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Interview with Govs. Pawlenty & Kaine

Fox News Sunday

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

It's McCain versus Obama, and the campaign is on. What are the keys to a Republican win? Where do Democrats hold the upper hand? We'll sit down with the governors of two swing states who are both contenders in the "veepstakes," Democrat Tim Kaine from Virginia and Republican Tim Pawlenty of Minnesota.

Then, Hillary Clinton finally ends her campaign. Where does she go from here? We'll ask our Sunday regulars -- Brit Hume, Mara Liasson, Bill Kristol and Juan Williams.

And our Power Players of the Week offer life lessons to the class of '08, all right now on "Fox News Sunday."

And hello again from Fox News in Washington. Well, the primaries are finally over, and the general election campaign has begun. To discuss the politics and policy of a McCain-Obama face-off, we're joined by two key supporters who are being touted as vice presidential running mates, Republican governor Tim Pawlenty of Minnesota and Democratic governor Tim Kaine of Virginia.

And, gentlemen, as I welcome you both back, consider this something of an "American Idol" audition, because I'm sure they're watching back at campaign headquarters.


PAWLENTY: I can't sing, Chris.

WALLACE: Well, you don't have to sing.

Let's start with some politics.

Governor Kaine, Virginia -- 13 electoral votes -- has not gone for a Democrat since Lyndon Johnson in 1964, but the RealClearPolitics average of recent polls shows McCain leading there by just one point.

Now, Obama campaigned in your state this week after he became the presumptive nominee. How does he attract the white working class voters among whom he showed such weakness against Hillary Clinton?

KAINE: Chris, we were thrilled when the senator started his general election campaign in Virginia with events in Bristol in southwest Virginia and then in Manassas here in northern Virginia.

And in our primary on the 12th of February, he did very well among white voters, won the white vote, won the Latino vote, had great crossover appeal. So he had in -- a tough opponent in Senator Clinton. You know, she would win white working-class voters in some states, but he did real well in Virginia in this already.

And in Virginia, we're independent, so you can walk into the ballot booth and pick either ballot on a primary day. He got more than twice as many votes as Senator McCain did on February 12th. And that gives us reason, along with those polls, to be very optimistic about his chances this November.

WALLACE: All right.

Governor Pawlenty, Minnesota -- 10 electoral votes -- hasn't gone for a Republican since Richard Nixon back in 1972. And for all the talk about your state being in play this year, the latest RealClearPolitics average shows Obama leading by 11 points.

So even though you're holding the Republican convention in your state of Minnesota, isn't it really still pretty much a longshot for McCain?

PAWLENTY: Not necessarily, Chris. It's a state that has transitioned from kind of deep blue or Democrat to competitive. And in recent years, we've had Republicans get elected statewide in Minnesota, and President Bush came very close two times in Minnesota.

And you combine that with Senator McCain's straight talk, his kind of populist appeal, his appeal to the mainstream as somebody who's going to sell well in the upper Midwest -- that's a combination I think would do well in places like Minnesota, Iowa, Wisconsin and the upper Midwest.

SurveyUSA had a poll out recently that showed he actually was ahead under certain circumstances in Minnesota.

WALLACE: Governor Pawlenty, let's talk about some of the groups where Senator Clinton showed strength, especially in the later polls from March on -- white working-class voters, women, especially elderly women, Hispanics.

Do you really think those voters may cross over and vote for McCain, and if so, why?

PAWLENTY: Well, if you look at Senator Clinton's message, it related to who has the experience, who's ready to do the job. Clearly, that would be Senator McCain as compared to Senator Obama.

They also perhaps were looking for somebody who was a little more mainstream, a little more ability to work across party lines, willing to take the leadership role. Senator McCain has a record on those things, not just rhetoric, as Senator Obama does not.

And so those are just two of many examples of qualities they perhaps saw in Senator Clinton that I think they'll also see in Senator McCain, a reformer, somebody who's willing to get things done and also was willing and able to appeal to a middle-class or mainstream voter.

WALLACE: All right. Governor Kaine, why should -- and why do you expect the Clinton supporters, and particularly those groups I talked about, to go to Obama instead of McCain?

KAINE: First, we saw them strongly support Senator Obama in Virginia. The early polling in the match-up between...

WALLACE: But not in Ohio, and not in Pennsylvania...

KAINE: That's true.

WALLACE: ... or West Virginia.

KAINE: That's true. There's a deep affection for Senator Clinton. I mean, she knocked it out of the park yesterday with her speech. And the fact that people preferred Senator Clinton or Senator Obama doesn't mean they'll not get on board.

And what we see, Chris, here is this fundamental desire in the American population for a change in direction of this nation. And the match-up between Senator McCain and Senator Obama couldn't be more clear.

Senator McCain, an honorable public servant and man, very much is going to pursue policies that have been the policies of the Bush administration. He's a stay-the-course candidate on Iraq and on the economy at a time when Americans want a change in direction.

And Senator Obama's got a great record in Illinois and in the U.S. Senate of working across party lines, not demonizing the opposition, welcoming all to the table so that we can solve these difficult and vexing questions -- energy prices, the state of the economy, our relations with nations in the world.

And these are big, tough issues that require this kind of "let's all work together" approach that Senator Obama has shown again and again can bring him success.

WALLACE: Go ahead.

PAWLENTY: Well, I was just going to say on that issue of the perception or the message that Senator Obama is going to have everybody working together, that defies the facts in the record.

