updated 3/11/2008 11:52:06 AM ET 2008-03-11T15:52:06

Guests: Jamie Rubin, Mort Zuckerman, Karen Hunter

TUCKER CARLSON, HOST:  Busted.  New York Eliot Spitzer, who made his political career as a very aggressive, hard-charging, crime-fighting state attorney general, is entangled tonight in a prostitution ring.  At this point, it‘s still unclear whether or not Mr. Spitzer will resign from the governor‘s office but it‘s hard for some to imagine his viability surviving this bombshell, which is tantamount to Eliot Ness confessing to bootlegging whiskey. 

Welcome to the show. 

Spitzer will reportedly not be charged as part of the investigation into this international prostitution ring but he could not escape the embarrassment of his secret dalliances. Identified as papers as “Client 9,” it turns out that Governor Spitzer paid thousands of dollars to a call girl identified only as “Kristen” and their tryst reportedly occurred at Washington‘s Mayflower Hotel among other places.  Court papers revealed communications and payments by this “Client 9” in the days around and including Valentine Day this year. 

This afternoon, Spitzer made a brief statement on the matter. 

(BEGIN VIDEO CLIP)

GOV. ELIOT SPITZER (D), NEW YORK:  I‘ve disappointed and failed to live up to the standard I expected of myself. 

(END VIDEO CLIP)

CARLSON:  In a moment, CNBC Charlie Gasparino will join us.  He has covered Governor Spitzer for a long time for a little context.  Later, we‘ll talk to Mort Zuckerman and Karen Hunter, New Yorkers both. 

This .Eliot Spitzer news bumped otherwise lead news—worthy news from the Democratic campaign.   But Barack Obama and Hillary Clinton, their battle rages on as Clinton continue to push the idea of Obama as her vice president.  Obama himself responded today. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), ‘08 PRESIDENTIAL HOPEFUL:  But I don‘t understand, if I‘m not, how is it that you think I should be such a great vice president? 

(END VIDEO CLIP)

CARLSON:  Obama did raise legitimate questions but questions—point rather, questions did arise about Mrs. Clinton‘s claim of foreign policy expertise.  Her assertion that she helped forge peace in Northern Ireland was described as, quote, “a wee bit silly,” by the Nobel Prize Peace winner who did forge peace in Northern Ireland. 

Later in the show, Clinton foreign policy advisor Jamie Rubin discusses his candidate‘s bona fides. 

We begin tonight with the New York Governor Eliot Spitzer story, his involvement in a multi-million dollar prostitution ring, not as an organizer, but apparently, as a client. 

Joining us now, the author of “King of the Clubs,” CNBC‘s on-air editor Charlie Gasparino. 

Charlie, does this shock you having covered this man for a long time? 

CHARLES GASPARINO, CNBC:  You know what shocks me?  That you kept a straight face when you mentioned that he was doing all this during Valentine‘s Day.  That‘s what really shocks me. 

CARLSON:  Well, it‘s one of those details that‘s kind of hard to pass up, frankly, if you‘re write a script about it. 

GASPARINO:  Yes, I agree.  You know, one of the things about Eliot Spitzer that always struck me was his zealotry.  He was—he never saw black and white when he went after people.  When he went after Dick Grasso, he saw a target.  He saw a guy that took way too much money and had to be evil.  He would—it would be a no holds-bar prosecution against Dick Grasso. 

By the way, when he went after Dick Grasso, he just tried—he didn‘t try to prove that he violated the state law that said guys that run nonprofits have to be paid in a reasonable way, he went after his personal life.  He dredged up dirt about whether he was sleeping with his secretary, whether he had some sort of—a child out of wedlock.  I mean it was really nasty, crazy stuff. 

Those types of zealots always—I always say, in my journals and career, those are the type of people that get in trouble like this.  It‘s a zealotry that you see out of those Baptist ministers, out of the Jimmy Swaggarts.  There‘s no gray.  There‘s only black and white.  And for some reason, those people always fall into this trap. 

CARLSON:  Well, see, here‘s my question.  I agree with you.  I think that Elot Spitzer‘s a frightening character.  I have always wondered why his public sins which took place right in front of us. 

GASPARINO:  Right. 

CARLSON:  .on page one of the “New York Times” went almost without comment and now we are upset that he went to a hooker where he was, you know, threatening decent people with prison for his own political advertisement. 

GASPARINO:  Here‘s the thing.  The business press which mainly covered Eliot Spitzer.  You got to realize he got into office in 1998.  He was a very—you know, he was—“The New York Times” basically said between him and his opponent that—he was running against, Dennis Vacco, they were two flawed candidates, you know.  He just survived a scandal where there were some allegations on whether he got money from his father or not improperly and he denied when he actually did.  I mean he came into office with a black mark, a black stain on his record.  And then he slowly built it back through the business press by doing these Wall Street prosecutions. 

The New York state attorney general‘s office never did that.  The business press fell down on the job.  They didn‘t look under the hood.  They didn‘t kick the tires.  They didn‘t what you should do.  Not everybody.  I tried to do it.  There were a few other reporters that tried to get at who Eliot Spitzer was.  And you really didn‘t see this sort of overreached.  A lot of people didn‘t believe that he overreached when he went after Dick Grasso and said he was guilty of all these things. 

