updated 1/23/2008 4:32:47 PM ET 2008-01-23T21:32:47

Guests: Lanny Davis, Peter Fenn, A.B. Stoddard, Charlie Gasparino

TUCKER CARLSON, HOST:  Former president Bill Clinton has baited Barack Obama for days and last night Obama bit, leading Senator Hillary Clinton for the most compelling debate of the season, maybe of the decade.  Here‘s a sample. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), ‘08 PRESIDENTIAL HOPEFUL:  There‘s a set of assertions made by Senator Clinton as well as her husband that are not factually accurate.  And, you know, I think that part of what the people are looking for right now is somebody who‘s going to solve problems and not resort to the same typical politics that we‘ve seen in Washington. 

(END VIDEO CLIP)

CARLSON:  And the down market politics continued after the debate.  Hillary Clinton opined that Obama came to last night‘s contest looking for a “fight,” quote, and Bill Clinton publicly repeated one of the half-truths that prompted Obama to respond in the first place. 

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER U.S. PRESIDENT:  He said President Reagan was the engine of innovation and did more—had a more lasting impact on America than I did.  And then the next day he said in the ‘90s the good ideas came out from the Republicans. 

(END VIDEO CLIP)

CARLSON:  So who, besides the Republicans, benefits from all the verbal ugliness?  We have last night‘s highlights, the day‘s aftershock, and analysis and defense of the Clinton strategy from Lanny Davis. 

That‘s coming up in just a moment. 

There appeared among the Democrats consensus on at least one issue, though, John McCain will be the Republican nominee.  It officially will not be Fred Thompson, whose much-heralded entrance into the race was followed by tepid campaigning and tepid support.  And this afternoon Fred Thompson quit the race for good. 

We‘ll analyze the effect of Thompson‘s pullout with the next debate, the Florida primary and the Super Tuesday all looming just ahead. 

And Charlie Gasparino will be along to help us make sense of the shaky financial markets worldwide and their effect on the American politics. 

We begin with the ongoing Obama/Clinton drama.  Joining me now is Hillary Clinton supporter and former White House counsel for President Clinton, Lanny Davis. 

Lanny, thanks for coming on. 

LANNY DAVIS, FMR. WH COUNSEL TO PRES. CLINTON:  Hi, Tucker. 

CARLSON:  I want to play what I thought was the least-noticed and yet maybe most remarkable line of last night, of the whole thing, more than two hours of this, Hillary Clinton at the very end of the debate explaining why she is a victim.  Watch this. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), ‘08 PRESIDENTIAL HOPEFUL:  We obviously still have problems of gender equality, you know, equal pay is not yet equal. 

OBAMA:  Right. 

CLINTON:  A woman makes 77 cents on the dollar and women of color make 67 cents.  So there is a big agenda waiting for the Democratic Party.  And we feel so passionately about this because we not only are running for office, but we each in our own way have lived it.  We have seen it.  We have understood the pain and the injustice that has come because of race, because of gender. 

(END VIDEO CLIP)

CARLSON:  “Each in our own way has lived it.”  It takes a lot of guts for a rich, privileged white lady who is one of the most powerful people in the world to claim that she is a victim of gender discrimination. 

Can you believe she said that? 

DAVIS:  Well, first of all, she‘s a role model for a lot of women who have experienced discrimination.  I remember Hillary when she was one of the few women at Yale Law School in an all-male fairly egotistical environment and as a woman she has had to struggle her way through both law firms as well as her career. 

CARLSON:  Wait, Lanny, Lanny, Lanny, I know you‘re trying.  But you just said she went to Yale Law School.  So that‘s almost a self-canceling sentence.  She‘s a victim of discrimination at Yale law school?  She‘s one of, you know, 100th of 1 percent of Americans, much less people who live in the rest of the world, who gets to go to Yale law school.  She hasn‘t driven her own car in almost 20 years and she‘s a victim of discrimination. 

I mean can‘t be both agree that‘s just BS? 

DAVIS:  The fact that we have a disagreement about being one of the few women at Yale Law School and actually not only surviving all those male egos, but doing very well there, I always appreciated, I think, most women watching your program know what I‘m talking about. 

But the big picture last night—maybe you don‘t, but I think most women do. 

CARLSON:  Well, OK.  What you‘re saying—look, let me just say, if Americans believe that Hillary Clinton, again, one of the most privileged people on planet Earth, is a victim, I don‘t know this country as well as I thought I did.  I mean maybe you can sell that.  Maybe you can‘t. 

DAVIS:  Victim‘s your word.  I think she talked about women of color earning 67 cents out of every dollar compared to black men and women who are white earning 74 cents or 73 cents out of every dollar.  Every woman watching this program knows that there isn‘t a level playing field as there isn‘t a level playing field for African-Americans.  I think it is an absolute miracle that the Democratic Party has two such strong candidates, one who is a woman, one who is an African-American. 

CARLSON:  Well, considering America is so sexist and racist as you‘ve just said, she‘s done pretty well.  I guess that is a miracle. 

DAVIS:  And so has Barack Obama.  I don‘t think we‘re sexist and racist.  I think there‘s a reality in the marketplace and that‘s a reality. 

CARLSON:  OK.  OK.  Well, that‘s what you‘re saying.  It‘s sexist. 

The mean white men are being mean again. 

DAVIS:  You use words I never use, Tucker. 

CARLSON:  Come on, that‘s what you‘re saying.  What are you saying?  What do you make?  I think Hillary Clinton is smart, I give her credit for that, I think she‘s quite smart.  That‘s why I was amazed by her line of attack last night that somehow Barack Obama is bad because he might have said something about a Republican, the kind of mindless partisanship that, frankly, most people disdain, hate, maybe, she‘s attacking him for saying something nice about Ronald Reagan?  I mean adults don‘t.  Adults don‘t talk that way. 

