updated 9/29/2008 5:17:51 PM ET 2008-09-29T21:17:51

Guest: Haley Barbour, Harold Ford, Jr., Robert Casey, Joe Lieberman, Gene Robinson, Pat Buchanan, John Grisham, Brent Scowcroft

DAVID GREGORY, HOST: Tonight, unsettling uncertainty.

President Bush pleads for a bailout deal as Senators McCain and Obama prepare for their first national debate. Despite all the rhetoric, there is no deal. But there will be a presidential debate. Tonight, the politics of leadership, as we preview the Mississippi showdown.

That and more, as the RACE FOR THE WHITE HOUSE rolls on.

Thirty-nine days to go in the race for the White House.

Welcome to the program. I'm David Gregory in New York tonight.

My headline, "Bailout Stalemated."

This moment, no deal on the president's bailout plan for Wall Street. Negotiations imploding overnight. Lawmakers on the Hill further away from an agreement tonight than they were yesterday.

House Republicans a key to this. Opposed to President Bush's administration's original proposal. they put out an alternative bill today. That bill waived off by Senate leaders and the president, who said it just won't work.

Then, less than two hours ago, Senate Democrats emerged from negotiations to announce some progress had been made, though the essence of the administration's plan remains in intact with some tinkering on issues that are big issues to Democrats like executive compensation. But will renegade House Republicans buy it? The bailout ball is now in their court.

Meanwhile, Senator John McCain, who had threatened to delay the presidential debate to work on reaching a bailout deal, has agreed to attend tonight's showdown at Ole Miss. McCain and Obama now gearing up to face off on tonight's focus, foreign policy.

Joining me now from Oxford, Mississippi, site of tonight's debate is Chuck T., Chuck Todd, our political news director.

And Chuck, two big stories, they've been rattling along all week. Now they come together on the campus of Ole Miss. There's still no deal. And I thought that was the basis of whether John McCain would actually participate.

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR: And I think that that has got to be what some in the McCain campaign are now regretting when they threw the debate as part into their decision to suspend their campaign and go to Washington. A lot of Republicans that I've talked to said they got 75 percent of what McCain was attempting to do: show some leadership on an issue that he hadn't shown leadership on before, the economy; get to Washington, attempt to be the guy that's a conciliator; show the base that he is being a little suspect of this Wall Street/White House deal, and he wants to churn things up and stir it up. But why throw in the debate threat? The debate threat might actually have politicized this more than it needed to be.

GREGORY: Yes. Here's what the majority leader of the Senate, Harry Reid, had to say about McCain's involvement in this process.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: I called on Senator McCain today to stand, let us know where he stands on the issue on this bailout. But all he has done is stand in front of the cameras. We still don't know where he stands on the issue. The insertion of presidential politics has not been helpful. I repeat, the insertion of presidential politics has not been helpful.

(END VIDEO CLIP)

GREGORY: That's the view, Chuck, from Senator Reid.

The question is, what specifically has Senator McCain done? And by inserting himself, does he now take ownership of a bill that's going to be very unpopular with the conservative base?

TODD: Well, that's the thing. And I don't know if he's going to end up supporting this bill.

Look, I talked to some conservatives who are sort of grassroots leaders who are sitting there, who were so happy that McCain was jumping in and showing that he may be against this thing. They believe that somehow, like immigration, David, that there is a firestorm burning out there in the conservative grassroots. That it's sitting there going, looking for a populist leader to tell Washington and tell New York, hey, wait a minute, this is not the right answer.

Now they're a little bit disappointed that McCain appears to be backing away. And like you said, McCain now, by announcing that there is a framework for a deal that he is comfortable with, that House Republicans are at the table, you're right, now he takes ownership of this, along with Obama, and it will be a little bit harder. In three weeks, this is still not going to be popular with the American public, because it's still never been explained very well to the American public by the Bush administration, by Hank Paulson.

GREGORY: Right.

TODD: So it's still going to be unpopular. And is McCain going to be able to say, well, I've never been that happy with it, but I voted for it anyway because everybody told me, we had to do something?

GREGORY: Right. Right.

TODD: Or is he going to want to say, you know what, hey, I was against it and I'm going to vote against it? We'll see.

GREGORY: All right. Chuck Todd, down at the site of the debate tonight in Mississippi.

Chuck, thanks, as always.

Joining us now is Republican Governor of Mississippi Haley Barbour. He joins us from the University of Mississippi, where tonight's presidential debate will soon take place.

Governor, good to see you. Thanks for being here.

GOV. HALEY BARBOUR ®, MISSISSIPPI: David, thank you very much for having me on your air.

GREGORY: Did you think the debate was ever in doubt?

