updated 10/7/2008 12:13:51 PM ET 2008-10-07T16:13:51

Guests: Erin Burnett, Bob Erhlich, Savannah Guthrie, Harold Ford, Jr., Lawrence O'Donnell, Chris Van Hollen, Marsha Blackburn, T. Boone Pickens, David Broder

DAVID GREGORY, HOST: Tonight as Wall Street burns, the presidential candidates fiddle with negative attacks. Despite the nasty rhetoric, it is the economy now, the major force in this race, and the polls and the electoral map are both moving Senator Obama's way. Senator McCain has beaten the odds before. Can he make a comeback at tomorrow night's presidential debate, or will Senator Obama ride the current momentum through Election Day? Plus, during the hour, new poll numbers. We'll have the release of the latest NBC News/"Wall Street Journal" poll. That and more as RACE FOR THE WHITE HOUSE rolls on. We're below 30 now. Twenty-nine days to go in the race for the White House. Welcome to the program. I'm David Gregory. My headline tonight, "Panic Attack from Wall Street to the Campaign Trail."The stock market plummets once again. Here are the boards. The Dow Jones industrial average diving as much as 800 points at one point today before closing at just below 10,000. You see the numbers. Meanwhile, Obama's stock is on rise. The latest NBC News electoral map shows Obama opening up a nearly 100-point electoral vote lead and double-digit leads in key battleground states such as Virginia and New Hampshire. But instead of addressing the financial crisis with plans of attack, character attacks ruled the day. Senator McCain blasted Senator Obama at a rally in New Mexico, while Governor Palin attacked Obama for his relationship with '60s radical Bill Ayers.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN ®, PRESIDENTIAL CANDIDATE: Whatever the question, whatever the issue, there's always a back-story with Senator Obama. What does he plan for America? In short, who is-who is the real Barack Obama?

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Our opponent is someone who sees America as imperfect enough to pal around with terrorists who targeted their own country.

(END VIDEO CLIP)

GREGORY: That was Governor Palin over the weekend. She changed that language a little bit on the campaign trail today, but it was the same message.

Obama fired back at what he called Swift Boat-style attacks.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: I cannot imagine anything more important to talk about than the economic crisis. And the notion that we would want to brush that aside and engage in the usual political shenanigans and smear tactics that have come to characterize too many political campaigns I think is not what the American people are looking for.

(END VIDEO CLIP)

GREGORY: Meantime, Senator Obama engaged his own attack on McCain today. The Obama campaign launched this Web site, keatingeconomics.com, which includes a 13-minute Web documentary on McCain's connection with the Keating Five savings and loan scandal of the late '80s and early '90s. But before we get to what's behind the negative campaigning, let's bring in Erin Burnett, anchor of CNBC's "Street Signs" and "Squawk on the Street," for more on the economy. Erin, another sign that Wall Street isn't liking what Wall Street provided last week.

ERIN BURNETT, HOST, "STREET SIGNS": It's amazing, David. You know, we were sitting there today, and actually there were hearings going on in Washington with the former CEO of Lehman Brothers, Dick Fuld, talking. And as you said, the market was down as much as 800 points, ended down only 370. So that actually is a rather significant comeback. The bottom line though is that that bailout package is no panacea. It's going to take a while to get up and running. And even when it does, there is still uncertainty about how it will work and how effective it will be. And the markets at this point, they need a little bit more certainty. It's hard, David. Some have likened it to a fire. If you put the fire out within five minutes of it starting, sometimes you can save the house. But once it's already an hour into the burn, it can be very difficult. And some are saying right now this crisis is about an hour in, and all the fire hoses are putting water on it and it's unclear whether it will work.

GREGORY: And it spreads overseas. Those are the headlines that everybody woke up to today, is that there's all this concern in Europe among their banks as well. Another thing, this has been now raging long enough that it's moving very quickly.

BURNETT: It's incredible. And when you think about it, David, you look at Europe. You know, everyone said, oh, Europe isn't going to have a problem, their lending standards weren't as lax. And they were saying that as recently as a week ago, and you're thinking, we all are ostriches with our heads in the sand. Of course there will be problems, now there are, and there were also problems around the world.

You're seeing it in some of those nations that drove all the growth, China, India. Those stock markets have plunged. Russia's market and Brazil's market also were halted in trading today. So it is truly global. You had the biggest one-day drop ever for emerging markets. So, the fear right now is a global phenomenon.

GREGORY: All right. Erin Burnett at CNBC headquarters...

BURNETT: Good to see you.

GREGORY: ... for us tonight.

Thanks very much, Erin, as always.

Want to bring in the political panel now.

Joining me, Savannah Guthrie, NBC News correspondent. She's been covering Governor Sarah Palin on the campaign trail. Harold Ford, Jr., chairman of the Democratic Leadership Council and NBS News analyst. Bobber Ehrlich, McCain supporter, former governor of Maryland, of course. And Lawrence O'Donnell, MSNBC political analyst. Bob Ehrlich, Governor Ehrlich, let me start with you first.

