updated 10/10/2008 11:20:46 AM ET 2008-10-10T15:20:46

RACE FOR THE WHITEHOUSE

October 9, 2008

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

Guests: Jim Doyle, Mike Allen, Joan Walsh, Michelle Bernard, John Harwood, Tony Blankley

JOE SCARBOROUGH, MSNBC HOST: Tonight, Wall Street wipeout, the Dow Jones dives over 600 points, falling below 8,600 for the first time since 2003. Now what are the candidates saying tonight to ease America's concerns about the economic crisis?

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

There are just 26 days to go in THE RACE FOR THE WHITE HOUSE. Can you believe that? 26 days. Welcome to the show. I'm Joe Scarborough in for David Gregory. My headline tonight, free falling, the Dow Jones plunged over seven percent, that is 679 points to close below 8,600 for the first time in five years. The NASDAQ down over 90 points, the Standard & Poor Index dropped seven percent.

Now listen to this, just a year ago the Dow closed at a record high of 14,000 points. For the latest on what's happening on Wall Street let's go now to John Harwood. He is CNBC's chief Washington correspondent. Also political writer for "The New York Times" and the perfect person to talk to today where once again finance and politics mix.

John, listen to these numbers, General Motors down 30 percent today. Lost 30 percent of their value today. Morgan Stanley lost 26 percent of their value, Merrill Lynch, 26 percent of their value. The markets down 21 percent since on this tear and over 40 percent in the past year.

We had the bailout last week. That was supposed to stop this bleeding.

What is going on on Wall Street?

JOHN HARWOOD, "THE NEW YORK TIMES": Well, it's just a tremendous lack of confidence right now. We see this coordinated action by the Federal Reserve and its counterparts around the world didn't really do anything to halt that slide. Now we've got the Fed talking about buying stakes directly in American banks which could be potentially another confidence booster. Nancy Pelosi, the House speaker, is preparing a second stimulus package. Can't pass before the election but she's hoping for potentially some action in a lame-duck session of Congress.

But it's plan that nobody really knows exactly what is going to stop this slide, Joe, and policy makers, the people who have got some clout right now, that's in Washington, you are talking about Ben Bernanke, Hank Paulson and to some degree the leaders of Congress and President Bush are flailing around looking for some answers that will stabilize things.

And obviously, Wall Street has no confidence in Washington, DC's answers because we do see the numbers plummeting. What's the impact on the political side of things? Take off your finance hat, put on your political analysis hat. How does this impact the campaign? More bad news for John McCain?

HARWOOD: Absolutely. If this were a national security crisis this would be great news for John McCain because the guy with expertise, the guy more familiar to Americans, the guy who has been through battles in that realm for years would be there to provide some calm and steadiness.

But on this issue Barack Obama has really owned it for the last few weeks. Partly that's an accident because he's the Democrat and he's taking advantage of the fact that people have lost confidence in the Republican Party and in President Bush. And part of it is because of his own performance, which has been very steady.

He has done well in the debates. He has probably done a better job of projecting presidential calm than John McCain who's been all over the map in some respects on this issue. So right now this is really providing another powerful boost for Obama. And John McCain is trying to take a cultural tact, going on to Bill Ayers and this Weather Underground issue out of Chicago. How does that possibly break through when you have got a 600-point drop in the Dow? Very, very tough for John McCain.

SCARBOROUGH: And of course, as the Dow drops so do John McCain's poll numbers. The latest Gallup tracking poll with averages over this week show McCain is losing to Obama by double digits. It's 52 percent to 41 percent. Not good news for McCain. And obviously his worst showing since this general election campaign began.

On the trail today Bill Ayers made a comeback as you were talking about, John. And McCain and Sarah Palin were rallying the base at a joint town hall meeting in a conservative stronghold in Wisconsin. A state that narrowly went for John Kerry in 2004.

Now, John McCain took this swipe at his Democratic rival after an audience member asked him about a '60s radical named Bill Ayers.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN: The point is .

UNIDENTIFIED FEMALE: Terrorist!

MCCAIN: . Senator Obama said he was just a guy in the neighborhood. We know that's not true. We need to know the full extent of the relationship because of whether Senator Obama is telling the truth to the American people or not. That's the question.

(END VIDEO CLIP)

SCARBOROUGH: And while John McCain was talking about '60s radicals in Wisconsin in the battleground state of Ohio Obama continued to hammer John McCain on the economy. Take a listen.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: His first response to the housing crisis in March was that homeowners shouldn't get any help at all.

Then a few weeks ago he put out a plan that basically ignored homeowners. Now in the course of 12 hours he's ended up with a plan that punishes taxpayers, rewards banks and won't solve our housing crisis.

But this is the kind of erratic behavior we've been seeing out of Senator McCain.