BARBOUR: Well, I expected it to happen. As I said yesterday, that I expected we would have a debate tonight at 8:00, Senator Obama and Senator McCain. I'll confess that it's nice to know it and not just believe it. So when it was confirmed, I was pleased, as I think all of us who worked so hard on this in Mississippi.

GREGORY: You're an elected official. You have run the RNC. You know Washington as well as anybody. Has John McCain exercised political leadership, or is he just guilty here of political maneuvering at the end of a campaign?

BARBOUR: Well, I don't want to be as partisan as Harry Reid, who I thought could have been have been much more partisan than anybody except Chuck. But the fact of the matter is, McCain said to the American people, I'm going to put a spear in the ground and make plain that Barack Obama and I have to be part of this deal.

He went back to Washington for that purpose, not to get mired in the details. Senator Obama also did the right thing in going back to Washington. But I don't think anybody expected him, and I don't want him to be sitting there, spending all their time working out the details.

But it's very important. One of these men is gong to be president of the United States. For him to have been part of this and made plain, I accept the fact that something has to be done, John McCain did that. Barack Obama followed his lead and did it, too.

GREGORY: And so your view is, as a governor, in an important part of this country, in the South, that both these leaders played a constructive role being in Washington at this time?

BARBOUR: I think both of them did the right thing to go back and say to their colleagues, as well as the American people, the next president of the United States recognizes something has got to be done. So you all go forward knowing that.

GREGORY: You're feeling the economic pain in this country, as well as anybody in the southeastern part of the country. People aren't able to get gas when they go to the gas stations because some of the shortages there, the mortgage crisis in the Southeast, and the housing bubble, et cetera, et cetera. Your party faces a disadvantage on the economy. The polls show that.

With all of that as the backdrop, what has John McCain, someone you support, have to accomplish tonight?

BARBOUR: Well, I think tonight's debate, you'll see McCain, who is plainspoken, he is not a phenomenon like Barack Obama, he doesn't ooze charisma like Barack Obama-you know, Obama can charm the skin off a snake. McCain is very plainspoken, very straight. But I think his experience, his strength, his courage, I think that will come out, it will be style versus substance.

But I do want to say this, to go back, David, to something you said.

GREGORY: Yes.

BARBOUR: The biggest problem for us is $4 gasoline.

GREGORY: Yes.

BARBOUR: And that's why we in Mississippi have an energy policy. Our energy policy is more energy. We need more domestic production of energy to bring down the costs so that our people can continue to go to work, continue to take their kids to school.

Energy is the biggest economic problem in this country if we don't see a total collapse of the financial markets. That's what most Mississippians and a lot of other people around this country are more concerned about. They want more energy for our country because they know if you want to bring down the price of something, increase the supply of it.

GREGORY: All right. Governor Haley Barbour down in Oxford, Mississippi, the site of the big showdown there tonight.

Governor, thank you for your time.

BARBOUR: Thanks, David.

GREGORY: Appreciate it very much.

Let's bring in the former presidential candidate and MSNBC political analyst, Pat Buchanan, and Harold Ford, Jr., NBC News analyst and chairman of the Democratic Leadership Council.

Welcome to you both.

Pat, let me start with you.

We have seen the insertion of John McCain into this process. Barack Obama has been in Washington, too. I'm going to ask both of you, what have we learned about these two men as leaders in the middle of this financial crisis and this bailout negotiation that has not led to a solution yet? What have we learned about them as leaders in the way they've handled themselves over the last couple of days?

PAT BUCHANAN, MSNBC POLITICAL ANALYST: John McCain will throw the long ball. When things aren't going his way, he will make a dramatic move like Palin, Sarah Palin. I think did he the right thing, I agree with Chuck, in interrupting the campaign.

Things were going Barack Obama's way because this was an economic disaster, and everything was going his way. It was back to his issue. So McCain comes back to Washington to get into the middle of this bailout.

His problem is this-I mean, we've heard Chuck talk about the Republican base. This isn't the Republican base. This is middle America that is boiling with rage. This is those working class White folks in Pennsylvania and Ohio.

They're looking, they're saying, you mean to tell me they're going to bail out Wall Street? These are Democrats and Independents. And what McCain can't do, in my judgment, he cannot be seen as part of what is going to look to America like a bailout of these fat cats on Wall Street for the arrogance and greed, and they're dumping all their rotten paper on the middle American taxpayer.

GREGORY: Harold, earlier today, I interviewed Senator Joe Lieberman. We'll see that in interview in full coming up a little bit later in the program. This is what he said about whether-the question I asked Governor Haley Barbour, which is, did Obama play as constructive a role as Senator McCain? This is how he answered.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT: I don't think Senator Obama played as critical a leadership role. Senator McCain was the one who said, I'm going back to Washington, I'm suspending my campaign. Senator Obama followed him here yesterday and left right away.