BOB EHRLICH ®, FMR. MARYLAND GOVERNOR: Hi David.

GREGORY: Is there anything that can drive the economy off the center of this election campaign right now?

EHRLICH: Maybe tomorrow night's debate, obviously, would be the big thing. But you see, it's a silly season now, and you do have a lot of character attacks going back and forth between the respective campaigns. I think from my perspective, when you're ahead you never go negative. And this whole thing about the Keating Five is obviously very negative in nature. And to me, as sort of a veteran politician, it shows that he may be ahead, obviously the economy is hurting, the Republicans generally, and the McCain campaign. But when you are comfortably ahead, you don't go negative. And right now, Barack Obama is going very hard negative on this very old issue. An issue by way, David, he said just a few months ago he would never talk about. It wasn't germane to the presidential campaign.

GREGORY: Right. All right. But Harold Ford, you're a veteran politician as well. The Obama campaign says, look, if we get hit, we are going to punch back. We're not going to be like previous campaigns. And Obama is getting hit pretty hard. And the McCain campaign is telegraphing the fact that they want to change the topic from the economy and make it about Obama's character.

HAROLD FORD, JR., NBC NEWS ANALYST: When you consider what happened on the Dow today, and the scoreboard that most Americans look to, the stock market, the big drop-although as Erin said, there was a comeback-when you consider that John McCain himself, eight years ago, after the way George Bush's campaign and George Bush himself treated him in South Carolina, it was John McCain, after those vicious ads were run against him in 2000, who said, I quote, "There's a special place in hell for the operatives who ran those kind of ads." To now embrace that approach... Number three, I think Barack Obama is right to respond. He has to be aggressive, he has to be forceful. His narrative and his campaign is ver clear and simple. If you want to break from the last eight years, and frankly if you want to break from the kind of awful, despicable campaigning that now John McCain, who is so much better than this, is running, vote for me. You have got to like where Obama is if you are an Obama supporter. And if you are a McCain guy, I know my friend, he is my friend, Bob Ehrlich is...

EHRLICH: Good to see you, Harold.

FORD: ... you ought to recommend to your candidate-good to see you, brother. You ought to recommend to John McCain, stay on the course that John McCain has always been on, the maverick, the independent, and lay out why you can make America a better place.

GREGORY: Let me bring everybody else in. Savannah Guthrie, you have been out there with Palin. We have seen her now make the turn. She had a successful debate, and now she's on the attack. She is the one leading this character assault against Barack Obama. She talked about William Ayers, who was involved with the Weathermen, the violent antiwar group in the '60s and '70s. And she talked as well to Bill Kristol on the pages of "The New York Times" today, on the op-ed pages. This is what she said in terms of bringing up the issue of Reverend Jeremiah Wright. "I don't know why that association isn't discussed," Governor Palin said, "more because those were appalling things the pastor said about our great country. And to have sat in the pews for 20 years and listened to that with, I don't know, a sense of condoning it, I guess, because he didn't get up and leave, to me that does say something about character. But you know, I guess that would be a John McCain call on whether he wants to bring that up." Well, Savannah, she has already brought it up. Clearly this its her new role.

SAVANNAH GUTHRIE, NBC NEWS CORRESPONDENT: There's no question this is her new role. McCain advisers would say, look, she was answering a question from Bill Kristol, and that's true, but she is not exactly a reluctant messenger here. They have clearly set out a role for her to go after Barack Obama, be the person who is going to go on the attack, and she really relishes it. Ever since this debate, I see a candidate who is a lot more confident, who really wants to take Obama on. And you get the feeling the minute the campaign says the Reverend Wright issue is fair game, she is going to be the loudest person talking about it out there on the trail.

GREGORY: Lawrence O'Donnell, as a practitioner of politics, as somebody who analyzes this, do you see a problem with execution from the McCain campaign? One, why do it now? Why didn't you do it earlier? Two, why if you're John McCain did you say we're not going to get into this Reverend Wright business and then have your running mate do that? Three, why telegraph so obviously that this is what you are doing? There was an aide who was quoted today in "The Daily News" saying, "If we're talking about the economy, we are losing, we have got to switch gears."

LAWRENCE O'DONNELL, MSNBC POLITICAL ANALYST: Well, part of the telegraphing was to actually legitimize it as a tactic, to be open with the news media about, we're going to go hard on this so we can all look at it, talk about it this way. But you know, it turns out the special place in hell that Harold Ford was referring to that John McCain mentioned for people eight years ago who ran those ads against him, that special place turns out to be the McCain campaign, where several of them are working and generating this new material.

