updated 10/29/2008 1:42:21 PM ET 2008-10-29T17:42:21

Guest: Richard Wolffe, Steve Forbes, Mike Allen, Chris Van Hollen, Michelle Bernard, Rosa Brooks, Ken Khachigian, Mike Gerson, Eugene Robinson

DAVID GREGORY, HOST:  Tonight, as Wall Street soars, each candidate is trying to reap their fortunes at the polls by declaring how they would handle the economy.  Senator Obama slammed Wall Street executives today and accused John McCain of riding shotgun with President Bush.  The Arizona senator continued to label Obama‘s plan as a massive tax increase that would redistribute wealth.  Money talks.  But for the McCain campaign, do the polls speak louder?  That and more as RACE FOR THE WHITE HOUSE rolls on.  One week to go in the race for the White House.  Welcome to the program.  I‘m David Gregory, reporting from Los Angeles tonight.   My headline, “Money Trail.” On a rainy and stormy day back East on the campaign trail, the day on Wall Street was anything but dreary.  Look at the market board.  The Dow Jones soared more than 10 percent and was up almost 900 points in the second largest one-day point gain ever.  But it was the dismal economy that was still the talk from both candidates today.   Senator McCain and Governor Palin appeared together in Hershey, Pennsylvania, for the first time since reports of tension between the two candidates.  McCain attacked Senator Obama‘s economic plans as he tries to make up a double-digit deficit in Pennsylvania polls. 

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  Senator Obama is running to be redistributionist-in-chief.  I‘m running to be commander-in-chief.  Senator Obama is running to spread the wealth.  I‘m running to create wealth.  Senator Obama is running to punish the successful.  I‘m running to make everyone successful. 

(END VIDEO CLIP)

GREGORY:  Obama was also in Pennsylvania, a state that both sides need badly.  McCain more than Obama, but nevertheless, a battleground today. Before moving on to Virginia—that‘s where Obama will be later—he seized on comments McCain‘s top policy adviser made about health care.  Listen. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  This morning, we were offered a stunning bit of straight talk, an October surprise from his top economic adviser, who actually said that the health insurance people currently get from their employer is, and I quote, “way better than the health care they would be getting if John McCain were president.”  The truth is, John McCain‘s health care plan is radical.  It is unaffordable.  It‘s not the change we need right now. 

(END VIDEO CLIP)

GREGORY:  Joining me now from Harrisonburg, Virginia, where Senator Obama just finished off a campaign rally, is Richard Wolffe, “Newsweek” senior White House correspondent and an MSNBC political analyst.  Richard now covers the Obama campaign full time.  All right, Richard.  What‘s the Obama campaign really focused on here as we get into the final week? 

RICHARD WOLFFE, MSNBC POLITICAL ANALYST:  Well, they‘re doing two things, David.  First of all, rehashing the closing arguments that the candidate unveiled yesterday, full of hope and promising change.  But in each stop, inserting some new swipes at McCain. This morning in Chester, talking about taxes.  This afternoon, on health care.  And one of the things we all wondered about as these campaigns entered the final stage was who would win the hand-to-hand fighting, the daily skirmishes between these campaigns, when they‘re fighting for each news (ph) cycle.  What we‘re seeing here is, at the very least, the Obama campaign trying to go toe to toe with the McCain campaign, that has proved very proficient at that skill before. 

GREGORY:  If Obama is on the defensive at all, Richard, he is at least geographically on the defensive.  He has gone back to Pennsylvania.  Governor Rendell wanted him back there.  That‘s a big play that the McCain team is making even though they‘re behind by double digits.  What kind of impact is the “Joe the Plumber” argument having as measured by the Obama campaign? 

