updated 8/4/2008 11:15:07 AM ET 2008-08-04T15:15:07

Guests: Chuck , Joe Watkins, Susan Molinari, John Harwood, Rachel Maddow

DAVID GREGORY, MSNBC ANCHOR:  Tonight, McCain steps up his attack.  The debate over racial politics.  So who won the week? 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, McCain defends his attacks, but vows to back away from the debate over race.  Has the campaign taken a nasty turn this week? 

Also tonight, new polls, the battlegrounds, the game plan.  Chuck Todd, our political director, will be here to go inside the electoral map.  The bedrock of our program, as you know, a panel that always comes to play.  With us tonight, for the first time, Joe Watkins, Republican strategist and an MSNBC political analyst.  Joe served as a White House aide to President George H.W. Bush.  Susan Molinari, Republican strategist, former congresswoman of course from New York.  John Harwood, CNBC‘s chief Washington correspondent and a political writer for “The New York Times.”  And Rachel Maddow, host of “The Rachel Maddow Show” on Air America, also an MSNBC analyst. 

In headlines tonight, picking a winner and loser this week.  It is a day which featured a new line of attack from Senator McCain.  Here is a portion of a Web video that the McCain campaign released today.  Not a lot of money behind it, simply looking for some free press and big play on the Internet.  The charge, that Obama has a God complex. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  It should be known in 2008, the world will be blessed.  They will call him, the one.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  A nation healed.  A world repaired.  We are the ones we‘ve been waiting for. 

UNIDENTIFIED MALE:  He can do no wrong. 

LARA LOGAN, CBS NEWS CORRESPONDENT:  Do you have any doubts?

OBAMA:  Never. 

UNIDENTIFIED MALE:  Can you see the light?

OBAMA:  A light will shine down from somewhere.  It will light upon you.  You will experience an epiphany and you will say to yourself, I have to vote for Barack. 

UNIDENTIFIED MALE:  Behold his mighty hand. 

UNIDENTIFIED MALE:  Barack Obama may be the one, but is he ready to lead?

(END VIDEO CLIP)

GREGORY:  So late today, McCain defended the tone of his attack and said he is prepared to move beyond this race debate that blew up yesterday, even though he insists that Obama started it. 

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I didn‘t bring up the issue.  I did not bring up the issue.  Senator Obama did.  Three times in one day.  And his campaign later retracted it.  So, I think it‘s pretty obvious that at least they acknowledge that.  So he brought up the issue of race.  I responded to it because I‘m disappointed and I don‘t want that issue to be part of this campaign.  Since his campaign retracted it, I‘m ready to move on and I think we should move on. 

(END VIDEO CLIP)

GREGORY:  We‘ll get into whether that was an actual retraction or not, but in response to McCain‘s latest video, the one we showed you just a moment ago, team Obama said this.  “It‘s downright sad that when we learned that 51,000 Americans lost their jobs, a candidate for the presidency is spending all of his time and the powerful platform he has on these sorts of juvenile antics.  Senator McCain can keep telling everyone how ‘proud‘ he is of these political stunts which even his Republican friend sand advisers have called ‘childish,‘ but Barack Obama will continue talking about his plan to jump start our economy by giving working families $1,000 of immediate relief.”

The race to the bottom indeed overshadowed that announcement by Obama today, an emergency energy rebate check to Americans suffering from high gas prices to be paid by a windfall tax on oil companies.  There is real substance here, believe it or not.  I want to bring in the panel for their thoughts on who won the week.  Rachel, who was it?  Make the case. 

RACHEL MADDOW, RACHEL MADDOW SHOW:  Unexpectedly, I think that Barack Obama won the week.  I would have told you at the beginning of the week if I had seen what the headlines were going to be and what each campaign was going to release that it would have been John McCain‘s week, attacking, attacking, attacking and keeping the press and the country that‘s focusing on the election right now, thinking about Barack Obama instead of thinking about George Bush and John McCain.  But unexpectedly, there has been a backlash.  And I think that John McCain‘s campaign has taken a hit and John McCain‘s reputation has taken a hit by these increasingly childish and kind of pitiful snarky ads.

GREGORY:  Among whom is he taking a hit?

MADDOW:  Among even his allies who are speaking to the press and using their names and allowing themselves to be quoted.  His former staffers saying that they think these ads are childish and beneath him.  I think that hurts.  I think that when John McCain‘s reputation becomes part of a discussion about these kinds of ads that he‘s running.  I mean, it looks like the kind of thing that you‘d put together on your dorm room and post on YouTube.  It doesn‘t look like the kind of thing you‘d expect from a senior statesman.

GREGORY:  It‘s very You-Tube-y.  There‘s no question about that, all those quotes taken out of context to make kind of in an over the top way, again, to make what is a serious point about Obama and one that certainly McCain wants to debate.  Joe, welcome to the program.  Your take here, make the case for who won the week. 

JOE WATKINS, REPUBLICAN STRATEGIST:  I think John McCain won the week.  I think John McCain won the week because he framed the issue.  Barack Obama said three times in a single day that they‘re going to make you afraid of me.  He was really pointing to John McCain and Republicans, saying Republicans are going to launch some kind of negative and race-based campaign.  Not fair.  You don‘t put words into the mouths of your opponents.  You certainly don‘t paint your opponent that way.  And John McCain was smart to come up and respond to that negative and say you know, stop doing this.  It‘s not fair.  It‘s not right.  We have to have a debate, but the debate doesn‘t have to be framed.  Every single time I disagree with you, it doesn‘t have to be framed to make me a racist.  Not fair.  And I think that he did a very, very good job of pointing that out and of causing Barack Obama to stop.  I bet you won‘t hear any more of those, won‘t hear Barack Obama say that anymore. 