He is somebody who's been out of the mainstream not just of America but of his party. He's somebody who has taken positions that have regularly ranked lockstep, almost robotically, with the Democratic caucus and liberal interest groups.

You look at Senator McCain's voting record -- he has consistently and regularly reached across the aisle to get things done in a big way. The change really has been from Senator McCain, somebody who's willing to take risks, take on big issues and get things done for the country.

KAINE: Well, Tim, let me just go at that a little bit. You know, again, saying that -- kind of talking about the senator's voting record, et cetera -- that's kind of Washington political talk.

What Senator Obama is talking about is let's solve problems. You know, look. We've got an energy policy and energy prices that have just gotten worse and worse. Foreclosures are -- the war in Iraq. We've got to solve these problems and do it in an effective way.

And in terms of a change message, I mean, Senator McCain is a person who -- again, respectable public servant, obviously, but -- has voted with President Bush 95 percent of the time in recent years and has said that that's what he wants to continue to do on Iraq and on the economy, pursue those policies that the American people have basically rejected.

WALLACE: All right. Let me pick up on this, and particularly on the economy, because with all the bad news that we saw on Friday, it's becoming increasingly clear, it seems to me, that the economy is going to be the central issue in this campaign.

And both Obama and McCain talked about the economy in their big speeches Tuesday night. Let's watch.


OBAMA: It's not change when he offers four more years of Bush economic policies that have failed to create well-paying jobs or insure our workers or help Americans afford the skyrocketing costs of college.



MCCAIN: I have a few years on my opponent.


So I'm surprised that a young man has bought into so many failed ideas.


WALLACE: Governor Pawlenty, won't voters blame Republicans, including John McCain, for the bad economy now under President Bush, especially when McCain is backing so many of President Bush's economic policies?

PAWLENTY: I think that's really a false premise, Chris. If you look at who's the change candidate in this election, it really is Senator McCain.

Look at the positions he's taken on energy. Tim raised that just a little while ago. The 2005 energy bill, which was the most significant piece of energy legislation the country's faced -- Senator McCain has voted against that bill because it was too much of the status quo, too many more benefits and breaks for the traditional gas companies, oil companies. Senator Obama, after bashing, you know, President Bush's approach on energy actually voted for the bill.

Senator McCain is leading the charge on climate change. Senator McCain has led the charge for a change of strategy in Iraq and on...

WALLACE: But let's talk specifically about the economy and the problems that we're facing right now. I mean, isn't McCain going to be blamed for the bad economy? It's his party. It's a Republican president.

PAWLENTY: I think once his message resonates or gets out with people as compared to Senator Obama's -- Senator McCain wants to cut taxes. He does not want to raise taxes on Social Security like Senator Obama does.

Senator McCain wants to relieve tax burdens on businesses so the entrepreneurial spirit can be unleashed and people will invest and grow jobs, as opposed to adding tax burdens to businesses in this country like Senator Obama wants to do.

WALLACE: Let me ask...

PAWLENTY: He has a health care program that wants to empower individuals with tax credits.

WALLACE: Well, we'll get to health care in a minute, but let's stay on the economy.

Governor Kaine -- because that was exactly what I was going to ask you. Obama talks about raising income taxes on the wealthy. He talks about raising the payroll tax for anyone making over $100,000. He talks about raising the capital gains tax from 15 percent up to as high, possibly, as 28 percent.

Isn't that exactly the wrong policy, raising taxes in a faltering economy?

KAINE: Chris, I've just got to say, Tim and I, I think, have reached a historic agreement here. We both agree this campaign's going to be about change, and that's a good agreement to reach.

And what we see with Barack is he does want to change direction, but it's not just about raising taxes. He wants to reduce taxes on seniors who make less than $50,000. They wouldn't pay income tax. He wants to reduce taxes on the middle class.

So instead of tax breaks targeted just at the wealthiest segment of the population, tax cuts for the middle class.

And he also -- on the capital gains side, he would allow the Bush capital gains cut to expire but then put in place taking the capital gains rate to zero for new businesses or small businesses to juice the economy at the small business level, which is where job growth occurs.

So these guys have very different strategies. Again, the McCain strategy has been pretty much economically keep in place the Bush tax cuts.

Senator Obama has said, "Let's reshuffle them and target these tax cuts more at those who truly need them in this tough economy."

WALLACE: Let me just move on, and you can continue this conversation.

But I want to talk about energy prices, because clearly, the spike in the price of crude oil is one of the biggest drags on the economy and one of the biggest pocketbook issues for Americans. Both candidates talked about that on Tuesday night. Let's watch.


MCCAIN: The next president must be willing to break completely with the energy policies not just of the Bush administration but the administrations that preceded his, and lead a great national campaign to put us on a course to energy independence.



OBAMA: ... pass an energy policy that works with automakers to raise fuel standards and makes corporations pay for their pollution and oil companies invest their record profits in a clean energy future.


WALLACE: Governor Kaine, Obama opposes drilling in Alaska, opposes drilling offshore, opposes nuclear power until you solve all of the safety problems. How does he end our dependence on foreign oil?

KAINE: Well, a couple of ways. He's a strong supporter of increasing investments in cleaner coal technology. The U.S. has sizable coal reserves, and we need to be investing significantly to clean up coal, and we can. It's been done in past generations and we can keep doing it.

He wants to, as he pointed out in the clip that you just showed, use greater taxes on the oil companies to plow into alternative energy research, which is something that other nations in the world have done. But we haven't had an energy policy in this country.