You know, I think there's a serious problem in the execution of it, specifically with Sarah Palin. And that is because, according to all the polling we have on the debate, including the flash poll that CNN did the night of debate, after the debate, she lost the debate by a very wide margin. And she does not have a majority of Americans thinking that she can be president or is qualified to be president. So, the problem with her doing this is it doesn't come from a place of authority. If you think back to Dick Cheney and how effective he was and how cunning he was against John Kerry in that campaign four years ago, it's because it was coming from a position of gravitas, a certain position of authority. And I'm not saying it worked with everyone, but it worked with the kind of voters they needed it to work with. It doesn't-I don't see the evidence. I don't see any polling evidence that indicates Sarah Palin has the authority to change minds about Barack Obama or Joe Biden.

GREGORY: Bob Erhlich, that specific issue where the quote about-from the McCain camp saying if we are talking about the economy, that we could lose, it's a losing issue politically.

ERHLICH: I don't think we should be...

GREGORY: Well, hold on one second. Listen to Senator Obama responding to that. He was in North Carolina, a state that he has put on the offense column for himself and made McCain defend. This is what he had to say about that today.

(BEGIN VIDEO CLIP)

OBAMA: I was a little surprised over the last couple of days to hear Senator McCain say, or Senator McCain's campaign say, that we want to turn the page on discussions about the economy. And a campaign-a member of Senator McCain's campaign saying today that if we keep on talking about the economic crisis, we lose. I've got news for the McCain campaign-the American people are losing right now.

(END VIDEO CLIP)

GREGORY: Bob, can you see an exchange like that tomorrow night?

ERHLICH: I hope so, because we shouldn't be afraid to talk about the reasons for this meltdown, for the mortgage crisis, for the ACORNs of the world. I sat on that House Banking Committee for four years in the '90s, I saw the use of class and race. I saw the leverage brought against financial institutions and banks to create this whole subprime thing, and the record speaks for itself. The transcripts were there. I believe and I know for a fact, in fact, the campaign is going to be talking more about this issue. There's a lot of fault to go around. If you want to start pointing fingers and assigning blame, clearly this hard left leadership of my committee at the time, the Barney Franks, the Maxine Waters, the Joe Kennedys-and Hal knows it very well. Leverage was brought against these institutions to create this market, to write those bad loans. It may have been done out of a sense of compassion, but it's not very compassionate to give mortgage to people who cannot make monthly payments. I really believe-I welcome dialogue on that issue, believe me.

GREGORY: All right. We'll probably have it tomorrow night. I've got to get a break in here. When we come back, the new NBC News battleground map shows Obama opening up a lead over McCain. But could tomorrow's town-hall-style debate on the economy-and remember, something McCain likes to do-be a game-changer in any way? Two lawmakers are going to face off when THE RACE returns right after this.

(COMMERCIAL BREAK)

GREGORY: Back on RACE FOR THE WHITE HOUSE.

A lot of negatives today, negative campaigning in the presidential race, and a gloom-and-doom day on Wall Street after last week's passage of the bailout bill. Joining me now to face off and discuss today's developments are Maryland Democrat Chris Van Hollen and Tennessee Republican Marsha Blackburn, who joins me from Nashville tonight. Both of you, welcome.

REP. MARSHA BLACKBURN ®, TENNESSEE: Good to be with you. Thank you.

REP. CHRIS VAN HOLLEN (D), MARYLAND: Good to be with you, David.

GREGORY: Thank you. Congressman, let me start with you. This is new from our new MSNBC/"Wall Street Journal" poll. And the question was, "Who do you want to control Congress?" The advantage here goes to the Democrats, 49 percent to 36 percent. As you survey the political landscape, do you fear that there is a "throw the bums out" mentality that is sweeping Washington?

VAN HOLLEN: I don't, because the people throughout this country have consistently looked at the Congress and discriminated between the actions of Democrats and the actions of the Republicans. And when they looked at the Democratic agenda, they saw a party that was trying to get the economy moving again, trying to make sure that we finally restore some oversight over the financial markets, a party that understands the health care stress and the other stresses that are facing the American people around the kitchen table. And that is why consistently, you have seen polls saying we support the Democrats. People are frustrated because they have seen a lack of progress, but they have seen who is trying to make progress and who is supporting the status quo.

GREGORY: Well, and Congresswoman, to direct the question to you, again, you've got Democrats in control, a big financial bailout package that has passed, it was very unpopular. And yet, still that advantage for the Democrats. As a Republican, do you fear that the wind of change means, get the Republicans out of town?

BLACKBURN: You know, David, one of the things that is so interesting to me is the American people have figured out that the Democrats are in charge of both houses of Congress. You have seen their advantage in the generic ballot begin to creep down a little bit. And that generic ballot, the difference between Democrat and Republican, has come closer together. Now, there are a couple of things here that I think are pretty important. And number one, as you said, there is this change in Washington. And I will tell you what, there are so many people that say, you know what? They are all the same, whether they are Democrat or Republican. They are looking out for self-interest, and they want individuals that are going to look out for the citizens. And the second thing, this bailout package that Secretary Paulson and Speaker Pelosi and Leader Reid were pushing through is incredibly unpopular. And of course, the Democrats are the ones that took the lead on this bailout package.

