updated 8/11/2008 11:50:11 AM ET 2008-08-11T15:50:11

Guest: Chuck Todd, Susan Molinari, Mark Green, Jonathan Allen, Reihan Salam, Lois Romano, Nicole Wallace

DAVID GREGORY, MSNBC ANCHOR:  Tonight, the Edwards affair.  He admits an extramarital affair dating back to 2006, telling ABC News wife Elizabeth learned of it that year.  He lied repeatedly to cover it up as a presidential candidate.  And now questions about his future abound in the party, and whether this creates another shadow over Barack Obama as he gets ready for the conventions.  All of this as the RACE FOR THE WHITE HOUSE rolls on. 

Welcome to RACE FOR THE WHITE HOUSE.  On a busy Friday, I‘m David Gregory.  Happy to have you here.  It‘s your stop for the fast pace, the bottom line, and every point of view in the room.  Tonight more on Edwards and the fallout from his admission today about a sexual affair.  Is this another skeleton in the Democratic closet that Barack Obama must struggle to overcome?  Will Edwards appear at the Democratic Convention.  All of that ahead. 

Later, inside the McCain war room tonight with senior adviser Nicole Wallace.  I‘ll talk to her one-on-one. 

Our panel tonight, playing for the first time, Jonathan Allen, a political reporter for Congressional Quarterly; Susan Molinari, Republican strategist and former Congresswoman from New York, she was a senior adviser for the Giuliani presidential campaign; Reihan Salam is here, associate editor of The Atlantic and author of “Grand New Party: How Republicans Can Win the Working Class and Save the American Dream”; and Mark Green, president of Air America Radio. 

Welcome, all.  The big story tonight, John Edwards admits he had an extramarital affair, he lied about it repeatedly once tabloid reports surfaced about it.  ABC News broke the story tonight and has an interview with him later on “Nightline.” The woman involved is a 42-year-old former campaign aide, Rielle Hunter, Edwards denies tabloid claims that he fathered Hunter‘s child. 

This is the statement that Edwards released late today. “In 2006, I made a serious error in judgment and conducted myself in a way that was disloyal to my family, to my core beliefs.  I recognized my mistake and told my wife that I had a liaison with another woman, and I asked for her forgiveness. 

“Although I was honest in every painful detail with my family, I did not tell the public.  When a supermarket tabloid told a version of the story, I used the fact that the story contained many falsities to deny it.  But being 99 percent honest is no longer enough.  I was and am ashamed of my conduct and choices, and I had hope that it would never become public. 

“With my family, I took responsibility for my actions in 2006.  And today, I take full responsibility publicly.  But that misconduct took place for a short period in 2006.  It ended then.  I am and have been willing to take any test necessary to establish the fact that I am not the father of any baby. 

“I am truly hopeful that a test will be done so this fact can be definitively established.  I only know that the apparent father has said publicly that he is the father of the baby.  I also have not been engaged in any activity or of any description that requested, agreed to, or supported payments of any kind to the woman or to the parent, the apparent father of the baby.

“It is inadequate to say to the people who believed in me that I am sorry, as it is inadequate to say to the people who loved me that I am sorry.  In the course of several campaigns, I started to believe that I was special and became increasingly egocentric and narcissistic.

“If you want to beat me up, feel free.  You cannot beat me up more than I have already beaten up myself.  I have been stripped bare and will now work with everything I have to help my family and others who need my help. 

“I have given a complete interview on this matter.  And having done so, will have nothing more to say.”

Susan Molinari, what happened to John Edwards? 

SUSAN MOLINARI, REPUBLICAN STRATEGIST:  I guess what happens to people in life and it‘s not just political life.  Obviously, the American public is a little more interested in John Edwards because he did put his family so front and center during the course of his presidential campaign.  He emphasized his relationship with his wife and his children. 

But, you know, John Edwards, I can‘t be harder on him than I am on any other guy who cheats on his wife.  And there‘s a lot that‘s out there.  I thought the statement he made is pretty outstanding tonight.  And I think we should respect the fact that if he‘s not going to be in public life, if he‘s not going to hold himself up as some kind of role model anymore, then we should move on. 

GREGORY:  Mark Green, before you react, this is Edwards in October 11th of 2007, as a presidential candidate, denying any suggestion of this affair.  Watch. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Senator, what‘s your reaction to the National Enquirer story and Anne Coulter‘s comments on MSNBC last night? 

JOHN EDWARDS (D), FMR. PRESIDENTIAL CANDIDATE:  The story is false, it‘s completely untrue, it‘s ridiculous.  I‘ve been in love with the same woman for 30-plus years.  And anybody who has been around us knows she‘s an extraordinary human being, warm, loving, beautiful, sexy and as good a person as I have ever known.  So the story is just false. 

UNIDENTIFIED FEMALE:  Why did you hire Rielle Hunter? 