When he went after Hank Greenberg, even before Hank Greenberg was prosecuted on civil fraud, Eliot Spitzer went on another station, on primetime, and basically said he is guilty of criminal fraud.  It‘s almost unheard of that that happens.  This was Hank Greenberg, the former chairman of AIG.  It forced him to resign at some point. 

CARLSON:  Well, I always wonder that.  I mean I ran into Spitzer one night in a restaurant and I said to him point blank, I really disapprove of what you do.  I think you‘re a serial abuser of power, running around throwing these people in jail. 

GASPARINO:  Right. 

CARLSON:  And he said to me. 

GASPARINO:  Trying to. 

CARLSON:  Exactly.  He said—almost quoting him. 

GASPARINO:  Right. 

CARLSON:  I never throw people in jail.  I only threaten to.  And I always wonder, what was his record?  Did anybody—how many convictions did he have? 

GASPARINO:  Well, he did some good things on Wall Street.  He—I wrote my first book on him, “Blood on the Street,” about he went after Wall Street abuse in regards to research and analysts work where the analysts were getting paid the high (INAUDIBLE).  That was pretty good.  But his record after that was very mixed.  He went—he tried to prosecute one guy named Ted Sihpol, a mutual fund, a broker for mutual funds, he lost.  OK? 

He went after Grasso, still case is on appeal.  He never really made

his case against Grasso, against Hank Greenberg, same thing, you know?  He

the case is still - there is—he hasn‘t won it, many of the cases. 

What he‘s done is threatened people and pushed them into submission.  That‘s what he‘s really doing and he‘s good at using the threat of criminal prosecution to get these guys to bend. 

Actually got most of the Wall Street firms have been coming to them and saying listen, you know, there is a chance I might indict you, no Wall Street firm has ever withstood a criminal indictment.  They go out of business.  And that‘s how he got these guys to bend. 

And also by delving into people‘s personal lives.  I can tell you, the stuff he‘s being accused of here is exactly the stuff he would dredge up against one of his targets and Dick Grasso, the former head of the New York Stock Exchange, for example, I mean, he went after Grasso, prosecuted him for making too much money as the head of an alleged nonprofit. 

CARLSON:  Right. 

GASPARINO:  Right?  But think of it.  He—what does Dick Grasso‘s alleged liaison with his secretary, which by the way there was scant evidence of that, or was what the fact. 

CARLSON:  And he literally went after Grasso for. 

GASPARINO:  His prosecutor, and it‘s in my book.  It‘s in the “King of the Club.”  His prosecutor basically put the secretary on this witness stand and asked her, “Will you ever in the apartment alone with Dick Grasso,” point blank. 

Then he went after Grasso, same prosecutor, a guy names Avi Schick, asked Grasso the question about an alleged love child.  These are two. 

CARLSON:  He‘s disgusting. 

GASPARINO:  It‘s horrible.  And you know, it‘s the type of stuff that you expect, not from a New York state attorney general, not from the governor of New York state, but you know, by some sort of rebel rousing guy from maybe out of Louisiana.  You know, you think of it.  It‘s the sleaziest. 

CARLSON:  Oh I would absolutely expect it in this state.  I would absolutely expect it in the state.  I think. 

GASPARINO:  But - what‘s happening to him right now is exactly what he used to go after people for. 

CARLSON:  You know, I‘m a little startled to hear that. 

GASPARINO:  And the irony, the hypocrisy. 

CARLSON:  Well, it is, because my first response when I heard this story, sitting in the newsroom, you know, five hours ago and someone tells me the story, my first response was I feel sorry for Eliot Spitzer.  I don‘t like the guy, disapprove everything he‘s done, but I always feel sorry for the man who‘s humiliated in public.  You made me feel a lot less sorry for him. 

GASPARINO:  Well, you know, that‘s the problem.  The—it was—I‘m, you know, I‘m apathetic when it comes to prostitution.  It‘s kind of a victimless crime in many ways.  There is a big argument.  I got of a lot of e-mails on the other side. 

CARLSON:  Right. 

GASPARINO:  But if you—the real crime is the hypocrisy.  How he would have used use this exact example against one of his targets and drove them into the ground. 

CARLSON:  All right.  Well, you‘ve convinced me. 

GASPARINO:  OK. 

CARLSON:  I‘m now officially rooting for his demise. 

Charlie Gasparino, thank you very much. 

GASPARINO:  Any time. 

CARLSON:  Appreciate that. 

He rode a no-nonsense platform all the way to the New York governor‘s office. What is next for Eliot Spitzer?  Can his career survive the scandal?  Will it survive this show?  We‘ll tell you. 

And has Hillary Clinton gone too far in her battle of Barack Obama? 

Some argue her latest assault could hand Republican a victory in November. 

Well, you‘re watching MSNBC. 

ANNOUNCER:  TUCKER is brought to you by. 

(COMMERCIAL BREAK)

CARLSON:  It was a political bombshell.  New York Governor Eliot Spitzer implicated in a high-priced prostitution ring.  Is this the end of his political career?  Will he make it to the end of this hour?  Updates in a minute. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, NBC‘S “SATURDAY NIGHT LIVE”)

UNIDENTIFIED MALE:  It‘s 3:00 a.m.  Across our country, kids are sound asleep.  But somewhere in the nation‘s capital, a phone is ringing.  Your vote will decide who answers that call. 