GREGORY:  Harwood, what do you say?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  Well, I know we are supposed to be hazing Joe as the first time guy on the panel.  But I have to agree with Joe.  I think John McCain won the week.  I think he drove the conversation, cheered some of his own troops by throwing a few hay makers at Barack Obama.  Some with humor and some with this very calculated effort to elevate the race discussion, which is a discussion that only benefits one side in this campaign, and that‘s John McCain.  They found the pretext to do it.  They did it.  They amped up the volume and that‘s good for John McCain. 

GREGORY:  Here‘s the push back though that even - and I brought this up over the last couple nights.  The message that McCain is making, that he‘s putting out there, and we just saw it in his over the top Web piece, that yes, he‘s popular, but is he prepared to lead? Did they dilute that message by bringing in the likes of Britney Spears and Paris Hilton and some of the antics of these other ads?  Was it poor execution to make a serious point?

HARWOOD:  I‘m not sure it‘s poor execution.  It got a lot of people talking about it.  There was a lot of buzz about those advertisements.  I think it‘s sort of clever and actually even that online video, you can make an argument that it‘s undignified for a presidential campaign to put that stuff like that and perhaps John McCain will regret it in the long run, but this is the kind of stuff that we see now on “The Daily Show,” that we see on “Saturday Night Live” and you have the campaign itself trying to use some of those techniques of mockery, exaggeration, satire, to drive a serious message. 

GREGORY:  All right Susan, wind it up for us.  Who won the week?

SUSAN MOLINARI, FORMER CONGRESSWOMAN:   It‘s 3-1 right now.  John McCain won the week.  The poll numbers are showing that this race is starting to tighten incredibly.  Barack Obama did not get any bounce.  In fact, he looks like he‘s slipping based on his world tour.  And Joe is absolutely right, as is John.  They sent the shot across, something that even the Clinton campaign said they wished they would have done earlier, which is we can disagree with you, we can take you on issues, and don‘t call us racist.  I mean, we take this very seriously.  John McCain takes his reputation seriously.  I think the guys are right.  You‘re not going to see this happen again from the Obama campaign.

GREGORY:  All right, we‘re going to take a break here.  More on the RACE today when we come back.  It is a provocative topic, so who benefits the most when the race card is in play?  Will it mobilize voters sympathetic to Obama or create a backlash that can help McCain?

(COMMERCIAL BREAK)

GREGORY:  Back now on the RACE.  Going inside the War Room and looking at issue of race in this campaign and what the impact is.  Back with us, Joe Watkins, Susan Molinari, John Harwood and Rachel Maddow.  First up, the remarks that struck a chord with the McCain campaign, ultimately changing the tone of this race in a hurry.  Here‘s one version of what Obama said in Missouri at three different events this week.  Watch. 

(BEGIN VIDEO CLIP)

OBAMA:  What they are trying to do is make you scared of me.  He doesn‘t look like all those other presidents on those dollar bills. 

(END VIDEO CLIP)

GREGORY:  After the third time, McCain campaign manager Rick Davis accused Obama of playing the race card.  Listen. 

(BEGIN VIDEO CLIP)

RICK DAVIS, MCCAIN CAMPAIGN MANAGER:  I don‘t know how else you explain the quote that you just played other than to believe somehow Barack Obama was calling something we‘d done racist or something we‘d done with racial overtones. 

(END VIDEO CLIP)

GREGORY:  Joe Watkins, one take from all of this in my mind is that both campaigns were putting each other on notice in a way and warning each other, don‘t go here.  Don‘t go down this road and they both felt the need to push each other back some.

WATKINS:  Absolutely, you‘re absolutely right David, that‘s exactly what they are doing.  I mean, remember, Barack Obama also made the same comment in Florida some time ago.  In Florida, he went so far as to say, after making the same remarks about they are going to make you afraid of me, he went so far as to say oh, and didn‘t I tell you?  He‘s black.  So he said it right out.  And you know how it works in this business.  If you don‘t answer a charge, especially if the charge is false, if you don‘t answer the charge, it basically becomes true.

GREGORY:  But the reality, Rachel, as we all know, it‘s not like this is coming out of nowhere.  There is real garbage that‘s out there against Obama on the Internet and the blogosphere generally.  There has been some stuff in political circles that have created an issue for him to respond to.  There was a “Newsweek” poll indicating 13 percent of voters think that he‘s a Muslim, for gosh sakes.

MADDOW:  Yes, and there‘s a lot of trash out there that the McCain campaign could score huge points on this issue by denouncing it.  Having a monkey that says it‘s name is Barack Obama is for sale as a fundraiser or as some sort of trinket for the campaign is not appropriate.  I mean, McCain could score some very easy points by denouncing that sort of stuff and putting some distance between himself and it.  He doesn‘t have to, but he has that opportunity.  I think what Obama is lashing out here is the overall tone of the McCain campaign, which is who does this guy think he is?  What do we really know about Barack Obama?  I do think there are some racial overtones to that.  I think the whole - I‘ve explained before - I think the whole he‘s presumptuous line has lot of race infliction in it.  And I think he‘s right to push on it. 