GREGORY: All right. Let me get to the battleground map here and let you all face off on this issue-the new NBC News battleground map. And here is the real key point. There are 100 tossup votes, electoral votes on that map. The tossup states: Colorado, Florida, Indiana, Missouri, Nevada, North Carolina, Ohio and Virginia. Congresswoman, those are Republican states from 2004 where McCain's barn is on fire, as Mike Murphy, the political strategist, said on "Meet the Press" yesterday. Is there any question in your mind why McCain has decided to try to get focus off the economy and go negative against Obama?

BLACKBURN: I think that one of the things that Senator McCain is trying to do and the campaign is trying to do is draw a distinction in character and trust. And certainly, Obama's ties to two individuals that were part of the Weather Underground, certainly that is something the American people need to be aware of. It's something that they need to know. The way he has approached that friendship and that relationship in working with the Chicago Annenberg Foundation, with William Ayers, all of that is something that should come to light. It's a consistent pattern, the issues that call into question his judgment and the ability to trust.

VAN HOLLEN: Let's not...

GREGORY: All right, hold on. No, we're not going to go on and on.

I want a response back and forth here.

BLACKBURN: Sure, absolutely.

GREGORY: Congressman, are those fair points?

VAN HOLLEN: Well, thank you. David, I think you saw in the answers the reason why the American people have greater faith in Democrats on both those issues. First of all, we were asked for a blank check of $700 billion for President Bush. It was the Democrats who said no way you're getting a blank check, we're going to write provisions in to protect the taxpayer. Nobody liked it, but we understood the cost of doing nothing could be economic disaster. Number two, you have heard the McCain campaign say it today themselves. They admitted it. They said when we talk about the economy, when we talk about the issues that the American people care about, we lose.

So what do we do? We change the subject. We go to try and trash Barack Obama. It's a fear and smear campaign, and it's a clear indication of how weak they are.And the reason the battleground states' polls are what they are is the American people are under incredible economic stress. Only the Democrats have proposed something that's different from the Bush/Cheney economic policy.

GREGORY: All right.

VAN HOLLEN: Barack Obama has proposed something different. And all they want to do is change the subject just like Governor Palin changed the subject after-when she got a question she didn't want.

GREGORY: All right.

Congresswoman, I'm going to give you the final word here.

BLACKBURN: Well, first of all...

GREGORY: The polling indicates-hold on, Congresswoman. The most important issue is clearly the economy in this race.

BLACKBURN: Yes, it is.

GREGORY: Specific on this question, what does John McCain have to do tomorrow, a town hall format, to try to even out the playing field on this issue?

BLACKBURN: John McCain needs to remind people that he is the one who has been pushing for reforms of Fannie and Freddie for about five or six years now. Barack Obama has never opposed Fannie and Freddie. John McCain also needs to remind the American people, he is the one that wants them to keep more of their paycheck every month and not have them send it to the government. And John McCain wants to reduce spending and Barack Obama wants a trillion dollars in new spending. And by the way, David, I'm the one on this show that voted against that bailout bill.

GREGORY: All right.

VAN HOLLEN: David, it's interesting to see-the new John McCain, Mr. Regulation, was the same guy who tried to get the regulators to back off of Charles Keating. And that is a much more relevant discussion in today's environment, where we are talking about deregulation versus regulation, other than this trumped-up thing that the Republicans have come out with out of total desperation.

BLACKBURN: It's not trumped up.

GREGORY: All right. I'm going to leave it there.

Congresswoman Blackburn, Congressman Van Hollen, thank you very much.

BLACKBURN: Good to be with you, David. Thank you.

GREGORY: Thank you. Appreciate it.

VAN HOLLEN: Good to be with you, David.

GREGORY: Coming next, Jim Cramer's warning about the future of the stock market and what you should do with your money. It's on THE RACE's radar tonight, right after this.

(COMMERCIAL BREAK)

GREGORY: Back now. Time for "Smart Takes."

All of the bad news on Wall Street has nearly everyone on Main Street asking the same question: Where can I safely put my money? Today's "Smart Take" is Jim Cramer's answer to that question. Listen to what he told NBC's Ann Curry on "Today" this morning.

(BEGIN VIDEO CLIP)

JIM CRAMER, HOST, "MAD MONEY": Whatever money you may need for the next five years, please, take it out of the stock market right now, this week. I do not believe that you should risk those assets in the market.

ANN CURRY, TODAY: Even if you would take a tremendous loss in selling your stocks with this decline, you say take it out if you need it in five years?