WOLFFE:  Well, they don‘t think there is really any to Pennsylvania, but this is the only defensive move that they are playing about Pennsylvania.  Virginia is much more of a key concern for them.  Here in the Shenandoah area of Virginia, they‘re really looking to put Virginia over the top early on November 4th.  As such, they say that would be the clear signal that they‘re heading towards a big victory.  So Virginia they are stressing much more than Pennsylvania.  But look, what are they talking about?  In Pennsylvania, it‘s taxes.  That goes straight to the “Joe the Plumber” argument.  Health care in Virginia.Again, it‘s the pocketbook issue where the candidates struggled through the primaries. 

GREGORY:  All right.  Richard Wolffe is on the campaign trail with Senator Obama.  Thanks very much.  Senator McCain spent his day focused on the economy, as well in battlegrounds Pennsylvania and North Carolina.  He will travel to Florida later tonight, where he‘s also on the defensive.   Joining me now is former Republican presidential candidate Steve Forbes.  Mr. Forbes now serves as special economic adviser to the McCain campaign, as well as chairman and CEO of Forbes and editor-in-chief of “Forbes” magazine.   Mr. Forbes, welcome. 

STEVE FORBES, CEO, FORBES:  Good to be with you.  Thank you. 

GREGORY:  Let me talk to you about the economy, what we‘ve seen on Wall Street.  So many investors, so many Americans focused on the economy and what‘s happening on Wall Street.  Huge swings, and now a huge swing today to the upside.  What‘s happening?

FORBES:  Well, I think it shows the uncertainty of the general investor.  We all know we‘re in a recession.  The next few months are going to be tough.  The credit crisis, I think the worst of it‘s over.  And so people are trying to figure out, OK, what happens next?  And my own feeling is, looking at what happened before and where we are today, is that if we don‘t make any more mistakes, this economy should be on the upswing by springtime.  And apropos of the early part of your program, I think the McCain campaign finally is focusing in a very sharp way.  It started yesterday at a press conference, focusing on the economy, that I think is going to help close the gap.  We‘ll see if it‘s enough, but it‘s moving in the right direction. 

GREGORY:  Let‘s talk about that, because Senator McCain appeared with Governor Palin on CNBC, our sister network, talking about the economy and the tax argument.  Let‘s play a portion of that interview and I‘ll have you react to it. 

(BEGIN VIDEO CLIP)

MCCAIN:  To somehow say that we‘re going to take money because “Joe the Plumber” reaches a certain income level, now we‘re going to take that money from him and give it to somebody else, that‘s a fundamental contradiction to what has made this country the strongest and greatest nation in the world.  It‘s a fundamental contradiction, and the American people are beginning to figure it out. 

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE:  Let‘s spread opportunity so that people like “Joe the Plumber” and others can create more jobs.  They can hire more people because they‘ll be able to reinvest their hard-earned money according to their priorities. 

(END VIDEO CLIP)

GREGORY:  So we have here in the final week of this campaign, Mr.  Forbes, a campaign that is defined by the bumper sticker phrase, “Joe the Plumber.”  Explain to me why that demonstrates leadership on the economy, an economy in crisis, by John McCain. 

FORBES:  Well, I think what it gets to is, where do we go next?  What is the aftermath of the credit crisis, the worst of which is now—I think we‘re getting over?  And I think you have two competing visions.  One is a redistribute the income vision—more regulation, more government spending.  And I think McCain is going to the Reaganesque approach of reducing taxes, creating more opportunity.   And the thing I think that is beginning to resonate and why they‘re spending so much time in Pennsylvania, is that people fear that while Senator Obama talks about $250,000 income, paying higher taxes, Senator Biden said today, no, it‘s $150,000, people fear that it‘s going to hit the middle class because that is where the most money is. 

GREGORY:  Yes, but that was a misstatement by Senator Biden.  I think that Senator Obama has been pretty clear that the threshold here is $250,000. 

