updated 7/10/2008 11:51:33 AM ET 2008-07-10T15:51:33

Guest: Kelly O‘Donnell, John Harwood, Stephen Hayes, Peter Beinart

DAVID GREGORY, HOST:  Tonight, is Iran‘s much-maligned missile test an October surprise in July?  The candidates are facing off over the threat.  And tonight, so will we.

The RACE FOR THE WHITE HOUSE rolls on.

Welcome to THE RACE.  I‘m David Gregory. 

Happy to have you here, your stop for the fast-paced, the bottom line and every point of view in the room.  Tonight, is Iran the new Iraq?  In other words, the new foreign policy debate to overtake this campaign? 

In our “Face-Off” tonight, two of our panelists take on the question:  Which of these candidates, Obama or McCain, is best equipped to handle the Iranian threat?

Later, we go inside the campaign war room to look at the electoral map.  Team Obama argues it has the edge in McCain‘s back yard in the mountain West. 

A “Smart Take” tonight from “The New York Times” explores the Clinton/Obama drama and why his supporters aren‘t doing more to help pay off her debt. 

The bedrock of this program, as you know, a panel that always comes to play.

And with us tonight for the first time, Peter Beinart, senior fellow at the Council on Foreign Relations and columnist for “TIME” magazine;

Kelly O‘Donnell; NBC News Capitol Hill Correspondent.  She‘s out with McCain these days.  John Harwood, CNBC‘s chief Washington correspondent, and a political writer for “The New York Times”; and Stephen Hayes, senior writer at “The Weekly Standard.” 

OK.  We begin, as we do every night, with everyone‘s take on the most important political story of the day.  It is “The Headline.”  I‘ll get us started here tonight.  My headline, “Is it Only a Test?”

By now, you‘ve probably heard that Iran‘s Revolutionary Guard, in war game maneuvers, tested nine medium-and-long-range missiles today, included at least one with the capability to strike Israel.  This comes as the West has ratcheted up pressure on Iran‘s regime to abandon its nuclear weapons program. 

And to put the Iranian threat front and center on the campaign trail today, Senator Obama told Matt Lauer on “Today” the U.S. needs direct talks with Iran. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  It has to combine much tougher threats of economic sanctions with direct diplomacy, opening up channels of communication, so that we avoid provocation but we give strong incentives for the Iranians to change their behavior.  We have got to have the kind of aggressive diplomacy that unfortunately has been absent over the last several years.  If we don‘t, then we‘re going to continue to see rising tensions that could lead into real problems. 

(END VIDEO CLIP)

GREGORY:  Point, counterpoint.

Senator McCain in an interview with NBC‘s Brian Williams, and later during a press conference with reporters, dismissed Obama‘s diplomatic overture, insisting the U.S. must be prepare today act against Iran, and soon. 

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  Their behavior has obviously not changed, and their behavior is more and more threatening to the existence of the state of Israel.  But far more as important to that, leading to a conflict in the Middle East which could draw the United States of America into that conflict and put brave young American lives at risk. 

(END VIDEO CLIP)

GREGORY:  Kelly O., this is right in the wheelhouse for John McCain.  He wants to talk foreign policy.  How did they deal with it today?  Your headline? 

KELLY O‘DONNELL, NBC NEWS CAPITOL Hill CORRESPONDENT:  Well, my headline, David, is “Launched Into His Comfort Zone.”

For John McCain, this is an opportunity with outside events giving him a chance to talk about foreign policy, national security, and to make a point that goes specifically against Barack Obama.  The Revolutionary Guard, the group within the Iranian military responsible for this, launched today.  They were branded by some in Congress as a terrorist organization. 

GREGORY:  Right.

O‘DONNELL:  McCain voted for that, Obama did not.  And he‘s going to use that as a test against Obama.  Is he ready to handle these kinds of foreign affairs? 

GREGORY:  And Hillary Clinton voted for that thing as well.

O‘DONNELL:  Exactly.

GREGORY:  And of course McCain was out there today saying this is another reason why you need a missile defense shield that‘s being deployed in Eastern Europe that, of course, President Bush is behind. 

O‘DONNELL:  Well, McCain wants to show his depth on these issues and his ability to also talk to the other nations that can help to try to force sanctions against Iran, to demonstrate that he‘s had long relationships with the heads of various countries.  He saw President Sarkozy of France just a couple of months ago, one of the key allies that will be needed in this. 

GREGORY:  Yes.  All right.  Peter Beinart, Obama looked at all this.  He looked ready as well.  He took this on “The Today Show” this morning, ready to run with it.  They have engaged in it all day.

Your headline from his point of view? 

PETER BEINART, SR. FELLOW, COUNCIL ON FOREIGN RELATIONS:  My headline is “Obama‘s Big Break.”

You know, it may be that the conventional wisdom is that talking about Iran, it plays to McCain‘s strengths in terms of foreign policy experience.  But the funny thing is that McCain keeps doing stuff which doesn‘t look presidential at all, and certainly doesn‘t make him seem like a steady wheel in the Oval Office. 

You know, he keeps joking about America‘s potential conflict with Iran.  First, remember that joke about “Bomb, bomb, bomb Iran”?

GREGORY:  Right.