(END VIDEO CLIP)

GREGORY: Response?

HAROLD FORD, JR., NBC NEWS ANALYST: I would expect my friend Joe Lieberman to say those things. He is supporting John McCain. It's clear that both candidates went back and probably got in the way of things just a little bit.

The reality with this plan, this stabilization relief bailout plan, is that a majority of Americans, hard-working middle class Americans, are the ones who are going to be hurt the most if they don't do something. The context, the substance, the contours of that they need to debate. But both of them went back and, frankly, it was a smart thing to do.

Governor Barbour had it right, both need to be back. But to fight over and quibble over if one followed the other back, look, John McCain had to do it. He was 10 points down in the polls. It looked as if the economy was hurting his campaign and candidacy.

What I hope one of them will do is to help frame this conversation in a way that middle Americans in Ohio and Pennsylvania and West Virginia can understand. What does it mean if a small business owner can't make payroll?

GREGORY: Right.

FORD: What does it mean if a retirement account for a senior in Tennessee is frozen? What does it mean if a college loan, if a student at the University of Tennessee, the University of Georgia, can't access his loan? That's what's at stake here, and that issue-those issues have not been fully...

(CROSSTALK)

BUCHANAN: But politically, John McCain, he took the bit in his teeth and came rolling back to Washington. He is right in the middle. He's the focus of the hour.

GREGORY: The question is what he actually accomplished with it.

FORD: That's a different question.

BUCHANAN: He stopped. The perception is that John McCain, as of now, he has come back and he stopped the bailout of Wall Street, which Dodd, Paulson, Barney Frank, Bush bailout...

GREGORY: So he has got to oppose it.

BUCHANAN: All right, here's the thing. That's the key question.

I don't think John McCain will benefit if they put together sort of a deal with a couple of minor amendments and he signs on to it. If he stands up against it, if three weeks from now when it starts to look rotten because some things come out, he can say, I opposed that had thing. It was done for Wall Street, not middle America.

GREGORY: All right.

BUCHANAN: There's the risk. That is the risk.

FORD: But Pat, if the Congress doesn't do something, if there are dire consequences a week or two from now, if you find not only a big bank but small banks and community banks collapsing across the country...

BUCHANAN: There's no deal.

FORD: Right. But that's the bigger challenge.

BUCHANAN: Suppose there's a deal...

GREGORY: All right. I've got to get in here. We'll continue this. You guys are sticking around.

I'm going to get a break in here. Coming up next...

FORD: We'll keep going at it.

GREGORY: You keep going during the break.

The backdrop of tonight's debate, the bailout battle on Capitol Hill. I'm going to get the latest on the bill from Banking Committee member Senator Bob Casey of Pennsylvania when THE RACE returns, right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: The best thing that I can do, rather than to inject presidential politics in the delicate negotiations, is to go down to Mississippi and explain to the American people what is going on and my vision for leading the country.

(END VIDEO CLIP)

GREGORY: We're back on RACE FOR THE WHITE HOUSE. I'm David Gregory.

That, of course, Senator Obama aboard his campaign plane as he made his way from the Capitol Hill bailout negotiations to Oxford, Mississippi, for tonight's debate.

Joining me now to discuss today's developments is Bob Casey, Democratic senator of Pennsylvania, member of the Senate Banking Committee. And he's on the Hill tonight.

Senator, good to see you.

SEN. ROBERT CASEY (D), PENNSYLVANIA: Thank you, David. Good to be with you.

GREGORY: So, Barack Obama has his debate as scheduled. He wants to go down there and talk about the economy.

Senator, we know what he wants to say about the economy. But this is a debate that will be watched by tens of million of people.

What does he have to make people feel tonight?

CASEY: Well, I think what Senator Obama will do tonight is what he has done throughout this campaign. I think he'll inform the American people about his vision for the country, especially on the economy. But also, obviously, there will be a lot of foreign policy.

And I think he'll do it in the same inspiring way that he's done it as a candidate. And I think that's pretty important.

We need a president who is going to have not just the right solutions on tax cuts for the middle class or helping our families with foreclosure prevention, or whatever the economic strategy is, but you also have to lead. And part of leading is inspiring people and moving them in the right direction. And I think he'll do that tonight.

GREGORY: OK. Well, Senator, what did Barack Obama do to lead, to inspire, and to move people in his direction on Capitol Hill in the middle of this country's biggest financial crisis, which is the question of this bailout negotiation? What did he do?

CASEY: I think he has got to do what he has been doing throughout this process. I don't think what we saw yesterday with John McCain was necessarily a constructive time period in the Capitol here.

There is a lot of bipartisanship on this issue. A lot of people working together. We didn't need John McCain to come here and tell us how to be bipartisan.

