updated 7/11/2008 10:50:24 AM ET 2008-07-11T14:50:24

Guests: Michelle Bernard, Michael Smerconish, Harold Ford, Jr., Tony Blankley

DAVID GREGORY, HOST:  Tonight, Obama‘s dog days of summer.  Is the Jesse Jackson flap just the latest sign of trouble on Obama‘s left?  Is the glow fading in Obama Nation?

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 we‘re going to turn the page on this Jesse Jackson story and ask whether, crudeness aside, Jackson was whispering what many liberals, black and white, are starting to dislike about the Democratic nominee. 

The other big story tonight is at the half hour—mental meltdown.  Why would a top economic adviser to McCain say that the state of the economy is all in your mind?  Those gas prices, home foreclosures, the meltdown in financial markets, all in your mind. 

Damage control in that camp tonight. 

And does Obama really need Clinton?  They were together this morning trying to raise money after he nearly forgot to ask his supporters to help her pay off her campaign debt. 

More on that coming up. 

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

And with us tonight, Michelle Bernard, president of the Independent Women‘s Voice.  Also joining us tonight is Michael Smerconish, radio talk show host on WPHT in Philadelphia, columnist for both “The Philadelphia Inquirer” and “The Philadelphia Daily News”; Harold Ford Jr., chairman of the Democratic Leadership Council and an NBC News analyst; as well as Tony Blankley, syndicated columnist. 

We begin as we do tonight, with everyone‘s take on the most important political story of the day.  It‘s “The Headline.”

The big headline tonight, “Is the Obama Glow Gone?” 

Jesse Jackson made some crude remarks on an open mike last weekend, in case you missed it. 

(BEGIN VIDEO CLIP)

JESSE JACKSON, RAINBOW/PUSH COALITION:  See, Barack has been talking down to black people on this faith-based.  I want to cut his (EXPLETIVE DELETED) off.  Barack, he‘s talking down to black people. 

(END VIDEO CLIP)

GREGORY:  Jackson said he thinks Obama has been talking down to black people when he talks up the need for African-American fathers to assume their responsibilities.  Obama did that on Father‘s Day at an African-American church. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  But if we‘re honest with ourselves, we‘ll admit that too many fathers are also missing.  Too many fathers are MIA.  Too many fathers are AWOL, missing from too many lives and too many homes. 

They‘ve abandoned their responsibilities.  They‘re acting like boys instead of men. 

(END VIDEO CLIP)

GREGORY:  Jackson‘s larger point, he said on MSNBC today, is that Obama should be advocating government solutions for what ails the black community. 

(BEGIN VIDEO CLIP)

JACKSON:  In the black community, I might add, infant mortality rate is highest, life expectancy is shortest.  Most children have been taught by teachers with less than three years of experience and preparation, where the jobs are out, drugs are in, murder rate is up. 

We have some heavy structural lifting to do.  And while the faith and hope of both concepts are significant, both are cost-free. 

(END VIDEO CLIP)

GREGORY:  The reaction has focused on Jackson‘s fading place in the national spotlight with all of this, how Obama represents the new voice of African-American political leadership, et cetera.  But isn‘t the real issue that this is another example of Obama‘s base bristling at the candidate‘s direction?  Is he everything that they thought he was? 

Political expediency is the charge from some Obama supporters.  Writing on ebonyjet.com, Eric Easter argued that the Father‘s Day speech that Obama gave from which I just showed a clip wasn‘t meant for the black community. 

“The fear among critics,” he writes, “is that the real audience that day was not the black people in the pews at all, but the white people in middle America looking for a strong signal that Obama was rejecting the politics of racial division and animosity.”

Remember, Obama made the remarks after the Reverend Wright controversy. 

Influential blogger and Obama supporter Andrew Sullivan wrote this today: “A few things have unsettled me in the past couple of weeks about the Obama campaign.  It is not the small adjustments to previously-held positions—FISA, the Second Amendment, Iraq—it‘s that sense that Obama‘s ample self-regard is lapsing into hubris.”

And so the question is whether, once he secured the nomination, did Obama seize the moment, seize the initiative, or have his adjustments to the center undermined his own authenticity? 

That‘s my take on all of this tonight.

Harold, take it on. 

HAROLD FORD, JR., NBC NEWS ANALYST:  I think you raise all the right points.  I would say two things. 

First off, Jesse Jackson and Barack Obama have over the years both been strong proponents of a larger self-responsibility for all Americans.  And at times have aimed their comments directly at African-Americans, and black men in particular.  So this is not new. 

I think the unfortunate and cruel comment and stupid comment that Reverend Jackson made on that live mike there has perhaps amplified this a bit and perhaps made us all think this is a first of its kind. 

Two, it does signal in a lot of ways a different kind of leadership, not just for black Americans, but for all Americans.  Barack‘s leadership, his approach to politics, is unique. 

One of the reasons he succeeded in the primaries is that he transcends and is able to hover above some of the normal politics, some of the normal back and forth.  The real challenge will be for Senator Obama is, how do you merge some of the things that Reverend Jackson talked about? 

There‘s no doubt that government will have to play a role in building bridges and addressing infant mortality and addressing the quality or lack of quality of teachers in schools.  So I think we‘ve made a lot out of this, but the reality is Barack has always been more moderate, more conservative when it comes to family values, and values in the household, and morality being taught more so than we thought. 