AMY POEHLER, SATURDAY NIGHT LIVE:  Hello? 

UNIDENTIFIED FEMALE:  Senator Clinton, I have President Obama on the line. 

POEHLER:  I‘ll take it. 

FRED ARMISEN, SATURDAY NIGHT LIVE:  Hillary, I‘m sorry to call this late again, but I need your help. 

POEHLER:  Mr. President, what can I do? 

ARMISEN:  The CIA just confirmed that Iran has completed a nuclear device.  It looks like the Russians, the North Koreans and Hugo Chavez have been helping them. 

POEHLER:  I was afraid of that.  When did this start? 

ARMISEN:  Apparently the day I was sworn in.  Those mother (censored by network).  Those (censored by network).  I trusted them.  I gave them my complete, total trust and they (censored by network) lied to me. 

POEHLER:  Mr. President. 

ARMISEN:  Oh my god.  I am so (censored by network).  What do I do, Hillary?  What do I do? 

(END VIDEO CLIP)

CARLSON:  Genius. 

Senator Hillary Clinton says her rival is not ready to be president.  She says Barack Obama hasn‘t passed the commander in chief yet, and he‘s not yet prepared to answer the White House phone in a crisis, especially in the middle of the night.  She also claims years of foreign policy experience including helping to bring peace to Northern Ireland. 

Asked about that claim, the former first minister of Northern Ireland and Nobel Prize Peace winner calls Hillary Clinton‘s claims, quote, “a wee bit silly.” 

Who is right?  Who‘s got the experience? 

Joining us now foreign policy adviser to the Clinton campaign and former assistant secretary of state Jamie Rubin. 

Jamie, thanks for coming on. 

JAMIE RUBIN, FMR. ASST. SECRETARY OF STATE, CLINTON FOREIGN POLICY

ADVISOR:  Nice to be with you, Tucker. 

CARLSON:  So this is kind of a damning quote.  This is from “The Daily Telegraph” in London.  Their standards are lower than ours but I think this quote is real. 

Hillary Clinton had direct role in bringing peace to Northern Ireland, and is a, quote, “wee bit silly” for exaggerating the part she played, according to Lord Trimble of Lisnagarvey, the Nobel Peace Prize winner and former first minister of the province, quote, “I don‘t know there was much she did apart from accompanying Bill Clinton going around, he said. 

Her recent statements about being deeply involved were the sort of thing people put in their canvassing leaflets during elections.  She visited when things were happening, saw what was going on, she can certainly say it was part of her experience.  I don‘t want to rain on the thing for her, but being a cheerleader for something is different from being a principal player. 

Ouch!

RUBIN:  Ouch is right.  I think that probably says more about David Trimble than it does about Hillary Clinton.  So let me read something for you. 

CARLSON:  Dueling quote. 

RUBIN:  This is John Hume, founder of the—SDLP and architect of the Good Friday agreement.  The only person to win the Nobel Peace Prize, the Gandhi Price and the Martin Luther King prize. 

“I am quite surprised that anyone would suggest that Hillary Clinton did not perform important work as first lady in the area of foreign policy.  I can state from firsthand experience that she played a positive role for over a decade in helping to bring peace to Northern Ireland.  She visited Northern Ireland, met with very many people and gave decisive support to the peace process.” 

Let me read that one again.  “She gave decisive support to the peace process.  There is no doubt that the people in Northern Ireland think very positively of Hillary Clinton‘s support for our peace possible during her visits to Northern Ireland and her meetings with so many people.  In private she made countless calls and contacts, speaking to leaders and opinion makers on all sides urging them to keep moving forward.” 

CARLSON:  To which I say prove it.  Where are the documents?  Every single act short of going to the men‘s room in the White House is documented.  There are documents that will support those claims.  They are in the archives.  Why can we see them? 

RUBIN:  Well, I‘m not part of the entire Clinton campaign. 

CARLSON:  I know.  It‘s a good question, though. 

RUBIN:  Hold on. 

CARLSON:  You have to admit. 

RUBIN:  Hold on.  Campaign apparatus.  But I understand that she‘s happy to have those documents released, being involved in some oral interviews today for my time in the Clinton administration, with the official history project, I know how slow these things work.  So they—she has said she‘d like to see them released. 

But listen, this is a Nobel Peace Prize winner, John Hume, someone who‘s respected all over the world and it‘s obvious to me that David Trimble perhaps has a favorite in the race or doesn‘t like women. 

CARLSON:  Wait, let‘s.

RUBIN:  .playing a role in any of this.  I don‘t know. 

CARLSON:  Right.  He probably hates women.  No, you‘re absolutely right.  Now that‘s a good point.  Like everyone who has a problem with Hillary Clinton, he‘s a sexist. 

RUBIN:  No.  I happen to know David Trimble and I know he‘s a very unusual guy. 

CARLSON:  OK.  But you‘re. 

RUBIN:  And I‘m not saying that everybody who disagrees with Hillary is a sexist.  But I am allowed to know from fist hand experience that there are people who don‘t want to give women proper credit. 