(CROSSTALK)

GREGORY:  Hold on one second.  We‘ll have a chance to respond to all of this, but I want to keep moving.  The question is, who does the debate benefit?  MSNBC.com‘s “First Read” says this, “Any time race is the topic du jour in the campaign, it‘s a bad day for Obama, period.  There are a lot of voters out there who don‘t want to have their vote judged through the prism of race.  If somehow a swing voter in Ohio, Pennsylvania or Michigan is made to feel that voting against Obama will make them a racist, they‘ll be resentful.”

John? 

HARWOOD:  Look, I think that is exactly true.  It‘s not just garbage out on the Internet or virulent racists who are a problem in this regard.  There are a lot of people who are uncomfortable with change.  Racial change is part of that.  Older voters in Florida, for example, that is a hard thing for them to get used to.  And the more people feel uncomfortable voting for an African-American candidate, even if they‘re not wicked or hostile people, the more that benefits John McCain and the more this is talked about, the more that benefits John McCain because it reminds people of what makes Barack Obama different and in some people‘s minds risky.

GREGORY:  Susan?

MOLINARI:  Well to say that you can‘t say to a candidate whether it is a woman or any other ethnic background, that because you‘ve only been in the Senate for two years, because we don‘t really know what your positions are, because we haven‘t been able to see how you can lead this nation during these troubled times and to call him presumptuous on the basis of the fact that he builds almost a presidential feel, and talked about this being such an incredible moment for the United States.  This is presidential politics.  People have said this to each other since we‘ve been born and you don‘t call anybody racist because you question your opponent‘s capabilities to be president.

MADDOW:  But Susan, how come nobody asked whether it was presumptuous for John McCain to call himself President McCain. 

MOLINARI:  Well, I mean it‘s just presumptuous in general for Barack Obama to - we can say is it right to say is somebody is presumptuous or not?  Is it correct?  Are we living in this day and age that where if you call someone presumptuous, you are a racist?  I mean, that is one heck of a deal. 

(CROSSTALK)

GREGORY:  Let me just - I want to keep moving.  What is behind Obama‘s remarks in all of this?  He told the “St. Petersburg Times” today, “What I said was I think everybody knows.”  He thinks everybody knows what he‘s talking about.  His campaign manager David Axelrod echoed that thought this morning on the “Today” program.  Watch.

(BEGIN VIDEO CLIP)

DAVID AXELROD, OBAMA CAMPAIGN MANAGER:  He said it to a crowd in rural Missouri, 99 PERCENT white.  There was all kind of press.  Nobody reported it as a racial comment.

MATT LAUER, NBC HOST:  What does the comment mean?  If it‘s not a direct reference to race, what does it mean?

AXELROD:  What he was saying and he does this in a self mocking way - look, I know I‘m not from central casting when it comes to presidents of the United States.  I‘m new, I‘m relatively young.  I haven‘t spent my life in Washington.  And yes, I‘m African-American and that‘s going to be some fodder.  But it was, in no way, intended or taken by the crowd or the media there in the way that the McCain campaign has portrayed it.

(END VIDEO CLIP)

GREGORY:  Yes, but they are different, Rachel, the way that Axelrod describes that it could be some fodder.  That‘s not what Barack Obama has been saying.  “They will use that against me.”  Who is the they, Rachel?

MADDOW:  I think he‘s saying the overall point of the McCain campaign is to make you afraid of me and to make you afraid of me on all the grounds that Axelrod was saying there.  I mean, Barack Obama is older than Bill Clinton was at this point in the campaign.  Right, but Bill Clinton self-deprecatingly talked about the fact that they would try to make you afraid of his youth, right?  That he said they would try to make it seem like he was too young for the job.  And he turned that around to his advantage.  It‘s the same kind of discussion.  If you wanted to say, John McCain, you are a racist and you are running against me in a white supremacist way, I‘m sure he‘d come out and say this.  He‘s not saying that.

WATKINS:  Rachel, he‘s saying they‘re going to make you afraid of me, and it‘s because of my color.  That‘s what he‘s saying.  I mean, I‘m a black guy.  I understand code.  I mean, my antenna goes straight up whenever I hear something like that from somebody else who like me, is African-American.  When you say stuff like they are going to make you afraid of me, scared of me, that makes me think.  And so really Barack Obama who really is a master of words, knew exactly what those words would conjure, what kinds of thoughts they would conjure in the minds of lots of people.

GREGORY:  But Joe, let me just challenge you on this point.  If you‘re Barack Obama, why shouldn‘t you say that? Is that not an acknowledgement of what he knows and what everybody knows is a real issue in this campaign among all kinds of voters? 

WATKINS:  David, you‘re absolutely right.  Race is an issue, it‘s going to be an issue in the campaign.  But don‘t paint your opponent as a racist.  Don‘t say your opponent is going to make you scared of him because your opponent happens to be African-American. 

GREGORY:  I‘ve got to get a break in here.  More after the break.  Coming up next, the “Wall Street Journal‘s” big story today on what Wal-Mart is telling its managers about the November election, that a Democratic victory would be bad for business.  We‘ll get to that when the RACE returns after this.