GREGORY:  Well, so...

FORD:  And we must remember, he grew up in a single parent home.  So he brings a perspective.

GREGORY:  Right.

FORD:  He and Jackson both, probably different than most people on this panel.  I grew up in a two-parent home.  Barack didn‘t, nor did Reverend Jackson. 

GREGORY:  All right.

So, Michelle, the issue is, is the glow gone?  Is this really an opportunity, with Jesse Jackson getting mad at Barack Obama?  That‘s exactly what he wants.  It‘s a way to build support among white Americans, working class whites with whom he had trouble going up against Hillary Clinton.  No? 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  Absolutely.  I don‘t think the glow is gone.  I feel like Reverend Jackson is the gift that just keeps on giving, particularly in this instance for Senator Obama. 

If you go back and you look at his speeches, even before the Father‘s Day speech, Barack Obama has always talked about the role of politics and faith and the role of personal responsibility.  Not just in the African-American community, where it‘s particularly important, but for the nation as a whole. 

So, you know, Harold is right when he says that this is not a new argument, but the reason that it is different and the reason that it marks the era of a new black politics is that traditional civil rights leaders have said, don‘t air your dirty laundry in public.  And we have seen Senator Barack Obama, we‘ve seen Bill Cosby do it.

GREGORY:  Right.

BERNARD:  And they go out and they talk about mythology (ph) and the importance of personal responsibility. 

GREGORY:  But here‘s the thing, Smerc.  This is not just about leadership in the African-American community.  It is about progressives in the Democratic Party looking at Obama and saying, we‘re a little tired of some of what you‘re doing here, some of the tacking to the center.  This is not what you ran on in the primary that created this phenomenon around you. 

MICHAEL SMERCONISH, RADIO TALK SHOW HOST:  I recognize that he has those problems because the movements that he‘s made since primary season, but I don‘t think on this particular issue, David.  The comment that I heard most often today—and I talked about it extensively—in a word, jealousy.  The perception is that Jesse Jackson is jealous of the torch having been passed to Barack Obama. 

And let me just say that I wasn‘t offended by the obscenity in this.  I was offended by the substantive remark that Jesse Jackson was making, because that speech that Barack Obama delivered on Father‘s Day so impressed me, that I‘ve had it posted on my Web site ever since. 

It‘s a remarkable message of self-help.  And Jesse Jackson took that message on substantively today. 

GREGORY:  Right.

SMERCONISH:  And as Michelle said, he did a great favor, I think, for Senator Obama in a white constituency. 

GREGORY:  OK.

But, Tony, we could be saying two things at the same time, which is that progressives—his base can be upset with him, and Jesse Jackson can be giving voice to that in a whisper, what those in the black community and other—those other people in the Democratic Party have been saying.  But you could also make the point that, precisely at a time when Barack Obama has to garner the trust of white Americans broadly, after the Reverend Wright controversy, that this is the sort of criticism that he wants. 

TONY BLANKLEY, SYNDICATED COLUMNIST:  Well, look, obviously, you know, I‘d stand next to Obama in a lightning storm.  He‘s lucky to have Jesse Jackson go after him. 

But I take your other point not so much that the glow is off with liberals, although it may be, but that the problem he‘s had from the beginning, which is he‘s an unknown commodity.  He hasn‘t been around for 10 or 20 or 30 years. 

So liberal aren‘t really sure whether he‘s really liberal.  They‘re a little worried about, have they got the right guy?  Conservatives who hear conservative rhetoric wonder, is that the real him?  Who is the real him?  Is there a real him? 

GREGORY:  What‘s real?  Right.  OK. 

BLANKLEY:  And that‘s the danger, that if it goes too far, it could undercut his support across the board, not just with liberals. 

GREGORY:  All right.  Later on—I‘ve got to take a break here.  We‘re going to come back to this at the half tonight in “Three Questions” and look at whether this is indicative of why Obama is not farther ahead of John McCain at this point. 

When we come back, however, John McCain‘s economic guru calls Americans whiners.  What‘s that going to do to John McCain‘s hopes for winning in November and winning the issue of the economy? 

Later on, your play date with the panel.  You can call us, 212-790-2299, e-mail to race08@msnbc.com.

THE RACE will be right back.

(COMMERCIAL BREAK)

GREGORY:  Back on RACE FOR THE WHITE HOUSE, now heading deep into the campaign war rooms.

McCain‘s brain on the economy says Americans are in a mental recession.  Does this end McCain‘s chances of winning the debate on pocketbook issues?

With us now, Michelle Bernard, Michael Smerconish, Harold Ford, Jr., and Tony Blankley.

OK.  Let‘s get right into this.

First up, McCain‘s top economic adviser, one of his advisers, Phil Gramm, refers to Americans as a “nation of whiners” in an interview with “The Washington Times.”  Here‘s what he said on the lagging economy.

To the quote board.

“You‘ve heard of mental depression; this is a mental recession.  We have sort of become a nation of whiners.  You just hear this constant whining, complaining about a loss of competitiveness, America in decline.  Misery sells newspapers.”

Then, “Oh God.  The economy is not as bad as you read in the newspaper every day.”