CRAMER: I do not care where stocks have been. I care where they are going. And I don't want people to get hurt in this market.

(END VIDEO CLIP)

GREGORY: Back with me, NBC analyst Harold Ford, Jr.

Harold, when you hear something like that, does it raise the question about whether the candidates, in a debate like tomorrow night, need to level with the American people about how bad things could get in the economy? That it's going to effect their leadership one way or the other?

FORD: There's no doubt. I think it says two things. One, the aspirations that both the candidates have when it comes to spending and tax cuts. I think they both have to be more realistic, and hopefully tomorrow, Mr. Brokaw and some of the questions that will come to the candidates will focus and force them to drill down on that. Two, I think it's also critical that Senator McCain be asked, in light of all this, how can you be focused on character assassination efforts, particularly when you have denounced these kinds of campaign tactics in the past? So I would be curious to know how and what they would do to scale back, and what the first six months either of these candidates would do. And I might add, you know where I stand in this race. I'm for Senator Obama.But I would love to hear both of them talk about it, because I think there are big differences. I like Senator Obama's plan on this, but I think it's important that both of them lay out, what will you do the first six months if you are faced with the kind of severe economic contraction that we see happening right now?

GREGORY: I think there's also the question of the ripple effects, what it means for the rest of their agenda, what it means for the entitlement difficulties that we are going to face.

FORD: That's what I'm saying, where do you scale back? Does this force you to look at Social Security and Medicare? I agree with you fully, David. Does this mean entitlement spending, infrastructure spending, the ambitious plans you have on the energy platform to expand alternative and renewable sources, or to incent Silicone Valley and Detroit to do things differently? How does this impact what you do?

So it will be curious. I think Americans would want to hear answers to those questions more so than some of the other nonsensical things that are being discussed.

GREGORY: All right. Short segment here. Got to get to another break. Coming next, the new NBC News/"Wall Street Journal" poll is taking voters' pulse on the economy. Our new poll, hot off the presses, when we come back on THE RACE, right after this.

(COMMERCIAL BREAK)

GREGORY: Stock markets around the world plunge again, as our brand-new NBC/"Wall Street Journal" poll shows voters are worried about the economy. The impact on the presidential campaign next, as RACE FOR THE WHITE HOUSE continues. Back now on RACE FOR THE WHITE HOUSE. I'm David Gregory. Time to go inside the war room for a look at our new NBC News/"Wall Street Journal" poll, release just moments ago. Here's the big number, the presidential head to head, it's Obama/Biden 49 percent, McCain/Palin 43 percent, consistent with other polls. It's now a six-point race. A poll taken two weeks ago showed Obama/Biden 48 percent, McCain/Palin 46 percent. The backdrop of all this, the Dow dropping 370 points today, closing below 10,000 for first time since 2004. And another key number from the poll, 77 percent of voters now say the country is on the wrong track, the Highest recorded number in an NBC News/"Wall Street Journal" poll for right track, wrong track. Back with us, Savannah Guthrie, our NBC News correspondent. She's been covering Sarah Palin's campaign. Harold Ford Jr., chairman of the DLC and an NBC News analyst, Bob Ehrlich, McCain supporter, former governor of Maryland, and Lawrence O'Donnell, MSNBC political analyst. We're going to go through these polls. Lawrence O'Donnell, first reaction, the head to head number, we see a movement in the race in Obama's direction.

O'DONNELL: It is very clear and now consistent in a body of polls. David, what has also happened in the two weeks since the last poll is that there have been two debates. There's been the presidential debate, the vice presidential debate. The polls about the debates, immediately following those, indicated that Obama won his debate, Biden won his debate by an even bigger margin. So they actually now-tomorrow night, Obama has a debate to lose. I mean, he can get up to bat and swing and miss. And he can still survive tomorrow night. That's how much pressure is on candidate McCain tomorrow night.

GREGORY: Right. And Bob Ehrlich, if you look at another number, voters feelings about their financial situation, worried and uncertain 56 percent, confident and optimistic just 35 percent, in between at seven percent. Now, again, you can make the argument that this, the general thought process about the economy, may benefit Obama. But as Lawrence just indicated, a town hall style format for Senator McCain tomorrow night may play to his strength.