(COMMERCIAL BREAK)

GREGORY:  Smart Takes tonight.  We‘re back.  A warning from Wal-Mart.  Is the mega-retailer encouraging its employees to vote Republican in the fall? It is a front-page story in today‘s “Wall Street Journal” and it‘s sparking a lot of reaction on the Web as well today.  And our panel‘s back to talk about it.  Joe, Susan, John and Rachel, the “Wall Street Journal” reports this.  Wal-Mart has been holding mandatory meetings for store managers and supervisors warning that a Democratic victory in November could lead to their stores being unionized and consequently hefty union dues, strikes without compensation, even possible job cuts. 

Today Wal-Mart vehemently denied that it was trying to influence its employees‘ votes.  But one Wal-Mart supervisor says the message was clear, telling the “Journal,” “the meeting leader said ‘I am not telling you how to vote, but if the Democrats win, this bill will pass and you won‘t have a vote on whether you want a union.‘  I am not a stupid person.  They were telling me how to vote.”

A Wal-Mart spokesman told the A.P. today, “Half of our political contributions are to members of each party.  We regularly educate our associates on issues which impact our company, and this is an example of that.  We stand ready to work with the new Congress and whoever is elected president.”

The impact of all of this on the race?  NBC‘s own “First Read” calls it a shot across the bow of big labor and says this could fire up the unions, whose power has been waning.  John Harwood, your take on it?

HARWOOD:  Well look, the line they‘re trying to maintain, Wal-Mart is, it‘s the same line between so called issue advocacy and express advocacy.  It‘s against the law to tell hourly employees how to vote.  But it‘s not against the law to tell them, we think this bill would be bad for our company and therefore bad for you.  That‘s what Wal-Mart says they‘re doing.  Unions say they crossed the line.  They‘re telling people how to vote.  And it‘s not just Wal-Mart, David.  It‘s a lot of American businesses are very concerned about this legislation that Barack Obama supports.  Democrats have been pushing, that would make it easier to organize unions.  It has to do with how you vote to organize a union.

And this is widespread across the business community.  I suspect it will be difficult to enact under any circumstances because it could be subject to a filibuster.  But that‘s what we‘re talking about and it‘s as I said, it‘s not just Wal-Mart. 

GREGORY:  Rachel, is there an impact here, a grass roots impact among union, among big labor generally that‘s now galvanized them into action?

MADDOW:  I agree with the First Read take on this, that this could really galvanize big labor and this could be a big labor.  I mean, it‘s a way to galvanize people who want this to pass, letting you know what the opposition is.

Honestly, if you wanted to define sort of a classroom stereotypical example of how to explain the difference between the two parties in the country, this would be the thing you‘d make up, except people would probably laugh at this stereotype. 

Wal-Mart executives telling their employees to vote for Republicans because Democrats like unions.  I mean, maybe the big impact of this is it will finally start making clear to the American people what the real difference is between Democrats and Republicans in this country at a time when for so many other reasons, it sometimes seems blurred. 

GREGORY:  Joe, you‘ve got Wal-Mart, that‘s kind of on the vanguard of a lot of these issues that are important in the campaign.  Health care and now the issue of unionization in big companies. 

WATKINS:  I think it makes sense to make employees aware of the consequences of their vote.  Clearly, you have a nominee apparent, a Democratic nominee apparent, who is saying what he‘ll do if elected president of the United States.  He said with regards to that $1,000 gift you‘ll give away, it‘s going to come on the back of a $16 billion windfall profit tax on oil companies.  He said that he‘s going to raise taxes on capital gains, almost double the rate of the tax on capital gains.  He‘s going to raise corporate taxes and payroll taxes and so on and so forth.  So people ought to be aware of exactly what a presidency means, if it‘s a Democratic presidency or a Republican presidency.  That‘s helpful for voters to know.  That way, they can make an informed decision and not just one based on passion. 

MADDOW:  He hasn‘t said he‘ll raise corporate taxes.

WATKINS:  He hasn‘t?

MADDOW:  No, sorry.  McCain‘s campaigning that he‘ll lower them.

WATKINS:  They think he‘ll raise corporate taxes.  I mean, right now that‘s - he‘s kind of backtracked on that.  This is part of his move to be a little more centrist.

GREGORY:  He does want a windfall tax though, he said that today, a windfall on the oil companies. 

(CROSSTALK)

HARWOOD:  Does want to raise taxes on capital gains and dividends.

GREGORY:  All right up next, McCain‘s got another weapon out.  We‘ve been talking about it.  This time suggesting Obama is a messiah, McCain or at least has that complex.  McCain may be knocking Obama off message.  But is McCain being heard as well?  Three question about the race, right after this.

(COMMERCIAL BREAK)

(NEWS BREAK)

GREGORY:  Back now on RACE FOR THE WHITE HOUSE.  I‘m David Gregory.  Time for the back half, happy to have you back with us.  We‘re going to pose the three biggest questions of the ‘08 for the day.  Still with us, for the first time, Joe Watkins, Republican strategist and an MSNBC political analyst—Joe served as a White House aid to President George H.W. Bush.  Susan Molinari is here, Republican strategist and former New York Congresswoman, John Harwood, cNBC‘s chief Washington correspondent and a political writer for the “New York Times,” and Rachel Maddow, host of the “Rachel Maddow Show” on Air America, also an MSNBC analyst. 