McCain distanced himself from the comments today, saying this before the press during a campaign stop in Michigan.  Watch.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  America‘s in great difficulty, and we are experiencing enormous economic challenges, as well as others.  Phil Gramm does not speak for me.  I speak for me.  So I strongly disagree. 

(END VIDEO CLIP)

GREGORY:  Obama pounds, as you could imagine, on Gramm‘s comments.  He was in Virginia this afternoon. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  I want all of you to know that America already has one Dr. Phil. 

(APPLAUSE)

We don‘t need another one when it comes to the economy.  We need somebody to actually solve the economy.  It‘s not just a figment of your imagination.  It‘s not all in your head. 

(END VIDEO CLIP)

GREGORY:  All right.  Quick reaction to this.

Harold Ford, empathy is job one as a politician about the economy.  It doesn‘t help here, does it?

FORD:  It doesn‘t.  You know, McCain distanced himself from Gramm.  He did the right thing.  But this reinforces a lot of what Barack‘s campaign is saying about McCain representing a third term for Bush. 

You may recall a month and a half ago at the White House, reporters suggested to President Bush—I believe it was the White House—that gas prices could reach $4 a gallon. 

GREGORY:  Yes.

FORD:  The president looked puzzled, if not altogether surprised, that that was the case.  You have Phil Gramm now saying this, and you had even McCain a few others months ago—or a year ago—saying the economy was not his strong point. 

I would remind Barack, and would give them a little counsel, there‘s no need to make fun of this.  What Americans need more is not jokes, but where do we go?  How do we address the housing issue? 

GREGORY:  Right.

FORD:  Is the housing bill working its way through Congress?  An answer.  Do we suggest to Fannie and Freddie, that GSEs, that they will remain solvent?  That we keep them capitalized?

Those are the questions that need to be answered for the American public, not to mention gas prices and other things. 

GREGORY:  Smerc—right.

But Smerc, the reality is, what Gramm said is not totally wrong.  Of course, there‘s a huge psychological aspect to what‘s happening in the economy and the behavior of the financial markets, but he sounds a lot more like an economist and not a politician. 

SMERCONISH:  He was very foolish politically to say what he said.  And no amount of mentalism is going to fill my gas tank at $4 a gallon. 

However, you know, my wife is a realtor, David.  And she says to me every day, “I‘ve got good product.  The interest rates are low.  Mortgage money is plentiful.  Why isn‘t the market picking up?”

And she is convinced it‘s because the American public turn on the morning shows and are continually told that the market is in the dump. 

GREGORY:  Yes.

SMERCONISH:  And consequently, it never gets out.  And they‘re waiting for the sign from the media. 

And let‘s be fair.  That‘s what he was talking about today.  And I think there are grains of truth in that. 

GREGORY:  All right.  Let me keep moving.

(CROSSTALK)

FORD:  If that‘s an argument, Barack is going to win this thing running away (ph).  I hear Smerc loud and clear, but you can‘t make that argument to Americans—to Ohioans and Pennsylvanians. 

GREGORY:  Next up, retiring Clinton‘s debts slips Obama‘s mind during their joint fund-raiser last night in New York.  Have you seen this?  Watch. 

(BEGIN VIDEO CLIP)

OBAMA:  Hold on a second, guys.  I was getting all carried away. 

Senator Clinton still has some debt.  And I could have had some debt if I hadn‘t won. 

So I know the drill.  That is part of the process of making sure that we are unified moving forward.  So I would just ask all of you to take that time to do that. 

(APPLAUSE)

All right.  Turn on the music again.  Let‘s keep on partying. 

(END VIDEO CLIP)

GREGORY:  Tony, what‘s striking about this is that he got in trouble with the Clintons originally because he wouldn‘t make a pitch to his supporters to get them to pony up to retire her debt.  And now suddenly it slips his mind.  What‘s the impact? 

BLANKLEY:  I think this is inside, inside, inside baseball.  The Hillary people are going to make the decisions they‘re going to make for bigger reasons eventually.  Most of them who are professional in the money-giving business will give because they‘ve got to be on the side of the next president.  And—so I don‘t think this is much of a problem for him.  The average voter is not going to care whether he forgot his line about Hillary. 

GREGORY:  All right.  Well, let‘s keep talking about money. 

Finally, Obama‘s overflowing money chest, is it all a little bit of hype here? 

Camp McCain announcing today that their war chest, combined with the McCain Victory Committee, totals $94 million cash on hand, and according to May financial reports from Federal Election Commission, the RNC had more than 10 times as much cash as the DNC, $40.6 million to $4.4 million. 

That‘s a lot of cash, Michelle, that they‘re going to be able to spend between convention time and Election Day. 

BERNARD:  Absolutely.  And this is definitely a money race.  What we have seen throughout this campaign, though, is that Barack Obama has been able to raise astounding amounts of money, and he‘s going to need to continue to do so, especially since he‘s decided to opt out of the way presidential campaigns are normally financed. 

This is good news for John McCain, though.  He needs to spend a lot of money on advertising, particularly in those battleground states.  He needs people to go out—not Phil Gramm, but others, instead of death by surrogates.  But he needs good people to speak on his behalf because he‘s going to need every single penny that the RNC and his campaign is raising to fight Obama. 