CARLSON:  There are. 

RUBIN:  .for things.  And he is one of those people. 

CARLSON:  There are.  I don‘t know Mr. Hume or Mr. Trimble. 

RUBIN:  I do. 

CARLSON:  I will say this.  You are making a remarkable claim.  You are claiming that someone who was not elected, who was not appointed, did not through Senate confirmation, who was entirely unaccountable and whose records we still don‘t have was making America‘s foreign policy and moreover doing it in secret. 

RUBIN:  Well, you know. 

CARLSON:  During the Clinton administration. 

RUBIN:  .that would be what I call a little bit of hyperbole, Tucker, seriously, I‘m going to... 

CARLSON:  Who‘s the hyperbolical?  And yours just saying she brought peace between the Catholics and Protestants. 

RUBIN:  I didn‘t say that. 

CARLSON:  OK. 

RUBIN:  And please listen carefully. 

CARLSON:  OK. 

RUBIN:  What I said is she helped.  She brought decisive support.  She did what President Clinton who was elected by the people of the United States wanted her do. 

CARLSON:  Right. 

RUBIN:  She helped bring peace to Northern Ireland through all the steps that she took.  That‘s what the president of the United States wanted.  And one of the reasons I happen to know a lot about this is that as spokesman of the State Department, the most memorable thing I know about the Northern Ireland peace process is that we in the State Department had nothing to do with it.  It was all done by the White House and George Mitchell. 

And as it happens a week ago I was at a dinner with George Mitchell and asked him about this.  And he said pretty much the same thing.  I don‘t understand why people are questioning this.  I had a lot of experience with Hillary doing things that were helpful to me. 

He—she‘s not claiming to be George Mitchell.  She‘s not saying she negotiated the peace process. 

CARLSON:  Look, I‘m willing to believe anything. 

RUBIN:  She‘s merely saying that she was helpful.  She experienced some of the things that go on in foreign policy in a way that very few other people have.  I was with her on a trip to Beijing—please let me finish because this is important—and I watched her manage a genuine international crisis.  U.S./China relations are very important tasks. 

CARLSON:  Over the women‘s conference? 

RUBIN:  You know—well, you think it‘s funny. 

CARLSON:  I do.  I think it‘s. 

RUBIN:  But actually whether she would go to the women‘s conference was an important issue in our government. 

CARLSON:  But does it rise to the level of crisis?  I mean it‘s not missiles in Cuba, it‘s a women‘s conference. 

RUBIN:  But I didn‘t—nobody says it‘s the missiles of Cuba.  But U.S./China relations are extremely important, Tucker. 

CARLSON:  Right. 

RUBIN:  They have a billion people there and how things go between the United States and China matters. 

CARLSON:  Right. 

RUBIN:  She threaded the needle.  She was able to do two things.  And she. 

CARLSON:  But hold up.  You‘ve already told me that she didn‘t make the decision to go.  I said—when you said this last time, I said, did she make a unilateral decision to go?  Was she the decision maker?  Was she the person, in a moment of crisis, whether to decide, yay or nay?  And you conceded no. 

RUBIN:  Of course not.  The president decided. 

CARLSON:  OK. 

RUBIN:  .to sent her.  But the question was how she would perform when she got there.  With the whole world watching, how will she going to thread the needle between keeping our engagement policy with China. 

CARLSON:  Right. 

RUBIN:  .going while promoting in a dramatic way women‘s rights and human rights.  That was hard. 

CARLSON:  OK. 

RUBIN:  I watched it done.  I watched her speech. 

CARLSON:  I will—we‘re out of time.  But let me just say, I will. 

RUBIN:  And she did it really well. 

CARLSON:  I will concede that I bet Hillary Clinton was a good ambassador and a good diplomat.  I‘m just saying I‘m not sure it‘s the same thing as a decision maker.  But. 

RUBIN:  But it‘s—what it‘s saying is. 

CARLSON:  OK. 

RUBIN:  .that she‘s better prepared than any of these other people who‘ve never even operated in the (INAUDIBLE). 

CARLSON:  Of course, she‘s better prepared than Barack Obama.  I‘m not

you know, I‘m arguing that.  All right. 

RUBIN:  Well, thank you for saying that at least. 

CARLSON:  Well, it doesn‘t say what—the guy‘s been in the Senate for 20 minutes. 

Jamie, thank you very much.  Appreciate it. 

CARLSON:  Thank you.  Nice to see you. 

CARLSON:  Hillary Clinton floats the idea of a dream ticket with Barack Obama.  There‘s one catch, though.  In this scenario the frontrunner plays second fiddle to the senator from New York. 

And the Obama camp accuses Hillary Clinton of using deceptive tactics to pull off a win over Obama.  How far is too far when the Democratic nomination hangs in the balance? 

This is MSNBC. 

(COMMERCIAL BREAK)

(MARKET REPORT)

(BEGIN VIDEO CLIP

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE:  You‘ve got to make a choice.  A lot of people wish they didn‘t have to.  I had people say, I wish I vote for both of you.  Well, that might be possible some day. 

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES:  She wins the traditional rural areas that we lost when President Reagan was president.  If you put those two things together, you would have an almost unstoppable force. 