I mean, to think about it, a country with no energy policy -- and that is one of Barack's top priorities, is to push us toward a robust level of investment and research so we can expand alternative energy sources. And that's at the core of his energy plan, and it's the direction our nation needs to go.

WALLACE: Governor Pawlenty, McCain is almost as liberal on a lot of these energy issues as Obama. He opposes drilling in Alaska. He would leave it up to individual states as to whether to allow offshore drilling, which in most cases means that they wouldn't do it. He wants a 60 percent reduction in carbon emissions by 2050. He talks about a national campaign for energy independence, but he's even less specific than Obama is.

PAWLENTY: Well, Chris, he's been very specific on a number of things, and I would also say this is another example of separating the rhetoric from the reality.

Senator McCain has led on this issue, much to the chagrin of some parts of the Republican Party. Senator Obama continues just to toe the line robotically with the Democratic caucus in Congress.

He votes 95 or so percent every year. What change has he really led? What big thing has he crossed over and said, "I'll work with the Republicans on?" The answer is nothing. Here you have Senator...

WALLACE: Let me interrupt for a second, because that's a good question.

What's your answer to that?

KAINE: Well, look. He, in his time in Illinois, worked with Republicans to reform the criminal justice system, worked with Republicans to find health care solutions for children, worked with Republicans on tax strategies for low-income individuals.

In the Senate, worked with Republicans on nuclear proliferation issues. He has been in the Senate here in Washington a short period of time -- campaign finance reform. He picked that mantle up and worked with Republicans in the Senate on those issues.

So this is a standard feature that's in Barack's DNA. On any big issue, he is going to reach out and find somebody on the other side and say, "Look, we may not agree on everything, but we do agree on this. Let's make common ground and move us forward." And that's what this nation needs. We're so divided right now. He can cut through that.

WALLACE: How do you respond to that, Governor Pawlenty?

PAWLENTY: Well, you look at Senator McCain's record on the big issues of our time -- changing the strategy in the war, being for climate change, cracking down on pork-barrel spending, being against earmarks, reaching across even on things even that are controversial, like campaign finance reform.

As a United States senator, not casting a vote as a state legislator, but leading, being the person who's in the middle of it -- gang of 14 that Senator Obama was against that gave us Justice Roberts and Alito.

WALLACE: This was the compromise on judicial nominations.

PAWLENTY: Senator Obama was even against that. Senator McCain was right in the middle of it leading that bipartisan charge. So again, whether it's energy, whether it's ethics, whether it's reform, whether it's spending, Senator McCain time and time again has been saying, "I'm willing to lead. I'm willing to take risks." We have not seen that kind of boldness from Senator Obama.

WALLACE: All right. We need to take a quick break here, gentlemen.

But when we come back, we'll discuss foreign policy, health care and the chances that one or both of these guys will end up as the running mate. Back in a moment.


WALLACE: And we're back now with Republican governor Tim Pawlenty of Minnesota and Democratic governor Tim Kaine of Virginia. All right.

Before we turn to other issues, let's discuss the possibility that one or both of you will end up as the vice presidential nominee.

Governor Kaine, if Senator Obama comes to you after this process and says, "I want you," what will you say?

KAINE: Well, first, this isn't about me. I'm not here about me. I'm here about the senator and his vision for changing America.

And what I've done for him so far is get out on the campaign trail, and I'm part of his economics adviser team, and I think my best feature in terms of helping him is do just exactly what I'm doing and help him in Virginia, which is very much in play.

WALLACE: Now answer my question.

KAINE: You know, I think probably it would be hard for anybody to say no under a situation like that. But I'm not expecting it, not counting on it, certainly didn't endorse the senator with any plan to get anything out of it. I just want to help him win, because I think our nation needs change.

WALLACE: But if he asks you?

KAINE: Again, what I can say is I'm not expecting it, don't spend a lot of time thinking about it. Of course, it would be difficult for anybody in those circumstances to say no.

But he's got a lot of great people to pick from, and his campaign has shown a great ability to make, you know, tough strategic calls and make them right. I trust that they will. I'm going to try to be a great governor and nights and weekends help the senator on the campaign trail.

WALLACE: As just a smart politician, how would you assess your pluses and minuses if you were -- as somebody was saying, "Hey, what about Tim Kaine," especially your ability to reach out to those white working-class voters where he's definitely shown a weakness?

KAINE: You know, I don't want to make the case for myself. I mean, I'm a governor in a state that's doing a lot of things well. And it's not about me. It's about my state.

We're the most business friendly state in America according to Forbes. We're the top performing state government in America according to Governing Magazine. I just want to have strong educational outcomes and a strong economy, or high income and low unemployment.

And it's not about me. It's about my state. And so I'm just going to do everything I can to keep Virginia in a good place. And we've got challenges. I want to try to work to solve those.

But my role with the campaign, again, has been helping the senator implement his vision of change in this country, be helpful in Virginia, give him some economics advice as a governor. And that's what I'm going to keep doing.

WALLACE: Is Hillary Clinton automatically the frontrunner for the number two spot?

KAINE: Well, I would say that the campaign has very -- from very early days -- I've been a co-chair, you know, talked a lot about Senator Clinton and Senator Clinton's supporters and the notion of party unity.

We needed to get the primary done. We need to let the dust settle. Again, Senator Clinton just did an absolutely remarkable job yesterday, knocked it out of the park in reflecting on her candidacy and in encouraging us all to come together.