BEINART:  And now, take a listen.  He just did it again yesterday. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  We‘ve learned that the exports to Iran increased by tenfold during the Bush administration.  The biggest export was cigarettes.  Given that the—yes—that the—supposedly...

MCCAIN:  That‘s a way of killing them. 

(LAUGHTER)

MCCAIN:  I meant that as a joke. 

(END VIDEO CLIP)

BEINART:  You know, that doesn‘t strike me as the kind of thing that‘s going to make Americans feel very secure about our next president going into a very, very difficult set of negotiations with a country like Iran. 

GREGORY:  All right.  We‘re going to get to more into this in our “Face-Off” in a couple of minutes.

John Harwood, you‘re looking at the Clinton/Obama drama.  There‘s more of it tonight.  Your headline? 

JOHN HARWOOD, CHIEF WASHINGTON POLITICAL CORRESPONDENT, CNBC:  David, my headline, borrowing from George Bush in the 2004 debates, is, “It‘s Hard Work.”

No losing presidential candidate ever found it easy to retire debt, and no candidate has ever run up as much debt as Hillary Clinton.  There‘s only so much Barack Obama can rustle up from his donors, the people, who, after all, chose not to give money to Hillary in the first place.

But he needs her disappointed donors in his race against John McCain now, and both sides have no choice but to work things out with the minimum wining.  They‘ll try with fund-raisers in New York tonight and tomorrow, because if they don‘t, David, they could go down in Democratic infamy for the biggest blown opportunity since the Yankees let the Red Sox climb out of that 3-0 hole in the American League championship series.

Sorry, Yankee fans. 

GREGORY:  There is a real question, though, just how much the Clinton team can expect Obama‘s supporters to pony up for her debt, a lot of which was incurred after she was, in the view of many, mathematically out of the race. 

HARWOOD:  David, some of her own aides had misgivings while she was loaning that money, thinking it wasn‘t a good idea, that she didn‘t have a very good chance of winning. 

GREGORY:  Right.

HARWOOD:  She did it anyway.  They thought she took an unwarranted risk there.  And so now they are asking Barack Obama to help.  He can do something, but not all that much. 

GREGORY:  Not everything.  All right.

Stephen Hayes, you‘re looking at another big story today.  That‘s FISA, the domestic terrorism surveillance bill that the White House championed.

They got it through Congress today, but the interesting part is to look at these candidates.  You had Barack Obama voting for it.  Hillary Clinton didn‘t give him any cover.  She voted against it. 

Your headline tonight? 

STEPHEN HAYES, SR. WRITER, “WEEKLY STANDARD”:  Yes.  My headline basically takes John‘s issue and looks at it from a different angle.  “Did Hillary Clinton Spurn Obama With Her FISA Vote?”

Barack Obama, as you pointed out, voted for a compromise bill, backed by the White House, that would give immunity to telecoms.  Now, Obama had voted against some of the amendments that would have prevented that immunity, but at the end of the day, he‘s on record voting with the White House on this issue, and Hillary Clinton is not.  That‘s going to be an issue, I think, for the left wing of the Democratic Party, who is much more with Hillary Clinton on this issue than with Barack Obama. 

GREGORY:  It‘s a broken promise to people on the left.  They think Barack Obama was with them all along in opposing this giving of immunity.  And in the end, he wasn‘t. 

HAYES:  Right. 

GREGORY:  All right.

We‘re going to take a break here, come back with our “Face-Off” tonight.  It‘s on the question of Iran.  The big question today: Who do you trust on the issue of dealing with the Iranian threat? 

Stand by as Hayes and Beinart prepare to go at it.  And later in the show, your play date with the panel.  Call us, 212-790-2299, or you can send us an e-mail, race08@msnbc.com. 

RACE FOR THE WHITE HOUSE returns after this.

(COMMERCIAL BREAK)

GREGORY:  We are back on RACE FOR THE WHITE HOUSE.

As THE RACE rolls on, Iran becomes a new flash point for debate between Obama and McCain as Tehran confirms the test-firing of nine missiles today, including one with a range to hit Israel.

The big question tonight, who is better suited to handle the emerging threat?  And could the surprise in July become a full-fledged crisis come October? 

Taking it on and facing off tonight on the left, Peter Beinart.  And on the right, Stephen Hayes.  OK, guys.  Steve, you start first.  Make the case for why you think McCain is better suited to handle this threat. 

HAYES:  Well, let me start by reading Barack Obama‘s response to a question today about the U.S. policy toward Iran. 

He said, “Iran must suffer threats of economic sanctions with direct diplomacy, opening up channels of communication, so we avoid provocation.  That would give strong incentives to the Iranians to change their behavior.”

Now, there are three problems with that. 

One, I‘m not sure what he means by suffering the threats of economic sanctions.  You suffer economic sanctions after they‘ve been imposed. 

Secondly, I think it‘s a problem that he seems unfamiliar with the strong incentives that the Bush administration, together with Europeans, have already given the Iranians.  We‘ve talked about this latest proposal would provide them with nuclear fuel, reconstructing nuclear reactors, promises of normalized trade relations.  I don‘t know how much stronger you can be with that. 