(END VIDEO CLIP)

SCARBOROUGH: Here to dissect it is our all-star panel, Harold Ford Jr., chairman of the Democratic Leadership Council and NBC News analyst, we've got Tony Blankley, syndicated columnist, Mike Barnicle, columnist with "The Boston Herald" and an MSNBC contributor and of course, still with us, John Harwood. Mike Barnicle, if I had a dollar for every time Obama and his lieutenants said "erratic" when describing John McCain over the past 24 hours, I would have enough money to invest in the stock market and lost it all.

That is their tack now, isn't it? In the time of economic crisis you can't trust John McCain because he's just too erratic.

MIKE BARNICLE, MSNBC CONTRIBUTOR: Yes, it is, Joe. You know, every four years about the only thing left that we do in unison as a country is a vote for president. And every four years there is always the phrase uttered by people in the media and people in politics, will there be an October surprise?

And unfortunately for Senator McCain the October surprise this year could potentially be the bankruptcy of general motors. A foundation-rattling event in this culture. For anyone over 30 the names Buick, Chevrolet, Cadillac, mean a lot. And in addition to unemployment and in addition to the collapse of a vital part of this country's economic engine that could really end the McCain campaign.

SCARBOROUGH: Tony Blankley, what is good for General Motors is good for America. At least that is what they said in the '50s and '60s. Today General Motors lost one third of its value in trading on Wall Street. Morgan Stanley down 26 percent, Merrill lynch down 26 percent, our market, the overall market down 40 percent from this time on this day last year. What does that mean for John McCain and the Republicans trying to run against these bad economic times?

TONY BLANKLEY, SYNDICATED COLUMNIST: Well, first I have to say I don't think it is really particularly useful for pundits or politicians to speculate on the imminent bankruptcy of firms. Because we saw that happen with some runs on banks a few weeks ago. I would hesitate .

BARNICLE: Tony, get real, will you? Get real. Look at the numbers today. It is under $5 a share for General Motors. One of the great, great vital spines of this country's economic engine. It is about to collapse. You can listen to CNBC all day long, it happens to be ESPN for anyone with credit cards. They will tell you in plain English that General Motors is on the verge of collapse. It is not making it up. It is not punditry. It is reality.

BLANKLEY: You are welcome to say what you want. I'll say what I want. I don't name companies who are not bankrupt and call them imminently bankrupt. That's your choice.

But the question that was asked me is what does the crash have to do with McCain. Obviously, it is potentially catastrophic. This is the first election in my lifetime, I think any of our lifetimes, the first story is not the presidential campaign but another story, in this case the financial crisis. And the public by two to one blames Republicans more than Democrats for it. Obviously, McCain is under a tremendous burden to break through on any other topic. And Obama who has run a brilliant campaign and has positioned himself well is the beneficiary.

But he is being swept by forces bigger than him just as McCain is being swept down by forces bigger than him.

SCARBOROUGH: Harold Ford, John McCain is going after culture warriors, talking about Bill Ayers and he is talking about other issues that may work when there is peace and prosperity when Americans feel they can vote on cultural battles. But they don't seem to be in the mood to do that right now. I want you to switch hats. Pretend you are a Republican strategist and that you had John McCain's ear tonight. What would you tell him he had to do to stop the political bleeding?

HAROLD FORD JR., DLC: If he doesn't go back to being the original maverick, independent John McCain, the thing that made him appealing to independents and moderates. If he continues down the path of this kind of veiled campaigning, an outright attempts to try to link Senator Obama to terrorists from the '60s. If he doesn't get back to talking about the economy and what he would do to build bridges in the Senate, engage in a new fiscal, usher in a new era of fiscal responsibility in Washington. I think that is his only hope. He has given the Obama campaign so many gaffes to use, from his comments about the economy to his comment about his homes.

If I were Barack advice I would give him advice not only to hammer McCain but give Americans a sense of his positive vision as well about what we can expect when he's president.

SCARBOROUGH: But, of course, John Harwood, he hasn't been doing that. Barack Obama has been staying out of the way. That seemed to be a very shrewd move. He is talking about John McCain being erratic, he is talking about the mistakes John McCain's making, but he really doesn't have, and I'm talking about a political need. If you want to talk about strategy, there's not a great need for him to put forth the Barack Obama vision for fixing the markets. If America is blaming McCain.

HARWOOD: I agree with you. They are putting out some plans. He is favoring a second stimulus package. There aren't a lot of details on that right now. They are consulting with Democrats on the Hill. But I really agree with the point that was just made about John McCain. I think he's got to engage on the economic issue. They are looking at recent history and seeing culture war issues have paid off for Republicans in recent elections. But you can't use that template because this is so different. He's got to find a way to figure out who he believes is true about the economy, why he thinks the policies that he favors are appropriate and then try to drive that argument.

He's an original maverick. How does that relate to the effort to cut taxes, to cut spending, to change regulation in a way that makes sense but doesn't impede the free market engine? That's what he has to try to come up with and he simply seems more inclined to go in another direction.