And that will be hugely helpful in getting us involved. But party unity is obviously one of the very top features that the Obama team will be weighing as they make the decision about the V.P., but also other decisions.

WALLACE: Governor Pawlenty, if Senator McCain comes to you and says, "You're the guy," what will you say?

PAWLENTY: I would say the same thing that Governor Kaine just mentioned a minute ago. I could go through that again.

But I have a fond and deep respect for Senator McCain and his leadership. I want to help him become the president because I think he'd be a great president. But I don't have any designs on being vice president.

If somebody came to me and said that, of course, it would be an honor to be mentioned, honor to be asked. It would be difficult to turn that down. But I don't have any designs, and it's not why I'm such a great and strong promoter of Senator McCain.

WALLACE: But both of you saying, in effect, if you were asked, the answer would be yes.

PAWLENTY: Well, I think that's all just speculation, Chris. And I've said repeatedly we're not going to get involved in speculation.

WALLACE: OK. Let's turn to something that isn't speculation, the war in Iraq and U.S. policy.

McCain and Obama talked about both Tuesday night. Let's watch.


OBAMA: It's not change when he promises to continue a policy in Iraq that asks everything of our brave men and women in uniform and nothing of Iraqi politicians.



MCCAIN: Americans ought to be concerned about the judgment of a presidential candidate who says he's ready to talk in person and without conditions with tyrants from Havana to Pyongyang, but hasn't traveled to Iraq to meet with General Petraeus.


WALLACE: Governor Pawlenty, you've actually been to Iraq more often and more recently than Senator Obama has. But won't it be hard for McCain to convince the American voters to keep supporting an American presence in an unpopular war?

PAWLENTY: Senator McCain said he'd much rather lose a campaign than lose a war. He understands the importance of winning this war in terms of American prestige and power around the world, and he's committed to making sure that this war is a success.

And he is the architect and certainly one of the earliest and strongest supporters of changing the strategy. And it's working, Chris. And as people continue to see the progress in Iraq because of the McCain surge strategy, I think they're going to be willing to support that strategy as it continues to reflect progress.

And if you're going to be running for president of the United States, it seems like it would be a good idea to have visited Iraq some time in the last 900 or so days. Senator Obama has not done that. He's not asked for direct meetings with General Petraeus, unfortunately.

He is somebody who has first said the Iranian revolutionary guard isn't a terrorist group, and now he's changed his views on that and several other foreign policy issues. It reflects an uncertainty in his judgment and perhaps even his knowledge.

But at the very least, he should go visit Iraq with Senator McCain. The two of them together, I think, could learn a lot or continue to learn a lot. Senator McCain has already been there, I think, over eight times since 2003.

WALLACE: Governor Kaine, I want you to obviously respond to that, but doesn't Obama have an experience problem? He keeps changing the parameters for these meetings with foreign adversaries, what constitutes conditions. And just this week he had to backtrack when he told a pro-Israel group that he supported keeping Jerusalem as the undivided capital of Israel and then had to, as I say, backtrack from that. Doesn't he have an issue there?

KAINE: Well, let me talk about the Jerusalem issue. He says he believes personally that Jerusalem should be undivided, but this is a matter of negotiation that's ongoing between Israel and Palestinian leaders right now, and he says he respects the process.

They're negotiating that. They're going to decide what the right framework is. He expressed a personal preference and a belief.

The issue of experience is fundamentally -- and Senator McCain's clip said it so well. It's about judgment. And this is a stark difference between these candidates.

Senator Obama said in '02 this war would be a big mistake. It's not about whether we win the war. It's about whether we were in the right war.

We need to win the war against terrorism. We have taken our eye off the ball in that fundamental fight in Afghanistan and elsewhere by the huge deployment of resources into Iraq. And the American public understands that now.

And so this is a clear differentiator between these campaigns. Do we continue to wage a quixotic war that we got into carelessly that takes our eye off the ball in terms of defeating terrorism, or do we focus our energies and strategy to defeating terrorism?

Senator McCain says very plainly, "I want to be in Iraq. We'll be there for a very long time."

Senator Obama says very differently, "No, we won't. We'll start to withdraw. We'll withdraw carefully, as carefully withdrawing as we carelessly went in, but we've got to refocus the effort and make it purely a war on terrorism," and that's what he'll do as president.

WALLACE: Governor Pawlenty?

PAWLENTY: Well, I think we agree on this. It is about judgment. But judgment is a derivative of a number of things, including experience and wisdom. Senator McCain has got actual national security and military experience.

And this isn't limited to a slip on Jerusalem in the case of Senator Obama. First he was going to meet with tyrants without precondition. Now he's modified that.

He was in favor of lifting the embargo against Cuba. Now he's modified his comments on that.

He first said the Iranian revolution guard wasn't a terrorist organization. Now he says maybe it is.

WALLACE: All right. I want to give Governor Kaine a quick rebuttal, and then I want to get to health care.

Go ahead.

KAINE: How does the experience help? How does Washington experience help when you then make blunder after blunder in the decisions you make?

We've seen Washington make blunder after blunder in this decision about to go to war in Iraq and in the course that they have pursued. And Senator McCain has said that we're going to keep pursuing that course.

We are not in a stay-the-course mode right now. We need fundamental change of this war effort. Senator McCain won't bring it. Obama will.

WALLACE: All right. I want to get to one last issue -- I know we're not going to solve that issue here today -- health care.