First up, it‘s getting hot in here.  Race took center stage on the trail in Florida today.  The campaigns continue to trade accusations about the race card.  In Orlando, McCain engaged in some tough back and forth about inner city violence and racial equality with members of the National Urban League, while in St. Petersburg, Florida, Obama was heckled by some angry protesters who wanted to know what Obama had ever done to help the black community. 

The day was capped off with the McCain campaign sending out a new fund raising e-mail with a link to this web-video mocking Obama as the messiah.  First question then, how has the tone of this campaign changed this week? 

John Harwood? 

HARWOOD:  I think it‘s gotten a lot tougher.  A lot of Republicans had been saying, while Barack Obama was having pretty good weeks over the last several weeks—he had a nice trip to Europe—that John McCain cannot win this on the basis of his own appeal.  He can‘t win a charisma fight with Barack Obama.  He really needs to make Barack Obama the focal point of the election and go after him more aggressively than he has.  He‘s done that this week.  That‘s worked for him. 

On the other hand, what I‘m hearing from Democrats is no candidate wins a referendum on himself, so Barack Obama has got to come back very aggressively at John McCain, hit him just as hard.  I suspect, given the tone we have taken this past week, it‘s going to get uglier. 

GREGORY:  Well, you know, Susan, it‘s interesting that sources within the McCain campaign that I‘ve talked to have said finally, maybe there‘s been some fits and starts this week.  Maybe there are questions about execution.  But finally there is a view inside the McCain campaign that they have a narrative here.  They have a way to frame the election, which is McCain is for country first; Obama is all about himself, and that they are going to keep hammering away at this for the next couple of weeks. 

MOLINARI:  I think what the McCain campaign saw was a Clinton campaign, when Senator Clinton and Senator Obama were in the primaries, where Senator Clinton tried to play nice and tried to not point out some of the inexperience failings of Barack Obama that came from voting present 130 when he was in the Illinois State senate, and sort of his overall lack of position.  I think that what the McCain campaign has finally gotten around to doing is to, quite frankly, adapting to what Senator Clinton did in the second half of her campaign.  We‘re going to put you on notice.  This is going to be a fair fight. 

GREGORY:  Former President Clinton, Rachel, said it would be a roll of the dice to nominate Barack Obama.  What‘s different about what McCain is trying to do here? 

MADDOW:  I think that they are, to a certain extent, copying the way Senator Clinton campaigned against Senator Obama.  Senator Clinton lost, we should remember.  I‘m not sure it‘s a great place to get tips on how to beat him. 

WATKINS:  I think they‘re trying not to make the same mistakes that Senator Clinton made.  She ran a good campaign, but she made some mistakes in not engaging Barack Obama.  They have said to Barack Obama, guess what, you‘re not going to race bait us.  You‘re not going to do that to us.  We‘re not going to sit back and take that. 

MADDOW:  Joe, how have you created the impression today that Barack Obama is the race baiter?  If you think about it, isn‘t that kind of incredible? 

WATKINS:  He was basically saying that McCain and Republicans were going to do this. 

MADDOW:  Yes. 

WATKINS:  The truth of the matter is that they are not. 

MADDOW:  Joe, honestly, in the world, when you look at Barack Obama‘s electoral chances, you look at the polling where people will admit, double digit numbers of Americans will admit that they will consider race when they vote. 

(CROSS TALK)

WATKINS:  I‘m black.  I live with this every day, I know. 

MADDOW:  Sure enough.  Americans admit—a significant, a scary proportion of Americans will admit that they will consider race when they vote and that that will make them not vote for Barack Obama.  The tone of the campaign from senator McCain is who does he think he is.  I don‘t know if he‘s a socialist.  You better ask him, all of this stuff.  I think for Barack Obama to say, they are going to try to make you scared of me; they‘re going to try to remind you how different I am than everybody else who has ever run for this, that is probably the most fair thing he has said in the entire campaign.  To call that race baiting is ridiculous. 

GREGORY:  Let me get in here.  Joe, quick comment, then let me get on to question two. 

WATKINS:  I don‘t think it‘s fair to call John McCain or his campaign or to say Republicans are going to come after me on the basis of race to make you afraid of me.  I think it‘s fair for John McCain‘s campaign to say don‘t do that anymore.  That‘s not fair and right. 

GREGORY:  All right. 

WATKINS:  John McCain accepted an apology and said, you know, let‘s move on from this. 

GREGORY:  Next up, McCain may have stopped Obama‘s momentum this week.  He certainly had the attack lines and he‘s in the news cycle.  But is he actually gaining ground with voters?  NBC‘s first Read analyzes it this way, “to use a boxing analogy, McCain is putting Obama into a bear hug, making it nearly impossible for the Illinois senator to move in the polls or land a punch.  For now, the McCain campaign appears to have a way to knock Obama off message.  The only problem for McCain, he‘s still not on any message of his own, other than we shouldn‘t have Obama.”

Skip ahead actually to the question in all of this, Susan Molinari, which is, if McCain is on the attack, does he have equal vigor behind what he‘s for, not just what he‘s against? 

MOLINARI:  I think he does.  It all depends on what the media is going to cover.  John McCain gave a very thoughtful, very concrete speech today before the Urban League, where he outlined in detail his plans and his proposals for education, for energy and for the environment, for the future and the economy and what his economic stimulus package would look like if he were elected president.  I think he has consistently spoken at least about these three issues.  Obviously, the war on terror. 