EDWARDS:  Excuse me?

UNIDENTIFIED FEMALE:  Why did you hire Rielle Hunter?

EDWARDS:  We hired a video crew to come in and do videos during the course of the last six months of 2006.  She was one of the people, she wasn‘t the only person.  They worked out their contract in that six months.  And then when that period ended, we hired another video crew to work here in the campaign. 

(END VIDEO CLIP)

GREGORY:  Mark Green, he had himself out there pretty far on that limb. 

MARK GREEN, PRES., AIR AMERICA RADIO:  Look, this is—Susan has implied and said it is sad, it‘s wrong, it‘s immoral, and pretty commonplace.  My memory is, from the Kinsey report, that half of all men in all marriages are unfaithful.  This doesn‘t justify it. 

And it‘s true throughout America and it‘s true in politics, David, if faithfulness in marriage were a presidential test, we wouldn‘t have had Roosevelt, Eisenhower, Kennedy, Clinton.  And we would be lionizing I guess, Nixon and W. because I presume they were faithful within their marriage.

So he is not running now, he is not about to, I don‘t think, go to the convention.  I can‘t imagine, even though it‘s August, this having a serious impact on Denver or the Obama campaign.  This is not financial fraud of the kind that did rise to the level of a big public issue in 2006 when it had an impact on the congressional races that year. 

GREGORY:  Jonathan, let me ask you this, what would there—there were—I‘ve talked to some Edwards people who say there were rumors about this, this obviously came up during the campaign, it was denied.  So here we learn from this statement about the affair in 2006, he tells Elizabeth Edwards about this.  Describe what you think the calculation must have been like with that revelation within the family, to then to go forward and run for president. 

JONATHAN ALLEN, CONGRESSIONAL QUARTERLY:  Well, it‘s really interesting.  John Edwards, in 1998, when he was talking about impeachment of President Bill Clinton, the trial of Bill Clinton in the Senate, went through how a politician would go through his options.  And actually, it‘s a long speech, too long for me to go into. 

But he talked about, how do I talk to my family about this, how do I hide it from them?  What do I do politically?  And so I think John Edwards actually has thought about this a great deal, and he obviously put his wife and his kids in a bad position, continuing the campaign for president while he knew this was out there. 

(CROSSTALK)

GREGORY:  Well, not only that, not only continuing the campaign, but as Susan suggested, making the tragedy in his family front and center in the campaign, bringing the kids on the campaign trail, and having tutors afforded them during the campaign, talking about his wife.

And let‘s not forget, going through her battle with cancer.  He made a point apparently in the interview with ABC that will air tonight that the affair happens during her remission.  I don‘t know how many people think that will mitigate that. 

(CROSSTALK)

MOLINARI:  . that‘s particularly relevant.

GREGORY:  But he makes that point. 

REIHAN SALAM, AUTHOR, “GRAND NEW PARTY”:  John Edwards always billed himself and was always thought of as the second coming of Bill Clinton.  And this is just so sad.  He squandered his tremendous potential in much the same way.  I never really trusted the guy all that much.  I found him a little smarmy.  I mean, he made his career as a trial attorney selling people sob stories that weren‘t always true. 

But he did bring a lot of very important issues to the forefront.  He talked about poverty in a way that few other politicians do.  He really talked about stuff that matters.  And his wife, you know, more depressingly for me, is someone who has become a really important voice on health care. 

And that‘s what saddens me most, the prospect of her being silenced on this because of his, frankly, repulsive behavior.  So this is just very depressing all around. 

GREGORY:  Let‘s hear some sound actually from Rielle Hunter.  This is in early 2007 on the program “Extra” talking about joining the Edwards campaign as she did back in 2006.  Watch. 

(BEGIN VIDEO CLIP)

RIELLE HUNTER, HAD AFFAIR WITH JOHN EDWARDS:  Meeting John Edwards was interesting.  He was very real and authentic.  He was inspirational to me. 

One of the great things about John Edwards is that he‘s so open and willing to try new things and do things in new ways.

(END VIDEO CLIP)  

GREGORY:  This obviously, Mark Green.

(CROSSTALK)

(LAUGHTER)

GREEN:  A comment that‘s political, but empirical.  He who is without sin should throw the first stone.  So John McCain and the Republicans can‘t even imply this is an issue because, as John McCain has admitted, he did this to his first wife while she was ill.  And so it‘s an interesting story.  It‘s a humiliating event for the Edwards, but I can‘t see this having any long-lasting impact, nor should it, in 2008. 

GREGORY:  Well, it is—McCain, by the way, was asked about this and had actually no comment about it at all.  But you‘re right, I mean, this is occurring and kind of the unfolding of this story as a presidential candidate and a public figure, somebody whose family was so central to his campaign, and all of this bubbling up. 