There are an estimated 47 million Americans who are still uninsured.

Governor Pawlenty, independent estimates are that the McCain plan would cover only seven million of those Americans.

PAWLENTY: Chris, there's three things we're after in terms of health care reform -- expanding access, improving quality and lowering cost. You have to do all three.

As to expanding access, Senator McCain's plan does that in a significant step. It doesn't solve all the problems, but it's a major step forward. But it does it by empowering individuals with tax credits, $5,000 a family, to allow them to make the choices in a marketplace.

Senator Obama sets up a whole new federal bureaucracy with a federal oversight and regulatory board of health care, a new national health care plan and benefit.

I think most people realize that the federalization or the government taking over the health care delivery system is not a wise idea as compared to Senator McCain's plan.

WALLACE: Governor Kaine, the Obama plan would cover more than two- thirds of that 47 million Americans, but it's a big government solution that Obama acknowledges, once it's up and running, would cost $65 billion a year.

KAINE: Senator Obama's plan, I think, is kind of the reasonable middle. There are those plans that were going to be purely top-down government solutions.

There were the plans, as Senator McCain's, that relies on the private marketplace. Private marketplace is tough. I mean, that's why 47 million are uninsured. Ask any self-employed individual or small business person who has to go into that marketplace to buy insurance and they're going to tell you it is extremely difficult to do so.

And so that is why a more active approach is necessary if we're going to improve quality and reduce cost and take a bite out of that 47 million, as Senator Obama says we need to on moral grounds. On productivity and competitiveness grounds we have to. We've got to be more active, and that's what his plan would do.

WALLACE: Governor Pawlenty?

PAWLENTY: Well, if you look at the three things I mentioned, expanding access is an important one. But if you have the federal government take over the health care system in whole or in part...

KAINE: It's not a federal government takeover. That's not the plan.

PAWLENTY: Well, it's certainly not a takeover in one step, but it moves toward a board that's going to have this oversight and regulatory power. It also then says the federal government's going to have a plan that's going to be the main plan for subsidizing access to people who can't afford insurance.

KAINE: It would be a federal government saying that they're not indifferent to this problem. It's not a federal government takeover. But it's active role in trying to solve it. Forty-seven million people -- you know, I love being governor.

Only one thing ever makes me feel ashamed -- citizens who pay taxes buy me and Tim and U.S. senators health insurance, and they can't pay for health insurance for their own families.

If the government can buy me insurance, we ought to be able to be active in trying to help solve this huge problem of access for 47 million largely working people.

PAWLENTY: We agree. It's just a different approach, Chris.

WALLACE: Well, it is a different approach, and we're going to obviously explore it more.

And I want to thank you both so much for coming in today. I think it's an interesting way to explore the differences. And I must say, as far as I'm concerned, you both did great in your "American Idol" audition. It's on to Hollywood.


PAWLENTY: Thank you.

KAINE: Thanks, Chris. Good to be with you.

WALLACE: Maybe we'll see you at the vice presidential debates this fall. Thanks again. Coming up, Hillary Clinton finally endorses Barack Obama. Did she do it right this time? Our Sunday regulars brings some answers to the table when we come back.



CLINTON: Today, as I suspend my campaign, I congratulate him on the victory he has won and the extraordinary race he has run. I endorse him and throw my full support behind him.


WALLACE: Well, that was Hillary Clinton saying Saturday what the Obama campaign had been looking for Tuesday night, that she is out of the race and fully supporting his candidacy.

And it's time now for our Sunday group -- Brit Hume, Washington managing editor of Fox News, and Fox News contributors Mara Liasson of National Public Radio, Bill Kristol of The Weekly Standard, and Juan Williams, also from National Public Radio.

Well, after the Tuesday spectacle, Brit, Senator Clinton was pressured in a pretty straightforward way by Democratic leaders to shut it down and get behind Obama. Did she pull it off properly yesterday?

HUME: Well, I think the event was about that, in part, making peace with the reality that indeed Obama is going to be the nominee.

It was a very unusual event, though, in a number of respects. First of all, it proved that nearly everybody in America apparently has a digital camera or a cell phone. I never saw so many raised. And in every photograph, every shot, you can see them.

The second thing is that when you endorse another candidate when the race is on, you usually go to one of their events and do it. In this case, of course, she held her own event with her own supporters to do it.

And you can make an argument, I suppose, that this was a more powerful way of her endorsing him for them. But I think at least as important was it was a further display of her strength as a candidate.

And I can not interpret that in any other way than she wants to say, "Senator Obama, I'm for you, but look at all these people I bring with me."

And I don't think that there's any way around the idea that she is in the hunt for the vice presidency, and that's a big part of what this was about.

WALLACE: Mara, when -- it's interesting, you know, because Brit talks about it was a Clinton crowd. When she talked about Obama, and I think we have some video of it, some people in the crowd -- not a lot, but some booed.

And that fellow was particularly demonstrative there. Does the split in the Democratic Party get patched up and, in the end, is it something that Clinton can do for Obama, or does Obama have to do it for himself?

LIASSON: Look, both. She has to make all the signals that she made yesterday, and make them over and over again. That's going to help a lot.

Obama has to reach out to voters that didn't necessarily reject him because they were for her. They just didn't want to vote for him, whether they were Hispanics, low-income whites, you know, older women. Whoever they were, they had a resistance to him that wasn't just because of their affection for Senator Clinton.