But the third and I think the most troubling aspect of Obama‘s statement today is that he seems to be worried about our provocation.  This comes after Iran said four days ago that they had missiles that they could use in a Blitzkrieg attack against Israel.  This comes after Ahmadinejad has threatened to incinerate Israel.  This comes after Ahmadinejad has talked about a war between the West and Iran, with Iran leading that war. 

At a certain point, Barack Obama needs to not worry as much about what we would do to provoke some kind of a conflict and much more about what Iran would do to provoke a conflict. 

GREGORY:  But Steve, is that a pro-McCain position?  In other words, what about McCain‘s position should inspire trust, should inspire a sense of confidence? 

HAYES:  Well, I would say the first benefit of McCain‘s position is that it‘s not Barack Obama‘s position. 

GREGORY:  Yes.

HAYES:  The second is that McCain clearly has dealt with these issues.  He understands these issues.  You know, I take Peter‘s point about McCain making jokes, but it‘s far better for a candidate to make a joke that may be judged inappropriate at times, but to actually understand the bigger issues, which I think McCain does, and he demonstrated with his comments today. 

GREGORY:  All right.  I‘ll get out of the way.  You guys face off. Peter, make your case for why Obama is the guy that voters should really trust on this. 

BEINART:  Well, I think there are a couple of things that Steve leaves out. 

The first is, while it‘s true that we have put some things on the table for Iran, we‘re not the ones actually talking to the Iranians about that.  We‘ve outsourced that to the Europeans.

It seems to me you never really know in a negotiation what‘s possible until you actually have that negotiation.  Why should we want to play a game of telephone in which the Europeans are the ones talking to the Iranians while we sit back?  It seems to me that you would want America in the driver‘s seat pushing very aggressively on that diplomacy to see whether, in fact, there is a diplomatic option. 

The other important point is that I think there is—in the carrot and stick approach that you need, I think you will have better sticks if America is seen to have made the extra effort to talk directly to the Iranians, which the Bush administration and McCain don‘t want to do.  And there‘s also a very important carrot that Steve didn‘t mention, which is America saying that we will not support regime change in Iran. 

It‘s illogical to expect that the Iranians are going to give up their nuclear weapon, at the same time that, if they do give up their nuclear weapon, they become vulnerable to an American effort of regime change.  You really have to choose between those two alternatives. 

HAYES:  But David, I think it‘s a little bit rich to hear from the political left in America these days that the Bush administration is now being too multilateral.  I mean, this was the charge for the first five years, the Bush administration isn‘t consulting our allies enough, we are not friendly enough with our old European allies. 

Now that the Bush administration has engaged in diplomacy with Iran, which some of us don‘t believe is a good thing, the way that they‘re handling it, they‘re being criticized from the left for being too multilateralist.  It seems to me that you have to sort of figure out which position...

BEINART:  No.  I know that that sounds like a nice point, but it really confuses apples and oranges. 

Multilateralism has to do with a certain respect for the opinions of your allies.  America‘s allies are not hostile to the United States talking to Iran.  By and large, I think they will be thrilled if we also talked to Iran. 

Truly multilateralism is a respect for the views of longtime American partners.  It is not saying we are out of the game, let them try to do the work for us.  That‘s not the kind of multilateralism...

HAYES:  Peter, but we are not out of the game.  That‘s the problem. 

We are not out of the game.

I mean, everything that‘s happening on the European side is happening in direct consultation with Condoleezza Rice and the State Department. 

BEINART:  Sure.

HAYES:  Again, some of us don‘t like—some of us don‘t like that.  I think they are actually consulting too much.  But John McCain‘s position is basically to engage in this kind of diplomacy.  And for Barack Obama to say at this point that the U.S. hasn‘t been engaged in aggressive diplomacy suggests to me that he just doesn‘t know what he‘s talking about on the issue. 

BEINART:  But look, it would be as if during the Cold War we said, we‘re not talking to the Soviets, but let the French talk to the Soviets, and we‘ll talk to them after the meetings to find out what they said.  That‘s not how Ronald Reagan made progress with Mikhail Gorbachev. 

In diplomacy, personal relationships are extremely important.  You have to get to know the players on the other side to figure out whether you can get anywhere.  We‘re not doing that.

GREGORY:  Let me interject here.

HAYES:  I think that...

GREGORY:  Let me interject here.  I want to bring John Harwood in on this point, which is the politics of this, this is a strategic debate about how to engage an enemy of the United States and a U.S. allies, and a building threat. 

The political reality, however, is that for a lot of Americans, they thought about Iraq as engaging Iraq, attacking Iraq, invading Iraq, would eliminate a threat.  There was no real threat of weapons of mass destruction.  Now they might be asked to do that again in some capacity. 

Are Americans up for that task of doing something now that they may wish we would had done now down the line. 

HARWOOD:  That is theoretical.  When you test this in polls, if you talk about Iran as a potential nuclear power, there‘s surprising support for confronting Iran directly.  Surprising to me. 

I thought after the exhaustion with the Iraq war it wouldn‘t be there.  Now, it may be a different thing once that confrontation becomes more approximate and people can see it. 

I‘ve got to say, I think Stephen has the high side of that argument on diplomacy in the sense that the Europeans are attempting to vindicate our position.  We are in league with them.  They‘re trying to advance our argument.

