systemic risk.

Look, the focus of regulatory debates until the last three weeks led by the administration have been summits to organize deregulation, summits to take burdens off.

If we're going to be doing this, and I don't think the fed had any realistic choice, we're going to need to have approaches that do everything we can to maintain systemic stability.

We've got more to do, though. We've got big issues of students not able to get loans, of municipalities that are struggling, of the people who are in a position to be able to afford homes not even being able to get reasonable mortgages at reasonable prices.

So there's a great deal that needs to be done to address the economic problems of the people, if you like, on Main Street after the very appropriate actions we've taken with respect to Wall Street.

WALLACE: Well, let me follow up. You figured out exactly where I wanted to go, because some Democrats -- and you're a Democrat -- feel that having now rescued, come to the aid of, bailed out -- however you want to put it -- Wall Street, that the government needs to do more to help out on Main Street.

As a matter of policy, not politics, do you favor the idea of the government getting involved, spending billions of dollars and buying up and refinancing some of these mortgages that people can no longer afford to pay?

SUMMERS: I think that that needs to be looked at very seriously to see whether it can be done in an effective way. There is no question that it's a major economic imperative to reduce the number of foreclosures. And if the government, by stepping in and engaging in transactions where it could well make a profit, can contribute importantly to that, that's a very worthwhile effort for the government to engage in.

There are many, many technical issues, and they need to be studied carefully and with great care. But there's no question -- there's some things that are very clear. We're not spending enough to help people get credit counseling to avoid foreclosure.

We're not doing enough to support state and local governments whose tax bases are being eviscerated by the process of foreclosure.

We've got a bankruptcy code where, if somebody's vacation home gets in trouble, they get more protection from the bankruptcy code than if a working person's principal residence goes underwater.

So there are a whole set of things we should be doing, that we can do, that will help to contain the pain in the housing sector, and I'd like to see us get moving and do them much more aggressively.

WALLACE: Well, let me bring in Mr. Hubbard.

Given the fact that the government intervened in the market on Wall Street, why not also intervene, do some of the things that Mr. Summers is talking about, especially to try to help out the 250,000 Americans who are in some stage of default and possible foreclosure?

HUBBARD: Well, I think the first things we need to do, and one the fed already has done, is try to bring liquidity back.

The second is to improve capital positions of the banks. You know, we're dancing around a big problem of the need to recapitalize banks. That's something that should be encouraged.

On the housing front, yes, I do think there's a reason to consider things ranging from, perhaps, a temporary expansion of the Federal Housing Administration to increased support for NeighborWorks America, for the kind of local support that Larry was referring to.

But I think we should be very cautious -- very, very cautious -- in doing much more.

WALLACE: Why?

HUBBARD: Well, I think we run the risk of creating a very, very large-scale and permanent program. A far better approach, it seems to me, is to figure out how we share losses among the three people who must bear them, which are the borrowers, the lenders and the taxpayers.

That's a discussion the treasury and fed should be leading right now before we talk about further intervention.

WALLACE: Gentlemen, let's turn to the issue of interest rates, and let's put up a chart, because it's pretty stunning. Since last September, the fed has cut rates six times, from 5.25 percent to 2.25 percent.

Mr. Hubbard, is that the right policy? And do you worry at all that it is driving down the dollar and possibly boosting inflation?

HUBBARD: Well, I think it's important to sort out two aspects of fed action. The one we've been talking about, about the financial stability aspects, liquidity provision, the new facilities, I think the fed deserves a great deal of credit for its activism.

I do think there is a danger that the current trend in monetary policy is too easy for the medium to long term and will lead to inflationary pressures and the problems in asset markets that you referred to.

After all, excessively easy monetary policy 2003 to 2005 was one of the contributing problems to the current situation.

WALLACE: Mr. Summers, how do you respond to that? And specifically, how does the fed balance its desire to fuel the economy to try to prevent a recession or, if it is one, make it smaller and shorter, with, on the other hand, the question -- the concerns about the dollar and especially inflation?

SUMMERS: Policy is about choices. And because of what's happened, there are no terribly attractive choices.

In my judgment, the greater risks at this point are of recession, of recession that tips over into continuing crisis in a way that took place in Japan and several European countries during the 1990s. And so I think the fed has to maintain a bias to that side.