EHRLICH: Absolutely. And quit frankly, I got to be frank with you here. Six points, with all this bad economic news, with-guess it depends what network you are watching concerning who won the debates, but six points with the margin of error there, three or four points. It's no time to panic if you are a Republican. You know very well, being the political veteran you are, 50 percent is the magic number. Despite all this bad economic news, all the generic numbers, everything that Harold can put out there tonight, it is six points. So I do believe, however, tomorrow night is important, obviously. He has to have a very good debate. This is his sort of forum. It's not prepared. And going back to process earlier with what Harold said, I agree with; I hate the one-minute, two-minute, three-minute rejoinders and all that. Exhaust the topic. Talk about the economy. Allow rejoinder after response after rejoinder after response. What really concerned me about that vice presidential debate was the fact that you had 30 seconds, you had 35. Both candidates can memorize lines. They can memorize what speech writers have given them. I want to see thought process, second degree, third degree, fourth degree. Again, what Harold said, you can't raise taxes with this sort of economy, Senator Obama. Defend raising taxes on the, quote unquote, rich. There's a lot of quote, unquote rich who aren't so rich any more. Your spending plan is a trillion dollars. Are you really going to seriously follow through on that, given the state of the economy? Senator McCain, what about you? How about the process here? Seven hundred billion dollar quote, unquote bailout? How about the 100 billion dollars in additional earmarks. How about all the icing? Even with everybody watching, with this Wall Street and mortgage crisis, they couldn't help themselves.

GREGORY: Let's talk about a sense of confidence in the candidates, also from the poll, which is how do the candidates approach to the financial crisis make you feel as a voter? And these are the results. When it comes to Obama, more assured, versus 25 percent saying they are more assured by McCain. Less assured, 29 percent Obama, 38 percent for McCain. No difference 32 and 30.

Savannah Guthrie, again, if it is stewardship of economy, who do you trust on the particular issue, right now that amorphous issue benefits Obama.

GUTHRIE: Exactly, and now you know why the McCain campaign is changing the subject, and not being exactly subtle about it. As their own adviser said in the "New York Post" today, when you're talking about the economy, that's a losing day for them. So they want to make this not a referendum on the economy, not a referendum on the issues, but a referendum on Obama himself. And they are taking the gloves off. If you didn't notice it yourself, they will come out and tell you. That's what Sarah Palin has been saying all weekend. Senator McCain tough today as well. They want to get the focus off the economy and on to Barack Obama, who is this guy?

GREGORY: Harold Ford, most important issue according to our poll, again, consistent with our previous poll, the economy 59 percent. Look at foreign policy, just 16 percent in terms of most important issues. Now, if you are John McCain, you have to look at that and you have to understand that the economy is a global issue. It is certainly a global issue when it is this kind of an extremist. And that's an area where he has got to try use some of his own foreign policy experience and judgment. Otherwise, it is all economy, all the time.

FORD: I thought Barack performed extraordinarily well in the first debate and I thought McCain held his own. I thought McCain held his own in the first debate for one reason: he focused on the polling data that showed Americans believed he had better commander in chief and better leadership qualities, according to the polls. Barack will pay attention to these polls tonight, as he has been. He seized at the economy, economic angst and concern and anxiety on the parts of Americans in Michigan, Ohio, Virginia and North Carolina, at the forefront of their minds. He will organize his presentation tomorrow night around those very issues. He will bring the conversation back to those issues to point out the vast differences between he and John McCain. He will cut taxes on 95 percent of Americans, and he will jump-start the economy by making investments in energy and education. He is going to have to answer some tough questions, but he will continue to focus this debate on the economy. One point to my friend Bob, if you look at the race, the individual states-and Bob and I know this well having been in elected office-it's about 15 to 20 states. If you look at the margin, as these polls show, Barack is gaining ground in Virginia and North Carolina and Florida and Ohio and Pennsylvania, and even New Hampshire, which David Gregory reported tonight. That has to be encouraging to Democrats. Frankly, even though it's only a six-point national lead, we like the trend lines in this race.

GREGORY: Yes. Lawrence, let me show you another number here, which pertains to the debates in particular. Which ticket is doing better in these debates, Obama/Biden 50 percent, McCain/Palin 29 percent. What surprises me about that is that I think both of these debates have highlighted pretty strong performances by both McCain and Palin. You can argue who won on points, certainly. But in both of those debates, they were strong performances. This polling doesn't bear that out at all.

O'DONNELL: There's no polling that bears that out, David. The polling we had that night from CBS and from CNN all indicated that Biden had a very big win, like giant margins over Sarah Palin, and that Obama, to all of our surprise, had a very significant win over McCain on the foreign policy debate, which was supposed to be the McCain winning debate issue. And so, going into tomorrow night, there just couldn't be more pressure on this ticket. And I'm not sure how patient John McCain is going to be with a pure attack strategy. I'm not sure how patient he's going to be running a campaign that says, if we talk about the single most important issue to voters, which is the economy, if we are talking about that, we are losing. I don't believe John McCain is going to believe that strategy as of next week. And I think he is going to have to find his way back to talking about the economy and almost nothing else for the rest of the way. He is the do it through his tax campaign. He is the tax cutter. That's the stronger argument and that's the campaign he should be running.