There‘s a lot of people within the campaign who I think are surprised by this, disappointed by this.  He certainly went through some denials, including he went pretty far with denials at times.  Listen to him just last month, July of this year, talking about these tabloid reports talking that were coming up, including whether or not he was a father of Rielle Hunter‘s baby.

And then the issue that happened quite recently about apparently visiting her in a Beverly Hills hotel room at a time when there was some effort to keep the story quiet.  This is Edwards from last month. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Senator, how do you feel the situation in Los Angeles on Monday would affect any future in politics in this administration—a potential Obama administration? 

EDWARDS:  I don‘t know (INAUDIBLE).

UNIDENTIFIED MALE:  (INAUDIBLE) National Enquirer story?

EDWARDS:  I don‘t talk about these tabloids and—no, they are tabloid trash, just full of lies. 

(END VIDEO CLIP)

GREGORY:  Susan, let me ask you something else as, again, we listen to the denials and sort of deconstruct what was happening in the time line and what was sort of happened to Edwards.  There was something interesting about this statement that he talks about his own narcissism, that he increasingly became egocentric and felt he became special, and increasingly egocentric. 

I mean, he got caught up in the whirlwind of his own political life. 

MOLINARI:  Well, yes, that‘s certainly what he says.  You know, clearly, there are so many good men and women in politics who are very successful who have whirlwind of the public who think they are special, who want to touch them, who want to believe in them, who don‘t allow themselves to become narcissistic to the point of cheating on their spouse. 

So, you know, I hope that this—look, people make mistakes, people cheat on their spouses.  But I don‘t think that we should all say, well, anybody who is successful in politics has to have that type of quality that makes them more prone.  I mean, that is certainly not true compared to the overwhelming multitude of men and women that I‘ve worked with in the federal government, state government, and city government. 

So these are still exceptions to the rule.  And let me just say, with regard to Elizabeth Edwards, she is somebody that we should pay attention to in the public discourse.  And clearly, I think, Senator Clinton has shown us that a woman can be wronged by her husband and still maintain her dignity and come out way ahead of the game professionally, at least, if not personally. 

So I hope that Elizabeth Edwards takes a cue from Senator Hillary Clinton and does not allow this to push her back and allows her to in fact be even more aggressive in the public discourse and being her own person and contributing what she needs to, to public policy. 

GREGORY:  All right.  We‘re going to take a break here.  Coming next, more on this breaking story about John Edwards admitting a sexual affair.  How will this admission play in tomorrow‘s papers?  We‘ll get a preview from The Washington Post, Lois Romano, that‘s up next on THE RACE.

(COMMERCIAL BREAK)

GREGORY:  Back now on RACE FOR THE WHITE HOUSE.  More on the John Edwards story today, admitting that he had a sexual affair back in 2006.  He lied to cover it up as a presidential candidate.  Joining me now is Lois Romano from The Washington Post, she‘s filing on this story for the morning -- national political reporter for the Washington Post.

Lois, good to have you here.  What are you learning at this stage of the day about how all of this unfolded inside the Edwards family, inside his mind about coming public about this now? 

LOIS ROMANO, THE WASHINGTON POST:  I think, David, that what we are conjecturing is that his feet were being held to the fire.  I mean, a lot of news organizations were working on it.  And he was also causing a major distraction to the Obama campaign. 

And I think probably, in addition to playing it out in the press, I think probably party leaders were calling and saying, you have to do something, this is going to be a fairly big distraction.  I also think he probably got a signal that he was not going to speak at the convention.  And so, you know, because a, “why is he hanging on to this lie?” 

GREGORY:  And do we have hard information at this point?  He has indicated that he doesn‘t whether he‘s going to the convention yet.  You would be hard pressed to believe that he would at this point.  But it certainly does raises a question with this hanging over Obama as a kind of skeleton in the Democratic closet, that it would become a distraction for Obama.

After all, Obama went out of his way to get a very high profile endorsement from Edwards earlier in the year in Michigan, of all places, where he—a state where he‘d like to make... 

(CROSSTALK)

ROMANO:  I think the Obama campaign was really hamstrung over this.  They were having discussions about it.  I don‘t think they had reached out to Edwards, I don‘t think Edwards had reached out to them.  I think they knew they had a really big problem on their hands.  There‘s no way he‘s speaking at the convention.  I don‘t know if he‘s going. 

I think one of the sad things is though probably Elizabeth is not going to be able to speak either because that would cause the same distraction.  I don‘t think he‘s going to speak, I don‘t think he‘s considered for VP.  And I don‘t think he‘s on line for a cabinet post.  I think it‘s going to be a while before he resurrects himself. 

GREGORY:  Well, let‘s talk about the marriage a little bit.  This is Edwards on “60 Minutes” talking about Elizabeth‘s breast cancer.  To the quote board on this. 

“First of all, there is not a single person in America that should vote for me because Elizabeth has cancer, not a one.  If you‘re considering doing it, don‘t do it.  Do not vote for us because you feel some sympathy or compassion for us, that would be an enormous mistake. 