DAVIS:  Look, folks in your business use words like bad and attack.  I use words like disagree.  It‘s a fact that Barack Obama said that over the last 10 to 15 years, which is from Newt Gingrich to George Bush, that‘s 10 to 15 years, the Republican Party is, quote, “the party of ideas.” 

Now I disagree with Senator Obama on that, Senator Clinton and Bill Clinton disagree, and most Democrats disagree.  Why did Senator Obama take offense and then deny saying that is a fact?  He alleges that he‘s being misquoted. 

CARLSON:  No, but. 

DAVIS:  He‘s not being misquoted, we just disagree with that. 

CARLSON:  But wait a second, Lanny.  Lanny, OK.  But hold on.  The fundamental disagreement is not on the question whether he said it, it‘s on tape.  The question is whether. 

DAVIS:  But he actually denied saying it. 

CARLSON:  No.  No.  No.  No.  The question is what does it mean.  OK?  And Hillary Clinton got up there and demagogued in the dumbest possible way by saying, you know, “I just don‘t believe that hating poor people and being a bigot is a good thing.” 

I mean, obviously, Senator Obama disagrees.  Look, the point is she‘s attacking him for daring to say something, anything nice, about the opponent which she clearly sees as an enemy.  And I‘m submitting to you, that‘s such a small-minded attitude that maybe that‘s not the future of this country.  Maybe being bipartisan, open-minded is a good thing, don‘t you think? 

DAVIS:  Again, I‘m not a host of a television show, so I don‘t use words like demagogue.  I talk about facts.  Senator Obama said that Bill Clinton said something factually inaccurate.  And Tucker Carlson can‘t name me one example of a factually inaccurate statement that Bill Clinton made.  His comments about the record on the war are fact. 

CARLSON:  But why. 

DAVIS:  It is a fact that Senator Obama said “I don‘t know” in answer to the question, how would you have voted on the war after criticizing Hillary Clinton. 

CARLSON:  But Lanny, that‘s wrong.  That‘s wrong.  Hold on.  I‘m sorry.  Bill Clinton used the phrase “good ideas.”  And Barack Obama did not use that phrase.  So he did mischaracterize Obama. 

I‘m not here to defend Obama.  I‘m merely saying is it a sin. 

DAVIS:  Excuse me.  The exact quote was in the last—here‘s the exact quote because I memorized it for this program. 

CARLSON:  Right. 

DAVIS:  “In the last 10 to 15 years, it‘s fair to say that the Republican Party are the party of ideas.” 

CARLSON:  And Bill Clinton. 

DAVIS:  That includes—excuse me—that includes Newt Gingrich to George Bush. 

CARLSON:  Oh my god.  But he didn‘t say good ideas.  OK, look.

DAVIS:  .and then he compared unfavorably Bill Clinton to Ronald Reagan.  Those are facts that we disagree with.  Period. 

CARLSON:  This is—OK.  OK.  The point is, you guys are treating it like a sin that he said something nice about the other side. 

DAVIS:  I didn‘t use the word sin.  I said disagree. 

CARLSON:  OK.  All right.  I give up. 

Very, very, very quickly, Hillary Clinton gets up there and brags about voting to limit by federal power the rate at which people can lend money, credit companies. 

Why should I be told by the federal government what rates my loan should be at?  If I want to take out a loan at 35 percent, why shouldn‘t I be allowed to?  Why is the government of Hillary Clinton going to patronize me and tell me I shouldn‘t be able to have a high-interest loan if I don‘t want?  I don‘t quite understand that. 

DAVIS:  My friend libertarian Tucker Carlson is against usury laws that limit interest rates.  In the most remarkable moment of the night, with John Edwards and Hillary Clinton, absolutely astonished at Barack Obama saying, “I voted against the Bill because the interest set was too high.” 

CARLSON:  Well, who cares about it?  I don‘t care about what the candidates said. 

DAVIS:  So therefore we have no limitations interests at all. 

CARLSON:  I want to talk about the principle. 

DAVIS:  That was very interesting. 

CARLSON:  OK.  But it‘s not about who cares about what Obama said or Edwards. 

DAVIS:  The principle that is. 

CARLSON:  I‘m saying, why are you telling me what my loan rates ought to be?  It‘s none of my business. 

DAVIS:  Because usury laws have existed probably for 1,000 years. 

CARLSON:  Well, so is slavery, and it‘s wrong.  I mean so it doesn‘t matter. 

DAVIS:  And Tucker Carlson the libertarian doesn‘t want limitations on lenders on the amount of interest rates.  Most Americans disagree with Tucker Carlson but it‘s a free country. 

CARLSON:  All right.  I don‘t want to be treated like a child.  Maybe you‘re right, maybe most Americans do, in which case I‘m out of here, man. 

Thank you so much, Lanny, I appreciate it. 

DAVIS:  Thank you, Tucker.  Thank you. 

CARLSON:  Barack Obama and Hillary Clinton continued their brawl today.  But John Edwards remains above the fray.  After more than a year of bomb throwing, he now claims to be the grownup wing of the Democratic Party.  Will people notice?  Will people care? 

Plus Rudy Giuliani is banking on a win in Florida.  Right now it‘s a four-way battle and he appears to be losing ground.  Will a front-page “New York Times” story that accuses him of having political opponents arrested help his efforts?  Probably not.  But details ahead. 