GREGORY: Savannah, tomorrow night is an interesting format. This is the kind of format where you had Bill Clinton saying, I feel your pain and George H.W. Bush looking at his watch. There is a lot of atmospherics in a town hall format like this. When I saw McCain in New Mexico this afternoon, I detected a great deal of impatience with Obama, some irritation with Obama that has spilled into the personal. And I wonder how you gauge, talking to people within the McCain campaign, whether that spills over into a one-on-one encounter tomorrow night?

GUTHRIE: Well, I'm sure they don't want to have a candidate who is out there visibly seething. But there's no question, this is a campaign that feels the pressure of 29 days and being behind, and is in the mood to fight. McCain has always been very good in these town hall formats. This is one of his strengths. So I think what he will want to do is connect with the voters. But it's a lot harder to really hit your opponent in a personal way when you are talking to regular people. You're not giving a speech up there. You're not on teleprompter. So as much as we saw a McCain who was very energized today, very strident and ready to attack, you wonder if that's really going to translate to this particular format tomorrow.

GREGORY: We will leave it there. My thanks to the panel. Coming next, a billionaire with a plan. T. Boone Pickens tells me how he would fix our energy crisis and he'll tell me about his one on one meeting with VP candidate Governor Sarah Palin. That's coming up next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I believe that-that this plan will work, over time. I signed the bill on Friday. It's going to take time for the Treasury Department to put a plan in place that won't waste your money, and that will achieve the objective. I believe in the-in the long run, this economy is going to be just fine.

(END VIDEO CLIP)

GREGORY: Back now on RACE FOR THE WHITE HOUSE. That, of course, President Bush this morning explaining that his rescue plan for Wall Street will take some time to work its way through the economy. I'm joined now by a man who has been a major player in our economy for some time, T. Boone Pickens, founder and chairman of BP Capital Management. He now promotes US energy independence through the non-partisan Pickens Plan. Mr. Pickens, welcome.

T. BOONE PICKENS, FOUNDER AND CHAIRMAN BP CAPITAL MANAGEMENT: Thank you.

GREGORY: After another day of anxiety on Wall Street and steep declines, how bad do you think it is going to get?

PICKENS: I don't know. It is-you have got to hope you are close to the bottom. But we may not be. The-I have the feeling we will see - we have got to have a rebound in here some place. And I think we'll have maybe it will be a short-term rally, but we will see it this week.

GREGORY: You think we'll see a rally this week? Do you agree with President Bush that it may take time, but the economy is going to be fine? I mean, he seems to suggest in relatively short order, and yet there is a lot of concerns about the American consumer pulling back, not only being worried but cutting his or her spending.

PICKENS: Oh, I think that, you know, you are seeing that right now. I mean, it is-you are having a big cut back. I was talking to the manager at DFW airport today and he said traffic is down. So there's no question we are going to have a pull back.

GREGORY: This is how the "Washington Post" describes your current role from earlier in the summer: "the billionaire speculator as energy wise man and oil and gas magnet as champion of wind power and a lifetime Republican who has become a fellow traveler among environmentally minded Democrats, even though he helped finance the Swift Boat ads that savaged the campaign of the 2004 Democratic presidential nominee, Senator John Kerry." This focus on using wind to help get this country off its foreign oil addiction, explain briefly the approach?

PICKENS: OK. You have got a fantastic asset in this country, which is the wind corridor from Texas to Canada. And you have a solar corridor from Texas to California. Those must be used. Those are renewable. They are clean. We have not been tasked in this country to do one thing for energy, because we have always bought cheap oil. And now we are up to almost 70 percent imports, and we are at the price today of 88 dollars a barrel. You are 550 billion dollars a year on imported oil. When you look at the 700 billion that's the rescue package, you are approaching that, and it is just one year of purchase of foreign oil. We have got to get off the foreign oil.

GREGORY: You have met with both candidates on the question of the environment. Who do you have more confidence in?

PICKENS: One thing on the foreign oil, before I leave it, the only resource we have in America to replace foreign oil directly, gallon for gallon, is natural gas. And we have it. It's abundant. It's cheap and it is ours. The candidates I have met with-I met with three, Senator McCain and Obama and Governor Palin. And good meetings with all three of them.

GREGORY: But who do you have most confidence in, do you think, to execute a strategy that gets us to where you think we ought to go on the environment?

PICKENS: Well, Senator McCain and Obama, you know, they are not energy people. When you talk to Governor Palin, there's no question she has had more experience with energy than either one of the senators have had. I wouldn't grade Senator Obama or McCain. They neither one have a plan. I'm actually-I'm the actually the only guy on the street with a plan.

GREGORY: Is McCain or Obama prepared to endorse the Pickens plan?

PICKENS: I don't know. I would hope so. I would hope both of them would endorse it, because it is a plan that would work for this country. It would create jobs. It would keep some of the 700 billion dollars that we paid last year for foreign oil at home. And it would be-it would be great for this country. Plus, the fact we would be using a resource of ours that's cleaner and cheaper than foreign oil.