“The vote for the presidency is far too important for any of those things to influence it.  But I think every single candidate for president, Republican and Democratic, have lives, personal lives that indicate something about what kind of human being they are.

“And I think it is a fair evaluation for America to engage in, to look at what kind of human beings each of us are, and what kind of president we‘d make.”

GREGORY:  It‘s stunning, even at this stage of politics in 2008 that you can have a politician who would make his personal character and his family so front and center in a campaign, who was hiding this kind of secret, and to do it with the kind of boldness that he did it. 

ROMANO:  He was interviewed by Katie Couric maybe in 2006 and he talked about it, about how fidelity was part of the whole package that people look at in a candidate.  And if you are dishonest about your family, you could be dishonest about other things. 

GREGORY:  Right.  And part of my question, tonight, is you go through the statement where he talks about telling Elizabeth Edwards in 2006 when the affair ended that it happened, what the calculation must have been like for him to then go forward and pursue the presidency knowing that as a campaign aide, someone he clearly didn‘t know very well, that other people inside the Edwards campaign say that this was somebody who would become very fast friends with people, who could make inappropriate jokes, is what one person said, at various points, that he had the confidence that he could move forward on this without being caught. 

ROMANO:  Well, you know what‘s very striking, I don‘t know if you Dave Bonior‘s statement, his campaign manager, he is very angry.  And I think, in addition to lying to the public, it appears that Edwards probably lied to his own campaign staff. 

And I think Elizabeth has to be a little bit accountable.  Everyone likes Elizabeth and everyone really feels for her in her illness and their family.  But she knew about the lie too and they all decided to go forward.  And you know, David, I‘m just not sure he would have come forward if he had not been pursued by the mainstream media. 

The ABC report is written by online by Brian Ross, who is one of their top investigators.  And I have got to believe that that was coming down hard on him too.  And the handwriting was on the wall that everything was closing in.  It was a tsunami.  He couldn‘t keep plugging the dam anymore. 

GREGORY:  All right.  Lois Romano from The Washington Post who is working on this story tonight as well.  Lois, thanks very much. 

Coming next, more fallout from Edwards‘ confession today, Hillary Clinton‘s reaction and other news from the “Radar.” A little later on, we‘ll talk about the McCain campaign, “Inside the War Room” with top adviser Nicole Wallace, when THE RACE comes back.  

(COMMERCIAL BREAK)

GREGORY:  Back on RACE FOR THE WHITE HOUSE, telling you what else is on THE RACE‘s “Radar” tonight.  First up, maybe his invitation got lost in the mail.  Today the White House announced that Vice President Dick Cheney will indeed speak at the Republican Convention in St. Paul next month.  The vice president‘s spokeswoman said Cheney received the invitation this morning. 

It followed speculation that the McCain campaign did not want the VP to attend because he could be a potential turn off to independent voters that McCain is hoping reach.  In primetime, Cheney will address the delegates on Monday, September 1st, the same night as President Bush.

Oprah may be on the road to the Democratic National Convention in Denver.  She has rented a home for a week near the Pepsi Center for, get this, $50,000.  She has not officially announced that she will coming to Denver, but she has been a big Obama supporter. 

Which leads me to ask you, Mark Green, the Oprah effect is not something that has been felt in the Obama campaign for some time.  When does she rev back up and get in this campaign? 

GREEN:  Well, I hope it‘s at Denver.  Look, the University of Maryland did a study, I can‘t vouch for it, I read it online in the Huffington Post today, that she may have moved 1 million voters to Barack Obama.  Sounds high to me. 

I remember, David, was once on Oprah 10 years ago, and the next day, the number of black women who said hello to me because of that was stunning.  However, you have got to think at this point, since so many people know that Oprah Winfrey, whose high E.Q. and whose high Q-rating, and this popularity is for Obama, and any effect is now built into the polls. 

I doubt that there are many black women or black men or people who just love her generally who now shift or vote because of her role in a general election given how prominently she was—endorsed him in the primaries. 

GREGORY:  All right.  Well, we‘ll see if she has got a role in the convention. 

Coming up, the latest on the breaking news about John Edwards, stunning admission of an extramarital affair.  Plus, the inside word from the war room of John McCain right after this.  

(COMMERCIAL BREAK)

(NEWS BREAK)

GREGORY:  Back now on RACE FOR THE WHITE HOUSE. I‘m David Gregory.  We have more breaking news tonight on John Edwards and him admission that he had a sexual affair, an extramarital affair.  ABC News is prepared to release the transcript of the interview during which the former presidential candidate admits to having an extramarital affair.  We‘ll bring that to you shortly, when we get that transcript.  Over the year, Edwards repeatedly denied allegations of an affair, first reported by the “National Enquirer.”  Watch this. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Senator, how do you feel this situation in Los Angeles on Monday will affect your future in politics and this administration, a potential Obama administration? 