GREGORY:  But Harold, is this financial spin, or is this a real advantage here?  Or has Obama really still got the advantage on this? 

FORD:  You have to give the advantage to Barack on this.  But I‘ll tell you, they‘re going to have—the Republicans are going to be well funded.  Barack will have more money. 

But the question is, what do you need to make your case and to deliver your message across the country?  They‘ve got to get a good message, but it looks as if they‘re going to have enough at least to make their case. 

GREGORY:  All right.  Got to keep going here.  We‘re going to take a break. 

Barack Obama‘s shift to the center, good move or recipe for failure? 

We‘ve been talking about it.  We‘ll get into it a little bit more. 

“Smart Takes” up next.

(COMMERCIAL BREAK)

GREGORY:  Back on THE RACE now.  “Smart Take” time, the most provocative, insightful, sharpest thing out there. 

And with us to talk about it tonight, Michelle, Michael, Harold and Tony. 

First “Smart Take” from “The New York Times,” Gail Collins.  She argues the other way here on this Obama discussion, that Obama‘s recent moves to the center is not a flip-flop at all.  It‘s making good on his promise to bring change. 

To the quote board.

“You liked Barack Obama because you thought he could get past the old brain-dead politics, right?  He talked and talked and talked about how he was going to bring Americans together, including Republicans and Democrats.  Exactly where did everybody think this gathering was going to take place, left field?”

“When an extremely talented politician tells you over and over and over that he is tired of the ‘take no prisoners‘ politics of the last several decades, that he‘s going to get things done and build a new consensus, he is trying to explain that he is all about compromise.  Even if he says it in the great Baracky way.”

Smerc, it‘s interesting.  A lot of times people project what they want to see, what they want to believe in a candidate, onto that candidate, and they don‘t always listen to what they‘re told. 

SMERCONISH:  I think you‘re right.  This is a classic glass half empty, glass half full.  What she calls rational common ground, others would refer to it as inconsistency. 

And the problem, David—the problem is, he‘s supposed to be different.  And when he changes his positions, he looks like all the others.  That‘s the problem for Barack Obama. 

GREGORY:  Tony? 

BLANKLEY:  Look, I think this is a reasonable explanation for a stunning series of reversals.  Everybody talks about candidates moving to the center in the general, and that‘s true.  But they do it by emphasizing points that are more popular in the center, as opposed to emphasizing points that were popular on the left or right, depending on where they‘re running from in the primaries. 

He is flipping on moral issues like abortion, you know, like capital punishment, in a matter of weeks.  I find it stunning that he—and I think not deft.  We‘ll have to see how much damage he does to his brand.  I‘ve never seen a politician do it this much, this fast. 

GREGORY:  All right.

Karl Rove picks up on this, writing in “The Wall Street Journal” today, saying that he disagrees.  This is what he said...

“Mr. Obama‘s biggest problem is that when it comes to substance, he‘s following the playbook of a Republican other than George W. Bush.  In 2000, Mr.  Bush won the general election on the same themes and positions as in the primaries instead of inconsistency.  Mr. Obama has followed Richard Nixon‘s advice to crater to his party‘s extreme in the primaries and then move aggressively to the middle for the fall.”

Harold, take it on. 

FORD:  Well, Karl Rove managed two campaigns for George Bush, and George Bush found his way to the center in some ways during the primaries, then found his way back to the right.  And then he found a mushy in between the right and center.  This is not unusual. 

I think this race, this long primary we went through, and Hillary‘s positions and Barack‘s positions, I think in fairness, Barack has probably held more of these positions than the press probably caught on to.  And he‘s being the politician and being a thinker that led him to the nomination and led him to be senator.  And as a chairman of the DLC, a centrist organization, we‘d love to see him finding his way to the middle on of a lot of these issues. 

GREGORY:  Right.  All right. 

BERNARD:  Can I add something?

GREGORY:  Final “Smart Take” tonight—yes, just right after this. 

Our final “Smart Take,” “The Atlanta Journal-Constitution,” Luke Boggs, takes issue with Obama saying he regrets letting his daughters participate in that recent interview with “Access Hollywood.”

To the quote board.

“Obama having his daughters at his side in a puffy little holiday interview should have been no big deal to anyone.  So what jumped out at me was how quickly Obama regretted his decision.  And that in turn made me wonder how often the senator has regretted other choices.”

“In November, ‘06, Obama said he regretted buying property from Tony Rezko.  In April ‘08, Obama said he regretted saying that bitter folks in middle America who have lost economic hope cling to guns or religion.  Perhaps the American people are looking for a regretful guy after eight years of George W. Bush, but I‘m not so sure.  After all, a lot of Americans understand that you don‘t get a bunch of easy do-overs in the Oval Office.”

Real quick, take it on, Michelle. 

BERNARD:  Well, I mean, this is somebody who probably is not going to be voting for Barack Obama, whether he changed his mind or not, or flip-flopped or not.  I mean, he raises absolutely valid points, but the bottom line, he‘s not going to be a Barack Obama supporter, and it‘s almost much ado about nothing. 