FORBES:  Yes, but I think people fear that if you‘re going to raise the kind of money that he‘s talking about, funding the massive programs he‘s talking about, tax credits and the like, which adds up to hundreds of billions, you can raise the taxes on upper income people, but that‘s only going to pay for about 10 percent of it.  Where is the other 90 percent going to come?   And I think you‘re also going to see an emphasis that, Bill Clinton, when he got in, in 1993 and promised the middle class a tax cut, and then said, oh, the budget deficit is so big, we can‘t do it. 

GREGORY:  So we may be in a situation where he doesn‘t cut any taxes, as he‘s promising, but he‘ll just roll back those Bush tax cuts? 

FORBES:  Well, and which mean for everybody a tax increase. 

GREGORY:  A tax increase, indeed.  Now, let me ask you this.  You know the economy, but you also know politics.  Bottom line, is it too late for McCain? 

FORBES:  I don‘t think so.  What‘s remarkable about this whole campaign is how fluid it has been, how it‘s upset every expectation.  You see it in the polling numbers today, an amazing number of undecided voters still out there, which is a little surprising this late in the cycle. 

GREGORY:  Yes.

FORBES:  So everything has happened in this campaign, and we may see another version of it in the next seven days. 

GREGORY:  Have a look at this new ad that has just come out late this afternoon by Senator Obama on the economy and we‘ll react to it.  Have a look. 

(BEGIN VIDEO CLIP)

NARRATOR:  The highest unemployment in seven years.  A record one million homes in foreclosure.  Financial markets in turmoil.  Wages declining.  Food and gas prices soaring. 

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  For too many, the American dream is fading.  The middle class is struggling.  We simply can‘t afford more of the same. 

We need a new direction now.  And that‘s why I‘m running for president.  I‘m Barack Obama, and I approved this message. 

(END VIDEO CLIP)

GREGORY:  So a lot of things he‘s doing there, the old Reagan argument, putting himself in front of the White House, trying to be presidential. Do you think the guy you support, Senator McCain, is doing himself a disservice by getting into a debate about the economy, by calling Barack Obama a socialist and having a socialist point of view?  Do you really think that people who surround and advise Senator Obama are socialists or would espouse that economic view? 

FORBES:  I think what you see is two competing visions of where we go from here. We know the economy is in trouble.  We have had a serious credit crisis, the worst since the 1930s.  A real devastation in 401(k)s and the like.  But the question is, what do we do now?   And I think Senator Obama—I think what Senator McCain is trying to do, and I think is now doing successfully, saying this man wants to raise taxes through spending, tax and spend, whereas Senator McCain is saying no, we‘ve got to reduce the burden on people. 

GREGORY:  OK.  But I take from that you think this is a better way to argue it, you don‘t agree with the idea of raising the “socialist” charge?

FORBES:  Well, I think the socialist charge gets to the fact that hey, Senator Obama wants to raise taxes, increase government regulations, increase spending, and...

GREGORY:  But are you really standing by that?  Do you think this is a socialist point of view?  Do you think this is a socialist economic philosophy?  That‘s your position?

FORBES:  Well, I think the position is, where do we go from here? 

GREGORY:  OK.

FORBES:  And whether you call it social Democratic, socialist, very liberal, whatever, tax and spend doesn‘t work. 

GREGORY:  I want to end on this point, because you‘re a person with some standing in the Republican Party.  Where does the party go from here?  Do you think the Republican Party is in some state of distress?

FORBES:  Oh, it‘s in distress because even though Senator McCain can pull a Harry Truman-like upset, and I think has begun the process—remember, Harry Truman pulled this off in the last week of the 1948 campaign—there is no question Republicans are going to take a beating on the congressional and senatorial level.  The only question is, how much damage are they going to take? Then after the election, whether Senator McCain wins or not, the party is going to have to I think reaffirm basic principles, get back to them, and avoid the kind of pork barrel corruption that Senator Stevens epitomized sadly this week with that conviction.  The party has got to get back to principles or else it will be in trouble long term, whatever happens to Senator McCain. 