The biggest advantage that Barack Obama has in the debate is to sort of throw up his hands and look at the big picture and say, you think what the Bush team is doing is working now?  Let‘s do something different. 

GREGORY:  Well, Kelly, that‘s the question for you.  So, inside the McCain campaign, they have to recognize that that is an effective argument, to say taking a hard line against Iran simply has not worked, not yet. 

O‘DONNELL:  Well, any time you see a similarity between John McCain and the Bush administration, that poses some concerns.  But if you‘re just looking at McCain versus Obama, those people around John McCain say this is an issue where they have real strength, because they believe that Obama has demonstrated a lack of familiarity. 

At one point, he called Iran a tiny threat.  And then at another, described it as a much greater threat.  He was opposed to the missile shield which John McCain supports. 

This stuff can be an area where John McCain can really describe some of his experience.  He has got a lot of personal relationships as well, as you were talking about a moment ago. 

One of his concerns about Obama‘s suggestion of meeting directly with the Iranian president is McCain believes that if you were to elevate an Iranian leader, if it‘s the spiritual leader or the political leader, having him side by side with the U.S. president, that that sends the wrong message.  But McCain says he is not opposed to more direct diplomacy, but he‘s concerned about the propaganda potential for a  U.S. enemy like Iran if they were to be seen on even footing. 

GREGORY:  All right.

Steve Hayes, final point on this. 

What‘s motivating voters on this issue right now?  Do they have that visceral level of fear that Iran is going to attack the United States?  That seems unlikely.  Are they as motivated by an attack on allies like Israel, the prospect of wider war in the Middle East? 

HAYES:  You know, I think right now, it‘s sort of open with regard to voters.  I mean, I think, as John pointed out, there‘s polling that indicates that voters are concerned about a potential threat from Iran. 

GREGORY:  Right.

HAYES:  But I think one of the things the McCain campaign hasn‘t yet done but needs to do is to describe in very frank and direct ways what the threat from Iran looks like, the threat to our allies, the potential threat to the United States, the history of Iran supporting terrorism, including terrorism that has killed Americans both back at the Khobar Towers bombing in the ‘90s, and in Iraq, next door to Iran today. 

So, the McCain campaign I think needs to do this.  They have spent a lot of time talking about energy, a lot of time talking about the economy, and relatively less talking about national security.  The time for that may be now.

GREGORY:  All right.  Got to take a break here. 

Coming up next, Barack and Hillary back at it again, trying to form a union.  Teaming up, holding fund-raisers in New York City tonight in about an hour.  And tomorrow.  Is it more about raising money for Obama or erasing Clinton‘s debt?   The drama in the relationship when THE RACE comes back.

(COMMERCIAL BREAK)

GREGORY:  We are back on RACE FOR THE WHITE HOUSE.

Time for today‘s “Smart Take,” the most interesting, most provocative, sharpest thinking out there.  Here again, Peter, Kelly, John and Stephen.

Right now, Barack Obama and Hillary Clinton are on their way to a New York City fund-raiser, the first in what “The New York Times” calls a crucial test of Democratic unity.  Despite the color-coordinated flattery fest in New Hampshire last month, deep risks remain between the two camps, with one especially sour point being Clinton‘s campaign debt.

The Times reports today, “Mr. Obama has asked his top donors to help raise money for her debt, and so far they have come up with less $100,000, though more in pledges.  A Clinton campaign official said a paltry sum, in the words of one.  Several Obama donors said in interviews that they were balking at Mr. Obama‘s call for help because they believe Mrs. Clinton accumulated most of her debt after she had lost any mathematical chance of winning the nomination, and was hanging on only in hopes of an Obama collapse.”

Does he really have any responsibility here, Peter? 

BEINART:  I think it‘s in his interest to try to help Hillary Clinton.  But I think we should be clear.  This is a story that matters a lot to Hillary Clinton and the people who she needs to pay off, and has absolutely nothing to do with Barack Obama‘s chances of winning in November. 

For—what‘s already clear from the polls is that Hillary Clinton voters have moved to Barack Obama in pretty strong numbers.  And none of them are going to be swayed by whether Barack Obama‘s donors support Hillary Clinton‘s retiring of her debt.

GREGORY:  You know, John, one of the negotiating points between Obama and Bill Clinton, former President Clinton, was him making some real efforts to get this debt down, including contacting his own donors.  This is obviously a source of concern and tension. 

HARWOOD:  Well, sure, it is.  First of all, I‘ve got to speak up for my man Pat Heely (ph) who wrote that “Smart Take.”  I don‘t think he wears a pocket protector like that graphic animation that popped up on “Smart Takes.” 

GREGORY:  You know, you never know, though. 

HARWOOD:  Yes, exactly. 

You know, look, Barack Obama has an interest in trying to placate Hillary Clinton‘s supporters.  He needs some of their money for the fall election.  He needs the base to be unified in the party.

And there is some evidence that there‘s remaining tension on the left for Barack Obama from those supporters of Hillary Clinton.  The question is, how long lasting is it?  I suspect it‘s not going to last all that long. 

And by the way, I think that vote from Hillary Clinton going to the left of Barack Obama on this FISA bill, you combine that with the fight he‘s got with Jesse Jackson going on today, that may be part of a scripted move to the center by Barack Obama.  Who knows? 