EDWARDS:  None. 

UNIDENTIFIED MALE:  None?  Not the “National Enquirer” story?

EDWARDS:  I don‘t talk about these tabloids.  They are tabloid trash, just full of lies. 

(END VIDEO CLIP)

GREGORY:  Edwards now admits a serious lack of judgment in engaging in an affair with 42 year old Rielle Hunter.  She was hired by the campaign, making over 100,000 dollars to make documentaries for Edwards‘ campaign website.  She spoke with NBC‘s “Extra” program early in 2007. 

(BEGIN VIDEO CLIP)

RIELLE HUNTER, DOCUMENTARY PRODUCER:  Meeting John Edwards was interesting.  He was very real and authentic.  He was inspirational to me. 

One of the great things about John Edwards is that he‘s so open and willing to try new things an do things in new ways. 

(END VIDEO CLIP)

GREGORY:  NBC‘s political director Chuck Todd joins me now.  Chuck, is this a story about the rise and fall of John Edwards or does it have a broader political impact in this campaign? 

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  I really think it‘s about John Edwards and John Edwards alone, or perhaps John and Elizabeth Edwards, because they were a political package or are a political package.  The campaign, in many ways, was the two of them.  It wasn‘t just about John Edwards.  I think the story—you know, their relationship, their battles with personal tragedies, whether it had to do with the death of their son or her battle with cancer, were always somewhat very public.  So here we go again with a personal battle that is very public. 

GREGORY:  What struck you about the statement, this afternoon, that he released where he admits the affair?  For people who may just be watching now, he says a couple things.  One, that the affair occurred in 2006, that he told wife Elizabeth about it when it was over.  That was all in 2006.  This is prior to him making the announcement to run for president.  He also talks about the fact that he got caught up in—he says, in the course of several campaigns, I started to believe that I was special and became increasingly egocentric and narcissistic. 

He got caught up in it all, and thought, I suppose, that he could get away with it. 

TODD:  It‘s interesting.  It‘s the story of a lot of politician that end up getting caught.  You hear them say very similar things, but not so directly.  I think that‘s what struck me about the statement is that it was so direct, this self-diagnosis, if you would, where he just says, look, I was narcissistic, I was self-centered.  This is how it happened.  Perhaps, this was his public way of almost apologizing, or what he ends saying to Elizabeth when he admitted it to her. 

The other thin that struck me about the statement, David, was how specific it was on certain things.  There‘s a time line.  Now, they are going to have reporters, probably not a lot of mainstream organizations, but there are a lot more than just mainstream news organizations on this story right now.  They are going to pursue every little detail about this, because he talks about—he even put in the statement the paternity test. 

A lot of people will tell you, why not make a statement that says, I‘m out of politics.  I made a serious error in judgment.  I put my family at risk.  I‘m done with politics.  It‘s time for me to heal these family wounds and work on myself.  Instead, it was very detailed statement, had some 700 or 800 words, and then said, I‘m not going to say anything more on this.  It put a lot out there.  That was something that struck me as odd. 

GREGORY:  For those of us, like you and I, who cover politics and this melding between the personal and the policy and the image of these candidates, this was striking, somebody who in 1999 -- I remember being with President Clinton at an event that was a John Edwards fund raiser in 1998, and the similarities between the two.  Yet, in 1999, Edwards takes to the Senate floor and denounces President Clinton for the impeachment scandal and his affair with Monica Lewinsky. 

Then this occurs in 2006.  He tells his wife, and then proceeds to run for the presidency, having had an affair with a campaign aide, denies it when it comes up in the fall of last year.  It was pretty brazen of him to think he could go through this process and come through unscathed.  What do you think motivated him? 

TODD:  That‘s what we don‘t know.  I think that‘s always, to me, been something—look, it‘s what attracts me to cover politics in some way.  We don‘t know necessarily what makes somebody who runs for president tick.  I think it is they tick a little differently than the average person.  Look, he did, he put himself at risk.  He put the Democratic party at risk.  He was not a gadfly candidate for president.  He was somebody who folks thought had a 10, 15 percent chance of nomination, which is actually pretty high. 

He was somebody who could have been 70,000 votes away from the vice president in 2004, and therefore a heart beat away from the presidency.  He put that at risk.  He put the Democratic party at risk.  He had hundreds, perhaps even thousands of employees, young folks who believe in him.  He put their—I‘m trying to figure out what to call it—their beliefs at risk.  Young folks fall in love with candidates when they work for them.  So he violated a big trust there. 

GREGORY:  We will report this, as we have been, as a news story about the fall of John Edwards politically.  There are broader questions of what it means to the party, what it might mean to Barack Obama, does he have a role at the convention.  What do we know as fact, at this stage, about the kind of pressure that was brought to bear on Edwards that would lead him to go public now? 