GREGORY:  All right.  Steve Forbes, a pleasure to have you on the program.  Thank you for your time. 

FORBES:  Appreciate it.  Thank you. 

GREGORY:  Coming next, mapping the race.  What do the candidates‘ travel plans say about their strategies and what they hope to accomplish one week from now? 

RACE FOR THE WHITE HOUSE returns right after this.

(COMMERCIAL BREAK)

GREGORY:  All eyes are on battleground Pennsylvania today just a week from Election Day, with Barack Obama holding a rally there this morning and John McCain holding two today.  And tomorrow, it is Florida for both candidates, where Senator Obama and Bill Clinton, former President Clinton, will make their very first joint appearance.  Joining me now with a look into the candidates‘ playbooks is Mike Allen, chief political correspondent for Politico. 

Hey, Mike.  How are you? 

MIKE ALLEN, CHIEF POLITICAL CORRESPONDENT, POLITICO:  Well, hello, David.  Great.  Thanks. 

GREGORY:  Let‘s talk about Sarah Palin, because there is a lot of intrigue here inside the McCain campaign about what‘s going on between Governor Palin and Senator McCain and the campaign staff.  It has really gotten ugly, Mike.  And you and I have been around together covering the Bush White House and Bush campaigns.  Winning campaigns don‘t have this kind of infighting that spills out publicly. 

ALLEN:  So true.  And if the McCain campaign were spending as much time talking about Barack Obama as they were about each other, they might be a lot better off.  You know, you talk to people who travel with Governor Palin.  She has a fantastic connection with her crowds.  They talk about how people don‘t call her “Governor” or “Vice President.”  They call her “Sarah.” She has this great connection, especially with these Republican crowds that she‘s out with.  But she has not bonded with the campaign staff, and there has been others toing and froing about the clothes and whether or not she takes direction, and what kind of speeches they‘re sending her, and whether or not she is looking ahead to 2012.   It‘s just a situation where it‘s like a bad marriage or a car wreck, or you‘re trying to tip—pitch a tent in the rain.  Something goes wrong, everybody is trying to blame someone else.  And even today, you have the state parties starting to say, it‘s not our fault, it belongs to the national party or the campaign.  What a mess. 

GREGORY:  Well, but, I mean, here‘s the problem.  You‘ve got people who are saying anonymously—Politico doing much of this reporting—that people are calling her a whack job or saying that she is a diva.  I know that I‘ve heard from people inside the campaign who say that Senator McCain has a very good bond with Governor Palin, but he is concerned about some of the infighting and how it‘s spilling out publicly. 

ALLEN:  And sure, because of the distraction.  Because every second is so precious to their campaign.  That travel schedule that you‘re just talking about, that‘s not a travel schedule that Senator McCain wants to have at this point.  It‘s a very defensive thing.   They‘re both going to be in North Carolina in coming days.  Incredible, it‘s great for North Carolina, but it‘s astounding.  And so he needs them to put off this discussion for another week. Have your postmortem, or victory lap, or whatever you have, have it after you‘re in the end zone.  And that‘s what that campaign has worked on.   They‘re having to defend themselves.  And you can‘t have one faction out there talking and not the other.  So it puts the people who are inside in a very difficult position.  Meanwhile, you have kids who are working hard, fighting very hard, and they see their bosses doing something else. 

GREGORY:  Right.  Mike, let‘s talk about the map.  And let‘s look at the NBC News political map, the electoral map as we see it now.

Our terrific political team looking at it with Obama, 286 and McCain at 163.  Again, this is where the projections are right now.  Things can obviously change before Election Day.  But you look at some of the polls here, Mike—Mason-Dixon out of North Carolina has Obama and McCain tied.  You have Mason-Dixon out of Montana has McCain with just a four-point edge.  And Florida, you have Governor Crist down there who wants to accelerate the hours for early voting.  Bill Clinton and Obama down there tomorrow night.  There is a big focus a state that could really be decisive if John McCain can‘t pull it off. 