GREGORY:  Well, we‘re going to talk about those Jesse Jackson comments that he made.  They were critical of Obama.  Then he apologized for them.  Does this only help Barack Obama? 

HARWOOD:  Yes. 

GREGORY:  We‘ll have more on that coming up. 

More on Iran, and more on the electoral map.  Our crack NBC News political team got some new numbers, and we‘ll see where the advantages are when we come back on RACE FOR THE WHITE HOUSE. 

(COMMERCIAL BREAK)

(NEWS BREAK)

GREGORY:  Welcome back to RACE FOR THE WHITE HOUSE.  I‘m David Gregory, happy to have you hear.  Breaking news this afternoon, Jesse Jackson taking on Barack Obama with some crude comments that he‘s apologizing for tonight.  Does it hurt or help Obama politically?  We‘ll explore that in just a couple of minutes.  First up though, we go inside the war room, special edition tonight, major shifts in the electoral map. 

Early last month, Obama and McCain were locked in an electoral college dead heat, taking 200 votes a piece.  This month, after shifts in 10 ten states according to a new analysis from the NBC News political unit, Obama has now opened up a 210 to 189 lead, leaving 11 states in the toss up column, with a grand total of 139 votes up for grabs.  So where were the changes?  Back with us, for the first time, Peter Beinart, senior fellow at the Council on Foreign Relations, and a columnist for “Time Magazine,” Kelly O‘Donnell, NBC News Capital Hill correspondent, who covers John McCain now, John Harwood, cNBC‘s chief Washington correspondent, a political writer for the “New York Times,” and Steven Hayes, senior writer at the “Weekly Standard.” 

First up, the big changes in judgment of the political unit: Wisconsin now moving out of the toss up column and into lean Obama.  Also Missouri shifting from a lean McCain to a toss up.  Now in Wisconsin, Obama has opened up a lead there in the polls.  In Missouri, both McCain and Obama have stepped up some of their campaigning there.  What‘s happened?  John Harwood, one thing that the political unit thinks is in Wisconsin, all of these states in the agricultural Midwest that are close to Illinois, which is where Obama is from, are looking to be an advantage for him. 

HARWOOD:  Sure, there‘s a little home cooking going on there.  Look, when the national water table rises for a candidate, it rises everywhere usually.  It takes states that were marginally Republican, makes them toss ups, that were marginally Democratic, makes them more strongly Democratic.  What we‘ve seen over the last month is Barack Obama wrapped up this nomination.  He was ahead one or two points over John McCain.  Now, he‘s ahead five or six points. 

If you‘re ahead five or six points, you‘re going to win the electoral map.  The question is can he hold or expand that lead?  The Obama campaign believes they have a model for this election where it‘s going to remain close, in single digits, and break bigger in the end.  We‘ll see if they‘re justified in that. 

GREGORY:  Steve Hayes, it‘s interesting, in Missouri—this is still a state that looks like it favors McCain.  It‘s also a real test for Obama.  Can he use the strength of Senator Claire McCaskill, who is his point person in the state, to reach rural voters in Missouri—in the big cities it‘s Missouri. 

HARWOOD:  You say that good. 

HAYES:  Sounds like you‘re a natural at this.  I think it doesn‘t hurt him that he has Claire McCaskill out as one of his chief surrogates on all issues.  She‘s quite effective, I think.  We were talking about this in my office right before I came over today.  One of the reasons that he has her doing as much as she is doing is that she‘s very good at it.  To have Missouri voters looking at her and seeing her on national news programs, touting Obama, advocating his policies, that‘s only going to help him in Missouri. 

GREGORY:  Next up, Ohio, Ohio, Ohio.  Still in the toss up category.  Some say an area of strength for McCain.  McCain working to seal up the state, talking about the economy there today.  That‘s the big issue.  Kelly, he‘s out there talking about the number one issue that could turn the state this fall.  This, of course, a Bush state in ‘04.  If he can turn this state, that is Obama, that‘s a huge advantage for him. 

O‘DONNELL:  McCain and his people believe Ohio is still an incredible target.  They are trying to drive the economic issue.  Advisers say he will be talking about jobs, energy, the economy and how all of those intersect every day.  Even when you have a day like today when national security will bleed back over, they say McCain will continue to try and push his views on the economy, especially stressing taxes for small businesses, which he talks about all the time as being real job creators.  That‘s important turf for McCain. 

GREGORY:  In 2006, one of the big problems was the state of the Republican party, which was a local issue in Ohio.  That would certainly bad for Republicans there.  Peter, you talk about Ohio.  The interesting thing there about rural voters, lower middle class voters, are some of the cultural issues that Obama is going to have to confront when he is trying to attract voters like this.  We saw his problems in the primary in this regard.  He‘s really got to find—he‘s got a message issue there and a personal issue, in terms of being able to connect to these voters. 

BEINART:  Yes, but on the other hand, he speaks very well and very comfortably about his religious faith, more than people like John Kerry or Michael Dukakis did.  Also, he has a real opportunity because of how badly these people are hurting economically.  The Republicans brand—the people hope that the Republican party can help them economically is nowhere near what it was say during the Reagan years.  So, yes he has a challenge.  But I think he has a real opportunity, because people are looking for a reason to vote for change.  And in our political system, voting for change means voting against the incumbent party. 