GREGORY:  Well, but, Smerc, there‘s a certain—it‘s like with the daughters interview.  You know, you sort of wonder how that all came down, and then this idea that he regrets it.  Do people respond well to that, or do they start to add up their regrets and say, OK, how are we making these mistakes? 

SMERCONISH:  I have to tell you, David, I think self-deprecation is a good thing, and you will know this issue better than I because you were probably in the room as the White House correspondent. 

Do you remember that press conference where President Bush was asked to articulate something that he regretted, and he stood at the podium dumbfounded, and he couldn‘t come up with anything?  My God, I regret things I‘ve said on your program tonight.  So I just don‘t think it has a ring of credibility when people speak like that.  I like that he looks at himself. 

GREGORY:  It is often interesting, though, when it‘s put to you directly, you know, what‘s something that you regret when you‘re put on the spot, let alone in front of millions of people watching, it‘s not always easy to come up with that comfortable answer.  And it‘s interesting that the follow-on to that, when Bush wanted to rectify that, his biggest regret was trading Sammy Sosa, he said, when he was owner of the Rangers. 

SMERCONISH:  Right.

GREGORY:  But later on, he said that one of his big mistakes was rhetorical, you know, the idea of “Wanted: Dead or Alive” for Osama bin Laden, or when it came to, you know, “Bring it on,” when he was talking about the insurgency. 

So that‘s the evolution of reflection on the part of George W. Bush. 

We‘re going to take a break here. 

Coming up next, one of McCain‘s main men when it comes to the economy says this mess of an economy is really just in your head.  That‘s really what he said.  We‘re going to get responses from Obama and McCain when we come back, and look at the impact on McCain, who wants to try to catch up on this issue of the economy, when THE RACE comes back for the back half. 

Don‘t go away.

(COMMERCIAL BREAK)

(NEWS BREAK)

GREGORY:  Back on RACE FOR THE WHITE HOUSE now.  I‘m David Gregory.  Happy to have you back here for the back half.  Tonight, damage control for the McCain campaign after one of the top economic advisers to McCain, a guy that says has vouched for his economic credentials, Phil Gramm, referred to the Americans whiners in a “Washington Times” interview.  How the campaign is responding to it, how Obama is responding to it; we‘re going to get through all of that.  We‘re going to go inside McCain‘s emergency war room on this issue. 

Back with us, Michelle Bernard, president of the Independent Women‘s Voice and an MSNBC political analyst, Michael Smerconish, radio talk show host on WPHT in Philly and columnist for both the “Philadelphia Inquirer,” and the “Philadelphia Daily News,” Harold Ford Jr., chairman of the Democratic Leadership Council and an NBC News Analyst.  And Tony Blankley is here, syndicated columnist. 

OK, to recap, one of Obama‘s economic advisers stirs controversy with remarks on the economy.  This is what former Senator Phil Gramm said in an interview with the “Washington Times,” to the quote board, “you‘ve heard of mental depression.  This is a mental recession.  We have sort of become a nation of whiners.  You just hear this constant whining, complaining about a loss of competitiveness, America in decline.  Misery sells newspapers.  Thank god the economy is not as bad as you read in newspaper every day.”

Now, Gramm has responded—this is a developing story—with this to the “Washington Post,” quote, I‘m not going to retract,” he says, “any of it.  Every word I said was true, when I said that we had become a nation of whiners.  I‘m talking about our leaders, our political leaders.  I‘m not talking about our people.  He said we‘ve got every kind of excuse in the world about oil prices.  We‘ve got speculators, the oil companies to blame.  But too many people don‘t have a program to get on with the job of producing.”

Issue here, however, Tony Blankley, is rule number one, empathy when it comes to connecting with voters on the economy.  This is a real drag on John McCain. 

BLANKLEY:  Yes, look, I mean—every successful politician knows never insult the public, and never insult the voters, whatever you privately think.  I think Gramm is quickly becoming the Wes Clark of the McCain campaign, going out now and defending a politically indefensible position, even if substantively, he could make a case. 

My experience has been with politicians who leave the scene for a while, when they come back, they often lose a step, and it shows.  I do have to say that this statement did remind me a little bit of Obama‘s calling people bitter, and that‘s not smart.  I think ultimately presidential candidates get blamed with what they say, not what their staff is saying.  This is an unpleasant tactical moment for McCain.  I don‘t think it‘s a strategic problem. 

GREGORY:  Obama obviously had one that was right over the plate to deal with on this.  This is what he said before a town hall in Virginia.  Watch. 

(BEGIN VIDEO CLIP)

OBAMA:  I want all of you to know that America already has one Dr.  Phil.  We don‘t need another one when it comes to the economy.  We need somebody to actually solve the economy.  It‘s not just a figment of your imagination.  It‘s not all in your head. 

(END VIDEO CLIP)

GREGORY:  Smerc, again, go back to what he said here.  The idea of that what you‘re seeing at the gas pump, the foreclosures in the market, what‘s happening in the financial markets, that this is a mental recession, that it‘s in your mind; this is the kind of thing on top of McCain having to deal with his statement that he‘s not an expert on the economy, he‘s got to be able to own this issue, and really inspire confidence on what may be the defining issue of this campaign. 