SCARBOROUGH: Mike Barnicle, we've got to go to break but very quickly, Mike Barnicle.

We've talked about it for some time. You talk about General Motors possibly being the October surprise. Also when John McCain uttered those words the fundamentals of the economy are strong. That may be the defining moment of his campaign. Might it not, Mike?

BARNICLE: It could well be. It is a sad thing watching the McCain campaign progress through these last three weeks. It is a very inept attempt to campaign for the presidency. People are very fearful in this country. There is a lot of panic not only in Wall Street but in average households across the country.

And John McCain is not addressing that. He is talking about some guy from 1969 that means nothing in living rooms across this country.

SCARBOROUGH: We have to go to break right now. We will be back with our panel. The question is coming up next. What candidate is providing real solutions for the economic mess that we are in?

And are McCain and Obama making promises they are not able to keep if they are elected. Two supporters face off when THE RACE FOR THE WHITE HOUSE returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama is happy to bail out Bear Stearns, AIG, Fannie Mae, Freddie Mac and the Democrats said they refuse to enact legislation to stop this crisis but he is opposed to helping home owners in America.

OBAMA: His first response to this crisis in March was that homeowners shouldn't get any help at all. That's what he said in March.

Then a few weeks ago he put out a plan that basically ignored homeowners. Now in the course of 12 hours he ended up with a plan that punishes taxpayers, rewards banks and won't solve our housing crisis.

(END VIDEO CLIP)

SCARBOROUGH: Welcome back to the race.

You just heard the candidates were on the attack today, slamming each other's economic plans while they are trying to sell themselves as the sturdy choice to lead us out of this crisis. With me now to face off on the question on who is showing more leadership on the economy, our Obama supporter Chris Van Hollen. He is Democratic congressman from Maryland and chairman of the Democratic Congressional Campaign.

We also have McCain supporter Darrell Issa, Republican congressman from California. Darrell, let me begin with you. Why do John McCain's poll numbers seem to drop every time the Dow drops?

REP. DARRELL ISSA, ® CA: Joe, it is very clear that the democrats have done a good job of trying to say that John McCain is the second coming of George W. Bush. When you see mistakes made in the eighth year of a president's term that clearly fall on his watch it's going to have a natural link.

What people forget is that John McCain has fought this administration on some critical issues, fought Democrats, particularly on these Democrat inventions of Freddie and Fannie that have been used or abused and are at the center of the crisis. So, yes, he votes like I do often with the president. But let's talk about the important differences especially related to this crisis.

SCARBOROUGH: And you know, Chris, a lot of Republicans were talking about how Freddie and Fannie were at the base of the crisis. Lending standards were lessened so poorer Americans could get homes even if they didn't qualify for the loans. Barack Obama didn't fight that anymore than John McCain did, did he?

REP. CHRIS VAN HOLLEN, (D) MD: Joe, what we are experiencing is collective amnesia on the part of our Republican colleagues. After all, they have had a monopoly in Washington, the White House and the Congress for six of the last eight years. They did nothing on this. In the first two years the Democrats have been in charge of Congress .

SCARBOROUGH: Chris, I have to stop you for a second - what you said just is not true. There are quotes from 2003 of the Bush White House trying to get Democrats to stand shoulder to shoulder with them on reforming Fannie and Freddie. Barney Frank was one of the leaders fighting against that reform. You know that and I know that.

Let Chris respond.

VAN HOLLEN: Joe, can you let me respond, please.

SCARBOROUGH: That's what I just said. Let Chris, respond. That means Chris you can respond. Now respond.

VAN HOLLEN: Thank you. The Republican chairman of the Financial Services Committee is quoted over and over now saying he tried to reform the GSEs, Fannie and Freddie and the Bush administration stood in his way. That's what he said.

The problem McCain's got is not just the fact that he has been supporting the Bush economic record. It is that he has been zigzagging all over the place during this economic crisis. The fact of the matter just the other night at the debate he said he has a new proposal. It wasn't Barack Obama, it wasn't George Bush's. He announced a proposal the Congress had already enacted. The Congress had already given the federal agencies the authority to buy up loans if banks agreed to take part of the hit.

And so now McCain came up with a proposal that says the taxpayer gets to take the entire hit and the banks will get off scot-free for making irresponsible loans.

SCARBOROUGH: Hold on, Darrell .

VAN HOLLEN: It is the fact he has been all over the place. Darrell, you have to let me ask you a question before you jump in. Chris makes a great point .

ISSA: The point Chris is making.

SCARBOROUGH: Darrell. Please, please. Listen to me, you have to let me ask you a question. You're wasting our time. I'm going to ask you the question. Chris talked about how McCain has been zigzagging over the past two or three weeks. I have talked to Republican senators and congressmen that are pulling their hair out saying what is this guy doing?