So I do think this can be patched up. I think the party is evenly divided, not deeply divided. It's not about issues or ideology. I mean, these guys agreed on almost everything. It was demographics that divided the party.

And yes, I think a lot of that -- the party will kind of come home and come together. I think he has problems with those groups as represented in a general election when they're independents.

But look. Senator Clinton ran a terrific campaign, especially at the end when she was kind of liberated from a lot of the constraints that her campaign had placed on her. She ran into an opponent who simply was better than her. And in a two-man race, one guy is going to lose.

I do think that one of the things she can do to bring this party together is to make it really clear that sexism is not the reason she lost, which some of her supporters say. She's never gone so far as to say that.

HUME: Actually, somebody just referred to it as a two-man race.

LIASSON: A two-person race.

She ran a great race. And to say that she didn't win because of some kind of gender bias diminishes her.

KRISTOL: Well, I'm upset because, you know, on Tuesday night Senator Clinton asked all of us to e-mail her at to advise her what to do. And I advised her to stay in the race, fight to the end, go to the convention.

The e-mail went through. It wasn't kicked back. And did she listen to me? No. I feel disrespected, really, by her. No. She did what she had to do. She endorsed Obama. She's not going to be the vice presidential nominee. I thought at one point it was possible, but the Obama people floated by Thursday the notion that, "Well, of course, if she were to be considered for the vice presidential slot, Bill Clinton would have to release the names of all of his donors to the library and the foundation," and he's not going to want to do that.

And even so, she wouldn't be guaranteed it. I think they've found a good way to signal to her she's not going to be the V.P. I imagine she might take herself out of consideration for that in a few weeks.

And Obama has pretty deftly, I think, cleared the field to pick the vice presidential running mate he wants.

WILLIAMS: Well, I think if you look at yesterday, I just thought, "Boy, what a moment," because Hillary Clinton, who had been running to the middle from the start of this contest, suddenly was running to the base.

And she was saying, "You know what? I'm a woman, and I'm proud to have been a woman in this race. I'm not making excuses for it. I'm not saying, 'Oh, don't worry about the fact that I'm a woman when it comes to being commander in chief.'"

She talked about, you know, those 18 million votes as cracking the glass ceiling for women in the country. And then she went on in this populous thing and, you know, brought in her husband, Bill Clinton, as not a negative, but as someone who she viewed as a role model in terms of what he'd accomplished for the country during the '90s.

I thought that was an upbeat, positive, can-do Hillary Clinton. And when she said that she embraced Barack Obama, I thought she did so with some vigor. You know, I thought it was all that people wanted in terms of bringing the party together. So I thought it was an impressive performance.

Brit says, you know, she should have gone to his event. I wonder if he shouldn't have come to her event. And it was a decision that he made not to be there with her yesterday.

WALLACE: It's probably better to keep them in separate rooms.

WILLIAMS: Well, but you know, I think ultimately what you have here is a situation where the party can come together. It's just a matter of, you know, she whooped him pretty good in these last few races. I think she won seven of the last 13.

HUME: Which does lead to this sense you have that there's something kind of incomplete about this whole process. She finished with a kick. He did not. She rallied this tremendous number of voters. She wants them to go for him, she says.

But if this is the end of her, this political season, and she's headed back to the Senate to her former role, is that going to be enough for all of them, who backed her with such enthusiasm, to turn to Obama? My sense is that that event did not help them to turn that page.

That event was a renewed reminder of her political strength, and their support and the intensity of their support, and I think there has to be some further gesture toward her...

LIASSON: She said she's going to campaign her heart out. I think there are going to be gestures and gestures and gestures.

WALLACE: And, Mara, the Obama camp believes that as you get into the general election and the differences on the issues become clear on the war, on the economy, on the kinds of judges they'd appoint to the Supreme Court, that a lot of the feeling, even of that fellow who was giving the thumbs down, is going to disappear.

LIASSON: Sure. Look, historical evidence is that the votes you get in the primary do not necessarily predict what you're going to do in the general.

Many Democrats are going to come home when, as you said, they look at the difference between Obama and McCain.

And in terms of gestures, look. Hillary is going to campaign her heart out for Obama. Obama is going to continue to lavish praise on her, as he has done in almost every single appearance.

But yes, they're going to come home to him. But he has problems. What the primary did is it exposed his problems with certain groups that are going to be very important in the general, not necessarily Democrats who are white working class or Democrats who are Hispanic, but independents who fall into those groups.

And he has a tremendous amount of work to do, even with Jews, who are among the most reliable voting block for the Democratic Party, although they've been more in play recently.

You know, he did, as one of our colleagues said, wheeze across the finish line. I mean, this wasn't a great end to the race for him. And now he's got a lot of work to do.

WALLACE: I want to go back to Clinton for the end of this discussion, Bill. Assuming that she doesn't end up on the national ticket, is this the fall of the house of Clinton in Democratic politics?

KRISTOL: Yes, I think so. I mean, I guess if Obama were to lose, she would be at the -- on November 5th, 2008 the frontrunner for 2012. But I just think people will want to turn the page.

We will have had 28 years of a Bush or a Clinton on a national ticket, from 1980 through 2004 -- well, I guess 24 years -- in seven straight elections, a Bush or a Clinton on the ticket, a Bush or a Clinton as president. And obviously, for the last 20 years -- that will be broken. There won't be a Bush or a Clinton on the ticket this time. And I think once that spell is broken, our long national nightmare is over. No, I don't mean that. I don't mean that. I want my White House Christmas invitation from President Bush. That was a joke. That was a joke.