But Glenn is absolutely right in being concerned about inflation and being concerned about the value of the currency. And so I don't think there's any absolute. It's a matter of finding the best dial setting that you can.

As yet, I'm comfortable with the general direction of what the fed has done. But I think if we look back with regret at this period, it is much more likely that we're going to look back with regret at extra unemployment, extra people losing their homes, communities having suffered because not enough was done to contain the situation, than that the rate of inflation has picked up.

But they've got to be on top of every indicator, and certainly it would be helpful to express more explicit concern about the value of the dollar.

And I have been sorry to see a little less coordination by the Treasury Department with other countries in containing this financial crisis, at least in terms of what's visible to the public, than I think would have been ideal.

WALLACE: Gentlemen, we're going to have to leave it there. Mr. Summers, Mr. Hubbard, thank you both so much for joining us and helping us understand this very troubling situation.

HUBBARD: Thanks, Chris.

SUMMERS: Thanks, Chris.

WALLACE: Coming up, the state of the Democratic presidential race -- with a number of developments this week, does Hillary Clinton still have a chance to win the nomination? Our Sunday panel will be along with some answers after this quick break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICHARDSON: I think that Senator Clinton has a -- she has a right to stay in the race, but I think eventually we don't want it going to the Democratic Convention bloodied...

(END VIDEO CLIP)

WALLACE: That was New Mexico Governor Bill Richardson hinting during his endorsement of Barack Obama that the time may soon be coming for Hillary Clinton to drop out of the race.

And it's time for our Sunday panel -- Brit Hume, Washington managing editor of Fox News; Jill Zuckman, national political correspondent of the Chicago Tribune, who joins us for the first time; and Fox News contributors Bill Kristol of The Weekly Standard and Juan Williams from National Public Radio.

Well, with Michigan now joining Florida in apparently deciding that they are not going to hold re-votes, the question is starting to be asked, "Can Hillary Clinton still win this nomination?"

Brit, is that an Obama talking point or is it a legitimate issue?

HUME: It's a legitimate issue. It seems all but certain that when the races that are run are over, he will have the most delegates and, in all likelihood, the most popular votes.

Now, it would be then possible mathematically for the superdelegates to throw their weight to Hillary Clinton, overtake Obama and deny him the nomination.

But I don't think there are many Democrats who would be willing to do that, and I don't think that the rank and file of the Democratic Party, especially it's very important African American component, would sit still for that.

So I think it's almost inevitable that he's got it.

WALLACE: Jill, do you agree with that?

ZUCKMAN: I think that most people believe that, but I think that what we've learned over this past six months or so is that every time we think we know something, it gets undone. I mean, everybody thought Obama had it locked up at New Hampshire, and she surprised us and won. I don't think that many people thought she would win Ohio and Texas. They thought he could put it to bed then, and she ended up winning.

So I just think we have to see what happens before we declare one of the candidates dead.

KRISTOL: I think she has a little more of a shot than people think. You know, there are about six million votes still to be cast if you sort of project out the turnout.

She would need to win by an average of 10 percent or a little more to surpass him in the popular vote, which I think she needs to have the moral credibility to say, "I'm behind in delegates but hey, I've caught him in popular vote, even without Michigan and Florida. And with Florida, I'm ahead of him. OK, superdelegates, you get to go for me."

I'm not sure it would work even then. So she would need to win these states by quite a lot. But she is ahead by quite a lot in Pennsylvania, the first one and the biggest one to vote. She'll knock 300,000 votes off Obama's lead in Pennsylvania alone, it looks like.

Then she has to win North Carolina. She has to run the table. She really has to win Pennsylvania, North Carolina, Indiana, Kentucky, Oregon. It's not out of the question, though.

I was in North Carolina Wednesday night speaking to a bunch of mostly Democrats who struck -- a couple of them came up to me and said they were disturbed by the Wright thing and might be moving to Clinton.

WALLACE: The Reverend Wright.

KRISTOL: The Reverend Wright problem for Obama, so -- the pastor disaster, as someone called it.

So I think -- you know, look. She really has to run the table, thread the needle -- whatever metaphor you want. But I think people are writing her out a little too soon.

WALLACE: Juan, let me ask you about this from a different point of view.