He suspends his campaign, he parachutes into Washington. He leaves. The crisis blows up again. You have got to admit, Democrats have been calling him erratic. That word fits John McCain right now, doesn't it?

ISSA: I certainly can make a little honesty on what Chris has been alluding to. First of all on a straight party line vote or almost straight party line vote the House passed a bill to try to reform Fannie and Freddie. It died in the Senate. John McCain was a leader in the Senate to try to make it go forward. It was the Democrats blocked it. This has been their baby. The Chris Dodds and so on.

SCARBOROUGH: Let's talk about the last two weeks. Has he been erratic?

ISSA: Certainly John McCain is a maverick. And John McCain will try to find as best he can ways to make a difference. Now he's not the president. If he were in the White House today I would hold him to a standard of bringing a plan and living with it. In fact what he is really doing is he is bucking a president that has the wrong plans, he is bucking Democratic leadership and Republican leadership that are buying into the wrong plans. Is he trying to find a soft spot to make a difference? Absolutely. Is he coming up against a president, President George W. Bush, who is on the wrong side of the solution? Absolutely.

But President Bush is standing with Barney Frank with the wrong solutions. That is the reason why the market has gone down 2,000 more points.

SCARBOROUGH: Finally, Chris. We have to wrap it up. I'll throw you the softball of the day.

VAN HOLLEN: Joe.

SCARBOROUGH: Explain how John McCain has been erratic over the past several weeks on this crisis.

MCCAIN: Oh, come on, Joe.

ISSA: Why don't we explain why Barack Obama has had solutions worse than the problem?

SCARBOROUGH: Let me say that Barack Obama when the administration asked for a blank check he said no. He laid out four principles to protect the taxpayers, said they have to be incorporated in the economic rescue plan. They were. On the other hand McCain was all over the map. First he was kind of against it then he was for it. Then he was going to get the House Republicans on board. Then we had a vote. They were not onboard. Then he came onboard for the package.

And then the other night he decided after the debate finished up that he was going to come up with another proposal. Turned out he had forgotten Congress had already adopted that proposal and given federal agencies that authority.

So he then unveiled a new plan that leaves the tax player holding the entire bag.

ISSA: Chris, the problem is the right vote was no on that bill to begin with, Chris.

SCARBOROUGH: I know you guys want to talk about this a lot more. We'll get you on the morning show and give you more time. This is a debate I want to hear more of.

Definitely. Thanks for being with us.

VAN HOLLEN: Thank you, Joe.

ISSA: Thanks, Joe.

SCARBOROUGH: Move over Tina Fey. Stephen Colbert cracks up when a guest does a doggone good impression of the V.P. nominee Sarah Palin. It's on THE RACE's "Radar" right after this.

(COMMERCIAL BREAK)

SCARBOROUGH: We're back now with a look at what is on THE RACE'S "Radar." Michelle Obama paid a visit to THE DAILY SHOW where Jon Stewart compared her to another woman in the political spotlight. Take a look.

(BEGIN VIDEO CLIP)

JON STEWART, TALK SHOW HOST: As this is going on, how do you remain sort of the center of the family? Is that the job to keep everybody grounded?

MICHELLE OBAMA, BARACK OBAMA'S WIFE: That's part of it. I have stopped reading and watching a lot of stuff.

STEWART: So you are a lot like Sarah Palin?

(END VIDEO CLIP)

SCARBOROUGH: Nice. Stopped over at "The Colbert Report", all I have to say is Tina Fey, eat your heart out.

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, TALK SHOW HOST: Sarah Palin, you like her?

SCARBOROUGH: Why wouldn't I? Doesn't everybody like her?

COLBERT: I love her.

SCARBOROUGH: God bless ya.

COLBERT: You call her a rock star.

SCARBOROUGH: She is a rock star, God bless you, you betcha.

COLBERT: Your reason for McCain not winning the things you are citing is polls and what is happening in the world. OK. McCain is going to pull it out, how?

SCARBOROUGH: How does he do it, Stephen?

COLBERT: Magic.

(END VIDEO CLIP)

SCARBOROUGH: Stephen Colbert one of the funniest guys around. Coming up next. More of today's stunning stock market drop.

We're going to get the very latest from CNBC's Margaret Brennan. Plus, John McCain and Sarah Palin hit the blue state of Wisconsin today. We're going to take a look how the economic climate in that state is impacting the political map and the other swing states when THE RACE returns.

(COMMERCIAL BREAK)

SCARBOROUGH: The stocks plunge again, the candidates hit the battleground states, but the economic and political climate suggests the map is shrinking for McCain. And some Democrats say, they say 2008 is shaping up into a landslide for Obama and Democrats. All that and more ahead as the RACE FOR THE WHITE HOUSE rolls on.