WILLIAMS: But you Clinton haters can't stop. I mean, it's just...

KRISTOL: It's not hate. It's just I just think people will want to turn the page. Do you think she would be the nominee in 2012?

WILLIAMS: It's possible. Look. I think with Ted Kennedy in failing health, I think she is going to be the Democratic force in the Senate.

I think if she wants -- you know, she said Tuesday night, "What does Hillary want?" Well, if she wants to be attorney general, if she wants a Supreme Court nomination, she can have it. That's what would -- you know, if Obama makes some signals, acts respectfully, I think he can bring so many people along.

WALLACE: All right. We have to take a break here.

But coming up, the battle between John McCain and Barack Obama begins.

And how does Friday's tough economic news play out in the campaign? Some answers when we come back.


WALLACE: On this day in 1949, the FBI released a report naming Hollywood figures as Communists. The report helped fuel the anti- Communist sentiment in the U.S. in the late '40s and '50s.

Stay tuned for more from our panel and our power players of the week.



MCCAIN: Americans have seen me put aside partisan and personal interests to move this country forward. They haven't seen Senator Obama do the same.



OBAMA: There are many words to describe John McCain's attempt to pass off his embrace of George Bush's policies as bipartisan and new, but change is not one of them.


WALLACE: That was Senators McCain and Obama this week with a taste of what lies ahead over the next five months.

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

Before we get to the bad economic news and how that's going to impact the campaign, let's take a look at the latest electoral map that we get from our colleague Karl Rove based on public state polls.

It shows Obama leading McCain 235 electoral votes to 233, 270 needed for election. And you see those states in yellow. Those are the toss-up states.

Five months out, Brit, both from the map and also in terms of just the general race, how do you frame the election? What do you think the choice is for voters?

HUME: Well, it's way closer than you would expect. You would expect Obama, coming off this triumph and this extraordinarily impressive and appealing candidate with a party gravity all in his favor, to be well ahead of where he is now, though the polls will probably catch up to that.

I think this race is about Obama. It's really not about McCain. McCain is positioned as a well-known safe alternative for voters who, for whatever reason, decide not to vote for Barack Obama.

To me, it's all about Obama. It's all about Obama on a number of levels. One is, can America elect a black man? I think America can, but if that black man is perceived as radical in any way, that's a big danger sign.

And the thinness of his record and the questionable associations feed into what I think is an undercurrent of apprehension about him, which is McCain's best hope.

WALLACE: Mara, do you agree with that...

LIASSON: Yes, I do.

WALLACE: ... that this is about whether when people go into the voting booth in November -- whether they feel safe with Obama? If they do, they vote for him and he wins. If they don't, McCain wins.

LIASSON: Yes, I really do. I think that McCain -- I do think this is a referendum on Obama. On the other hand, I do think that McCain has to present himself as enough of a change candidate. He can't really compete with Obama on that.

But he has all of the pieces out there to be a reform Republican and to make the correct kind of break with Bush -- not necessarily a wholesale one, but -- and I think he hasn't done that yet, and I do think he has to do that, certainly coming out of the convention if he's going to even take advantage of whatever doubts there are out there about Obama.

KRISTOL: You know, the McCain campaign has been stumbling along, but he's only about three points behind Obama, which I think is pretty good for McCain.

I did my own little allocation of the states on the electoral map.

WALLACE: Forgive us, but we actually trust Karl Rove more than you.

KRISTOL: No, no, I took his -- I took his and supplemented it with informed judgments.

Here's an amazing fact. If you take the 2004 results, give McCain New Hampshire, which Kerry won, which I think is reasonable, give Obama New Mexico, Colorado and Iowa, which Bush won, in all of which now Obama is ahead, you end up -- leave everything else the same, which is quite possible, you end up with 269-269 result. That would be fun.

WALLACE: And we'd continue this right into the House of Representatives.

KRISTOL: House of Representatives, yes.

LIASSON: And Obama is the president.

KRISTOL: Then Obama is the president, presumably.

WALLACE: And HBO gets to make another movie.

WILLIAMS: Well, I think that it's -- I agree with what Mara and Brit said, that this is all about Barack Obama, and it's all about degree of risk and how comfortable voters are with the kind of change that they believe Barack Obama would bring.

But Barack Obama has to define what is the change. That's the challenge. And this week he's going off starting this tour of states, some states that are toss-up states that we saw on that map, and wants to focus on the economy.

And I think that's his big hope, is to say, "You know what? On domestic issues, I'm stronger. I care more. I'm in touch more with what's going on."

John McCain's hope, by contrast, is to say, "When it comes to dealing with international issues, specifically with terrorism, the safe bet is to stay with me. The safe bet is to stay with the party that has protected America, prevented any further attacks on the homeland," and I think that's his strength.

But, boy, I tell you, when you saw the contrast in the two presentations Tuesday night, I don't think there's any way you would say, "Oh, my gosh, one is vital, young, telegenic, that's Barack Obama. That's the guy with energy and a sense of the future."

And there's John McCain saying, "You know, but I've got this problem with Barack Obama," and looking faltering and stuttering and against that terrible backdrop. I just -- you know, there's no comparison.

WALLACE: All right. Let's talk about the economy, because the news on Friday was certainly striking, Brit.

I mean, you had this $10 spike in the price of a barrel of crude oil. You had the unemployment rate. There were some statistical issues, but it was up by a half a point, the highest in two decades. Stock market -- 400 points down.