Barack Obama, I think, led in a very constructive way, even when he was on the road campaigning, laying out principles about protecting taxpayers, putting forth ideas about how we hold CEOs accountable. So I think he was leading even as a candidate, even as a nominee.

People expect these candidates to be the nominees of their party, to run for president. They don't expect them to come back and micromanage legislation. And I think Senator Obama did the right thing by providing leadership, but also saying, we have got a debate tonight. And I think he made the right decision to commit himself to that debate.

GREGORY: Was there a concrete step that he took that was able to move the process along and move it toward passage? I mean, people are watching this in America and seeing this debate go back and forth. We have passage that we don't have agreement, and then we're farther away yesterday-today than we were yesterday. And they have to be scratching their heads and saying, I thought that the economy was going to go south on us unless we got this thing passed.

CASEY: David, it's the job of the Congress and the administration to work on this here in Washington. This isn't something that the nominees of both parties have to come to Washington and micromanage.

I think people expect these two candidates to debate. Even as we're-look, al Qaeda and the terrorists are not taking time off while we debate this economic and this financial crisis. We have got foreign policy challenges that Senator Obama is going to talk about tonight. We've got to stay on the hunt for the terrorists. We've got to make sure that we're building an economy.

So you've got to be able to do a couple things at one time, not just focus on one piece of legislation, as big as this is. It's the job of the Congress, it's the job of the administration to work on this and to work with the American people to get it done.

GREGORY: All right. Senator Bob Casey on Capitol Hill tonight.

Senator, thank you, as always.

Let's go back to our panel, Pat Buchanan and Harold Ford, here.

Harold, let's talk about the debate here. They are going to talk about the economy. They'll talk-they'll have their back and forth on who provided leadership in the course of this bailout negotiation. We still don't have a deal.

Let's talk foreign policy. That's the focus of this debate. Big advantage for John McCain.

How do you see the contours of this tonight?

FORD: Well, I'm not so certain this is a big advantage for John McCain.

GREGORY: In the polls we see it's an advantage for him in terms of voter perception.

FORD: In that regard it is.

If you think about the last seven years, the organizing principle in our foreign policy and national security has been al Qaeda and bin Laden. If you measure this presidency up against that, we've not found them, they have grown. We've not seen an attack on our soil, but they've not grown. They've grown around the globe.

Barack Obama is the only of the two candidates who has said, I'm willing to go into Pakistan if need be. I will chase bin Laden wherever he might be. John McCain has suggested-has been a little more timid on that front.

They will have the debate on the surge. You will hear McCain take Barack on pretty aggressively. But I hope Barack will fire back and say, well, if you believe so strongly that the surge has worked, are you willing to follow my lead and let us find bin Laden? And you and I both declare tonight that the presidency, the first four years, our first term will be judged, our foreign policy, by whether or not we put it in end to al Qaeda and put an end to bin Laden.

GREGORY: But Pat, do you think this is going to be a toughness question about who is tougher on this? I think Barack Obama wants to reframe our outlook on foreign policy and make this a referendum on judgment calls that have been made.

BUCHANAN: This debate is about Barack Obama. We all know John McCain, he's somewhat hotheaded. He's A tough customer. A veteran. A POW.

The country is looking to see if Barack Obama has the toughness, the discipline of mind, the focus, the ability to be basically a centrist/Jack Kennedy Democrat who can command the foreign policy of the United States in a time of war, in a time of great turmoil abroad.

Right now, they're looking at this gauzy, classy, cool character. And that's the problem for Obama. He's got to solve the Obama problem with middle America. If he can do that, as Kennedy did and Reagan did, I think he wins the debate. And I think he probably wins the election.

GREGORY: All right. Let me get another break in here.

Coming next, the Bill Clinton factor, it's on THE RACE's radar tonight.

We'll tell you about it after this.

(COMMERCIAL BREAK)

GREGORY: Back on RACE FOR THE WHITE HOUSE. Going to check back here with Pat and Harold on the Clinton factor, which we like to check in on now and again. We're talking about Hillary and Bill Clinton.

President Clinton, Harold Ford, this week has been effusive in support of John McCain, talked positively about Sarah Palin. But he's a lot more, in some people's eyes, temperate, a little bit more tepid, when it comes to Barack Obama.

Is there a problem here?

FORD: No, I don't think there's any problem. I think he's-not only has she been out, Mrs. Clinton been out campaigning, the president made clear when Senator Obama visited him that not only would he win, but he would win this race handily because the issues are in his favor. I hope to see the president out on the campaign trail over the next few weeks. I think he can be helpful in a number of these key states, including Pennsylvania and Ohio, and maybe even in Arkansas.

GREGORY: But Pat, where is the love? Where is the full embrace? Where is it?