ALLEN:  Yes.  I can tell you, David, that the Obama campaign views those additional hours, the Republican governor, Charlie Crist giving people an extra hour to vote early, a full 12 hours, they view that as a huge victory.  Charlie Crist was asked about that.  He kind of acknowledged that it hurts his guy.  He said this was a personal decision, not a partisan decision.  But they‘re having to—you talk about those other states where it‘s very close.  They should be red states.  The Republican National Committee spending ad money in West Virginia, Montana.  That‘s an indication, David, that they‘re concerned about an historic landslide.  They‘re just trying to save face with buys like that, taking money out of crucial other states.  What they have to depend on is that these polls are not picking up something that‘s out there.  That‘s why they‘re putting so many chips on Pennsylvania.  If there is something that is going on that the polls aren‘t catching, if the polls are wrong, where will it do us the most good?  And Pennsylvania is a big state.  And if the polls are wrong, and you can cash in on Pennsylvania, you have a chance, a chance of making those number add up.  But you see from that map how hard it is. 

GREGORY:  Well, and you and I know from covering final weeks of a campaign that you look for evidence that there‘s actual movement in the polls, you look for evidence that the campaigns pick up on that.  And you just said something very important, which is the view within the McCain campaign that, if the polls are wrong, where are they best positioned, are they seeing any hard evidence?  It‘s important that a candidate is outwardly feisty, saying I don‘t believe the polls, like McCain was with Tom Brokaw on “Meet the Press.”  He has to say that publicly.  But internally, do they actually see evidence of any tightening? 

ALLEN:  David, what they tell me is that they see glimmers that they‘re trying to make seem like daylight.  Their strategist will argue to you that Virginia is still in play.  In fact, the most honest comments about that are that it is not.  They will tell you that Iowa is still there.  Iowa very tough.

GREGORY:  Right.

ALLEN:  And there are glimmers in these states.  And you have to grab on to that because you have this huge organization, you have all these people who need to get out and vote.  You have volunteers and staff, and you need to keep working for another week.  So, it‘s a coach who is down three touchdowns with two minutes to go and saying, here‘s how it could be done.  Sure, it could be done.  It‘s not very likely. 

GREGORY:  Well, and then you just have the enthusiasm issue, which is people think it‘s over.  On either side politically, you could have a depressed turnout, which neither side wants to have.  All right, Mike.  If you would, just stick around one second. Coming next, “Joe the Plumber” may have found himself a new job.  It‘s on THE RACE‘s radar tonight.  It‘s coming up right after this. 

(COMMERCIAL BREAK)

GREGORY:  You know him now.  He‘s “Joe the Plumber.”  It‘s what‘s on our radar here tonight. He is the voter known as “Joe the Plumber.”  He‘s now officially in the McCain camp.  He endorsed Senator McCain today before hitting the campaign trail on a daylong bus tour of Ohio, where he attacked Obama for what he said during their now famous rope line conversation about taxes. 

(BEGIN VIDEO CLIP)

JOE WURZELBACHER, “JOE THE PLUMBER”:  If you look at spreading the wealth, you know, that‘s honestly right out of Karl Marx‘s mouth.  No one can debate that.  That‘s fact. So it‘s not my opinion.  That‘s fact. You know, his health care, universal health care, again, that goes right along with socialism.  So, I mean, these aren‘t smears.  These are facts.  So yes, it would worry me.  Once you start on something, you know, with this whole $250,000 -- once you start somewhere and you set a precedence, you know, where is it going to go next? 