(COMMERCIAL BREAK)

CARLSON:  Bill Clinton is on center stage on the campaign soaking up the attention and savaging his wife‘s main opponent Barack Obama.  Was it inevitable the former president would become the center of attention?  That‘s what he claims.  We‘ll analyze that claim.  Coming up. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  I have to say that, you know, I would have to, you know, investigate more, you know, Bill‘s dancing abilities, and you know, some of this other stuff before I accurately judged whether he was, in fact, a brother.  But. 

WOLF BLITZER, CNN ANCHOR:  Let Senator Clinton weigh in on that. 

CLINTON:  Well, I am sure that can be arranged. 

(END VIDEO CLIP)

CARLSON:  You went out to dinner last night, you missed a debate featuring an argument about whether or not Bill Clinton is black, whether or not Ronald Reagan changed the direction of the country, and whether or not a slumlord supports Barack Obama.  In other words, you missed some great television. 

Joining us now to review it the associate editor of “The Hill” A.B.

Stoddard and Democratic strategist Peter Fenn. 

Welcome to you both. 

All right.  So Tom Daschle comes out—he‘s, of course, a stand-in for Obama, a big supporter, former senator from South Dakota—over and over again, he says, we find the Clinton campaign has made an overt effort to distort Obama‘s record. 

Now I believe that‘s objectively true.  Why is that happening? 

Eugene Robinson has the most interesting smart piece in the “Washington Post,” in which he says this, he says, “The reason the Clintons despise Obama, Obama‘s candidacy not only threatens to obliterate the dream of the Clinton restoration, it also fundamentally calls into questions Bill Clinton‘s legacy by making it seem not really such a big deal.” 

Obama has set his sights on higher and implicit in this campaign promises—he promises to eclipse Clinton‘s accomplishment.  He doesn‘t just want to piece together 50-plus-one, he wants to forge a new post-partisan consensus that includes Republicans. 

Ooh, that‘s what this is about, isn‘t it? 

PETER FENN, DEMOCRATIC STRATEGIST:  Listen, you have seen nothing yet. 

CARLSON:  But that‘s why they hate him. 

FENN:  This is—let me tell you, this is patty cake.  The two Democrats going at it is patty cake compared to what you‘re going to see the Republicans go after either one of these folks on. 

CARLSON:  I disagree. 

FENN:  And I will tell you we sit here and build all this stuff up.  These are two people who basically have very few disagreements on the issues, Tucker.  They agree on most everything.  And you know.

CARLSON:  But that‘s why it‘s such a bitter rivalry. 

FENN:  No—look, it‘s a bitter rivalry because we‘re coming to February 25th where there are 22 states and nearly half the delegates being chosen.  The stakes are so high. 

CARLSON:  But it has nothing to do with. 

FENN:  And the only—now wait, wait.  The only way. 

CARLSON:  Bill Clinton didn‘t (INAUDIBLE). 

(CROSSTALK)

FENN:  No, no, no, he has plenty of—no, no, no, he‘s got plenty of ideas. 

CARLSON:  Oh come on. 

FENN:  Look, I mean, look, if you look—and this is what I think really ticked him off, you want to know?  Whose ideas in the past 15 years led to serious change in this country?  His as president.

CARLSON:  Oh give me a break. 

FENN:  So—but my point. 

CARLSON:  He inherited a stable country not at war for the first time in 50 years, with it, he did what?  Not a lot.  Let‘s be honest. 

FENN:  But (INAUDIBLE) the campaign.  This is what I‘m saying.  I don‘t think there‘s anything out of bounds or out of line here. 

CARLSON:  Well, I do.  I think there is something out of bounds. 

And Dick Morris, who I‘ve never quoted on TV, but it‘s just a smart piece that I. 

FENN:  Thinking of out of bonds. 

CARLSON:  I think this is out of bounds.  He said will Obama carry black voters?  Of course, he will.  He leads four to one among them now.  But by making that the central question, “Obama‘s South Carolina victory will be hailed as proof he won the African-American vote.  Such block voting will trigger the white-black backlash the Clintons need to win.  Once whites see blacks voting en masse for a black man, they will figure it‘s a racial game and line up for Hillary.  Already she carries voters by two to one.  The Clintons can well afford to lose South Carolina as long as the election is seen not as a bellwether of how the south will vote but as an indication of how African-Americans will vote.  It‘s a small price to pay for the racial polarization they need to win.” 

That‘s true.  That‘s why they‘re making him the black candidate. 

A.B. STODDARD, “THE HILL”:  Peter, as a Democrat, I would like to ask what self-respecting Democrat in the 2008 cycle is going to hedge away from the Obama candidacy towards Hillary because he is the black candidate. 

Has he said anything divisive?  Has he said anything anti-white?  Has he said anything to upset anybody?  And that‘s a question for Peter, but I want to get back to the larger point, which is about this playing right into the Republican hands.  My Republican friends are dancing in the streets today. 

FENN:  Of course they are. 

STODDARD:  And I think Obama has been given an incredible opening by the Clintons.  They are using cynical Clintonian tactics.  It is now a game on their terms and he must beat them at their own game. 

FENN:  Look, you‘re both going back and forth in this. 

STODDARD:  I don‘t know if he can.  Just wait.  No, no, no.  I‘m going to finish up on this. 

FENN:  Well, you asked me a question, too, A.B. 

STODDARD:  I‘m going to let you answer in a second. 

CARLSON:  She‘s in fire, Pete. 

FENN:  Yes.  Here we go. 

STODDARD:  I think the fact Ted Kennedy allowed his name to surface in a “Newsweek” piece that Jonathan Alter wrote this weekend about him calling Bill Clinton and saying stop it, I think - Tom Daschle, the former Senate majority leader‘s comments today, is evident that there is huge Clinton fatigue in the Democratic Party, and if Obama can correctly and effectively, and I doubt that he can, tap into that, if he can say we don‘t want this kind of White House, and the Republicans are dancing in the streets, he actually—he‘s probably going to win this.  I know it will be hard. 