Welcome back to the RACE FOR THE WHITE HOUSE. The stock market continued a seven session free fall today. Let's take a look at the closing numbers. The Dow plunged over 7 percent, closing below 8,600 for the first time since 2003. For the latest on the tanking markets, let's go right now to CNBC's Margaret Brennan. We are going to see if she can find a silver lining in some of the most ominous dark clouds of our time. Margaret, a year ago, of course, as you know the Dow hit its high. We have dropped almost 40 percent in a year's time. Does anybody there have any idea on how low it's going to go before it bottoms out?

MARGARET BRENNAN, CNBC CORRESPONDENT: That is the big question. And of course traders are looking for something they call capitulation, which is exactly what you're referring to, a bottom. They want to touch bottom because stocks are so some would say so oversold, so cheap at this point, that we're waiting to see who's going to step in and start buying.

The pressure, of course is because people feel they need cash immediately, today's sell off was really accelerated by a few things. One of them is that today that ban on short selling expired. Remember the SEC put that into effect in September because shares of Lehman Brothers and other banks that had been troubled declined so substantially, they claimed, in part because people were betting that those stocks would go down. They were selling the stocks short.

So today was the first time that short sellers got to come in and sort of take that position again. And the biggest decliners in today's markets were those stocks that were initially banned from shorting like General Motors. General Motors shares are below $5. They haven't been that cheap since 1950. It's not just the financials. It's the consumer stocks as well. We saw a broad sell off because we had really weak September sales results from a lot of consumer stocks. Abercrombie and Fitch and even cheap chic retailers came out and said September people were frightened. Fear is ruling the stock market and it's ruling the malls. They are not coming out and they are not spending their money.

So if you want a silver lining here Joe, it's that consumers do seem to be holding on to cash in some ways which is going to cause retailers to have to mark items down to get them to come out and spend this holiday. But based on the September sales results that we've seen so far, analysts at J.P. Morgan are saying they are predicting the weakest fourth quarter holiday Christmas sales in 20 years.

SCARBOROUGH: Yikes.

BRENNAN: So bad for retailers, good for consumers, cheaper prices. And if you don't need your cash right and you want to put it to work in stock market there are some cheap stocks these days.

SCARBOROUGH: Buy low. American Airlines very low. General Motors low. I see Morgan Stanley down 26 percent.

BRENNAN: Yeah.

SCARBOROUGH: Merrill Lynch down 26 percent, GM down 30 percent. There are some bargains. Also, another place where there is bargain, Margaret. I just got an e-mail from a friend in my hometown in Pensacola, Florida, gas below $3 a gallon for the first time in months.

BRENNAN: Absolutely, oil closed at $83 a barrel I believe today.

SCARBOROUGH: Wow.

BRENNAN: That's the lowest level this year. I mean, remember when we were at $140 and $150 a barrel just a few months ago? So that will have a trickle down effect. And you're right, it's going to help you out at the gas pump. But at this point, analysts who a few months ago would have blamed everything on a higher gas price for keeping consumers from spending money are now saying consumers have bigger worries than what they are spending at the gas tank. But it will put a little bit more cash in shoppers' pockets. The idea is though will they spend it? Will they save it? Consumer debt fell by the largest percentage that we have seen in 10 years last month, so that's a sign that consumers are paying down their debts. They're not spending as much right now. So we'll see. A little more gas money in their pocket, maybe things will start turning around.

SCARBOROUGH: We shall see. Margaret Brennan at CNBC, thank you so much, greatly appreciate it.

BRENNAN: Thanks, Joe.

SCARBOROUGH: All right, the candidates wrangled over the economy and battleground states today. Obama was Ohio while Senator John McCain and his running mate Governor Sarah Palin opened up a two day, three city swing through Wisconsin. He told the crowd just hours ago in the Badger State that they were going to be hard for him to carry. NBC's latest electoral map shows the state is leaning Obama.

With me to talk about, Democratic Governor of Wisconsin, Jim Doyle. Governor Doyle is an Obama supporter, but he remains neutral on whether Brett Favre should have been traded or not. Governor, thank you for being with us. Tell me what's happening in your state right now? Do bad economic times mean good news for your candidate Barack Obama?

GOV. JIM DOYLE (D), WISCONSIN: Well, they mean bad news for everyone but it's certainly people have clearly rejected, I think, the whole sideshow of the McCain/Palin personal attacks. They are way too concerned about what is really going on.

And I really do believe that we know Obama pretty well in Wisconsin. He ran a great primary here. He is from a neighboring state. He has really been a calm and steadying kind of leader through all of this. And I think you are seeing that. So it is far from over. We have had such tight races here in the last two times. I don't want to jinx this thing at all, but clearly the movement has been very, very strongly to Senator Obama.

SCARBOROUGH: You know, for those of us outside of Wisconsin, we tend to think of the state as being much more progressive than it actually is. John Kerry squeaks by in 2004. It was pretty competitive in 2000 also. Why is it that this race, the Wisconsin race is usually so close every four years?