SMERCONISH:  I think there are two analyses.  One is a political, and this was bone headed, indefensible, politically speaking.  And then for him to come back and try and explain, they should send him away on vacation.  There‘s no amount of explaining that can salvage this.  On a substantive level, what I am trying to argue is there are some grains of truth in that which he is articulating.  I think the way in which the media tells us what‘s going on in the economy—this is one of those perception becomes reality scenarios. 

Not gas prices, because four dollars is four dollars.  Man, that‘s too much.  On other facets, and I think of the home market in particular, I think there‘s a heavy mental component. 

FORD:  Can we deal with a few numbers here for one moment?  There‘s been five million jobs created since George Bush was president.  There were 23 million created by his predecessor.  We spend 700 billion dollars a years as Americans we send overseas to countries like Venezuela and Iran to purchase oil from, to those in the Middle East who seek to undo us.  We have a competitiveness problem in this nation, whether we want to admit it or not.

Smerc, I understand where you‘re going, but this is not mental.  This is real.  The fact that we don‘t graduate enough engineers and scientists in this country, that‘s real.  The fact that we don‘t have a real immigration policy in this country, that‘s real.  The fact that small businesses are paying too much for health care and crippling their ability to innovate and hire more people, these are real issues.  As much as it be elemental, this is a real issue for government leaders, for business leaders, and certainly for people across this country. 

GREGORY:  Let‘s go ahead and listen to what John McCain said.  He had a press conference about this and had to distance himself from Phil Gramm.  Watch. 

(BEGIN VIDEO CLIP)

MCCAIN:  I don‘t agree with senator Gramm.  I believe that the person here in Michigan that just lost his job isn‘t suffering from a mental recession.  I believe the mother here in Michigan, around America, who is trying to get enough money to educate their children isn‘t whining.  America‘s in great difficulty.  And we are experiencing enormous economic challenges, as well as others. 

Phil Gramm does not speak for me.  I speak for me.  So I strongly disagree. 

(END VIDEO CLIP)

GREGORY:  Here‘s the problem with that, Michelle.  John McCain is going to have a hard time distancing himself from Phil Gramm now, and saying he doesn‘t speak for me, when his bona fides on the economy—he‘s told us in debates.  He‘s told us on the campaign trail during the primaries.  He said that‘s why people like Phil Gramm and Jack Camp vouch for me on my economic credentials, that in a sense, he was disciples of these guys.  Now he‘s saying, no, don‘t listen to Phil Gramm.  He doesn‘t speak for me.  Can he really distance himself from him now? 

BERNARD:  This is a serious problem for McCain, not as one instance by itself, but if you look at the totality of the instances where Senator McCain is literally being stabbed in the back by surrogates who go out, they make ridiculous comments, and then he is put in the position of having to defend them.  And particularly when you‘re talking about economic issues, which, just as you have just said, Senator McCain has admitted that is his weak point. 

It‘s going to be very difficult.  It puts sort of—Phil Gramm has sort of opened the door, and Barack Obama is walking right through it, as any lawyer would tell you.  He will continue to try to tie Senator McCain to a third Bush presidency, which we keep hearing over and over again.  In these economic times, politically speaking, it was a ridiculous thing to do.  And it puts—McCain is not a good speaker. 

SMERCONISH:  If I can make a quick campaign point. 

GREGORY:  Real quick. 

BLANKLEY:  You compare how Obama did, his statement, in a live audience filled with energy, and McCain does his statement with no energy at all.  I would have set him up in a room, made an emphatic powerful statement about his belief, get the audience cheering, and have that be the sound bite of the night for him defending the economy, rather than that quiet, passive, almost narcoticized voice that he has.  It‘s a bad event for him. 

GREGORY:  I‘ve got to take a break here.  Coming up, three questions and this; does Barack Obama really need Hillary Clinton?  A lot of talk about it.  We get that debate going when we come back.

(COMMERCIAL BREAK)

GREGORY:  Back now on THE RACE.  Turning our attention to today‘s three biggest questions in the ‘08 race.  Still with us, Michelle Bernard, Michael Smerconish, Harold Ford Jr., and Tony Blankley.  First up, unity take two.  In the past 24 hours, Barack Obama and Hillary Clinton have had two joint fund-raisers, raking in roughly five million dollars.  At a Women for Obama breakfast today, Clinton even compared their relationship to a famous film duo. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK:  During the campaign, I‘m sure you read that Barack would get up faithfully every morning and go to the gym.  I would get up and have my hair done.  It‘s one of those Ginger Rogers-Fred Astaire things that are part of our lives. 

(END VIDEO CLIP)

GREGORY:  Fred and Ginger, can‘t imagine one without the other, right? 

Obama seemed to echo that sentiment to the crowd. 

(BEGIN VIDEO CLIP)

OBAMA:  I desperately need her and Bill Clinton involved in this campaign.  And I‘m absolutely convinced that if we‘re working together and all the women in this room are working together, there‘s no way we‘re going to lose in November. 

(END VIDEO CLIP)

GREGORY:  But immediately after the joint fund-raiser, Obama headlined a PAC working women‘s event alone and had a really strong message for empowering women, economically and otherwise.  First question today, does Obama really need Hillary Clinton to win over female voters?  To win period?  Smerc, I‘ve had this debate internally, and my own reporting shows me this is not a linkage that looks possible for her to be on the ticket.  Is that a mistake?  Does he need her? 