GREGORY:  Wait a second, this is what he wants us to be talking about, not that speech today, John Harwood.  They put out these ads.  Rick Davis took the tack that he took to make this an issue.  They want to make Obama the issue.  That‘s where they want the spot light.  They want to bring him down, more than, apparently, they want to focus on their own message, at least this week. 

HARWOOD:  Exactly right.  Where Barack Obama would have been on more solid ground, had he not said they are going to make you scared of me because I look different, but rather had he said they hope you‘re going to be scared of me because I look different.  Because that‘s definitely true.  There‘s one issue where John McCain has been making concrete progress and he‘s been pushing it very hard.  That‘s the issue of energy, and his pursuit of nuclear energy, oil drilling, things that are—polls show are popular.  In fact, we have some news, I think we‘re going to talk about it later, today Barack Obama is saying he might be willing to compromise on off shore drilling as part of a broader energy strategy.  That shows that John McCain was making some affirmative headway with that issue.

GREGORY:  I want to pick that up that issue a little bit later on the program.  It‘s very interesting and it‘s new tonight.

Finally, Obama and McCain‘s poll position.  The latest NBC News/”Wall Street Journal” poll has Obama with 47 percent, McCain with 41 percent.  Obama‘s six point lead is outside the margin of error, might be considered comfortable in a different climate.  When voters are asked which party, regardless of candidate, they prefer to win the White House, 43 percent feel strongly that the next president should be a Democrat, only 28 percent want a Republican.  This is a year Democrats when have a huge landscape advantage, an unpopular president, power in Congress and a demoralized opposition.  Yet, McCain is running way ahead of the Republican brand, while Obama is running behind the Democratic brand.  The question, why isn‘t Obama further ahead?  Rachel?

MADDOW:  I think because in the big picture, John McCain is winning the election now.  You don‘t see it in those national head to head polls.  Again, we do not have a national election.  You‘ve got to look at the way that he‘s moving up in those battle ground states.  As long as this election is about Barack Obama, John McCain has a chance of winning it.  If this election is about George Bush and John McCain and Republican rule and what the last eight years have been like, Obama can win it without opening his mouth and never giving another beautiful speech.  Frankly, for all of McCain‘s awkwardness on the stump, for all the difficulties his campaign has had, they have the focus on Obama.  Until Obama can turn that around, he will lose. 

GREGORY:  Real quick, go ahead. 

WATKINS:  I don‘t think Obama has really defined himself yet.  We certainly know he‘s a great speaker.  He‘s a brilliant guy.  He‘s a very, very smart guy.  He‘s well educated.  He has a wonderful family.  Those are all wonderful things.  He‘s terribly charismatic.  Look at the crowds in Germany, when he was over there as a rock star about a week or so ago.  At the end of the day, people still don‘t know where he stands on a whole host of issues.  It‘s not enough to be charismatic.  It‘s not enough to be charming, to be inspiring with your words.  People want to know, where‘s the beef. 

GREGORY:  Got to take a break here.  Coming up next, battle ground plans.  Rachel just mentioned it.  The man with the math, Chuck Todd, is going to join me to look at Obama‘s best pick up opportunities, McCain‘s pick up opportunities as well.  Later on, your chance to play with the panel.  We‘ll talk more about the latest information about Obama and off shore drilling. 

(COMMERCIAL BREAK)

GREGORY:  Back now on RACE FOR THE WHITE HOUSE.  Is the race to 270 electoral votes—looking at battleground states.  Obama is looking to dramatically reshape the electoral map, while McCain is hoping to hold the states that President Bush won back in 2004 and grab some big pickups in socially conservative industrial swing states.  Today, we‘re focussing on four regions where the fight is the fiercest, the West, the South, the agricultural Midwest and the Rust Belt.

Here with me now, NBC News political director Chuck Todd.  Chuck To, let‘s get to it.  Start here with the West.  When you look at this electoral map, where are the battlegrounds. 

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  The best battleground we have going is where you have Obama trying to expand the map and where you have McCain more on the defense really than anywhere else; you have Colorado, New Mexico, Nevada, with Colorado probably the fiercest, the closest race right now, New Mexico tilting a little bit Obama, Nevada tilting a little McCain, maybe Montana in a moderate Obama landslide, maybe Oregon in a moderate McCain landslide. 

Really those three states of Colorado, Nevada, New Mexico; when people say the west battleground, they are speaking of those three states. 

GREGORY:  Let me ask you a couple follow up questions; you talk about New Mexico, obviously it‘s been a very tight battleground in the last couple cycles.  People in the Obama campaign have said to me, look, unless there‘s a real wave for the Republicans, this should be a Democratic state.  They have do, of course, Bill Richardson there and his network. 

TODD:  We may be on the verge of moving this out of the toss up.  There is definitely a lot of evidence that says Obama is a lot stronger in New Mexico.  Look, he‘s doing much better with Hispanics than all of that conventional wisdom during the primaries said.  Just because Hillary Clinton won the Hispanic votes in the primaries didn‘t mean that they weren‘t going to vote Democratic.  The immigration issue so damaged the Republican brand.

GREGORY:  Does it spill into Arizona at all?

TODD:  It could.  We have seen tighter polls in Arizona.  Look, if John McCain were not the Republican nominee, we would add a fourth state into the toss up battleground. 

GREGORY:  You talk about Colorado.  I want to keep going back to this.  Obviously, this is an opportunity for Obama at the convention to stage a huge retail event.  That‘s his acceptance speech.  What else is going on in Colorado that helps him there? 