BUCHANAN: Look, it's nonexistent, fellow. Listen, no-but what he's doing, look, he's former president of the United States. He helps himself when he is gracious to Sarah Palin and he's gracious to John McCain.

But I agree, I think he's going to go out. And I think he's still an asset of the Democratic Party and I think he can help Barack Obama. But he's not going to cut himself up for Barack Obama.

GREGORY: In the process. All right.

Pat, you're sticking around.

Harold, thank you very much.

We're coming back after the break.

Coming up, I'm going to talk to McCain supporter Senator Joe Lieberman about McCain's role in the bailout battle.

And later, best-selling author John Grisham joins me from his alma mater.

That's Ole Miss, site of tonight's first presidential debate.

Plus, a debate preview with former national security adviser Brent Scowcroft. We're pleased to have him to get his thoughts on the way ahead on foreign policy.

RACE FOR THE WHITE HOUSE returns after this.

(COMMERCIAL BREAK)

DAVID GREGORY, MSNBC ANCHOR: Lawmakers square off over the bailout and McCain and Obama prepare to turn their attention to foreign policy in tonight's first presidential debate.

In the next half-hour in "RACE FOR THE WHITE HOUSE," Senator Joe Lieberman, former National Security Adviser Brent Scowcroft and bestselling author John Grisham join the race just hours away from the main event.

Back on "RACE FOR THE WHITE HOUSE," I'm David Gregory in New York.

Tonight, the back half. Here is the latest on the bailout Bill tonight; as of now, no deal on the plan. House Republicans proposed as an alternative bill to the bailout plan; that bill which was dismissed by senate leaders and the administration.

The president took to the podium this morning. He called on congress to quote, "rise to the occasion." House Republicans agreed to rejoin the negotiations. Then about two hours ago, senate leaders agreed to announce some progress had been made on the bill. The ball now returns to the House Republicans.

Joining us now: John Harwood, CNBC's Chief Washington correspondent; political writer for the "New York Times;" Gene Robinson, MSNBC political analyst and columnist and associate editor and all around nice guy at the "Washington Post" and still with us, Pat Buchanan, MSNBC political analyst.

John Harwood, put this all together. Where does this bill stand?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT: I think the bill appears to be making progress. I'm hearing favorable signs from both Democrats and Republicans on my Blackberry from down here in Oxford, where we're getting ready to have this debate.

The question is how much of that House Republican proposal might get incorporated into this deal? The administration does not believe the Republican proposal could essentially replace the Treasury. So it's a question of throwing a stop to those House Republicans so that they'll feel like they have got something and can go on-go along. If they don't the thing could be in trouble.

GREGORY: Right and just to remind people-just very quickly explain, what is it that they're proposing as an alternative?

We know the one model is $700 million, buy these bad assets from these investment banks. The House Republicans don't want to do that.

HARWOOD: Right. And on the $700 billion, the Democrats on the Hill have agreed to slow that down, begin with $250 billion and do it more slowly.

But the essential difference on the House side is where the main Paulson proposal would have Treasury buy up these bad assets, take them off the books of financial institutions and try to make them stronger and get the credit markets flowing, the Republicans say let's do two thing. Let's help those financial institutions by cutting the capital gains tax retroactively and by ensuring them against losses on some of this paper rather than buying into the government, which they think is akin to socialism.

GREGORY: All right John, stick around. That's the back drop for my conversation earlier today with Connecticut Senator and John McCain supporter Joe Lieberman. Here's our conversation from earlier today.

(BEGIN VIDEOTAPE)

GREGORY: Senator Lieberman, let me begin. Senator McCain was very clear in the last couple of days. He said that he thought that this bailout bill was going south. He's going to suspend the bill (sic), come to Washington and wanted to postpone the debate.

Well, there is still no agreement on the bailout package and yet now he is going to the debate. You've been with him. Why did he change his mind?

SEN. JOE LIEBERMAN, (I) CONNECTICUT: One, John made the right decision in coming back to Washington to try to bring the parties together so we could avoid an economic disaster, do so in a way that protected taxpayers, which is what he wanted to do.

Two, there was no deal yesterday and I think he worked very hard over the last two days, shuttling between the Senate and the House on the phone with the administration and the White House. And moved it to a point where now, the four leading parties are in the room together and they're negotiating.

I think Senator McCain felt that he had it at a point where there was nothing more he could do for the next few hours. And that he could go to Mississippi which he's wanted to do all along and have this debate. He'll get right on the plane and come back when it's done.

And look, Senator Obama and Senator McCain must have been here. They needed to be here because as presidential nominees, they're the titular leaders of their respective parties. This is big and urgent business.

GREGORY: Nobody crawls (ph) with that. My question to you, senator, is what is it precisely that Senator McCain did to make a qualitative difference in the outcome?