TODD:  It‘s interesting, in this interview, he was asked about what he would do at the convention.  He said he hadn‘t been asked yet to participate, which had been actually contrary to what we heard.  Obviously, that‘s from the horse‘s mouth.  He said he had been not asked yet to participate, hadn‘t decided whether he was going to go or not.  It would be hard to imagine that he would after all this.  Nobody wants to draw attention away from the nominee.  That would be more hurtful than the situation is. 

The real hurt here could be on Elizabeth Edwards.  She was just beginning to carve out a political biography on her own.  She has joined the think tank called the Center for American Progress here, trying to become a really big deal on the Democratic side in policy.  She wanted to be the lead spokesperson in the Democratic party on health care.  We would have seen her as a surrogate for Obama when the discussion was about health care.  We would have seen her on news shows, like this one.  Now, we‘re not going to see her.  It‘s not just the end of John Edwards‘ political career.  It might be at least a short circuiting of what I think was a budding political career in her own right in Elizabeth Edwards. 

GREGORY:  All right, let me bring in the panel as well to comment on an aspect of this that we haven‘t gotten to tonight.  Jonathan, I‘ll start with you.  The Democratic party going forward, Barack Obama going forward now has a couple things to deal with.  Maybe this will dissipate as an issue.  But if there are shadows that are over-hanging him at the moment, it‘s the fact that this has bubbled up with John Edwards and the fact that he‘s still got some Clinton issues to contend with as well.  Namely, is Bill Clinton on board?  Is he four square behind him, after saying this week that nobody is prepared to be president, after having said that other candidates like Joe Biden and Bill Richardson were prepared to be president?  And the role of Hillary Clinton at the convention and whether they will be an effort to put her name into nomination. 

Is there a cumulative affect of these Democratic skeletons in the closet that have an impact on Obama? 

ALLEN:  I think it‘s the latter two skeletons, and not John Edwards, that has the larger affect.  I think you can‘t really transfer the personal failings of one politician onto another one.  But insofar as Bill Clinton goes, he said everybody in the Democratic party is qualified to be president at one point except Barack Obama.  That‘s a huge problem.  If I‘m Barack Obama‘s folks, I‘m really worried.  I‘ll remember that President Clinton once had a mis-fed teleprompter and started speaking without his given speech, and hope that he doesn‘t decide to give a speech other than the one he has submitted at the Democratic convention. 

GREGORY:  Right, exactly. 

ALLEN:  Of course, they still have to deal with this Hillary Clinton issue as well. 

GREGORY:  Susan, is that what we‘re going to continue to talk about?  The Clinton effect, rather than whether there is some role for John Edwards here going forward, and whether that‘s a distraction? 

MOLINARI:  I think so.  I don‘t know the answer to this, but in some bizarre way does this—the fact that you have the John Edwards issue coming up, does this remind people of the personal failings of Bill Clinton and does that diminish any of the impact we felt he was having in hurting the Obama candidacy?  Maybe I‘m getting a little too political analyzing here.  The beginning of today, we all thought clearly the issue with the Clintons and the games that they were playing, in terms of would they put her name into nomination and did they have to go through a role call vote and what role would Bill Clinton have, really could have a very disastrous effect on the way I would think a candidate like Barack Obama would want his convention to be covered. 

I think that is a much bigger story.  I agree, the personal failings of John Edwards and the issues between him and Elizabeth are not transferable to the Obama campaign.  I don‘t think any Republican would try to make that connection at all. 

GREGORY:  We have some new information here, some early excerpts, quotes of John Edwards from his interview with Brian Ross on ABC “World News Tonight.”  The first is this, from the interview with Bob Woodruff, quote, “two years ago, I made a very serious mistake.”  He also said, “all of which fed a self-focus, an egotism, a narcissism, that leads you to believe you can do whatever you want.  Also this, a quote from ABC, “I wanted to keep this mistake I had made two years ago previously private.” 

Chuck Todd, if you‘re still with us, one of the things we learned today is that when he made that visit to the hotel in Beverly Hills, he claims it wasn‘t an effort to see Rielle Hunter, but somebody that knew her.  All of this certainly an attempt to keep this quiet.  So he was certainly engaged in an effort to do that. 

TODD:  He was.  Look, according to somebody that I know that was briefed about the entire interview, they said that was his explanation for why he was at the Beverly Hilton that night, when he was confronted by those “National Enquirer” reporters, that he was there to meet a friend of Hunters‘, who was apparently helping keep this a secret for however he was helping.  This person, it was a friend of Hunters, and it was somebody that Edwards was dealing with. 

So, look, he clearly was trying to keep this secret.  You start one line, you go down the trail.  That clearly caught up with him. 