If, and I repeat if, not necessarily that set of perfect trifecta, but if bad economic news continues, does McCain stand a chance?

HUME: He stands a chance because he is not the incumbent. But the candidate of the incumbent party is always affected badly by bad conditions in the country. And the economy is certainly not likely to be perceived as particularly good.

On the other hand, whatever happened to the recession? I thought we were in a recession. You don't hear that. It hasn't happened. It's kind of a miracle that it hasn't, given all the forces that were arrayed against the economy which continues to kind of poke along at a very slow pace, but remarkable nonetheless.

I would say that if this bad economic news continues, obviously, it helps Obama. McCain will need to outline a program that makes it appear that he will do something major about it.

You would think that gasoline prices could help McCain. It's helping the members of the Republican Party in the Congress where the Democrats are not for doing anything to increase our supply. But except for nuclear power, McCain really isn't either.

WALLACE: I was going to say, he's on the Democratic page on this issue.

HUME: I don't think that's an issue that works too well for him, although it may work for people down ballot.

WILLIAMS: Did you say gas should help McCain?

HUME: I'm saying that the issue of gasoline prices could help McCain because the public polls have changed on this issue, Juan.

People are for exploring for more oil. They're for more nuclear power. They're for exploring for oil off the coasts. The Democrats are all against this and Obama is, too.

WILLIAMS: Are you kidding me? We have two oil men in the White House right now and oil prices going up right now under Republican policy. That's going to help McCain.

HUME: John McCain is not one of those people who's in the White House right now.

LIASSON: You know, it's hard to see how a bad economy helps McCain in any way, shape or form. But he also hasn't come up with even just the raw material he needs to make -- to get into the debate.

He needs to have a real plan, a better plan than he does. I think it also matters who he picks as the vice president, if they're seen as competent in those areas where McCain has said very honestly that are not his main strengths.

I mean, he's a national security, foreign policy...

WALLACE: And that raises a really interesting question, Bill, because the fact is that McCain has had this time -- I mean, he has had four months since he locked up the nomination.

And for all the talk about the sickly green backdrop of the speech, and the fact that he didn't read a Teleprompter very well, I think the thing that surprised me the most is he didn't have a bold initiative on the economy or on energy to sit there and say -- you know, beyond just making fun of the change line, to say, "I represent change and I've got some specific new ideas."

KRISTOL: Well, there's more he could do, but he's locked himself in to certain positions which limit his flexibility.

For example, he can't become a huge advocate for drilling, which I agree with Brit would actually be popular. On taxes, he's already proposed a corporate tax cut, and therefore his ability to do something bolder with big tax reform is somewhat limited.

I think probably -- McCain is McCain, you know. If this is a commander in chief election, I think he has a good shot at winning. If it's an orator in chief election, he's going to lose.

Or to put it slightly differently, if it's a verdict on is the country in good shape, he's going to lose. If he can make it a choice election going forward at a time of war, I think he has a pretty good chance to win.

People could decide they've got a Democratic Congress, they're not going to have conservative policies over the next two to four years, much as I would like them, you know, no matter who's president, isn't it safer to have McCain as commander in chief.

WILLIAMS: Well, I think if you listen to this conversation, you think, "How can Barack Obama lose," and yet when you look at the electoral map, the electoral map is pretty much what the electoral map's always been.

And it looks like it favors the Republicans and at least forgives the sins of the past eight years.

WALLACE: All right. Got to go. Thank you, panel. See you next Sunday.

Up next, our Power Players of the Week.


WALLACE: It's become a tradition around here to sample some of the advice that graduates are getting right now at their commencements. The speakers range from a former president to the best-selling author to a baseball legend. And they are all Power Players of the Week.


CAL RIPKEN JR.: I truly believe that your life is ultimately measured not by how many consecutive games you play, or how much wealth you achieve, or how many times you grab the headlines, but rather by the quality of your character which ultimately defines you as a person.



GEORGE H.W. BUSH: As I cast around for a few catchy sayings that might etch their way into your memory, I came across this little tidbit of job advice that says don't be irreplaceable. If you can't be replaced, you can't be promoted. Now, think about that.



OBAMA: You can take your diploma, walk off this stage and chase only after the big house and the nice suits and the other things that our money culture says you should buy. But I hope you don't.

It's because you have an obligation to yourself, because our individual salvation depends on collective salvation.



J.K. ROWLING: If you choose to use your status and influence to raise your voice on behalf of those who have no voice, if you choose to identify not only with the powerful but with the powerless, if you retain the ability to imagine yourself into the lives of those who do not have your advantages, then it will not only be your proud families who celebrate your existence, but thousands and millions of people whose reality you have helped change.



JESSICA LANGE: I would encourage you with all my heart to just be present. Be present and open to the moment that is unfolding before you, because ultimately your life is made up of moments.



DAVID MCCULLOUGH: Make the love of learning central to your life. What a difference it can mean. If your experience is anything like my own, the books that will mean the most to you, books that will change your life, are still to come.



DICK CHENEY: I can't help being a little jealous of the graduates and cadets here today. After all, you'll still have a job eight months from now.


WALLACE: And we join the commencement speakers in wishing the graduates of the class of 2008 all the best, especially Remick (ph), who graduated from high school on Friday.

And that's it for today. Have a great week, and we'll see you next "Fox News Sunday."

For more visit the FOX News Sunday web page.

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