(END VIDEO CLIP)

CARLSON:  Let‘s get this straight.  Barack Obama is dangerously, frighteningly inexperience, and yet, at the same time, he is suddenly experienced and appealing enough for Hillary to put aside their differences and entertain the thought of having him be her VP.  Is she serious or is this more Clintonian spin?  Today‘s “New York Daily News” aptly referred to latest attempt by the Clinton campaign to dominate the campaign narrative as, quote, Hil‘s Chutzpah.

Just imagine for a second what the Clintons would do if Barack Obama, trailing in pledged delegates and in number of states and in the popular vote, floated the idea of Clinton being his vice president.  Probably wouldn‘t stand for it. 

Joining us now is the editor and chief of “US News and World Report,” the chairman and publisher of the “New York Daily News,” Mort Zuckerman, as well as distinguished lecturer at Hunter College, and the head of Karen Hunter Publishing, a joint venture with Simon & Schuster, Karen Hunter.  Welcome back. 

Mort, your paper I thought put it really well.  The sub-head under the wood was something to the effect of Hillary tries to sell a house she doesn‘t own. 

MORT ZUCKERMAN, “US NEWS AND WORLD REPORT”:  Well, you know, she is not exactly in the position to offer the vice presidency.  You also probably know it is good politics for her, which is what motivates this.  The fact is that Obama will carry with him a number of constituencies that might otherwise stay at home or certainly not go out there and campaign, the youth vote, the African-American vote.  And I think this is good politics. 

In another way, it suggests that she is the natural candidate for the presidency and he for vice presidency.  He has not, I might add, said that he wouldn‘t accept it, because as the saying goes, nobody wants to be vice president until they are asked.  So I do think that this is always a possibility, and, frankly, would probably be the strongest Democratic ticket, I suspect. 

CARLSON:  Definitely.  I agree with that. 

ZUCKERMAN:  That‘s the politics of it.  The problems she is going to have—she‘s going to have to persuade a lot of people to make her the presidential nominee.  And that‘s still a long step away for her. 

CARLSON:  It is just stunningly brazen, Karen.  I just want to repeat the same idea in another way.  This is Tom Daschle, the former senator form South Dakota, on “Meet The Press” summing it up.  Watch this. 

(BEGIN VIDEO CLIP)

TOM DASCHLE, FORMER SENATOR:  It‘s really a rare occurrence, maybe the first time in history, that the person who is running number two would offer the person who is running number one the number two position. 

(END VIDEO CLIP)

CARLSON:  I don‘t know what to say. 

KAREN HUNTER, KAREN HUNTER PUBLISHING:  Desperation. 

CARLSON:  Really?  You don‘t think it‘s smarter than that?  You don‘t think it‘s more evil than that? 

HUNTER:  It is more evil and I think I appreciate you for saying that because it is more evil.  But it is really desperation.  She knows she doesn‘t have a snowball‘s chance in hell of actually winning this nomination.  It‘s the only way to float that out there, maybe get a few voters who aren‘t educated or who aren‘t smart enough to see through this and go say well, if I vote for Hillary, I am going to get both of them.  I really like Barack Obama, but she is right.  He is really not that experienced, as if that‘s really an issue. 

They are not even putting two and two together. 

CARLSON:  I disagree.  I think not only does she have a good chance of winning it, I think she is the favorite to win it.  Anybody who would do anything this divorced from reality and do it with a smile, relaxed way, is capable of waging the total war necessary to—

HUNTER:  But is that the person we want to lead the country? 

(CROSS TALK)

HUNTER:  Give me a break.

CARLSON:  I‘m saying as a political matter, she‘s well situated. 

ZUCKERMAN:  Absolutely, this is just normal politics.  With all due respect, I don‘t think that this is anything—

HUNTER:  That‘s the point of this campaign that Barack Obama is waging.  We don‘t want politics as usual.

ZUCKERMAN:  He has not always waged the politics that he describes.  Let‘s be candid.  When his particular foreign policy adviser says that he might be changing his position on Iraq, you get into real problems compared to what he has said.  This is not unusual.  I do think this is actually just a political move and not a bad one on her part or on her husband‘s part.  So this is not something we should be surprised at. 

HUNTER:  Does it speak to desperation though? 

ZUCKERMAN:  I don‘t think it is desperation.  I don‘t think it is desperation at all.  I mean, I agree with Tucker.  She does have a reasonable chance to get it.  She may not be the number one candidate, but she will argue, as you know they have, that she‘s the number one candidate in the state where the Democrats typically carry an election. 

HUNTER:  I will go on record—

(CROSS TALK) 

CARLSON:  Not just that, also the states that start with N, New Jersey and New York.  That‘s key somehow. 

HUNTER:  I will go on record.  I will go on record.  This ticket will not happen.  So everyone out there—

CARLSON:  Good.  Well, that is probably good news for John McCain.  Here is something that caught my eye this morning.  So Hillary Clinton and Barack Obama are both running ostensibly as the anti-Bush.  We have had this reign of error the liberals are so exercised about.  Here‘s the “New York Times‘” description of Hillary Clinton‘s view of loyalty, and tell me who this reminds you of.  I‘m quoting, “Mrs. Clinton showed a tendency in her campaign towards an insular management style, relying on a coterie of aides who have worked for her for years, her aides and associates said.  Her choice of lieutenants and her insistence on staying with them, even when friends urged her to shake things up, was blamed by some associates for the campaign‘s woes.  Again and again, the senator was portrayed as a manger who valued loyalty and familiarity over experience and expertise.”