GREGORY: Mr. Pickens, finally, as somebody who, I mentioned before, funded the Swift Boat campaign against John Kerry; with the economy in this condition, do you think character attacks in this election cycle are warranted? And would they be effective?

PICKENS: I don't-I don't see any character attacks. I really don't pay too much attention to the ads. But I don't see any activity on the 527 front.

GREGORY: What about front either of the candidates?

PICKENS: Oh, I don't know. I just, I don't watch political ads. I don't pay much attention to them. And, so, you know, whatever they want to do, if they are watching their polls, is what they are doing; if they get results, then they will attack. If they don't, they will back off.

GREGORY: All right, T. Boone Pickens, thank you very much for talking to us tonight.

PICKENS: Sure.

GREGORY: Coming up next, McCain and Palin step up the attacks on Obama. And "Saturday Night Live" goes after the debate performances of both vice presidential candidates. David Broder of the "Washington Post" joins me for the state of the race when we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUEEN LATIFA, ACTRESS: Governor Palin, what its your position on health care regulation?

TINA FEY, "SATURDAY NIGHT LIVE": I'm going to ignore that question, and instead talk about Israel. I love Israel so much. Bless his heart. There's a special place for Israel in heaven. And I know some people are going to say that I'm only saying that to pander to Florida voters, but, from a very young age, my two greatest loves were always Jews and Cuban food.

(END VIDEO CLIP)

GREGORY: That was Tina Fey playing the role of Sarah Palin on "Saturday Night Live" this past weekend. joining me now, David Broder, columnist for the "Washington Post." David, you actually wrote this week, you thought they both did well in this debate? Palin notably?

DAVID BRODER, "THE WASHINGTON POST": Yes, but not as well-

GREGORY: Not as well as Tina Fey.

BRODER: I mean, that is the great discovery of this election campaign.

GREGORY: Right. But what's the result of that debate, then? How does it play?

BRODER: I don't think it changed the race at all. When you talk to voters, all they were talking about last week was this economy that has people just scared to death.

GREGORY: You have a six-point race now in our poll and in other polls. We see this battle ground map that has John McCain on defense in these nine Republican states, nine Bush states from 2004. How do you see this?

BRODER: Well, I think he is very much on defensive, and not quite sure how to change the equation at this point. There are fewer and fewer places where he can hope to come back, and fewer and fewer issues on which he can begin to compete with Obama and the Democrats.

GREGORY: And yet, he's been counted out before. Once the conventional wisdom starts to gel that he hasn't in real trouble, make the case for how he can pull it out?

BRODER: Because he has a backbone of absolute steel and will never quit. The one thing we know is that 29 days from now, John McCain will be fighting with every bit of energy and life that he has got in him.

GREGORY: There is an argument that's made by people I talked to in the McCain campaign, which is similar to what Hillary Clinton folks argued late in the game during the primaries, that there are a bunch of late deciders in these red states and some of the blue states that they would like to put in play, who might be independent voters. They might be Hillary Clinton supporters. And that they might be willing to make a judgment about Barack Obama. They may not be sure about him yet. And that's what McCain is counting on, some of the late breakers.

BRODER: I think that's absolutely valid analysis, because people really do not know a lot about Barack Obama. He was not part of their lives until this year. And many people are just getting to know him for the first time. But, also, he is doing a much better job now of explaining himself and explaining his policies than he was doing when he was running against Senator Clinton.

GREGORY: In your experience, what compares to this? I mean, this isn't just the economy as a major issue. This is the economy as a huge.

BRODER: It's a comparison that many others have made, but I think 1980. People were ready for change in 1980. They were disillusioned with Jimmy Carter, but they had a lot of doubts about Ronald Reagan. And until he finally satisfied those questions, they didn't move.

GREGORY: So what do you look for tomorrow night? Again, an issue that is not just an economy in turmoil, but a huge external event that is becoming an international issue, that is the economy. What do you expect tomorrow night in a town hall format that has voters asking questions as well?

BRODER: Because it's voters and not policy experts, the real test will be who conveys a message that I understand this kind of situation well enough that you can trust me to come up with answers. I don't think people will expect detailed answers tomorrow night, but the question of personal confidence, where McCain usually does very well. That's why he likes town meetings. It will be the key test.

GREGORY: Do they have an obligation to level with the American people and say this is going to get a lot worse?

BRODER: Yes. And I think if either of them really begins to do that, that fact in itself will bring confidence to people.

GREGORY: All right, David Broder with the "Washington Post," thank you as always. That's going to do it for the program tonight. I'm David Gregory. A programming note here before we go, tune in to MSNBC for tomorrow night's town hall presidential debate at Belmont University in Nashville, moderated by our own Tom Brokaw at 9:00 pm Eastern. I will be bringing you our coverage. "HARDBALL" coming up next.

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