LIEBERMAN: I think the most important thing he did, and again, he comes as the leader of the Republican Party is to engage the House Republicans in this negotiating effort. Congress Blunt is now one of four at the table with Barney Frank, Chris Dodd and Judd Gregg.

And this agreement is not going to make it with the small number of people who announced an outline yesterday. Speaker Pelosi has been very clear she will not pass this agreement with only Democratic votes in the house. And I understand that. So you need to bring in some of the House Republicans.

GREGORY: But Senator McCain has not even declared his position on the bailout plan.

LIEBERMAN: Well, he has from last week, a week ago today. He said it was urgent that action be taken to avert a national economic disaster. He gave five conditions that he said had to be part of it. Three or four of those are actually, in some ways, all five are actually in the proposal that's being discussed now.

But, you know, you have to get an agreement around here to get anything done. And you can't do it with a small number of people. The House Republican caucus has to be brought in. And I think the most significant thing Senator McCain did in the two days he was here working very hard was to do exactly that.

GREGORY: Is he going to deliver his house caucus? Those recalcitrant Republicans who didn't like this deal? Can he deliver them now?

LIEBERMAN: Well, he is trying as hard as he can. Let's be clear about this. It takes two to tango or in this case, four to tango; Senate and House Republicans and Democrats.

So the Democrats have to be willing to move a little bit, to bring the House Republicans into this. And that's why the negotiations going on now are so important. But I believe that John McCain played a critical role in bringing the discussions to this point.

I'm optimistic that we'll have an agreement this weekend. When the market is open on Monday, they could do so with some reassurance. But it's got to an agreement with a lot more protections for taxpayer money than would have been in there when this started earlier in the week, or even yesterday.

GREGORY: How do you respond to the criticism? To a lot of people that this was election year, end of the campaign season; maneuvering by Senator McCain to look like he was the one who could get some credit for crisis management here. In the end, this was nothing more than a political stunt?

LIEBERMAN: It wasn't.

Number one, this is John McCain as I've known him over the last 20 years as a colleague and friend in the senate. Just about every time when there is a big problem or a national crisis, he is in the middle of it, bringing people together to get things done.

And I think he said to himself out on the campaign trail, I belong in Washington. So does Barack Obama. Our nation is on the verge of the abyss. And I've got to go back there and make it work.

Incidentally, David, when did he that, he took a risk. He is now, in some sense, more accountable for whether anything happens than he would have been if he had stayed on the trail.

GREGORY: So you're saying, this is going to be John McCain's bill.

LIEBERMAN: Well, it's not going to be John McCain's bill. But if it doesn't happen, he put himself on the line. I think he did it because he knows how important it is for the country that we get an agreement and one that protects taxpayers.

GREGORY: So would you also say that, Senator, given the stakes here, given the importance of this legislation, that Senator Obama played as constructive a role as senator McCain, coming back to Washington?

LIEBERMAN: I don't think Senator Obama played as critical a leadership role. Senator McCain was the one who said, I'm going back to Washington;

I'm suspending my campaign. Senator Obama followed him here yesterday and left right away.

And look, the key ingredient here was to bring these House Republicans to the table to negotiate an agreement; John McCain was the person who made that happen. I'm proud of him that he did. Now they have got to reach an agreement for the good of the country.

GREGORY: Senator Lieberman, thank you very much for taking the time.

LIEBERMAN: Thanks David. Take care.

(END VIDEOTAPE)

GREGORY: We're back.

Gene Robinson, first to you. He wants the credit for bringing them back to the table. We don't have an agreement yet.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: We don't have an agreement and we don't know what John McCain thinks. John McCain won't say whether he supports this agreement or not, or supports this basic idea of the $700 billion bailout with modifications that are designed to bring Republicans on board and to protect the taxpayers.

He's been-It's a very curious thing that he did. He came back and made a big deal of that and effectively took ownership of what finally happens, yet did not enunciate what he wants to happen.

PAT BUCHANAN, MSNBC POLITICAL ANALYST: His natural instincts are McCain/Feingold, McCain/Kennedy, McCain/Lieberman, all of these things; his natural instincts would tell him to on to the bill sort of with reservations; you know the one that goes through.

However, I think his political interests are not doing that.

GREGORY: In not signing on to the bill. This is going to be a big bailout.

BUCHANAN: It's going to be a big bail out. The establishments are going to love it. I mean Washington will love it. New York and Washington will love it; I don't think the country is going to love this.

I think there's going to be outrage about it. And I think many of those Republicans, quite frankly, are on the right side. You can see. Look at Dodd the way he's denouncing what he has to do; and all the things, bailing out these terrible people and everything. So I think McCain better think long and hard before he signs on to this.