TODD:  There‘s a few things.  First of all, the Republican party has been eating itself alive.  You have the party just went too far to the right in too many instances.  A lot of libertarian style Republicans, people that aren‘t motivated by social issues, but they are motivated by taxes and smaller government, they have been turned off by the Republican party.  And Democrats have been doing a very good job locally in appealing to these folks on guns, even on religion.  Ritter is a very—the governor there, Bill Ritter, very religious guy. 

Obama is not the perfect candidate for Colorado.  McCain should be the better candidate there.  Yet he is struggling.  That is because the infrastructure of the Colorado Democratic party is so much better right now. 

GREGORY:  Independents. 

TODD:  Independents is growing.  They are ideologically more conservative in Colorado than they are in some of these other places.  Like I said, this should be where McCain should be doing well, but right now, they are all tipping Democrat. 

GREGORY:  Let‘s go East.  Let‘s talk about the Rust Belt.  Here, we are talking Pennsylvania, Ohio, West Virginia, Kentucky.  This is where McCain wants to really focus the election. 

TODD:  This is where he‘s playing offensive.  We keep talking about McCain‘s playing defense in so many places.  He is playing offense in Michigan and Pennsylvania.  If he sweeps Ohio, Michigan, Pennsylvania, that troika of states, he is going to be president of the United States.  They know that.  They are putting everything they can.  They really think they are going to win Michigan.  I think they think they are coming up short in Pennsylvania.  Something is not clicking there. 

GREGORY:  You talk about Pennsylvania.  We have a new poll from Quinnipiac out this week.  Obama up 49 to 42 percent.  Again, it‘s narrowing. 

TODD:  Narrowing a little bit, but it‘s high single digits.  This is a big state where McCain has outspent Obama in television advertising the last two months and this thing is still in high single digits.  I think you‘re going to see, by October 15th, they make a decision and say, you know, we‘re going to start yanking some money out of Pennsylvania and we‘re going to go all in in Michigan. 

GREGORY:  Why Michigan?  What‘s happening Michigan that‘s tough for Obama? 

TODD:  Everything that could go wrong for Obama has.  Number one, he didn‘t get to campaign there.  A lot of the primary states where Obama campaigned, he was able to move his organization in and keep it there, North Carolina, Indiana, where you saw the active primary campaigns allowed them to create new targets and new battleground.  Michigan, without the primary, he never competed there, so he‘s behind organizationally.  Detroit, the mayor of Detroit there, Kwame Kilpatrick, very unpopular, creating a racially uncharged atmosphere in the suburbs of Detroit, where you have white voters there not liking the mayor and it‘s creating an uncomfortably racial issues there. 

Then you have the fact that Democrats control everything in Michigan.  So the economic woes there are pinned to the Democrats as much as they are pinned to George Bush. 

GREGORY:  All right, one more poll to show you from this region in Ohio.  It‘s Obama 46, McCain 44.  This is a tight race. 

TODD:  Ohio is Ohio.  We‘re back to where it is.  Ohio, nothing has changed.  It‘s a close race.  Can Obama do a little bit better?  Basically, you can draw a U in Ohio, a very thin U, skip Cincinnati, you go from Toledo up to Youngstown, follow those borders.  Can Obama make any inroads there?  If he does, he wins the state.   

GREGORY:  The economy, the economy.  Housing very tough there in terms of foreclosures. 

TODD:  Not going to be able to use social issues as effectively to win those voters, the way Bush did.

GREGORY:  Let‘s talk about the agricultural Midwest, again, Wisconsin, Minnesota, Iowa, the Dakota‘s, Nebraska, Kansas, Missouri, Illinois.  What pops out at you there? 

TODD:  The fact that it‘s a big problem for McCain.  This is where—I call it the region of Illinois.  Everything that touches Illinois, Obama has over-performed. 

GREGORY:  Indiana was tight. 

TODD:  Indiana and Missouri should both be lean Republican state. 

Frankly, they‘re both toss ups.  Why?  They border Illinois.  Iowa is over.  Wisconsin is over.  Minnesota, let‘s see how the convention plays.  I think there‘s a chance because there‘s Republicans there, maybe if McCain has a good impression, he could keep it in play.  I tell you, I talked to Republicans, they think they may end up pulling out of Wisconsin and Iowa. 

GREGORY:  Very interesting.  Quickly, let‘s go to the south from Virginia on down.  Virginia, if he picks Tim Kaine, Obama could put that in play. 

TODD:  He could.  I‘ll tell you, when Jim Webb won Virginia, he combined the angry Democrats and he picked off some military veterans.  One thing you can‘t overlook in Virginia is McCain‘s status as a veteran.  It‘s big veteran state there in Virginia Beach.  It‘s going to be tough.  This is not going to be Obama‘s 271st electoral vote.  If he gets to 270, other states come first.  If he wins 300, then maybe Virginia. 

GREGORY:  Your home state of Florida.  It‘s Obama 46, McCain 44 in the Quinnipiac poll.  Is this going to be a tighter slog than a lot of people expect for McCain? 

TODD:  Obama has spent five million in the state so far in the general election in television advertising.  McCain has spent zero.  Obama has spent his way to a tie.  McCain is saying, we‘re going to spend money there, but our voters are snow birds.  They‘re not there in August and July.  We‘ll go ahead and roll the dice, let him catch up.  This will come in the end.