Let's say that she wins big in Pennsylvania but doesn't overcome the lead and that at the end of the day that Obama has a sizable lead, several hundred thousand votes in the popular vote and also has a lead in the pledged delegates, but, but as Ed Rendell, the governor of Pennsylvania, was suggesting, you look at these polls and you see she is leading McCain in states and McCain is beating Obama.

Why not the superdelegates -- that's one of the reasons they were appointed in the first place -- making a cold, calculated decision -- yeah, we're sorry, Barack Obama, but we want to win the White House and she's our best shot. WILLIAMS: Oh, I think that's one of the issues for the delegates to decide. Also, given the...

WALLACE: But would that be such a terrible thing for them to do?

WILLIAMS: No, I don't think it would be terrible, but I think it would upset a major component of the Democratic Party's base and all the people who have been so excited and thrilled by Barack Obama's astounding candidacy.

People would say, "Wait a second. What about the black vote in particular?" I think there's a special sensitivity there, as Brit was saying.

But secondly, I think there are lots of young people who have come out, been energized by this, who would say, "Gosh, you know, I put all my energy and time into working for it, and the superdelegates have simply overruled me. You know, what kind of political process is this? What kind of democracy is this?"

So it would raise all those questions. But to get back to the key point here, does she have a chance, I really find it astounding that so many people are quick right now to write off Hillary Clinton again, because the suggestion seems to me to ignore the idea that she's the one gaining momentum or, as Ed Rendell said here this morning, if you look at things like the electoral votes coming out of the big states, it's been Hillary Clinton's party.

I mean, if we had the rules -- I think I've said this to you before -- of the Republicans -- the Democrats had the rules of the Republican Party, you know, Hillary Clinton would be the winner because she's winning -- in winner-take-all situations, she's been winning the big states, and there would be no proportional sharing of votes.

HUME: But the problem with that argument is that it is an attempt to relate all this to the general election. She's winning the big states in an election among Democrats in almost all cases.

When you introduce the rest of the population into the equation, there's no reason to believe that that will necessarily hold. After all, does anybody really think that some of these big states like even New York, for example, is going to go Republican because it's Obama, not Hillary? I don't think so.

WALLACE: But there are some states that, according to Rendell, like New Jersey or Pennsylvania...

HUME: Well, he's talking about...

WALLACE: ... that might tip Republican.

HUME: Maybe. But he's talking about a snapshot now taken at the height of Obama's crisis over Reverend Wright, when he has been weakened by that, particularly among independents and Republicans, but even among, obviously, some Democrats as well. That will eventually recede in the public's imagination, and the polls may look very different. They looked very different just a few weeks ago.

WALLACE: Jill, let me...

HUME: So I don't think that's going to -- I don't think the current polls in certain big states are going to be what decide it for the superdelegates.

WALLACE: Jill, let me throw one other thing into this, and that's the battle over money. And let's put up this graphic, which is quite remarkable.

The candidates had to report Friday how much money they had at the end of February, and the gap, as you'll see, is significant. Obama had $31.5 million cash on hand -- that's money that could be used for the primaries - - almost no debt.

Hillary Clinton had only $11.7 million cash on hand, and all but $3 million of that was -- she also had debt. So she's only $3 million in the black. Is that a significant factor in this?

ZUCKMAN: Absolutely. I mean, Senator Obama is like a money machine. And that's never going to be a problem for him. He's always going to be able to get his message out, reach the people he needs to reach.

Senator Clinton -- it's harder for her because she's not going to be able to match him commercial for commercial, and that's probably one of the biggest reasons why many people end up getting out of a campaign. They just run out of money.

KRISTOL: You know, I think that's really true. Obama is already up on the air in Pennsylvania. He had an ad up in the Villanova game Friday night, I was told by someone watching it. I'm sure he'll have an ad in Villanova's game today against Siena and a lot of happy Philadelphians, because Villanova might go to the...

WALLACE: I know somebody had it in their bracket.

KRISTOL: It's virtually the only team I still alive. I desperately need Villanova to win.

The money advantage is going to make it even harder for Clinton to sort of run the table and pull off all the upsets she needs. I think that's absolutely right.

WALLACE: So, Juan, for all the talk that we heard from Bill Richardson -- and he said it several times today -- about, you know, we don't want to have all this negativity right after the primaries end in early June, we've got to get together and bind the party together -- he's basically saying it behind it together behind Obama -- do you expect it to be bloody hand-to-hand combat all the way up to the convention? WILLIAMS: I do. And I think that right now what we're looking at -- I don't see Mrs. Clinton or Senator Obama somehow, you know, singing "la-dee- da" and "Kumbaya." I don't see it.