You have done a great job, Brownie.  Is that a hint enough?  Who does it sound like?

ZUCKERMAN:  No, absolutely.  I think if you have to measure executive ability on the basis of the way each one managed this campaign, Obama clearly outshines Hillary Clinton and by a good margin.  He ran a brilliant campaign.  She blew a campaign lead that she should have been able to maintain.  There is absolutely—a lot of that was due to sheer political miscalculation, which is really astonishing because her husband, after all, had the reputation of the best political manager of the generation. 

HUNTER:  We can‘t have it both ways.  She can‘t be this brilliant politics who can‘t seem to manage her own campaign, who can‘t seem to manage her own finances, who has loan herself five million dollars, and didn‘t plan ahead beyond Super Tuesday. 

CARLSON:  As her husband proved—and we give him more credit than he deserves as a manager, as a president.  I believe he‘s a brilliant campaigner and fantastic tactician.  But the Clinton White House was just filled with people yelling at each other at 3:00 in the morning.  That‘s exactly what her campaign apparently is.  I think you can be a great politician and a lousy manager.

HUNTER:  It may have been filled with people yelling at each other, but this kind of mismanagement I don‘t want in the White House.  I think you wouldn‘t want them in the White House either. 

CARLSON:  I think that‘s fair to say, Karen.  I think you are on to something.  You‘ve seen the subtext of my remarks.  Yes you have.  I want to—perception.  I would not be for that.  Isn‘t this—do you think, Mort, at the end of all this, we will have redefined in the public mind what the Clinton presidency was?  Will the Clintons have been redefined for good? 

ZUCKERMAN:  No, I mean, look, I think the Clinton presidency under Bill Clinton was what it was.  The real question is: did the country want to have the Clintons back in the White House.  Bill Clinton really, when he left office, was hugely unpopular, not popular.  The country did not want him back in White House.  I still believe they don‘t want him back in the White House.  It‘s one of the big handicaps in her campaign. 

It doesn‘t mean they don‘t want her back in the White House but they don‘t want the two of them back in the White House.  That‘s a real problem for them. 

Nevertheless, it always gets down to who the finalists are.  The finalists are Obama and Hillary and we‘re going to see how it plays out.  The fact is, she is still a very formidable candidate.  We will see who wins.  It is not over yet by a good margin. 

CARLSON:  Karen, when you hear people—you think back and remember hearing people say, very glibly, that Bill Clinton was our first black president; what do you think of that now? 

HUNTER:  I didn‘t think anything of it then.  I definitely don‘t—I think it‘s an insult.  I think even Hillary making thing whole big thing about Barack being her vice president and Bill saying that would be a team that couldn‘t be beaten, that‘s also very arrogant.  I think it slaps in the face of what we saw in South Carolina. 

CARLSON:  Could you mention anything more patronizing than that? 

HUNTER:  No, I couldn‘t.  That‘s the point I‘m making.  This is very insidious and it‘s  very clever.  I hope that people are smart enough to see through it for what it really is. 

CARLSON:  Don‘t hold your breath for the last part.  Mort, at some point, don‘t you think that Florida and Michigan have to have delegates seated?

ZUCKERMAN:  Yes, do I.  I do think the Democrats are going to have to address that issue. 

CARLSON:  Is there a fair way to do it? 

ZUCKERMAN:  In Florida, bear in mind, the Democrats in Florida did not want to have the primary when it was slated to happen.  It was forced on them by the Republican dominated legislature and a Republican governor.  I can understand their views, because, in fact, it meant the Florida votes—the Democratic votes are not being counted in this nomination procedure, and I think that‘s very bad for the Democrats and very bad for the concept of what democracy is about. 

It was forced on them and it was a political deal that they forced upon the Democrats. 

HUNTER:  But it was forced upon them with the notion that they wanted to matter in this election. 

ZUCKERMAN:  Who is they? 

HUNTER:  They wanted to matter in this election.  They wanted to matter in this election, so they moved it up so they could have a voice.  And, low and behold, we have an historic campaign here where people in April are going to have a voice.  People in May will have a voice.  They blew an opportunity to actually have a voice by not following the rules.  Whose fault is that? 

ZUCKERMAN:  That is not the Democrats‘ fault.  That‘s the Republicans‘ fault. 

CARLSON:  Regardless, though, the Obama campaign is in a position where it may have to argue against having revote.  They can‘t make that argument. 

HUNTER:  They can‘t make that argument.  It speaks to everything Mort was saying.  It flies in the face of everything that we call ourselves as a democracy.  The reality is, they knew going in that these were the rules.  I had a friend in Florida who didn‘t vote because she said, my vote is not going to count.  Her father is 80 years old.  Of course, they were going to go out and vote, that they had there vote counted.

A lot of people whose vote—who went out to vote and—you know—

ZUCKERMAN:  Perfect argument for revote. 