SMERCONISH:  I think sometimes it‘s too simplistic of an analysis that we all engage in, where we think, OK, if you take Hillary Clinton, all of a sudden you‘re controlling the female vote.  If you‘ve got Bill Richardson, you‘ve locked up the Latinos.  If you‘ve got a leader in the Jewish community, that vote is secure in the Florida.  I just don‘t think that‘s the way the model is going to operate in this particular election.  You‘d rather have both Clintons on your side, because they are a dynamic duo on the stump, and he needs the money. 

GREGORY:  Is that the reality, Tony?  Look at it this from the outside, from a Republican perspective.  There‘s so much bad blood that remains between the campaigns.  All this sparring over money and lists of donors and all that does not portend very well for a good relationship. 

BLANKLEY:  I‘m a broken record.  I don‘t think that Hillary makes a darn bit of difference to Obama‘s campaign.  Obama‘s campaign will succeed if he convinces the public that he‘s the kind of guy that they need.  And what Hillary does or doesn‘t do, how well they get together—but to deconstruct the Ginger Rogers reference.  You remember Ginger Rogers claimed she could do everything that Fred Astaire could do but backwards.  Maybe there was a deep brag going on there. 

BERNARD:  She said she had to do everything Fred Astaire did. 

GREGORY:  I think you‘re on to something there. 

Next up, it‘s been a month since Obama locked up the Democratic nomination, but is he where he really needs to be in the battle against John McCain?  The new Pew poll out today shows Obama has increased his lead over McCain from three to eight points.  It‘s now Obama 48 to McCain 40.  But there‘s a catch.  An AP analysis of the Pew poll notes that, quote, a third of registered voters say they are undecided or may change their minds, far more than said so at this stage in 2004.  And independents are evenly split between the two.

Given that the political climate is so bad for Republicans this year, and the primary fight seems in hindsight to have left few scars, his rival last month is out today campaigning and fund-raising for him; so the second question, why isn‘t Obama farther ahead, Harold? 

FORD:  I got to tell you, if you‘re Barack Obama and we here at NBC are debating tonight why he is not further ahead in a race, you‘ve got to be feeling pretty good as you head into the summer.  He faced a long primary, which I actually thought was pretty good, because it allowed him and Mrs. Clinton and our eventual winner Barack Obama in this primary to be a stronger candidate. 

As we head into the fall, presidential races are always about who‘s best on national security, who can lead the economy.  The economy will be foremost on people‘s minds, because of the challenges that we face.  Senator Obama still has some work to do.  He‘s got to tell his biography or tell us about himself even more.  He has a compelling story.  And as he wraps more specifics around how he‘s going to guide and navigate us through these challenging times, he will continue to win votes. 

But I got to tell you, if I was eight points ahead in the presidential race in early July, I wouldn‘t be complaining.  I‘d continue to work, continue to put my head down, and continue to touch voters.  That‘s what he‘s got to do. 

GREGORY:  But Michelle, some of the criticism about Barack Obama is that he gets in a position of strength, and then he can coast.  There was some of that during the primary.  And those who are criticizing him, even if they‘re supporters, are saying that‘s what we‘re concerned about now in some of this tacking toward the center, taking his base for granted to some degree.  As Andrew Sullivan wrote on his blog today, hubris within the campaign. 

You have a time when McCain‘s campaign is in deep trouble.  People inside the campaign admit it.  Republicans outside the campaign admit it.  Is Obama doing everything he can at this time? 

BERNARD:  This is a place where I disagree with my very good friend Harold here.  If I were in this position and I was only eight points ahead, I would actually be a little bit worried, because Barack Obama really has a lot going for him in the fact that John McCain is not the best campaigner.  There‘s a lot of disaffection in the Republican party.  There is not the kind of excitement out there for the McCain candidacy, as there is for the Obama candidacy. 

But I do think he‘s doing everything that he can do.  It was a long and protracted race, and people don‘t know him.  And one of the things that we have failed to mention tonight, but I think we really do need to talk about is the fact that we are dealing with our first African-American presidential candidate.  There are a lot of people—NBC‘s own demographics, every primary night showed us that were uncomfortable, not necessarily with him being African-American, but couple that with the fact that they don‘t know him, questions about whether he‘s a Christian or a Muslim, is he patriotic enough. 

So he needs to continue to go out and tell his story, tell his biography, and explain to the American public why he believes he‘s the best candidate for our nation at this time. 

GREGORY:  It actually feeds the final point, the battle to define the election.  Today the pro-Obama AFL-CIO launched this new campaign in six battle ground states, linking McCain to President Bush.  Watch. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  He wants us to keep spending 10 billion dollars a month in Iraq, just like Bush.  That‘s money we could use to build schools and roads and create needed jobs here at home. 

(END VIDEO CLIP)

GREGORY:  Team McCain already up with its new battleground spot, highlighting McCain‘s military service in Vietnam, his status as a P.O.W.  and his career as a maverick senator.  NBC‘s First Read says the McCain draws heavy contrast with Obama, and signals a turning point in the McCain message, an attempt to make this election a referendum on Obama and shift the focus from Bush.

Third question then, Obama wants to make this election a referendum on Bush, but is it turning into a referendum on him?  Tony? 