DOYLE: Well, we are very, very evenly divided. I was the first Democratic governor elected in 16 years. And I came in with huge Republican majority in both houses of legislature. This year by the way and I'm sure this is happening around the country, we may well take over both houses of legislature because of the turn against Republicans. But we are a very, very evenly divided state.

So Al Gore, it was less than a tenth of a percent and John Kerry was less than a tenth of a percent. We have voted for the Democrat five consecutive times, but the last two times have been very close and so it's natural when the Republicans look at what Democratic state could they win back, Wisconsin is at the top of the list.

But I'll tell you what John McCain has done over the last-if this were three or four weeks ago, it was a very different picture. And what's happened since then has moved this very, very strongly towards Barack Obama.

SCARBOROUGH: All right, thank you so much, governor. Now Governor, let me ask you one final question. Do you still start every morning sweating on the treadmill watching "MORNING JOE?"

DOYLE: I do. I was watching today. I was on the bike today but I was sweating hard. And I'm a regular watcher. I really enjoy the show and I'll tell you, when Brett Favre threw six touchdown passes for the New York Jets and the Packers lost three straight games, I'm getting a little worried about that.

SCARBOROUGH: Bring back Favre. All right, thank you, governor. It's really great to talk to you, really appreciate it.

Let's go down to our panel for a rapid response. With us is John Harwood, CNBC's chief Washington correspondent, a political writer for the "New York Times." Harold Ford Jr., chairman of the Democratic Leadership Council, an NBC News analyst. Tony Blankley, syndicated columnist and Mike Barnicle, columnist for the "Boston Herald," also an MSNBC contributor.

John Harwood, let's start with you. We do need to remind our viewers tonight while everybody is suggesting that this election seems to be Barack Obama's to lose, just four weeks ago as the governor suggested John McCain ahead in a lot of these electoral map polls, right?

HARWOOD: Sure.

SCARBOROUGH: It can change again.

HARWOOD: Yes. Well, it could change again but look, it is harder the deeper you get into the cycle and it's harder when you have a story with a force and power and anxiety producing characteristics of this economic mess.

People are looking at their-as Tony said earlier, this is an election that has been knocked off of the top of the front page, if you will, by people looking at their 401(k) plans and what we've seen as a result is all of these potential takeaway opportunities for John McCain, Pennsylvania, Michigan where they've given up, Wisconsin, Minnesota. All those things are drifting against him and he's still got to play.

Barack Obama, on the other hand, is looking at a map and he says, Iowa, I've got that in the bag, New Mexico, I've got that in the bag from the Bush list of 2004. And he has such a wealth of other opportunities. He's ahead in Florida. He's ahead in Ohio. He's doing well in Colorado. Nevada is a longer shot. North Carolina a longer shot. But you've got so many states where Barack Obama could take big chunks of electoral votes and the opportunities for John McCain to counter that are dwindling.

SCARBOROUGH: You know, Tony Blankley, a couple of months ago this seems like it might be 1980 all over again. Then it was 1988 when McCain started doing well against the Democrats, Dukakis of this year. But I've got to tell you, I know you were working with Noone (ph) in 1996. I was on the campaign trail in 1996. This is smelling a lot like Bob Dole's final four weeks in presidential politics.

BLANKLEY: It also feels a little bit like 1932. Let me make a suggestion. There's an interesting factor going on here that the Republicans have about $75 million of advertising money they are about to drop. Obama has had the luxury of being able to advertise very heavily in the battleground states for a number of weeks. He'll continue because he's got plenty of money. But McCain is going to have a chance to deliver a message. We'll see if he finds the right one.

And to go back to what we were discussing earlier, I disagree that he has to talk about economic. I think nobody has a clue, not Paulson, not the top experts in the world know what to do. I think the only chance McCain has is to undercut the trust in Obama. He should go after him with everything he's got, with all that $75 million in advertising, neither he nor Obama or anyone else are saying anything persuasive about how to get out of this mess.

SCARBOROUGH: Harold, that makes sense. Hold on, Harold. After all you and I both know Barack Obama doesn't know what to do in this crisis anymore than John McCain, Hank Paulson, the Fed chairman, the Fed chairman of the European Central Bank. The smartest economic guys on the planet don't know how to fix this crisis. So why do we believe that Barack Obama has a better idea than John McCain?

FORD: Because he is sharing them. I think two things. I disagree with you slightly about him not having ideas. I think this stimulus package with spending on infrastructure, ensuring that we're able to push money to the states to allow them to create jobs and continue.

SCARBOROUGH: You want to spend another $150 billion after we just kissed goodbye to $1 trillion. Where does that money come from?

FORD: We have the same place we found this $700 billion for the bailout here and the same way that we continue to find it for the war. But we can quarrel about Barack's ideas and McCain's.