That said, look, if Obama wins nationally by six, he‘s going to carry Florida.  If he only wins nationally by three though, then suddenly, Florida is a toss up. 

GREGORY:  Final point, what about Alaska with Ted Stevens?  Does that change its qualification? 

TODD:  My favorite line is as Alaska goes, so goes a landslide.  Look, it is the heart and soul of what‘s wrong with the Republican party right now.  You have this party that‘s been in power too long in Alaska.  They‘re all being tossed aside.  It‘s not just Stevens.  It‘s Don Young, the congressman who has been there since 1969.  They already ousted a governor.  They might actually go blue.  That would tell you everything you need to know. 

GREGORY:  Chuck T, thanks very much.  A lot more of this to come on this program and online.  We just keep going. 

TODD:  We‘ll start doing it ever week.

GREGORY:  All right, coming up next, your play date with the panel. 

(COMMERCIAL BREAK)

GREGORY:  Back in our final segment tonight, your play date with the panel.  A little bit of news, some new developments from the campaign trail tonight; Obama may be reconsidering his stance on offshore drilling.  He told the “Palm Beach Post” today, quote, “my interest is in making sure we have the kind of comprehensive energy policy that can bring down gas prices.  If in order to get that passed, we have to compromise in terms of a careful, well thought out drilling strategy, that was carefully circumscribed to avoid significant environmental damage, I don‘t want to be so rigid that we can‘t get something done.” 

Back with us, the panel tonight, Joe, Susan, John and Rachel.  John, significant change there? 

HARWOOD:  I think I hear the outer continental shelf cracking a little bit there.  I think that shows you John McCain grabbed the upper hand with that drilling issue.  Democrats have been privately worried that they didn‘t have an effective enough response from the Obama campaign or from the Democrats in Congress, basically.  And by signaling this flexibility, Barack Obama is trying to move the conversation off of that.  He has done that earlier in the campaign on issues of taxes, saying he might delay some of his tax increases if he thought they would harm the economy.  He‘s trying to show some strategic flexibility.  Of course, John McCain will accuse him of being a flip-flop. 

GREGORY:  I was just going to say.  Rachel, I was just going to say, a lot of the fish off the continental shelf might be saying flip-flop, flip-flop.  In reality, I think what the Obama team would say is no, look, this is what we said; this would have to be part of a broader package.  If we‘re going to get the whole deal—since we think this is a gimmick, if we are going to get the whole deal, then we think about it. 

MADDOW:  This is political malpractice by the Obama campaign.  This is idiotic.  On the week that Exxon Mobile proclaimed 12 billion dollars in profit, when John McCain‘s economic proposal gives the oil companies a billion extra dollars that they‘re not already getting in tax payer money in tax cuts to the oil companies?  It‘s political malpractice that he would quoted saying anything about energy this week that wasn‘t about that. 

GREGORY:  OK.  The bench has ruled.  Before we play with the panel, we have another campaign alert here for you tonight.  This is Obama defending his remarks in Missouri that we‘ve been talking about, this racial political debate.  He‘s now defending these remarks against accusations from the McCain campaign that, in fact, he was playing the race card.  Obama said in an interview on NPR, National Public Radio, radio tonight that that‘s not what he was doing.  We‘ve got the sound.  Listen.

(BEGIN VIDEO CLIP)

OBAMA:  This notion that somehow I was playing the race card is ridiculous.  What I said, in front of a 98 percent conservative, rural, white audience in Missouri is nothing that I haven‘t said before, which is I don‘t come out of central casting when it comes to what presidential candidates typically look like.  It doesn‘t just have to do with race.  It has to do with my name.  It has to do with my biography and my background.  It has to do of our message of change.  In no ways do I think that the McCain campaign has, you know, targeted race issues.  Although, I will say that the way they have amplified this has been troublesome and the eagerness with which they have done it indicates they think they can exploit this politically. 

(END VIDEO CLIP)

GREGORY:  Do you think, Joe, even hearing this latest defense, that he‘s got some explaining to do?  If he says in Missouri, they are going to do these things, then issues a response after McCain calls him on it, saying in no way are we suggesting that they have injected race, the McCain campaign has injected race.  Which is it? 

WATKINS:  Barack Obama didn‘t say it once, he said it three times in Missouri.  He said it once in Florida.  He even made a similar statement in Germany to the throngs of people that were there for his rock star tour.  Clearly, he‘s a smart guy and he knows the power of words.  To imply that your opponent is going to use race or anything else to scare folks says what it means.  I think John McCain says, you know, if you‘re willing to not do it anymore, we can move on from this.  John McCain isn‘t trying to exploit anything politically.  He just wants him to stop. 

GREGORY:  Comment Rachel? 

MADDOW:  Yes, I think McCain is the one who came out and said they are playing the race card.  They are playing the race card.  If McCain wants it to stop, he could stop sending out his press releases on the subject too.  That would also be a form of disarmament on the subject.

GREGORY:  All right.  We‘re going to leave it there.  Thanks so much to a great panel tonight.  That does it for RACE FOR THE WHITE HOUSE for this Friday.  I‘m David Gregory.  We‘ll see you back here Monday night, 6:00 pm Eastern time.  “HARDBALL‘s” coming up next.  Have a peaceful Friday night and a good weekend.

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

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