BLANKLEY:  It‘s going to be a referendum on Obama.  The public‘s already decided they don‘t like Bush.  They‘re obviously going to think that McCain is a good part of Bush.  That‘s inevitable.  The question is is Obama the one they want for president?  He‘s going to prove that to the people.  That‘s what the campaign is going to be about.  If I were McCain, I‘d be doing all my communicating, a lot of my advertising, trying to shape the impression of who Obama is. 

GREGORY:  It is interesting, Harold, that you see McCain already moving away.  Yes, he‘s got a strong biography.  Yes, he wants people to look at him positively.  The contrast now say this guy is too risky, inexperienced, too risky, what‘s he really for, who is he really.  It‘s all these threshold questions that Obama has to face, at the time when Obama wants to focus on linking McCain and Bush together. 

FORD:  If you‘re John McCain, you want to make this race a referendum on Barack Obama.  And in fairness to Smerc, he made this point earlier in the week on this very show, that this is what this race is really becoming.  Two, John McCain, you have to remember, he‘s a brand in and of himself.  We may talk about him every night on this network and other networks may talk about this race, but people know John McCain outside of what‘s been talked about over the last several months. 

John McCain will try his hardest to resurrect his brand from the year 2000.  Michelle Bernard is my friend, and I‘ve known her for 25 years.  The only point I make about Barack right now is Barack is running against a brand.  He‘s not a Republican as much as he‘s John McCain.  He‘s the Republican nominee, but he brings some unique attributes to this.  Where I agree with Michelle 1,000 percent, Barack better tell his story soon and better tell it well.  The faster and the better he does it, the more likely it is he‘ll take the oath of office in late January. 

GREGORY:  Got to take a break here.  Quick note about friends.  You know, when you listen to John McCain, when he calls somebody his friend, that‘s when I really get worried because that‘s when he‘s angry. 

FORD:  Michelle‘s my friend for real, David, for real. 

GREGORY:  We‘re all friends.  Imagine if we weren‘t friends, how really nasty it could be.  Coming next, your play date with the panel, because we‘re all friends, the viewers and us together, when we come back.

(COMMERCIAL BREAK)

GREGORY:  Final moments.  Time for your play date with the panel.  Back with us tonight, the panel tonight, Michelle, Michael, Harold, and Tony.  First up, Charlie in Michigan called us with this question.  Listen. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  I‘ve been a Democratic voter for 60 years.  I‘d vote for a frog if they‘re Democratic.  But Obama seeks the evangelist vote by going for the faith-based initiative.  Why should I vote for him?  It‘s against all my thoughts. 

(END VIDEO CLIP)

GREGORY:  Tony, do you still stick to your position here that, even though some voters may be upset about some of this tacking, they‘ve still got no place to go. 

BLANKLEY:  I mean, look, this is a yellow dog Democrat, but a green frog Democrat.  I think very few people, if they‘re lifelong Democrat, not going to vote for Obama because they disagree with him on one issue.  This may be a place holder for many other doubts he has, but I‘d be surprised if that one decision would be sufficient. 

GREGORY:  Yes.  Michelle, the issue is are Democrats likely, as we‘ve seen Republicans do in the past, to simply sit this issue out, sit the election out?  Most Democrats want to win so badly, I would think rank and file Democrats would say, look, if he‘s tacking a little bit to the center, part of what he‘s got to do to win to, break through to some new voting groups. 

BERNARD:  Absolutely.  I mean, Democrats have been in hibernation for the last eight years, and I think that—obviously, there are some people that are single issue voters, and if this person, the frog man, happens to be a single issue voter, maybe he will sit it out.  But Democrats want to be back in the White House, and I think that they‘re going to rally around their candidate, and they‘re going to vote for him in November. 

GREGORY:  Dallas in Florida writes, “how legit of a shot does John Edwards have when it comes to being the VP for Barack Obama now that Jim Webb has said no?  Wouldn‘t Edwards be a great choice to help Obama keep states like Virginia and North Carolina in play?  He could also help in parts of Ohio and West Virginia, where they may feel uncomfortable with Obama.” 

That latter part is true, Smerc.  But Edwards couldn‘t carry his own state last time around. 

SMERCONISH:  I think there‘s a faulty premise in that question, as I understand it.  I don‘t know that he had such great strength in delivering all that much in the last cycle.  I don‘t see his stock as being on the rise, even with Webb getting out. 

GREGORY:  Harold, do you think that Edwards is in play at all on a short list? 

FORD:  I‘m sure he‘s in play.  Barack‘s got to think about a lot of things.  I think Smerc raises some good points.  I understand that Joe Biden and others have moved up that list.  It will be interesting to see. 

GREGORY:  We‘re going to leave it there.  Thanks for a great panel tonight.  You can play with them every week night here on MSNBC.  Just send us an e-mail at RACE08@MSNBC.com or call us 212-790-2299.  That‘s THE RACE for tonight.  I‘m David Gregory.  Thanks for being here.  We‘ll see you back tomorrow night, same time, 6:00 p.m. Eastern, only on MSNBC, the place for politics.  Stay where you are.  “HARDBALL” with Chris Matthews starts in a matter of seconds.

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

END   

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