WALLACE: Certainly not "la-dee-da."

WILLIAMS: No. And you've got 2.5 months now in the continuing process, and you've got time before the convention. I think it just gets nastier and nastier.

And I think people are not ready for things like Reverend Wright to interrupt the process, disrupt momentum. And I think if you look at the numbers right now in terms of the national polls, Hillary Clinton has had a surge.

Why has she had a surge? The only intervening event has been Reverend Wright. And so I think, again, it comes down to people paying attention to these kind of events that are unpredictable but still make this contest...

WALLACE: Well, that's right, and...

KRISTOL: I hope it's nasty and bloody, needless to say, and it goes to the convention. But I don't think so. Look, the superdelegates -- there's one thing we haven't mentioned. A lot of the superdelegates -- their main priority is keeping the party together.

And Brit's right about -- if Hillary does slightly better in the national polls than Barack Obama, they're not going to say, "Oh, we're going to overturn the judgment of the elected delegates and nominate Clinton over Obama," and bitterly split the Democratic Party.

When you talk to Democrats, they say, "1968 -- we do not want that again." They would prefer a united party with slightly less chance of winning than to go to Clinton on the premise that somehow she'll pull them over the finish line.

WALLACE: All right. We need to take a timeout here.

But coming up, we'll turn to the general election campaign -- how John McCain did during his trip overseas and how he stacks up against his potential Democratic opponents. Back in a moment.

(COMMERCIAL BREAK)

WALLACE: On this day in 1983, Ronald Reagan proposed the Strategic Defense Initiative to protect the country from nuclear attack.

Never fully deployed, the so-called "Star Wars" program paved the way for today's anti-missile systems.

Stay tuned for more panel and our Power Player of the Week.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: Al Qaida 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 Qaida.

(END VIDEO CLIP)

WALLACE: That was John McCain with a little help from his friends correcting a mistake he made while visiting the Middle East this week.

And we're back now with Brit, Jill, Bill and Juan.

So a funny thing happened on John McCain's trip overseas. While he was busy polishing his foreign policy credentials, he made a mistake about Al Qaida and Iran and had to be corrected by his friend Joe Lieberman, who was along on the trip with him.

Brit, big deal or just a blip?

HUME: I think it's probably just a blip, but it was a bigger blip than he wanted or needed at the time.

I think the overall impression of the trip was this is a man welcomed by, knowledgeable of, and comfortable with foreign leaders across a big part of the globe.

But the mistake, nonetheless, raises not a question about his knowledgeability -- we all kind of believe that he has that -- a question, perhaps, about his age, which is an issue. I mean, the feeling was not that he's a dope, didn't know his way around, that he might have had kind of a senior moment there, and I think that's unfortunate for him.

But I think probably the trip was a net plus.

ZUCKMAN: I thought the most revealing thing that happened with that comment was the Democratic National Committee jumping all over it, making the argument that McCain doesn't know what he's talking about when it comes to foreign policy.

And like Brit said, I don't think many people believe that. I mean, the man has traveled all over the world and really prides himself on his relationships with foreign leaders.

WALLACE: But do you think, Jill, there's a danger that if -- and certainly not -- one by itself isn't going to do it, but if you had two or three of these, that people might begin to have doubts -- and the polls indicate there are some who already do -- about the idea of a then-72-year- old man taking the oath of office?

ZUCKMAN: My guess is we're never going to see that happen again after this. I saw him do an interview when he was asked about it, and he looked really irritated that it was being brought up. That's a danger. I mean, anything can be used to show, "Hey, he's 71 years old."

WALLACE: Let me switch to something else, Bill. With all the talk about Obama and Reverend Wright, I got a bunch of e-mail this past week from viewers who said, "Why don't you ever talk about McCain and some of the evangelical ministers who have endorsed him?"

And let's put up a couple of these -- Reverend John Hagee, who has called the Catholic Church a false cult, and Reverend Rod Parsley, who has attacked Islam said that Allah was a demon spirit.

Do you think it's fair, Bill, to compare McCain's, quote, ministers to Obama's pastor?