GREGORY: I want to ask somebody into this conversation because this is the back drop of leadership; the question of leadership. David Brooks in the "New York Times" today. He wrote about John McCain; wrote about him as a fundamental leader, but had a complaint as well. We'll put it on the screen for our viewers.

This is what David Brooks wrote:

"What disappoints me about the McCain campaign is it has no central argument. I had hoped that he would create a grand narrative explaining how the United States is fundamentally unprepared for the 21st century and how McCain's worldview is different. Without a groundbreaking argument about why he is different, he's had to rely on tactical gimmicks to stay afloat. He has no frame to organize his response when financial and other crises pop up."

Gene.

ROBINSON: I thought that was a really interesting take by David. John McCain is not like other politicians. That's certainly true. And there is a lack of-a certain lack of a framework around what he does. He is a crisis-I wouldn't say crisis manager, but he gets in the middle of a crisis and kind of draws attention to himself.

But sees, it personalizes the big events in a way that is distinct from, for example, the way Barack Obama operates. They call him "No drama Obama" inside the campaign. Nobody would call John McCain "no drama McCain."

BUCHANAN: I'm in uncommon agreement on Brooks on this. I don't think he has a real foreign policy, a broad outlook, a Nixonian outlook, if you will and the same with the political philosophy, the economic philosophy. I think he is very much ad hoc and he is what's put this together.

Let's be out front. Let's do the deal. And I think that is missing and it is what tends to give sort of a lack of coherence to the decisions he takes.

GREGORY: Ok. We have to take a break here.

Coming next on "THE RACE," John Grisham joins me from Ole Miss, the site of the debate tonight.

Later on National Security Adviser, formerly, Brent Scowcroft on foreign policy questions the candidates could and probably will face tonight.

Stay tuned for this.

(COMMERCIAL BREAK)

GREGORY: Welcome back.

There have been so many twists and turns in the presidential race, it could have been written by my next guest. That's John Grisham, the author of too many bestselling books to mention but we'll mention some, including "The Firm," "A Time to Kill," "The Rainmaker" and most recently, "The Appeal."

He is also a politician, a former state lawmaker from Mississippi who has helped fundraise for Democrats, including Hillary Clinton. John Grisham joins me now from his alma mater, Ole Miss.

Mr. Grisham, thank you very much for being here.

JOHN GRISHAM, BESTSELLING AUTHOR: My pleasure, David, happy to be here.

GREGORY: Let me show you something that was written in the "L.A. Times" today. This is about style over substance in this debate that we're about to see tonight about Barack Obama.

"Obama, who once taught constitutional law, tends toward long, annotated answers and shrinks from verbal combat. His laid-back manner can seem aloof and, at times, condescending."

How big of an issue is this for Obama and what do you expect from him tonight? Do you expect a little bit more fight?

GRISHAM: Yes. More fight, shorter answers, an effort to connect with the voters. I think he is very much concerned with the aloofness issue. And I think you'll see a little more personality tonight.

GREGORY: Is it a question of him taking the fight to John McCain over the economy, over foreign policy? Or is it him really kind of finding a way to define what leadership should look like in the future?

GRISHAM: Well, they're going to take the fight to each other. That's just inherent in these debates. Everything else they're doing these days. Every move they make now is political.

The things that happened this week in Washington, the things that will happen tomorrow; they're all calculated for political gain. But I think you'll see both of them go after each other on foreign policy, certainly the economic issues.

I know this is supposed to be about foreign policy tonight.

GREGORY: Right.

GRISHAM: You can forget that. Right off the bat, it is going to be about the economy.

GREGORY: Let me talk to you about the south and the fact that we have history in this campaign; the first African-American nominee of a major party. Also have the first woman as a VP nominee in the Republican Party.

But talk about Barack Obama. Is this race so close in your judgment, in part because of his race and voters' attitudes across the country?

GRISHAM: Yes. I think the race is close because of his race. It's the Democrats year to win. It should be-the race should not be close right now after all the obvious problems we have had for the past eight years, the problems we're having now. And it is my belief that the race is close because of Obama's race.

That's not to say he can't win. But if you had a traditional Democratic candidate in the race, I think that person would be up 15 points.

GREGORY: And do you think if the race is close, in the end, he faces a real problem?

GRISHAM: Historically, yes. Obviously not races like this, of this magnitude. But in state senate races, U.S. Senate races, gubernatorial races, where the black candidate was thought to have a much higher lead in the polls than what was actually revealed once the votes were counted. Racial leakage, call it whatever you want to call it. But Obama is very aware of that.

GREGORY: I mentioned you raised money for Hillary Clinton. Have you come around as a supporter for Barack Obama? And do you the Hillary Clinton voter is squarely behind him?

GRISHAM: Well, for purposes of tonight, I'm officially nonpartisan. I'm here at the request of Ole Miss and the city of Oxford to help share this wonderful spectacle. It's a big deal for ole miss.