GREGORY:  Finally here, from my reporter‘s notebook today, team Obama has taken a keen interest in the west as fertile ground for electoral map gains.  Talk to advisers today who said it‘s New Mexico, Nevada and Colorado, Bush states in ‘04, that Obama would like to turn blue this fall.  Here‘s what a top Obama adviser told me today, in New Mexico, he said, the Latino vote is starting to break Obama‘s way; 38 percent of the electorate in New Mexico is Latino.  Kerry narrowly lost the state in 2004.  Obama can capitalize on the inroads among Latino voters that Clinton made during the primary.  Plus, of course, he is connected to Bill Richardson, the governor‘s network throughout the state. 

Then you go to Nevada.  Big surge in voters.  We reported on this last night, registering Democratic over the GOP.  According to Nevada political blogger John Ralston, The Democrats have a 55,000 voter advantage over the Republicans, when it was much tighter when you go back.  It was dead even in 2004. 

Finally, look at Colorado.  Hispanic voters leaning Obama.  Polls show that voters with heavy Bush fatigue going into the polls.  We‘ve seen some turn around there.  Democrats, more moderate Democrats getting into office, including Governor Ritter.  Also, Obama advisers saying there‘s tens of thousands of unregistered Hispanics that could be brought into the Obama fold.  Steve, how do you see it? 

HAYES:  It doesn‘t hurt that he‘s going to be having his convention there either, and giving a major speech and getting a lot of press coverage.  I think that sounds about right.  I think it will be interesting to see—If John McCain doesn‘t do well in those three states, I think his chances of winning the presidency are virtually nil.  He needs to do well.  As you pointed out, that‘s sort of his backyard.  You can look at all the states that Chuck Todd and the political team designated as toss up states, but if McCain doesn‘t do well in his own backyard, he‘s in real trouble. 

GREGORY:  Inside the campaign, what are they doing about immigration?  He gave a speech there where he‘s emphasizing border security.  Does he not want to talk about immigration much because he realizes it‘s going to be a problem on his right flank?  Yet, the party has done a lot of damage, in terms of his ability to attract those voters. 

O‘DONNELL:  He‘s asked about immigration at almost every town hall meeting.  The frequency of it means it gets less national attention.  He addresses it every day.  One of the things that I find unusual is when we are in any of those states you just described, McCain is much more likely to describe himself as a western senator, to stress his knowledge of western issues, water conservation, land use, things he feels comfortable talking about in a language that people in those states really get.  That‘s important for him. 

Also, when he‘s trying to reach out to Hispanic voters, it‘s one of the rare times we see John McCain talking about the abortion issue.  Many Latinos, Hispanics are Catholic.  Many are opposed to abortion.  He is opposed to abortion.  That is one time we see that coming into the discussion. 

On immigration, he does talk about the border fence, and a need to secure the border.  He basically says, we tried a couple of times; it failed.  We have to do the fence first.  But always follows by pretty much sticking to the position he had that caused him so much trouble, about what do you do with those illegal immigrants who are in the country.  Often refers to them as god‘s children, in a way to try and soften that.  So he‘s talking about those issues, trying to be very parochial when he‘s that part of the country.   

GREGORY:  It‘s still a big wall to climb, if you will, after everything that‘s gone on in this immigration debate. 

We‘re going to take a break.  When we come back, Jesse Jackson‘s name back in the ‘08 race today.  We‘ll tell you what it means for Obama when THE RACE returns.  Also on our radar, Barack Obama stopped by the office building where Eric Holder, a member of his vice presidential search team works at his firm.  No official word on whether he actually met with Holder.  When asked who he was meeting with, Obama answered, I‘m not going to tell you, but an important visit today for a couple of hours.  We‘re coming right back on THE RACE.

(COMMERCIAL BREAK)

GREGORY:  Back now on RACE FOR THE WHITE HOUSE.  The three big questions of this race.  We‘re going to address them here tonight with our panel.  Back with us, for the first time, Peter Beinart, with us from “Time Magazine” and the Council on Foreign Relations, Kelly O‘Donnell, John Harwood and Steven Hayes from “The Weekly Standard.” 

Let‘s get right to it, this controversy with Jesse Jackson.  Breaking news tonight, the Reverend Jesse Jackson, an early supporter of Obama‘s presidential bid, just wrapped up a press conference where he apologized for derogatory comments he made about the Illinois senator.  Jackson made what have been described as pretty crude comments when asked about Obama speaking in black churches.  He suggested Obama was speaking down to black people in some of his messages, when there are real issues that have to be dealt with in the black community, including the mortgage crisis and the number of African-Americans who are in prison. 

Jackson is very sorry, he says, for those remarks.  He did not realize his mic was on during a discussion Sunday with a cable news reporter for Fox News.  Today, Jackson said that he was trying to make the point that African-Americans need not just faith, but also government based solutions to the problems facing their community.  The Obama camp has not commented on all of this.  The big question, what is the impact on all of this from Obama? 