(END VIDEO CLIP)

GREGORY:  For the record, “Joe the Plumber‘s” real name is Samuel, and he does not have a plumbing license.  He says he doesn‘t need one where he works in Ohio. Nevertheless, he says he has never met McCain personally, but feels it‘s his civic duty to campaign for him now. Politico‘s Mike Allen is still with me. Mike, you know, what‘s striking about “Joe the Plumber” is that it is a good basis, it‘s a good issue perhaps for John McCain as a way to gain on the economy.  But it‘s so narrow.  It is such a narrow frame for McCain to use in the last weeks of the campaign.   And by the way, it was something that sort of—that he just found along the campaign trail, rather than a theme and a message and a frame for his opponent that he‘s been driving for months.  And polls show that he is not winning the tax argument against Obama.  ALLEN:  It is.  But David, as you know, he is trying to use “Joe the Plumber” to evoke and suggest something larger.  His message in these final days is that Senator Obama will raise your taxes, will stunt job growth.  And he‘s going to say, I‘m trying to fix the economy and improve the economy and fix Washington.  And you look ahead, David, as you know, on these schedules.  Usually they say victory rally, health care roundtable.  You look at Senator McCain‘s schedule for the days ahead, and it says “Joe the Plumber” event.  “Joe the Plumber” event.   So he is trying to use this to say about Barack Obama, he is not who you think.  He is trying to say, if you‘re going to have buyer‘s remorse about Barack Obama, have it now, not after you vote. 

GREGORY:  OK.  Mike Allen with Politico.com.  I‘ll look forward to the playbook in the morning, Mike.  Thanks.

ALLEN:  Thank you, David the Anchorman. 

(LAUGHTER)

GREGORY:  Coming next, Obama and the Democrats are staging an all-out battle for Florida, but the McCain campaign tries to turn the discussion back to national security and Iran.  Will it work? 

THE RACE returns after this.

(COMMERCIAL BREAK)

GREGORY:  Full speed ahead for Obama preparing for a major media blitz tomorrow and a rally with former President Bill Clinton in Florida.  Is there anything that Senator McCain can do at this point to stop an Obama sweep on Election Day?  Two top Republican insiders join me for an end game strategy session.  As THE RACE continues. I‘m David Gregory.  Welcome to the program from Los Angeles tonight.  The candidates are placing their final battleground bets as we are now just seven days from the election.  Senator Biden was on offense today in Florida.  A state where Obama heads tomorrow night with former President Clinton in a final attempt to turn the Sunshine State and its 27 electoral votes back from red to blue.  Joining me now from Miami is Obama supporter and chairman of the Democratic Congressional Campaign Committee, Congressman Chris Van Hollen of Maryland. Congressman, welcome.

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

GREGORY:  Let me talk to you about sealing the deal.  If you‘re Barack Obama, he‘s with Bill Clinton tomorrow night in Florida, a pretty big name to have in the state to try to turn that over.  As well as this buying 30 minutes of network air time to make a final pitch.  How does he use that time and what is the argument he makes?

VAN HOLLEN:  Well, I think he is going to use that time to tell the American people one more time what his policies are on the issues that are important to them.  On the economy, how his plan is dramatically different from the last seven years that we‘ve had with George Bush whereas he is going to point out, John McCain is right on the same page as the Bush administration when it come to the economy. He is going to talk about how he wants to restore American credibility overseas.  I can tell you, I‘m here in South Florida.  They have early voting here in South Florida.  You see lines going around the block.  And having a chance to talk to people, people are hungry for change. I mean, they‘re coming out in big, big numbers.  And in the conversations I‘ve had, they say they‘ve had enough of the last seven years.  They see John McCain as more of the status quo.  And they want to turn the page on that.  And they see Barack Obama as offering something new.  Especially when it comes to the economy.

GREGORY:  Congressman, let me offer you a different point of view that obviously the McCain campaign would like to count on.  That is that there might be some movement in the poll that the Joe the Plumber argument, this notion that raising tax on upper income Americans is the wrong approach in a recession.  Taxing small business owners, there is obviously a debate about whether he would do that.  Senator Obama.  It is the wrong thing to do in a recession. If you‘re Barack Obama, the one thing you haven‘t done is really level the American people about whether you can do it all.  And there is a lot of concern out there that while he will be committed to rolling back the Bush tax cuts, that when push comes to shove and the realities of this economy come home to roost, that this tax cut he‘s promising for the middle class, like Bill Clinton did, will not be reality in Congress.  Is that a fair concern?