CARLSON:  So what do you think of that point, Peter? 

FENN:  I think he. 

CARLSON:  What do you make of that point that if he wins South Carolina, it will be seen now, thanks to what‘s happened to him in the hands of the Clintons, it will be seen as a victory of a black man elected by a black constituency. 

FENN:  You know what I think of that? 

CARLSON:  Which I think is terrible. 

FENN:  I think it‘s crap.  I think that. 

CARLSON:  I hope you‘re right. 

FENN:  I think it‘s wrong.  And I don‘t think it is a cynical effort by anybody.  I think that if you go into that—if it was a cynical effort by one part of this party, one candidate to divide folks racially, it would come back to haunt them in November and it‘s a—and I agree with you. 

But here‘s my point, here‘s my very basic point on this.  And we talked about this months and months ago.  Once the African-American community saw Barack Obama up close and personal, once he won a few races, this—and I said it on the show in the spring, you know, it‘s very difficult for Hillary Clinton to win in a state which is 50 percent African-American. 

But does that mean that this is a racially polarized election?  It should not mean that. 

CARLSON:  Well, but do you honestly—be as sincere as you can be.  Do you believe—take Kennedy as A.B. just alluded to.  Ted Kennedy himself said to Clinton, don‘t inject race into this and blame them for injecting race in this, according to Jonathan Alter‘s piece in “Newsweek.” 

Do you think that that—the race have actually—they think they‘re going to win because the Latino vote, because the Latino vote, they believe, and I think this is absolutely true, is to some extent is anti-black. 

FENN:  Well, listen.  You have—you saw that a bit in Nevada.  There is no question.  My point on this, however, is people are going to vote how they are going to vote.  But—Ted Kennedy is right, where folks are concerned, where I spoke out against it.  I don‘t like the notion of Bill Clinton as attacker in chief.  I think he‘s better as supporter in chief.  I don‘t like the notion even though it was misconstrued, when he uses the word fairy tale to talk about the Iraq policy, it‘s very easy to say you‘re just talking about Barack Obama.  Big mistake. 

I mean the fact of the matter is that folks are playing with fire when they start throwing around any kind of racial innuendo. 

CARLSON:  Well, yes, because he‘s Islamic Manchurian candidate who may have been dealing cocaine. 

FENN:  No. 

CARLSON:  According to Hillary surrogates. 

FENN:  Come on.  I mean that‘s over the top. 

CARLSON:  They said that.  We‘ve got that tape. 

FENN:  That‘s over the top. 

CARLSON:  He certainly is over the top.  The Islamic Manchurian. 

FENN:  He said that he did this.  And you know something?  That‘s why I admire—no, no, that‘s why I admire Barack Obama.  He came right out, said it straight up what he did.  At least. 

CARLSON:  Right.  Well, they‘ve—all right. 

FENN:  No Clinton person. 

CARLSON:  We‘ll be right—yes, a Clinton person said that.  Bob Kerry said that.  We played the tape on this show. 

FENN:  I know.  I know. 

CARLSON:  Fred Thompson drops out of the race for the Republican nomination.  Who will he endorse and where will his supporters go? 

Plus Barack Obama picks up an endorsement from the biggest newspaper in South Carolina.  Polls show he‘s got a good shot of beating Hillary Clinton this weekend in the primary there.  Could that actually be a good thing for her?  You just heard our opinion. 

This is MSNBC.  We‘ll be right back. 

(COMMERCIAL BREAK)

CARLSON:  Want to get a closer look at Fred Thompson‘s campaign for the White House, you‘ll have to catch it on a rerun.  Thompson‘s act was slow to hit the stage, never really got the reviews he hoped it would.  Now it is being canceled, something that‘s happened to many of us. 

Now that Thompson‘s off the lot, which Republican stands to benefit most? 

Back again the associate editor of “The Hill” A.B. Stoddard and Democratic strategist Peter Fenn. 

A.B., you‘ve got to give Fred Thompson credit for brevity.  He got in late, short campaign, here‘s his dropped out statement. 

Quote, “Today I have withdrawn my candidacy for president.  I hope that my country and my party have benefited from our having made this effort.  Jeri,” his wife, “and I will always be grateful for the encouragement and friendship of so many wonderful people.” 

No explanation.  No ruminations.  Just “we‘re out.” 

STODDARD:  Well, I mean I like that.  No press avail, no cameras, no nothing. 

CARLSON:  Yes.  I like that, too. 

STODDARD:  Apparently sadly, I think his mother is not well.  So that‘s not good, but—and I think he‘s with her.  So maybe it‘s not appropriate.  It was very clear on Saturday night in his speech that this was the end and he was using a past tense and he was going to leave.  There‘s some confusion about whether or not he‘s going to endorse McCain now or later.  And I think that his—some advisor was quoted today anonymously saying he‘s probably not going to do it soon. 

And I think it‘s hard feelings with the Huckabee campaign that they don‘t want to come out right away because Mike Huckabee and Ed Rollins, his adviser, were, you know, always painting him as the stalking horse that we‘re trying—you know, to try to mess up South Carolina for Mike Huckabee.  I think there‘s hard feelings there.  But I imagine, you know, as I‘ve been predicting for six months or whatever it is that he will endorse McCain at some point. 

CARLSON:  Well, you‘d think, I mean, McCain and his wife Cindy went on Fred Thompson‘s honeymoon. 

STODDARD:  I saw that in your interview. 

CARLSON:  Yes. 

STODDARD:  And that‘s (INAUDIBLE). 

CARLSON:  So that suggests a certain level of closeness not typical (INAUDIBLE). 