John Harwood, you brought this earlier.  The issue of having Jesse Jackson come out and say, Obama is hurting himself, the crude nature of his remarks was that he was really hurting himself in the black community by the way he was taking on the black community through black churches, talking about faith, talking about their conduct in their own lives, and disregarding the important role that government plays and that government should be playing in the lives of black Americans.  What impact does this have coming now against Barack Obama? 

HARWOOD:  I see absolutely no evidence that Barack Obama is hurting himself with black constituents in any way.  Black people are on fire in this campaign.  They were throughout the Democratic primary process.  I think colorful criticism from the left, from Jesse Jackson, who is saying he‘s pressing black males too hard, in terms of making that moral argument about restoring families and living up to you responsibilities, that‘s tonic to the ears of some of those white working class voters that Barack Obama wants to lure in places like Ohio and Pennsylvania that we‘ve been talking about. 

GREGORY:  Peter, this is something that Barack Obama, by all accounts, has managed very well, in terms of his role in the black community and leaders like Jesse Jackson, Al Sharpton and others have tread rather carefully in criticizing him, for sure.  In this case, it‘s a potential plus that he would—he hasn‘t responded to this, by the way—that he would be seen as taking on some of that establishment in the African-American political leadership. 

BEINART:  I totally agree with John Harwood.  It might not have been a good idea for Barack Obama to pick the fight with Jesse Jackson, it would have seemed beneath him and unnecessary.  But if Jesse Jackson takes a swipe at Barack Obama, particularly because he‘s saying that Barack Obama is stressing responsibility too much --  it‘s worth noting, African-American voters are not upset about Barack Obama‘s message of responsibility at all.  As John was saying, they were extremely excited about Barack Obama.  If anything, if it had any impact, this actually helps him, because it reminds more conservative white voters that Barack Obama and Jesse Jackson are very different people. 

HARWOOD:  David, I think the Obama campaign may be making sure all the TV bookers have Al Sharpton‘s phone number right now.  They‘d like to extend this story a little bit. 

O‘DONNELL:  David, it‘s about generational politics too.  You see a divide between Obama and the kind of leadership he‘s trying to present, and Jesse Jackson represents a different time, a critical time in the Civil Rights Movement.  But if there‘s space there, that probably is helpful to Obama, to not be tied into a period where there was a different sort of dialogue going on.  Obama‘s very much trying to move to the middle.  This probably does help.

BEINART:  You see that with Jesse Jackson‘s son, who is very close to Barack Obama, his own generation. 

GREGORY:  Let me move on here.  The White House gets its way on FISA, the domestic ease dropping bill.  The president talked about it. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  This legislation is critical to America‘s safety.  It is long overdue.  This bill will help our intelligence professionals learn who the terrorists are talking to, what they are saying and what they are planning.  It will ensure that those companies whose assistance is necessary to protect the country will themselves be protected from lawsuits for past or future cooperation with the government. 

(END VIDEO CLIP)

GREGORY:  Twenty one Democrats, including Obama, joined Republicans and voted to pass the new administration backed surveillance bill.  But a majority of Democrats, including Hillary Clinton, voted against the bill because of the controversial provision that gives retroactive immunity to telecom companies who help conduct warrantless wire tapping.  Obama has taken heat by opponents of the bill.  In recent weeks, 22,000 of his supporters signed a petition on his website, asking Obama not only to vote against the bill, but to lead his party in the fight against telecom immunity and the White House. 

Second question today, the FISA fall out.  To borrow from Stephen Colbert, is Obama now on notice with Democrats.  Steve Hayes, it‘s not just a question of breaking the promise, it‘s an issue of authenticity.  That‘s what the John McCain campaign will argue. 

HAYES:  Yes, I don‘t think this particular vote is one that‘s going to be a make or break vote with a lot of left leaning Democratic voters.  Clearly, they are not happy about it, as evidenced by the poll that you cited on his own website.  But really, I think, the bigger problem for Obama is a cumulative effect here, with the FISA vote, reversing himself on FISA, seeming to soften his Iraq position.  You have the public financing issue.  There‘s a series of these things that I think are leading to some disillusionment among his supporters on the left wing of the Democratic party. 

The McCain campaign has grabbed onto it a little bit and accused him of being a flip flopper, arguably too much, I would say.  Really, I think that where this potentially hurts him is with his own base. 

GREGORY:  Peter, is he in a danger zone here? 

BEINART:  Absolutely not.  The idea that Democrats are not going to turn out in overwhelming numbers for Barack Obama just, it seems to me, defies political reality.  The great advantage that Barack Obama has is that his supporters are incredibly hungry.  In fact, one of the reasons they are so upset about Barack Obama is not only because they genuinely disagree with him, but because they know that they are going to go to the polls to support him anyway.  They know they have no leverage over him, because Democrats are so hungry for the White House. 

That‘s the fundamentally stronger position he‘s in than John McCain is in.  John McCain has voters who might be very happy to sit at home.  Democratic voters will not sit at home under any circumstances this fall. 

HAYES:  David, let me clarify what I was saying.  I agree with Peter completely.  I don‘t think that Democrats are largely going to sit home.  What causes him problems in the short term is all of the publicity that he‘s getting, and all of the back and forth that he‘s hearing from the Democrats, I think present him short term problems from a PR perspective.  Peter‘s absolutely right.  The enthusiasm for Obama on the left is—He‘s going to have Democratic votes regardless of what he does. 