HUNTER:  What are rules for?

CARLSON:  Thank you.

HUNTER:  Thank you.

CARLSON:  Truly.  Stocks fell today for the fifth straight day.  The housing market gets bleaker every day.  So forget 3:00 a.m., forget experience could this election be about the economy? 

In today‘s edition of pseudo-celebrity, where are they now, we will check in on your favorite faux-hawk, former “American Idol” contestant, Sanjaya.  Where is he now?  We know.  We‘ll be right back.

(COMMERCIAL BREAK)

CARLSON:  Welcome back.  For more than a year we in the press told you that this presidential election would be about Iraq.  One word, we said, Iraq.  We are reassessing at this point.  Stocks saw another triple digit loss today.  Home sales remain dismal and home foreclosures have hit record levels.  It is looking like one word, the economy. 

Joining us now, the editor in chief of “US News and World Report,” and chairman and publisher of the “New York Daily News,” Mort Zuckerman.  Mort, I assume you agree. 

ZUCKERMAN:  Absolutely.  And if you think the economy is bad now, wait for what it will be over the next six months to a year.  It is going to dominate the election in my judgment, particularly the point you mentioned in your intro, housing prices.  That affects everybody; 69 percent of American families have their own homes, and those—the values and prices of homes have been dropping.  They dropped nine percent a year over year, the first time in over 40 years, I might add.  This past year, they‘re going to drop another 10 to 12 percent.  Everybody will lose on it. 

CARLSON:  Judging from at least my own neighborhood, and I‘m sort of interested in following housing prices, houses were ludicrously over-valued.  Normal people could not buy houses without coming—some sort of over-extended credit scheme.  Shouldn‘t they readjust to some extent? 

ZUCKERMAN:  Without question.  We had the biggest housing bubble we have had in the history of this country between the year 2000 and the year 2007.  So this bubble had to burst.  The fact is, it did burst.  That does not escape—let people escape from the fact that the value of their major asset is now going down, instead of up. 

I don‘t know if you saw the statistic; nine million people now have mortgages that equal or exceed the value of their homes.  By the end of this year, it will be 15 million people.  A lot of people who thought they had an equity which is 2/3 of their total household equity, the home value.  It‘s the biggest asset in the American household.  Those prices are going down dramatically. 

They are going to feel poorer.  They are going to blame somebody and it is going to be, in my judgment, the incumbents. 

CARLSON:  I think you are probably right.  That‘s when they start walking away from the property.  The “New York Times” had an interesting piece today that—this weekend, that I think informed people of what they didn‘t know, which is the Fed, the Federal Government and the Federal Reserve, has really one lever, interest rates. 

ZUCKERMAN:  Right.  It doesn‘t—they cannot deal with the kind of capital losses that both the banks are facing, the financial institutions are facing, and the housing people are face. 

CARLSON:  What can the federal—when the new president is sworn in in January, what can he or she plausibly claim to do? 

ZUCKERMAN:  Well, if we have to wait a year for anything to happen—bear in mind, they would lowered interest rates and they packed a fiscal stimulus bill.  In my judgment, it will have a minor effect on the economy.  Half of the fiscal stimulus is generally saved.  The other half is insignificant compared to the overall losses of housing, which is going to approach four trillion dollars. 

So we are looking at a catastrophic loss of values.  The only thing that we can do is—people like Alan Blinder, the former vice chairman of the Federal Reserve, Larry Summer, the former treasury secretary, have both recommended—what you do is you want to make sure there is some way to prevent all these foreclosed homes from being dumped on the market.  You have to find a way to help people stay in homes rather than foreclosing them, and the banks then throw them on the markets, which will break the housing market to even lower levels than what is going to happen anyhow, because the bursting of the bubble. 

This would be a disaster for this country and for millions of people in country. 

CARLSON:  I mean, we—in one minute give me—

ZUCKERMAN:  Federal government is going to have to do what it did during the Depression.  They are going to have to provide the banks with government bonds in lieu of those mortgages.  The banks should pay something for that.  Then they will be able to—the people that own—occupy these homes will be able to service their mortgages at much lower interest rates, so that they will not be forced, because of the debt service cost, to allow these homes to be foreclosed and then have them tossed on the market. 

They have to find a way to allow people to stay in their homes on a basis they can afford, so that these homes are not foreclosed and thrown on the market.  Millions of homes will be involved in this. 

CARLSON:  There are a lot of speculators who are in trouble, people who are flipping houses, people trying to get rich quick.  We should not bail them out with tax dollar. 

ZUCKERMAN:  They‘re the ones who shouldn‘t be bailed out.  Not the speculators, not the people who lied on their application forms, in terms of what they said their income was or their net worth was.  In fact, a huge number of people did, in fact, exaggerate their net worth.  Those people should not be helped. 

The people who should be helped are the people who are just hard working people, who have been paying their home mortgages for a while, suddenly find that either their mortgage costs go up, or they have a problem with their employment.  And these people should not be losing their homes under these literally catastrophic conditions for the housing industry, which we have not seen since the Great Depression.  This has not happened to this country.  So nobody knows what the consequences are. 