FENN:  And of course, he did endorse him in 2000. 

STODDARD:  Yes, and once before. 

CARLSON:  Not only endorsed him, he traveled with him, he and Lindsey Graham and—anyway, but tell me this, if you were to look at his campaign on paper, like a lot of us did, certainly I did, I bought into it completely, he‘s a perfect candidate.  I mean from the outside looking in, as a Democrat looking over to the Republican side, were you surprised that he didn‘t get traction?  And why didn‘t he? 

FENN:  Well, you know, the rap on him all along was that he was lazy and didn‘t have fire in the belly.  Now if that‘s your rap. 

CARLSON:  Good for him. 

FENN:  .you don‘t want—well, I understand that.  You know, we‘ve loved reluctant presidents. 

CARLSON:  Yes. 

FENN:  Dwight Eisenhower, I think, was the last one.  But anyway, the problem he had was that his waiting to announce, waiting to announce, waiting to announce caused everybody to say what‘s going on?  And then by the time he got in, it was too late for him to influence the race in Iowa or New Hampshire, so he took the version of the Rudy late, late strategy, and based on South Carolina. 

CARLSON:  See, I think that his failure to get anywhere suggests the Republican Party has on some deep level changed for good.  I mean even though the Republican Party wants someone who emotes, who feels your pain, who understands where you are in life, who pretty much will do something for you.  Gone are Republicans who were kind of content to be left alone, it seems to me.  I think I‘m the last. 

STODDARD:  Well, I mean, I think smart Republicans realize the party is really crippled and in serious jeopardy of losing the White House and that the party needs to find someone to go up against either the Clinton machine or a post-partisan sort of transitional figure like Barack Obama. 

I mean, you know, all the polls, all the indicators, all the issues, all the money, all of the turnout, everything says Democrat take the White House in November.  So if you are a smart Republican, you‘re going to be begging for a change, some kind of different candidate. 

FENN:  You know—and first, you‘re thinking of the Republicans is for a whole year they‘ve been dissatisfied with their candidates and they‘re always looking for the person on the white horse.  And at one point it was Thompson and that failed.  And first it was going to be Giuliani, and then Giuliani tanks.  So, you know, they‘re faced now, actually, and this is why I think that, you know, the McCain surge, is they‘re back to kind of what they know. 

CARLSON:  Yes.  But what they know is Fred Thompson, the candidate who pledges not to bother you.  You know?  But they don‘t want that.  I want the—the zen message is zen candidacy. 

FENN:  The guy was going to sleep until noon. 

CARLSON:  That‘s exactly right.  Reagan didn‘t work 12-hour days and he won the Cold War.  I don‘t know. 

FENN:  (INAUDIBLE) 

CARLSON:  A new report accuses Rudy Giuliani of using the police to punish his political enemies.  We‘ll have details. 

Plus John Edwards makes a bold prediction about the Republican field.  He says John McCain will win the nomination.  Everyone else on the stage last night appeared to agree.  Wishful thinking?  Or is it honest analysis? 

You‘re watching MSNBC. 

(COMMERCIAL BREAK)

(NEWS BREAK)

CARLSON:  Rudy Giuliani‘s presidential campaign is going better than, say, Fred Thompson‘s, as of 2:30 this afternoon, but not that much better, really.  Having spent the last 50 days in Florida preaching tax cuts and neo-conservative foreign policy, Giuliani saw his image under attack once again on the front page of his hometown paper, the “New York Times.”   In 1997, the paper says, the former mayor reportedly had an angry phone caller to his radio show, who then told a tale of woe about traffic sting operation to the “Daily News,” arrested by city cops on a 13-year-old traffic warrant. 

So just what size does the miracle have to be for Giuliani to get the Republican nomination?  Here again, the associate editor of “The Hill,” A.B. Stoddard and Democratic strategist Peter Fenn. 

Alexandra, you grew up in New York City, as I remember.

STODDARD:  Things are done a little differently there. 

CARLSON:  This is—I ripped it out this morning.  I read this bleary eyed and I thought, I better read this later just to make sure I got it right.  It claims in 1987, a guy, James Chilase (ph), a chauffeur, calls in and says, my street in the Bronx, they have rigged the lights so cops are giving people lots of tickets.  The mayor doesn‘t respond.  So he brings this information to the “Daily News.” 

That day, the paper comes out; the police officers show up on his door step.  Quote, what are you going to do,” he said, “arrest me?”  They did.  They threw handcuffs on him, brought him downtown on a 13-year-old traffic violation.  That‘s unbelievable.  He was later awarded 290,000 dollars by the city for that.  That‘s such an abuse of power.  I don‘t really know what—if that‘s true—

STODDARD:  That‘s what I said when I read it was, if that‘s true, because I wonder why the “New York Times”—I know everyone has to push their Rudy stories out this week in case he‘s toast next week.  But why did the “New York Times” just report this?  Why?  He‘s their man?  Why now? 

CARLSON:  If you‘re running—I think he would be a tremendous president of Pakistan.  I mean that.  I think Rudy Giuliani is a very talented guy, an extremely tough person, great at doing things.  He saved New York City.  He was a hero, I believe, on 9/11.  He‘s a really impressive guy in a lot of ways.  But that‘s authoritarian behavior. 

FENN:  This is Rudy Giuliani as Tony Soprano.  Further in that article

the poor guy that lost to him in a college class president race was dogged by him for years.  Listen, I think to know Rudy Giuliani, as New Yorkers do, is not to love him.  Clearly the polls now show him way behind in his own state.  The “New York Times” clearly—Mayor Koch, all these folks cannot believe this guy could actually become president of the United States. 

CARLSON:  But if he loses Florida, it‘s not happening, correct? 