GREGORY:  We‘re going to take a break here.  Coming next, we will switch gears and ask this question: will McCain‘s recent attacks on Obama hurt his image as a straight talking maverick?  McCain‘s senior adviser, Nicole Wallace, will join me coming up next on THE RACE.

(COMMERCIAL BREAK)

GREGORY:  We are back on RACE FOR THE WHITE HOUSE, inside the war room of Senator McCain‘s campaign, going one on one with senior adviser to the campaign, Nicole Wallace.  Good evening, Nicole. 

NICOLE WALLACE, MCCAIN CAMPAIGN ADVISER:  Thanks for having me on such a busy day. 

GREGORY:  It‘s a busy day.  Let me first ask you—it‘s not why we asked you on the program, but this John Edwards story; any reaction to this from Senator McCain at all? 

WALLACE:  No, not at all.  Just sitting here listening to your program, I just keep thinking about all the analysis about John Edwards, the politician.  I‘m sitting here thinking John Edwards the father.  I hope we all keep in mind that this is a man with a family.  I don‘t know if that affects how you have to do your job, but it is something that strikes me.  Maybe I‘m getting soft these days, but it‘s a sad day. 

GREGORY:  It is a sad day.  It‘s certainly a sad day for their family.  The point is well taken.  Let‘s talk about this campaign and talk about McCain campaign strategy.  You have tried, the campaign has, recently to tarnish Obama‘s credibility and his image in a couple ways.  On the one hand, it is to describe him as a celebrity, to use Britney Spears, Paris Hilton to suggest he‘s sort of famous for being famous, that he‘s a lightweight.  That‘s on the one hand.  On the other hand, it is to reduce his energy plan to the idea of the tire gauge, to suggest that his whole energy plan is really about whether there‘s enough air in the tires. 

The question is, are these ambush political tactics?  Is that consistent with the original maverick that you claim John McCain is? 

WALLACE:  Two quick things here, David.  One, I never hear anyone put it to the Obama campaign the internal deliberations that they may have gone to when they made the strategic decision to essentially filet an American hero, a former POW on the stump every day, which is what comes out of their candidate‘s mouth every day on the stump. 

Two, Barack Obama tarnished himself.  We didn‘t paint him as anything that he isn‘t.  He certainly—he went overseas.  We were pleased that he was finally going to visit the war zone.  Their campaign made a decision.  They obviously did it to gain advantage—you don‘t do things in campaigns for other reasons—to hold a 200,000 person rally in Europe in the midst of a presidential campaign.  It was obviously a decision to celebrate his celebrity with a crowd of screaming Europeans.  By pointing it out, it‘s not our effort to tarnish him.  It‘s shining a light on something that his campaign spent a lot of time and money trying to shine a light on themselves. 

GREGORY:  When you talk about trying to tarnish McCain‘s image or filet his image or his reputation, certainly there‘s been a very aggressive attempt to tie him to President Bush and say he‘s a third Bush term.  What else do you have in mind in terms of what they have done? 

WALLACE:  Look, let‘s not gloss over that.  You covered this White House.  I worked at this White House.  John McCain used to make major news every time he ended up at odds with the Bush White House.  Whether it was attacking the secretary of defense for the conduct of the war, whether it was a very high profile disagreement that he had with the Bush White House over torture and other aspects of the war on terror. 

So it‘s a blatant lie when Barack Obama stands in front of his supporters and calls John McCain an extension of the Bush administration.  It‘s simply not true.  So, it‘s not something to gloss over.  On the other hand, Barack Obama is someone who‘s—the two pillars of his candidacy are a politician who‘s going to do things differently, change we can believe in, and the other is judgment that he pointed to in his race against Hillary Clinton, when he said I gave a speech in 2002 in which I had better judgment than you did on Iraq. 

I think that Barack Obama‘s wounds are self-inflicted.  I think it‘s the job of any campaign to highlight a candidate‘s weaknesses.  That‘s all that we‘ve done.  Really, our focus is on communicating John McCain‘s vision for the future, for making this country energy independent and getting people working again. 

GREGORY:  But, clearly, the McCain campaign has made a calculated decision to turn up the heat on Obama, to go on the attack, to try to have a different narrative frame for this campaign.  In fact, Senator McCain told David Broder that he laments the tone of this campaign and what‘s happened over the past several weeks.  This is what he said back in April about the kind of campaign that he was looking forward to.  We‘ll let you listen to it and have a response. 

WALLACE:  OK. 

(BEGIN VIDEO CLIP)

MCCAIN:  This will be a respectful campaign.  Americans want a respectful campaign. 

I‘m tired of the attacks.  They are tired of the impugning people‘s character and integrity.  They want a respectful campaign and I‘m of the firm belief that they will get it and they can get, if the American people demand it and reject a lot of this negative stuff that goes on. 

(END VIDEO CLIP)

GREGORY:  Has Senator McCain lived up to that? 