So I'm not going to be partisan tonight. But I am a lifelong yellow dog Democrat and everybody knows that. You can kind of read between the lines. As far as all of Hillary's supporters-

GREGORY: How about those yellow dog Democrats in particular?

GRISHAM: The what?

GREGORY: Particularly the yellow dog Democrats, are they behind Obama?

They're the ones for Hillary Clinton who may still be on the fence now.

GRISHAM: Not all of them. Not all of them. I suspect that by the time the election gets here, in five weeks, the vast majority of them will come around. You can't go through an 18-month very competitive primary season and get beat then suddenly wake up the next morning and feel great about the guy who beat you. It doesn't work that way. It takes time.

GREGORY: All right. John Grisham, down at Oxford, Mississippi; Ole Miss.

Thank you very much. Enjoy the evening.

GRISHAM: My pleasure. Thanks, David.

GREGORY: And coming next, former National Security Adviser, Brent Scowcroft joins me as McCain and Obama prepare to turn their attention to foreign policy in tonight's first presidential debate; his thoughts about what should and will be on the agenda tonight.

(COMMERCIAL BREAK)

GREGORY: Tonight's debate will be on the economy, sure with the bailout crisis. But its main focus is foreign policy and joining me now is Brent Scowcroft, National Security Adviser to both Presidents Gerald Ford and George H.W. Bush. He is also featured in a new book titled "America and the World-Conversations on the Future of American Foreign Policy."

General Scowcroft, nice to have you here.

BRENT SCOWCROFT, FORMER NATIONAL SECURITY ADVISER: Nice to be with you David.

GREGORY: This is an important debate; the first debate. What is your most important question for these candidates on foreign policy?

SCOWCROFT: I think there are going to be three. But central to it all will be the Middle East. That is Iraq, Iran, Palestinian peace process, and if you extend it a little, Afghanistan. But in addition, there will be issues about Russia and the controversy over Georgia and finally, North Korea is rearing its head again. I think those almost obviously will be the focus of the debate.

GREGORY: If the war on terror is a book and George Bush has written Chapter One, President Bush, how would Chapter Two be different under McCain versus Obama?

SCOWCROFT: Chapter One had the framework of 9/11; a shocking attack on the United States. That is dimming somewhat. And the war has gone on. Now, we have not been attacked seriously again.

The question is, are we winning the war? Are we losing the war? What are the tactics? And I think we're not going to win the war by killing terrorists. But how do we do it? I think that will be certainly one of the other ones. As will be energy and climate control.

GREGORY: But if you can distill their two approaches to fighting and winning the war on terror, how do you distinguish between the two of them at this stage?

SCOWCROFT: It is not easy, although I would-my instinct tells me that Senator McCain will be more militant, continue the current policy. And Senator Obama may be saying, we need a new-we need a new approach. But that's a guess.

GREGORY: In Iraq, has the surge been successful enough that Senator Obama's discussion of a timetable for withdrawal has become irresponsible? Do you run the risk of losing the security gains that are in place?

SCOWCROFT: I think the surge has certainly been successful in the sense that the situation in Iraq looks very different from it did before the surge. And that has changed attitudes toward what we need to do next.

I still think there is a difference between the candidates. And the question is can you now start talking about a timetable? Or do you still have to judge it by circumstances on the ground? And withdraw the troops only related to the situation on the ground.

GREGORY: As you think about the world, what worries you most?

SCOWCROFT: What worries me most? I think in the short term, it's the Middle East. Because I think there are so many fragile areas, aspects to the Middle East, and the possibility of some kind of an explosion which could make things significantly worse than they are now. It is very present.

I think the possibilities for progress, too, but that's what worries me most. It may not be the most mortal problem in the world. But it is certainly the most-

GREGORY: And even within the Middle East, the most pressing challenge to the next President is what?

SCOWCROFT: I think there are three and they're related; Iraq, Iran, and the Palestinian peace process. And they all work off each other. And I think it will take some exquisite diplomacy to manage it.

But I think one can. For example, progress in the peace process will enable us to put Iran back on the defensive, rather than the offensive. Progress in Iraq will help the Arab countries to join us, cooperate with us more.

GREGORY: Finally here, you worked for Republican administrations. Do you think governor Sarah Palin is prepared to lead and manage a crisis in foreign policy as either vice president or potential president if something happens to Senator McCain, were he to become president?

SCOWCROFT: I don't know Governor Palin. All I know is what I read in the paper and what you all say. I think much of it depends on the mind, the way one deals with crises and so on.

GREGORY: Ok. General Brent Scowcroft, thank you very much.

That will do it for us. We'll see you back at 9:00 p.m. Eastern for the presidential debate.

See you then.

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

END

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