FENN:  Tucker, five primaries, which he did contest, which he did spend millions of dollars in—I totaled this up today, put a little piece in the blog on “The Hill,” total for all five states, he got 18.9 percent.  That‘s less than four percent per state where he‘s running.  His numbers have tanked.  The press—

CARLSON:  He was beaten by Ron Paul. 

FENN:  Let me tell you something—exactly, and the press is giving him a free ride.  Rudy wasn‘t even here.  He campaigned in New Hampshire more than any other candidate, and he got—

STODDARD:  There‘s good news for him, which is that Fred Thompson dropped out today, but also that Mike Huckabee is actually not contesting Florida and is not there.  So it‘s actually a three-man race now. 

CARLSON:  I want to get your take on the prognosticators we saw last night on stage in Florida, the three Democratic front-runners, maybe the only candidates left in the Democratic race, except Kucinich and Gravel.  Here are their guesses for who the Republican nominee is going to be. 

Watch. 

(BEGIN VIDEO CLIP)

EDWARDS:  It‘s becoming increasingly likely that John McCain is going to be the Republican candidate.  Now, here is what we have to be thinking about; who will be tough enough and strong enough, and who can compete against John McCain in every place in America?  And I think I can go everywhere and compete head to head with John McCain. 

CLINTON:  I believe, of any one of us, I am better positioned and better able to take on John McCain or any Republican when it comes to issues about protecting and defending our country and promoting our interests in the world.  And if it is, indeed, the classic Republican campaign, I‘ve been there.  I‘ve done that. 

OBAMA:  I believe that the way we are going to take on somebody like a John McCain on national security is not that we‘re sort of—we‘ve been sort of like John McCain but not completely.  We voted for the war, but we had reservations.  I think it‘s going to be somebody who can serve a strong contrast and say we‘ve got to overcome the politics of fear in this country. 

(END VIDEO CLIP)

CARLSON:  Is that, A.B., a rhetorical device or do they believe McCain is going to be the nominee? 

STODDARD:  I think, actually, all three of them genuinely believe they are the strongest against McCain for different reasons.  Edwards is running is as the southern son of a mill worker and he believes he can compete—

CARLSON:  Slow down, he‘s the son of a mill worker? 

STODDARD:  He finds it very hard, and he did last night—although obviously he did so great in the debate—to—on this question where he wants to describe how he‘s more electable in certain pockets of the country than that woman and that black man.  But he does believe he‘s more electable and he‘s the best the Democrats can put up against John McCain. 

Barack Obama clearly thinks he can attract more moderates and post-partisans and be an agent of change better than John McCain.  Hillary Clinton thinks she‘s going to borrow her national security bona fides from her husband and knock John McCain out of his boots. 

CARLSON:  John McCain is not the nominee, right now.  Do they really believe he‘s going to be?  Why are they saying that?

(CROSS TALK)

FENN:  But look, think about this a minute.  Mitt Romney is not out of this thing.  This guy is going to write millions of dollars in checks to buy media time in these 21 states that the Republicans are in.  You know, unless—I don‘t think John McCain is going to run away with this in Florida.  This is a four-person game.  Who knows what‘s going to happen in Florida. 

STODDARD:  We don‘t either, but the Democrats do. 

FENN:  We wish.  But here is my central point here; this has been such

a fluid election all the way along, I still think it‘s fluid.  I think—

the one thing I think is probably not fluid, I don‘t think John Edwards is

going to get the nomination.  But,

CARLSON:  Going out on a limb.

FENN:  Really.  But Edwards—I think people shouldn‘t count out Mitt Romney. 

CARLSON:  Speaking of Mitt Romney; apparently a tape of Mitt Romney on the trail—I believe this is from yesterday—I actually haven‘t seen it.  I heard about it, though.  This is Mitt Romney campaigning.  Take a look. 

(BEGIN VIDEO CLIP)

MITT ROMNEY ®, PRESIDENTIAL CANDIDATE:  Who has got your camera, though?  Who let the dogs out?  Hoo, hoo.   

UNIDENTIFIED FEMALE:  All right. 

ROMNEY:  Hey, buddy, how are you doing?  What‘s happening?  Some bling-bling here, too. 

(END VIDEO CLIP)

CARLSON:  Got some bling-bling. 

FENN:  He‘s really a brother, isn‘t he, that boy? 

STODDARD:  Did he tell that crowd about getting the 1962 Rambler for his 60th birthday from his five sons. 

(CROSS TALK)

CARLSON:  See, everybody, obviously, in the press despises Mitt Romney. 

STODDARD:  No. 

CARLSON:  No, I‘m not saying you.  I‘m just saying, everybody -- 

STODDARD:  I love when he—

CARLSON:  You must be the only person who does.  Every single person I know who works in the press just hates Mitt Romney, almost as an aesthetic matter, like ew.  I‘m starting to like him now, because that‘s so dorky. 

STODDARD:  He‘s very dorky. 

CARLSON:  That may be the dorkiest things I‘ve ever heard. 

STODDARD:  His sons say that‘s the whole thing.  He says gee willikers and stuff.  He‘s really dorky and very cute. 

CARLSON:  Peter, I want to be totally honest with you.  I don‘t know if we still have the sound bite, but you remember the slum lord moment last night?  This is a two-part question.  First, Hillary—

FENN:  And the Wal-Mart moment. 

CARLSON:  Right, the Wal-Mart moment.  But Hillary Clinton accused Barack Obama of receiving support from a slum lord in Chicago.  Wouldn‘t he be better known as a provider of affordable housing?  What‘s the definition of a slum lord?  Why is that different from—

FENN:  The guy was convicted, was he not? 

CARLSON:  Of being a slum lord. 