KRISTOL: No, because these are just individuals who have endorsed Senator McCain. I think actually some of the attacks, especially on Reverend Hagee, are unfair.

But leaving that aside, no. This would be like attacking Obama because random individuals in the Democratic Party have endorsed him.

Obama and Wright have a close relationship. Obama chose not just to join Reverend Wright's church but to stay there over 20 years. And that's what hurts Obama, not that he joined.

In the speech, he was quite clever. He said some people asked why did I join this church, and then he recounted his rather moving experience of attending a sermon and worship at that church.

But the question isn't why he joined in the first place. It's why he stayed after 20 years of all these sermons. But McCain doesn't have that problem.

WALLACE: Well, let's talk about his speech. The big issue this week -- one of the other big issues was Obama's speech about Reverend Wright and race. Let's take a brief look.

(BEGIN VIDEO CLIP)

OBAMA: I can no more disown him than I can disown the black community. I can no more disown him than I can disown my white grandmother.

(END VIDEO CLIP)

WALLACE: Juan, did Obama, with that speech, put this issue, the Reverend Wright issue, behind him?

And let's look at it from two angles -- first of all, in terms of the general -- of the Democratic primary, and then the general election if he ends up being the nominee against McCain?

WILLIAMS: In neither case did he put it behind him, Chris. I think in terms of the primary race, he's got to deal with what I think of as the Reagan Democrats.

He had some success with them in Wisconsin, not so much in Ohio. And he's going to come up against them definitely in Pennsylvania -- potentially could be a game-changer in North Carolina unless he's able to hold onto the -- and so this has impact there.

And I'm betting that the Republicans will bring this up in a major way come general election time.

But to get to your point about Hagee and Parsley and others, I think that one thing you notice is that Barack Obama, when he was confronted with anti-Semitic statements made by Louis Farrakhan, he did separate himself from Louis Farrakhan, even though Louis Farrakhan is not his minister, unlike what McCain has done here.

I think McCain has been slow to state -- but you know what's funny, McCain was a guy who talked about a lot of these evangelical ministers as being intolerant. And then he's gone back on that now in his quest for this election -- to win the Republican primary and for the general election.

I think he has a problem there in terms of getting some comfort level with evangelicals. That's going to be a problem for him going forward.

HUME: On Obama, Chris, I think that the issue will last in more than one way with Reverend Wright. I think it raises questions about who and what Obama really is.

Is he post-racial? Well, it turns out not so much, and not enough to where he felt called upon to even privately urge his minister to stop saying these outrageous things about this country and about white people.

You also find Obama on the issue of being bipartisan -- and you go and look at his record, and you find that it's pretty thin, particularly on the tough votes and the tough issues.

He was simply -- he expressed his support for bipartisanship, but when the tough votes came on issue after issue, he wasn't there.

I think you find it in other areas. You even find it in his record on Iraq, that while he says -- and he certainly did, back before the war, declare that he was against it and never, obviously, cast a vote to authorize the war -- he couldn't; he wasn't in the Senate yet.

But along the way, you find that he's vacillated in a number of ways on the war. At one point, he said, you know, his position really wasn't very different from the president's.

So I think that what is going to happen is you'll have a very serious scrutiny of his record, and whether the posture that he has struck -- some may call it a pose that he has struck -- in this race is supported by the record he has made.

WILLIAMS: Well, you know what? On the speech, I thought the speech was -- you know, it's of a historical nature, the speech that he gave, but it didn't really deal with the issue on the table...

HUME: Exactly.

WILLIAMS: ... which is why he sat in those pews...

HUME: Exactly.

WILLIAMS: ... for so long.

HUME: Right.

WILLIAMS: And the idea that he spoke of his grandmother saying, "You know, gee, black men scare me on the street a little bit," in private, and saying somehow that's analogous to what the reverend was saying in front of a congregation, inflaming racial division...

HUME: Right.

WILLIAMS: .. seems to me totally crazy.

It really required him to say, on a personal level, "I'm a sinner, and I stayed there too long, and I made a mistake, and I've grown." But he can't do it -- for some reason, can't personally do it.

And on the McCain thing, by the way, it's not his age. It's that he continues to conflate Al Qaida and what's going on in Iran.

WALLACE: All right. I think we can officially say that the Reverend Wright issue is not over. Thank you all, panel. See you next week.

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