WALLACE:  I believe he has.  You know, look, it‘s a respectful campaign, but that doesn‘t mean that you shy away from highlighting the differences.  As your own Tim Russert used to say, it‘s a big election about big stuff.  I think, when you‘re talking about big differences, these are very different men, with very different biographies.  The Obama campaign is never shy about pointing out the age and philosophical difference, time in Washington.  That‘s the work of campaigns to make sure that people understand the choice that they have. 

On the big issues, there are very stark differences.  On the policies that people care about, people are looking for leadership.  I believe this is a leadership election.  They want someone who is going to end this war with victory.  They want to achieve the objective.  I think everyone agrees now, as a country, that it‘s time to end the war in Iraq.  It‘s how do we do it.  I think everyone agrees now as a country that it‘s time to stop shipping 700 billion dollars overseas to countries that is are not very friendly to us.  The question is how do we make ourselves energy independent. 

So there are big differences there.  We are certainly committed to running the honorable campaign John McCain promised. 

GREGORY:  Let‘s talk about McCain the maverick, which is a theme that‘s been highlighted by the McCain campaign this week.  There‘s a new ad that has been put on the Internet in support of that idea.  Let‘s run it and talk about it on the other side of it. 

(BEGIN VIDEO CLIP)

TOM DASCHLE (D), FORMER SENATOR:  He can work with Democrats on key issues.  Whether it‘s campaign finance reform or tobacco policy, he‘s worked with us. 

SEN. JOE BIDEN (D), DELAWARE:  John McCain is a personal friend, a great friend.  I would be honored to run with or against John McCain.  

SEN. JOHN KERRY (D), MASSACHUSETTS:  I have enormous respect for him. 

He is a courageous, patriotic American, who stands up for what he believes. 

HOWARD DEAN, CHAIRMAN, DNC:  I admire Senator McCain greatly.  He‘s one of the people we model our campaign on, because he is very direct, very blunt, and nobody has to guess at what he‘s thinking. 

SEN RUSS FEINGOLD (D), WISCONSIN:  I love John McCain.  He‘s a great guy. 

OBAMA:  Since coming to Washington, I believe that the right approach begins with the proposal put forward by Senator Lieberman and Senator McCain. 

CLINTON:  I know Senator McCain has a lifetime of experience that he will bring to the White House and Senator Obama has a speech he gave in 2002. 

(END VIDEO CLIP)

GREGORY:  It‘s a very cleverly constructed ad, I have to admit.  But is this a conversation that you really want to have?  John Kerry, for instance, in a response that you knew the Democratic committee would have, said this about McCain today: “John McCain has changed in profound and fundamental ways that I find personally really surprising and, frankly, upsetting.  He‘s not the John McCain as a senator who defined himself, quote, as a maverick, though questionable.  That‘s a different John McCain.” 

That‘s an argument you get from some Democrats and critics of John McCain, that this is not the John McCain of 2000 who took on George W.  Bush.  It‘s a very different figure. 

WALLACE:  Look, I put all my faith in the wisdom of the voters.  I think if you came out with us on the trail, which I hope you will do, you will see that John McCain the maverick, John McCain the straight talker and John McCain the guy that gets a standing ovation when he talks about the need to drill and drill now—who would have thought two years ago that that would be the largest applause line when you travel through Racine, Wisconsin and through Michigan and through Ohio and through Florida? 

If you come out and see it, and if we get out of some of the back and forth that happens, as I understand it must, in the Northeast corridor, you‘ll see that John McCain is still offering straight talk.  He spends his days on the campaign trail, face to face with voters.  He does not stand in the arena.  You do not have crowds of 2,000 people.  He interacts.  These are spontaneous interactions.  They are—I think even his early supporters would consider them vintage John McCain.  He‘s talking about his vision for the future.  So that‘s the campaign we‘re running. 

People in Washington are going to say what they are going to say. 

It‘s really not the focus of our campaign. 

GREGORY:  Nicole, certainly the McCain campaign has landed some blows against Senator Obama over the last week and a half.  Some of the polling reflects that.  In your estimation here, as we start to gear up to the conventions, is this a dead even race? 

WALLACE:  Oh, god.  I feel like we are still very much the underdog.  I think that polls go up and polls go down.  You and I have both been involved in more than a couple presidential campaigns, and the only campaign and the only poll that matters is the one on election day. 

So we‘re the underdog.  I think we expect to remain in that position.  It‘s one that, frankly, Senator McCain is most comfortable running as.  I think we‘ll look forward to staying neck in neck through November. 

GREGORY:  All right, Nicole.  Thanks for coming on.  Have a good weekend.  Talk to you soon.  That‘s going to do it for a busy day for RACE FOR THE WHITE HOUSE.  I‘m David Gregory.  THE RACE will return in two weeks, live from the Democratic convention in Denver.   Have a peaceful Friday night and a good weekend.  Stay with NBC here and MSNBC. 

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

END   

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