FENN:  Of whatever he was doing to make his money as a slum lord. 

CARLSON:  Do we really want to run around—look, we can debate that. 

Take a look at this—

FENN:  There are builders of affordable housing and there are slum lords, who never fix up their property and kick people out. 

CARLSON:  Take a look at this, and look at Hillary Clinton as she levels that charge.  I‘m interested in your reaction.  Watch. 

(BEGIN VIDEO CLIP)

OBAMA:  What I said was that Ronald Reagan was a transformative political figure because he was able to get Democrats to vote against their economic interests to form a majority to push through their agenda, an agenda that I objected to.  Because while I was working on those streets watching those folks see their jobs shipped over seas, you were a corporate lawyer sitting on the board of Wal-Mart.  I was fighting these fights.  I was fighting these fights. 

CLINTON:  I was fighting against these ideas when you were practicing law and representing your contributor, Rezko, in his slum landlord business in inner city Chicago. 

(END VIDEO CLIP)

CARLSON:  Is she appealing, do you think, when she said that? 

FENN:  I think both of them were unappealing, to be perfectly honest with you.  You know, I think she was coming back at him.  It‘s the na na, na na stuff.  I don‘t think it‘s helpful.  I don‘t like it.  I think there‘s plenty of things to discuss.  

CARLSON:  I have a lot of theories.  Attacked her for sitting on the board of Wal-Mart, which employs thousands of people—Wal-mart is evil now?  OK, but here‘s what I don‘t get, she doesn‘t need to attack him.  She‘s the front-runner.  All things being equal, she wins.  She doesn‘t need to behave that way.  I don‘t think it helps her.  I think most Democrats agree.  Why is she getting mad like that?   

STODDARD:  The theory is that she was not speaking to South Carolinians last night.  The room was largely in support of Barack Obama, if you listened to the boos and the applause.  She was playing to the February 5th states.  And she has friends there, and she‘s going to do well there, and she has broad support there.  And she is employing a strategy to pick at Obama, to get him off his message, to flummox him and make him talk about amendments.  And he fell right into her trap last night and went on and on about my health care plan, those credit card companies. 

It was just exactly what she wanted, which is he is JV.  He‘s not a heavy lifter.  He doesn‘t have the experience.  When the going gets rough, he‘s going to spin out and not know what he‘s doing.  The whole thing with voting present in the Chicago legislature—Illinois legislature, it worked. 

CARLSON:  I think she can do that without—I think she hurts herself, not that I‘m trying to help her, when she does that. 

FENN:  I think both of them hurt themselves in that exchange. 

CARLSON:  I agree with that.  I think she hurt herself more, just my view.  Thank you both.  I do.  Peter, A.B., very smart.  Thanks for coming on. 

Washington is in full crisis management at the moment, trying to head off a recession in the rest of the country.  The DOW closed down nearly 130 points today and stocks are plunging around the world.  Could we already be in a recession?  We‘ll ask our CNBC expert Charlie Gasparino next. 

Plus, there is more economic news to report today, the economy of Britney Spears.  Calculate what you think the Britney business is worth.  Get a pen and paper ready.  Stay tuned. 

(COMMERCIAL BREAK)

CARLSON:  The R word is no longer just a whisper on Wall Street.  With the market riding a turbulent wave all day today and closing down 120 points, the question remains, is a recession coming or is it already here?  Joining me now is the author of “King of the Club, Richard Grasso and the Survival of the New York Stock Exchange,” CNBC‘s Charlie Gasparino.  Thanks for coming on. 

CHARLIE GASPARINO, CNBC ANCHOR:  Any time. 

CARLSON:  Are we in a recession?  Does it matter if we define it that way? 

GASPARINO:  There‘s some technical definition of a recession in terms of GDP growth, or lack of growth in GDP, and there‘s some ruling body that says it‘s a recession.  But the market really does believe we‘re in a recession.  And who cares, in a sense?  Yes, we‘re going to have a slow down in economic growth.  There‘s no doubt. 

The real question, when does Wall Street—when does the financial system repair itself?  That‘s what you were seeing today.  You were seeing incredible indigestion in the financial system, real worries about bad loans on the books of all these banks, whether it‘s spreading broadly throughout the world, and real problems with the sort of credit situation in the U.S., and also a lack of confidence—and, you know, I can‘t underscore this more—in the Federal Reserve, in Ben Bernanke.  That 75 basis points cut, a lot of people on the street said, what is he doing; why did it take so long; it sounds like desperation. 

So yes, the market came back today.  By the way, the market was off 400 points early in the morning.  I was up really early today, so I forgot.  But it was off big-time early on.  It came back, obviously.  It was only down 120 points, but, you know, there are wild swings in the markets today.  That‘s because you have a couple of things going on, de-leveraging, people selling stuff, the stuff they can sell.  Number two, a lack of confidence in the people that run the economy, namely Ben Bernanke, the Fed chief. 

CARLSON:  When the candidates—and all of them are doing it—claim they have a plan to stimulate the economy, to pull us out of recession, stave one off, are they telling the truth?  Let me put it another way, can you think of an example in the last 50 years where action by Congress in the short-term staved off recession? 

GASPARINO:  No, none of this short-term stuff.  What did Reagan have going for him back in 1980?  Well, he had a Federal Reserve chief, Paul Volcker, who was mad about stamping out inflation.  He raised interest rates dramatically.  Then, he also had—on the fiscal side, he had his own sort of fiscal stimulus plan, which was a dramatic reduction in taxes, especially on the upper end.  It freed up the sort of—what do they call those?  The animal instincts of the markets, where not just the markets expand but businesses expanded. 