GREGORY:  Let‘s get on to number three here, the days other big story we‘ve been talking about, Iran.  Iran test fired nine missiles, including three long range missiles today.  Both Obama and McCain condemned Iran‘s move and talked about the need for some tough diplomacy. 

(BEGIN VIDEO CLIP)

OBAMA:  It has to combine much tougher threats of economic sanctions with direct diplomacy, opening up channels of communication, so that we avoid provocation, but we give strong incentives for the Iranians to change their behavior.  We have to have the kind of aggressive diplomacy that, unfortunately, has been absent over the last several years. 

MCCAIN:  Action besides diplomacy has to be contemplated and taken. 

That‘s why meaningful and impactful sanctions are called for at this time.  It‘s time for action, and it‘s time to make the Iranians understand that this kind of violation of international treaties, this kind of threatening of neighbors, this kind of continued military activity is not without cots. 

(END VIDEO CLIP)

GREGORY:  Third question today, so who benefits politically at this stage from a showdown with Iran?  The showdown that has continues?  John, how do you see it politically?

HARWOOD:  I think it benefits John McCain marginally.  I don‘t think it‘s a huge thing.  I think Barack Obama can press that argument that we need a different approach from George Bush.  That‘s how he tries to mitigate some of the difference, in the same way that with that FISA vote today, he tried to narrow the difference with John McCain over a potential foreign policy problem in November. 

GREGORY:  Kelly, how do you see it. 

O‘DONNELL:  I agree with John.  For McCain, this is an area where he feels at home, feels he can strongly argue against some of Obama‘s positions.  And while Obama seems to be moving a bit closer to where McCain is, the McCain team will try and use that against him and cast him as a politician who will make decisions and will alter his position based on what the needs of the moment are.  That‘s the continuing narrative they are trying to build. 

GREGORY:  All right.  I want to shift gears just a moment back to this Jackson issue.  Quick campaign alert, before we take a break here, the Obama campaign has just responded to Reverend Jesse Jackson‘s comments for the first time today, saying this, quote, as someone who grew up without a father in the home, Senator Obama has spoken out and written for many years about the issue or parental responsibility, including the importance of fathers participating in their children‘s lives.  He also discusses our responsibility as a society to provide jobs, justice and opportunity for all.  He will continue to speak out about our responsibilities to ourselves and each other.  He, of course, accepts Reverend Jackson‘s apology.  That from campaign spokesman Bill Burton, just a couple of moments ago. 

We‘ll take a break.  Our remaining moments, your play date with the panel, coming up on THE RACE.

(COMMERCIAL BREAK)

GREGORY:  Back on THE RACE.  Final moments here.  Back with Peter, Kelly, John and Steven.  I want to read you again Barack Obama‘s statement that we got from Bill Burton, his press secretary, just moments ago, reacting to Jesse Jackson.  This is the statement, “as someone who grew up without a father in the home, Senator Obama has spoken and written for many years about the issue of parental responsibility, including the importance of fathers participating in their children‘s lives.  He also discussed our responsibility as a society to provide jobs, justice and opportunity for all.  He will continue to speak out about responsibilities to ourselves and each other.  He, of course, accepts Reverend Jackson‘s apology.” 

Part of a scathing statement from Congressman Jesse Jackson Jr. is this, quote, “I‘m deeply outraged and disappointed in Reverend Jackson‘s reckless statements about Senator Barack Obama, his divisive and demeaning comments about the presumptive Democratic nominee.  I believe the next president of the United States (INAUDIBLE) his inspiring and courageous experience.  Reverend Jackson is my dad and I will always love him.  He should know how hard I have worked for the last year and a half as a national co-chair of Barack Obama‘s presidential campaign.  I thoroughly reject and repudiate his ugly rhetoric.  He should keep hope alive and any personal attacks and insults to himself.” 

HARWOOD:  Wow. 

GREGORY:  Peter Beinart, quite an exchange there from the son and a response from Obama‘s campaign tonight. 

BEINART:  Absolutely.  One of the sad ironies of this is that actually Jesse Jackson, himself, if you go back, early in his career, spoke an enormous amount about personal responsibility in the African-American community.  It was really one of his signature themes.  It‘s particularly sad and ironic that he would criticize Barack Obama for talking about that. 

HARWOOD:  Forget this Clinton/Obama fund raising drama.  I think we‘ve got some Jackson family drama to deal with here. 

GREGORY:  Right, right.

O‘DONNELL:  There won‘t be a family Sunday dinner, that‘s for sure. 

GREGORY:  Exactly.  In the end, you got the sense, didn‘t you John, from that statement from the Obama campaign that they can take this in stride.  They will take the wrap for standing up for personal responsibility. 

HARWOOD:  They are defending where Barack Obama is coming from, which is a good place for him to be, position-wise in the campaign, and saying, you know, Jesse Jackson is not important enough for us to fight with right now.  Then you have the son coming in and really smacking the father.  That was fascinating.

GREGORY:  We‘re going to leave it there.  Thanks to a great panel tonight.  That does it for RACE FOR THE WHITE HOUSE.  See you back here tomorrow night, 6:00 eastern time.  Don‘t go anywhere, “HARDBALL,” with Chris Matthews starts right now.

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

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