But I think two things to try to answer your question and what Tony said, why I disagree with him. The war was the big issue in 2000 and 2004. It was harder for Americans really to get their arms around that fully. The economy is a different thing because you know people who have been laid off. You have family members and neighbors and friends who have been laid off. You have people who are worried about health care and their retirement funds and pension funds.

So it is much harder, even if Barack doesn't have a specific and discreet set of answers, as you mentioned, Joe, what he is doing is talking about the issues and talking about the pain and anxiety people are feeling. But you may have hit on the right point, the best point earlier, when you said McCain seems to be disconnected, seems to be unfamiliar, doesn't seem to have the handle and the handle and the grasp on economic issues. To say that the fundamentals were strong, that might have been the point of no return for John McCain's campaign.

SCARBOROUGH: And you know, Mike Barnicle, also he did that. And after he did that, he followed up with - and again, the Democrats it is in their talking points, everyone is talking about John McCain being erratic. But that's exactly how he's behaved over the past two weeks. It seems to be a lesson in what not to do when you're at a critical point in your campaign.

BARNICLE: Joe, this might be John McCain's biggest dilemma, his biggest problem, the biggest weight that he carries through the rest of the fall campaign. And there's something that Bill Parcells said, legendary football coach, you are what your record says you are. The public knows that the record for both Democrats and Republicans in Washington has been pathetic over the last several or eight years. That's how many people feel.

So that is what Barack Obama has going for him. Tony Blankley's potential strategy to dump $75 million or whatever of negative advertising, that might work if it were not for the front pages people are consuming each and every day and the economic hard times that they are living through each and every day. People right now don't care about the past. They don't care about finger pointing and assessing blame. They want to know where are we going tomorrow, where are we going next year and who is driving the car.

SCARBOROUGH: Tony, we've got to go, but I'll give you a quick response.

BLANKLEY: They also want to know who is driving it. And that is the last argument McCain has that Obama cannot be trusted to drive it. That is the argument, point he is trying to make.

BARNICLE: Tony, John McCain is driving.

SCARBOROUGH: That is the last argument John McCain has.

BLANKLEY: And it may be a winner.

SCARBOROUGH: But, you know, that could be-

BARNICLE: He is driving a model T if that is his best argument.

SCARBOROUGH: I was just going to say.

BLANKLEY: We are lost in a metaphor.

SCARBOROUGH: The thing is, if you are driving a car that is weaving all over the road-

BARNICLE: He is driving the model T with the crank engine.

SCARBOROUGH: OK, Barnicle, now stop it.

BARNICLE: A good GM car.

SCARBOROUGH: A good GM car, making fun of John McCain's age today.

HARWOOD: A hybrid.

SCARBOROUGH: Stop it right now.

BARNICLE: I love the guy.

SCARBOROUGH: Yeah. It sounds like it. And he loves me.

McCain's support among women has shot up after McCain picked Governor Sarah Palin as his running mate. But new economic concerns are moving them back to Obama. How does McCain win them back? We'll get a look at the women's vote when the RACE returns.

(COMMERCIAL BREAK)

SCARBOROUGH: Up next, polls show women moving from McCain in the midst of the economic crisis. Can Sarah Palin help him connect with the kitchen table issues? The RACE returns right after this.

(COMMERCIAL BREAK)

SCARBOROUGH: Welcome back to THE RACE. McCain is trying to shore up support with women, especially white women who are excited by Sarah Palin. But now they have moved to Obama because of the economic crisis. The week after the Republican Convention, McCain was within 10 points of Obama among all women. It was 48 percent to 41 percent with him leaning with white women. Now Obama is leading McCain 17 points among all women, 55 to 37 percent. That's actually less than the percentage that Bush won in 2000 and 2008 and that Bob Dole won in '96.

And Obama now has a one point edge with white women. With me now talking about it, Michelle Bernard, she's president of the Independent Women's Forum and an MSNBC political analyst. And Joan Walsh, she's editor-in-chief of salon.com. Joan, why is McCain bleeding economic support from women?

JOAN WALSH, SALON.COM: Because Joe, I think women tend to be in a paradoxical way more conservative in a sense of being concerned about the economy, being worried about anyone who seems erratic. And they tended to vote to trend Democratic, not always white women going back to Ronald Reagan. They worry about government. They care about government. They believe government can help them. So they have been more favorable to Democrats.

And I've got to say, this particular campaign that John McCain and Sarah Palin are running seems tailor made to frighten women into the Barack Obama camp. Obama seems calm, collected and passionate.

SCARBOROUGH: Michelle? It may not be that Barack Obama has the solution. It's just that John McCain seems a bit too erratic here?

MICHELLE BERNARD, INDEPENDENT WOMEN'S FORUM: I don't know if it is that John McCain seems erratic. But I will say is that Barack Obama seems to be delivering a message that resonates particularly with Democratic women when he talks about comparable worth and the wage gap and the Family Medical Leave Act. Women listen to that and Senator McCain's camp at least recently on economic issues is not explaining how his belief in free markets can actually benefit women. If he talked about the tax code in a way where he explained how his tax policies might allow women to bring home more money in their paychecks, they would listen. If he talked about flex time and initiatives he would enact that would allow women to balance work and family, you might see some of those women who have migrated to the Obama camp come back to McCain.