I think you need the Fed working with fiscal policy.  This is in a sense kind of a cheap way out of this.  The Fed cuts rates 75 basis points, probably should have a lot early.  Number two, you get George Bush dropping little leaflets of dollar bills to people in the short-term, giving everybody a 700 dollar tax rebate, which is going to be spent pretty quickly and it‘s not going to have much long-term affect. 

I really think what you need here is a long-term plan, a plan where businesses can say—let me tell you something, Tucker, I talked to small business owners a lot today.  What they are saying is they want some sort of certainty about taxes.  Will the Bush tax cuts be extended?  Is there any way to deal with capital gains.  They are worried about a Hillary Clinton or Barack Obama—more so Hillary.  I think most people think Hillary is going to win now—coming in there and raising taxes on the rich.  That is not a good thing. 

CARLSON:  Someone has got to pay for this universal health care stuff they are talking.  That‘s a whole other conversation. 

GASPARINO:  I‘ll be back for that tomorrow. 

CARLSON:  I hope you will come back for that.  Thanks a lot, Charlie. 

Poor Dr. Phil.  He was just trying to help out a struggling starlet. 

But his meeting with Britney Spears is causing him nothing but trouble.  Her parents are mad.  Fellow mental health professionals say he‘s exploiting her.  New he‘s incurred the wrath of the one person in the entertainment world you don‘t want to cross.  You know who that is?  Oprah Winfrey.  We‘ll be right back. 

(COMMERCIAL BREAK)

CARLSON:  Welcome back.  Joining us now to make sense of this crazy world we live in is the vice president for prime time programming here at MSNBC, Bill Wolff. 

BILL WOLFF, MSNBC VICE PRESIDENT:  If that‘s what I‘m here to do, we‘re in grave, grave trouble, Tucker.  It was Oscar day today, you know, and, of course, the big economy day.  Here is the story that ties them both.  Once again overlooked by Academy of Motion Picture Arts and Sciences was one Britney Spears, who was, in truth, neither artful, nor scientific in most of her motion pictures last year. 

However, Britney made a headline in the “Washington Post” today courtesy of the respected Mr. Cohen.  Mr. Cohen praised Britney for her role in the economy, which was originally enunciated as the Britney Industrial Complex by “Portfolio Magazine.”  By Portfolio‘s estimate, Britney sells enough magazines, records and Internet searches to amount to 110 to 120 million dollars of economy every year, Tucker.  And that‘s just the transactions we can keep track of, if you know what I mean. 

CARLSON:  That‘s amazing.  And I do know what you mean, Bill. 

WOLFF:  I figured you would. 

CARLSON:  She‘s an economic power house.  She‘s up there with Cameron and Burkina Faso, if not edging them out.  

WOLFF:  I would say she‘s edging them out.  We laugh and laugh about Britney, Britney, Britney.  But who leads the world in Google searches year after year after year after year?  It‘s Britney Spears, Tucker.  Fear Britney.  She has much, much power. 

CARLSON:  That‘s unbelievable.  I think Hillary is going to win with statistics like that. 

WOLFF:  You ignore my counsel at your own peril.  Now, among those on the very edge of the outskirts of the periphery of the Britney Industrial Complex is, of course, Dr. Phil McGraw, the tough loving Texan TV psychologist, who tried selflessly to offer his services to the troubled former starlet. 

Well, most shameless grabs for publicity go unpunished but not his.  The “National Inquirer,” with it‘s probably better than 50 percent accuracy rate, reports that Dr. Phil‘s TV patron, none other than Oprah Winfrey, is furious with her mignon.  According to an insider, according to the “National Inquirer,” quote, Oprah is furious.  She expected Phil to apologizes before the situation got out of hand.  Instead, he used the spotlight to tout his struggling talk show.  Oprah thinks he has completely lost his sense of right and wrong, end quote. 

If Phil loses his sense of right and wrong, what does he got?  He‘s got the moustache.  I‘ll give him that.  But after that, it‘s all about the sense of right and wrong. 

CARLSON:  I love that.  The key word being lost, implying prior possession. 

WOLFF:  It‘s true.  You are a stickler for details.  Finally, I have your international news roundup.  World markets have reacted badly to the perceived slippage in the U.S. economy, but the coconut smashing market is booming. 

Dateline India; that is Mohammed Zakir (ph).  He set about cracking

200 coconuts in rapid succession with his elbow.  Already the world record

holder with 72 cracked coconuts, Tucker, in just one minute, Zakir‘s story

ends happily here as well, as he cracked all 200 coconuts—there he goes

in just over three minutes. 

Now, the natural question is; what could fill someone with enough molten rage to inspire such a violent display, especially against defenseless coconuts?  There are unconfirmed reports tonight, Tucker, that Zakir staked his hopes way back in March on the Fred Thompson campaign.  Not taking it well. 

CARLSON:  He is not alone in that, Bill.  There are many people here inside the beltway who made the same mistake.  I‘m one of them.  Of course I didn‘t sign up.  I‘ve got a day job.  But I did think Fred Thompson was going to do slightly better than he did, especially when he came out and said in response to the question from the Associated Press, what is your favorite possession and answered, quote, my trophy wife.  I thought every Howard Stern fan in America would be on his side. 

WOLFF:  They also asked him for his guilty pleasure.  He said, none of my pleasures are guilty.  I salute a man who lives his life like that.  Fred, we hardly knew you, but appreciated your participation.  You filled our airwaves for many months, before, during and now after your fledgling and now past candidacy for the president of the United States. 

CARLSON:  I‘m a fan.  Bill Wolff, thanks a lot, Bill. 

WOLFF:  You got it. 

CARLSON:  That does it for us.  Thanks for watching.  We‘ll be back here tomorrow night.  Join us then.  Up next, “HARDBALL” with Chris.  Have a great night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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