One of the consequences is that people are going to stop consuming some—they will have to save under their income.  They can no longer save under the appreciated asset value of their homes. 

CARLSON:  Every time we have this conversation, I feel anxious. 

ZUCKERMAN:  You should be.  On this one, we are all anxious. 

CARLSON:  I am.  Mort Zuckerman, thanks very much.  I appreciate it. 

San Diego might be picture perfect, but it is dogs are not.  At least, some of them aren‘t.  Senior dog show correspondent Bill Wolff will have this not so cute pup story when we come back. 

(COMMERCIAL BREAK)

CARLSON:  Welcome back.  One of the great pleasures of coming to New York is I get to confirm that Bill Wolff does, in fact, exist in the flesh.  He is real. 

BILL WOLFF, MSNBC VICE PRESIDENT:  Tucker, my pleasure, as always, and an honor to share a seat with you, my friend.  I‘m serious.  While you were busy paying attention to stuff like Eliot Spitzer and the presidential nomination fight, my baseball season officially began today, Tucker, with the first great catch of Spring Training. 

It happened in Arizona, the Cubs and the Brewers.  That‘s Mark Derosa (ph) going deep to left.  Oh, what a catch by that guy!  You are going to see a replay of this, Tucker.  This is the official first sign of spring, as this guy goes flat out.  Wait for the instant replay.  Watch this.  What a catch. 

CARLSON:  So good. 

WOLFF:  Neither the Brewers nor The cubs needs an outfielder.  However, had that occurred at a St. Louis Cardinal game, that guy would be a major leaguer this day, because the Cardinals don‘t have any good outfielders. 

CARLSON:  Plus, a lot of people on the Cardinals are 14, 15 years old. 

WOLFF:  Some, more than you would think.  Their records are a little dicey.  Not all “American Idol” also rans, Tucker, turn out to be abject failures in the music business.  We have news from Long Island, New York about famously odd Sanjaya Malakar, the sideshow heartthrob from last year‘s edition. 

He hasn‘t sold many records, hasn‘t packed any arena shows coast to coast, but he did sing at Rachel Later‘s (ph) Bat-Mitzvah Saturday in Huntington, Long Island, New York.  He showed up during the day with Rachel to get his hair done with her.  Then he sang “Isn‘t She Lovely” during Miss Later‘s first dance with her dad.  While the Bat-Mitzvah tradition symbolizes a new beginning, Tucker, by initiating young people into adulthood—I went through it myself—it is hard to imagine where Miss Rachel Later goes from here.  That‘s a high point, Sanjaya. 

CARLSON:  That is a high point.  I will say, I was at a Bar-Mitzvah when I was 13 where Aretha Franklin sang. 

WOLFF:  I was at a Bar-Mitzvah when I was 13 and it was mine, and I spoke about James Dean in “Rebel Without A Cause” in my speech. 

CARLSON:  Was he there? 

WOLFF:  No.  It was supposed to be about Isaiah 67.  I got 250 bucks in savings bonds and a baseball bat.  Things are a little different around St. Louis apparently than wherever it was you were. 

Now, one of the horrifying consequences of growing older, not the Bar-Mitzvah, but the emergence of hair where it didn‘t used to be.  Check this out—unless you embrace it, which is what this man in northern India did.  His ear hair—that ear hair is in the Guinness Book of Word Records.  He set the record in 2003 with five inches of flowing ear hair. 

Today, his locks measure an amazing and unfortunate ten inches.  He combs and shampoos the hair and complains, Tucker, that the Indian government does not pay him enough respect as a world record holder. 

CARLSON:  It doesn‘t matter, Bill, because he gets that respect right here. 

WOLFF:  There are very few rules in my marriage.  But one is, if I have that, it has to go away or—

CARLSON:  Of course. 

WOLFF—over.  Eyebrows, too.  I get too many eyebrows, she is done with me. 

CARLSON:  I‘m on her side. 

WOLFF:  I‘m always on her side. 

Finally, San Diego, a town you know about—it calls itself America‘s finest city.  Part of its boundless appeal, Tucker, is its annual ugliest dog contest.  There is the winner this year, a familiar face for those of you who keep close track of these pageants.  It‘s Victoria, the Italian Greyhound, who was defending her prestigious title.  She beat out a bunch of really ugly dogs to retain her crown. 

Tucker, as unattractive as Victoria is by most accepted standards, she‘s absolutely no competition for the world‘s original ugliest dog, that guy, a visitor to a little program we used to call “The Situation with Tucker Carlson.”  That is Sam the dog.  Sam is no longer with us.  There was Sam.  That was an ugly mutt. 

CARLSON:  Yes.  He is no longer here, but his image is burned into my brain.  It‘s like staring at a fluorescent light. 

WOLFF:  If you saw him once, you will never forget him. 

CARLSON:  Unbelievable.  Bill, it was worth it just for that to come to New York. 

WOLFF:  Great to see you, brother. 

CARLSON:  Great to see you.  Thank you. 

That does it for us.  Thanks for watching, as always.  We‘ll Back in Washington tomorrow.  We‘re excited.  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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Copy: Content and programming copyright 2007 NBC.  ALL RIGHTS  RESERVED. Transcription Copyright 2007 Voxant, Inc.  ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon NBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

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