WALSH: Maybe.

SCARBOROUGH: That's a maybe. But you know Joan, so much of this maybe, again, not just with women but among a lot of the voters in the economic crisis, it may be the tone. After the first debate I heard a lot of smart guys saying that McCain won it. I woke up the next morning and just saw the visuals and said, no he didn't. It was Obama that seemed so relaxed on the debate stage. That maybe who America wants and especially women want in this time of crisis.

WALSH: I really think in large measure it comes down to that. I also think that the free market isn't looking so hot right now, Michelle. So pointing to old Republican-

BERNARD: No. Not necessarily. I could argue-

WALSH: Michelle, I was talking.

BERNARD: I apologize Joan, but I could argue that the government is responsible for the sub prime market.

WALSH: That's ridiculous.

BERNARD: There are people who say that if the government under Bill Clinton had not decided that the government was going to decide who should own a home and who shouldn't, then basically decided that the entire country should own homes, we might not be in the problem.

WALSH: The problem was not mainly in the way. Certainly government regulated sub prime loans were going out that is a much larger point, Michelle. The free market looks like hell right now and Republicans have become socialists. John McCain wants to bail out the banks and give money directly to the banks and buy these terrible mortgages. People are yelling socialist about Barack Obama at these crazy McCain/Palin rallies which are completely off the hook. We changed sides here. It's like none of these old labels mean anything anymore. We are at a level of government intervention in this economy that is unprecedented so the ideological stuff is stupid.

BERNARD: I agree with you there.

SCARBOROUGH: Actually both parties, Joan, just for the record, are looking pretty socialistic to me.

WALSH: Well, sure.

SCARBOROUGH: And I actually prefer the free market still.

BERNARD: Absolutely.

SCARBOROUGH: Joan, thanks for being with us. Michelle, thank you so much. Sorry for the short time. The crisis on Wall Street sort of squeezed-

BERNARD: Ate our segment.

SCARBOROUGH: It kind of did eat our segment. And also, I always talk too much. THE RACE FOR THE WHITE HOUSE will be right back talking about a Democratic landslide.

(COMMERCIAL BREAK)

SCARBOROUGH: Welcome back to THE RACE. The headline from "Politico" today, Democrats believe a landslide may be on its way. Let's bring in right now "Politico's" Mike Allen, who writes the most important note of the morning for politics. Mike, thanks for being with us. Not a lot of time. Talk about the landslide Democrats believe may be coming.

MIKE ALLEN, POLITICO: Joe, we are used to American presidential elections being close. And people thought this would be close until the very last day. The Obama campaign, as recently as their convention, was saying every key state will be tight as a tick. But instead, Republicans are beginning to worry that John McCain's poll numbers are going to be like the stock market, no floor. They are behind and being outspent almost everywhere that is important to them, Virginia, North Carolina, your state of Florida, Ohio. John McCain now has to win all of those and he is in trouble in all of them.

SCARBOROUGH: Mike, what does it mean for the Senate races? Could 2008 look a lot like 1974 or 1994?

ALLEN: It sure could. If Democrats get to 60 seats in the Senate, they are going to have total control of the nation's agenda if they get the White House. And they probably won't get quite that close, but they'll get to a few. Every key Republican Senate race and House races, they see their numbers falling through. Now I talked to Republicans today. They believe there will be one more turn. This election has never been predictable. They think they will get one more shot. But time is running out and days are exponentially important because so many people are making up their minds and so many people are actually voting early now.

SCARBOROUGH: Quick question, when is the last time one party had the White House, the House of Representatives and a 60-vote majority in the Senate? Because I really do think that is where we are going to be after this election.

ALLEN: I'm not going to be wrong about this for your viewers but what that means is it will be almost like LBJ. That under those circumstances, Senator Obama would be able to enact a remarkable agenda, from day one, a long list of bills. We are used to gridlock. This is going to be something totally different for our system.

SCARBOROUGH: My guess, Mike, just a guess. We'll check it out. And hopefully you can be on the show tomorrow morning, on "MORNING JOE." Probably 1974 after the huge post Watergate landslide. But we shall see.

Mike Allen, thank you so much.

ALLEN: I'll do my homework.

SCARBOROUGH: OK, and we'll talk to you in the morning. And that does it for us on THE RACE FOR THE WHITE HOUSE. I'm Joe Scarborough we'll see you on "MORNING JOE" tomorrow at 6:00 a.m. David Gregory will be back this time slot tomorrow. Thank you for being with us and thank you Jamison for putting the show together. Stay with us. "HARDBALL" with Chris Matthews is right now.

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

END

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