VAN HOLLEN:  Well, no.  I think it will be one of the first orders of business.  One of the things that Joe the Plumber has done that benefits Barack Obama is more clearly outline what his tax plan is.  And his tax plan as independent analysts have said is better for families earning under $250,000 than John McCain‘s plan. That‘s according to independent analysts.  The question is not whether or not Americans are going to get a tax cut.  The question is who is going to get the tax cut.  And under John McCain‘s man, it is the same old thing.  The folks under the Bush plan, at the very top, CEOs, the head of Fortune 500 companies get on average $700,000 tax cut under John McCain‘s man.  Under Barack Obama‘s plan, if you‘re under $250,000, 95 percent of those American families are going to get bigger tax cuts than John McCain. So I think Joe the Plumber at the end of the day has done Barack Obama favor.

GREGORY:  But congressman, let‘s talk about the realities of even Democratic rule if it come to that.  If the Democrats have the White House and both branches, both houses in congress.  Are you telling me this is a sure thing?  That you will have the votes to raise taxes on upper income Americans without any pushback?  That all these more conservative Democrats who were swept in 2006, they‘re all going to be on board?  There won‘t be a fight about this?

VAN HOLLEN:  What I know everyone will be on board to do, David, is to provide the middle class tax relief that Barack Obama has talked about.  Making sure that families under $250,000 have that tax relief that he‘s promised.  That will happen.  Even Barack Obama has talked about a question of timing with respect to rolling back the Bush tax cuts on the very wealthy and whether or not that is something you would do right away, given the economic situation or whether that‘s something would you postpone. But both for economic fairness reasons, as well as making sure we get the economy moving again as part of an economic recovery plan, the Congress will move very quickly if the American people elect Barack Obama to enact his tax plan for middle class tax relief.

GREGORY:  That is a very important point you‘re making.  I would like to flesh that out.  You‘re saying now that it would be potentially postponed.  That rolling back the Bush tax cuts would not be an immediate priority of a Democratic Congress under Barack Obama.

VAN HOLLEN:  Well, look.  I think Barack Obama will determine the timing of his tax cuts propose balance respect to the rollbacks of the Bush tax cuts on the very wealthy Americans.  It depends partly on what come with respect to the economy.  But what has been very clear is that he will move forward quickly and the new Congress would move forward quickly on the middle class tax cuts that he‘s outlined.

GREGORY:  But isn‘t that an acknowledgment that it is a risky thing to do to raise taxes on anybody in this economic climate?  If you‘re conceding that perhaps we have to cut taxes?  That is the number one thing we have to do for the middle class but to raise taxes on even upper income Americans would really hurt the economy?  Doesn‘t that basically confirm John McCain‘s argument and his difference with Barack Obama?

VAN HOLLEN:  No, because as all economists will tell you, in terms of economic stimulus, what you want to do is make sure that middle income Americans, those people who are working every day and having to spend money just to meet their payments, that is what is necessary as part of a stimulus to the economy.  What happens at the top end, is a lot of that money actually goes overseas.  It doesn‘t even necessarily go right into the economy. And the second point is, we do have to distinguish between short term.  Where we need to get the economy a boost.  And make sure middle class Americans get that tax relief.  But we have to keep our eye on the deficit problem.  And that‘s where John McCain falls so far short.  Because he doesn‘t have any plan in the out years for how he is going to reduce the deficit. We are now borrowing billions and billions of dollars from China.  We‘re mortgaging our children‘s future.  What Barack Obama has said is we need a plan to provide middle class tax relief but we also have to keep our eye on the long term.  We cannot mortgage our children‘s future.

GREGORY:  Although Barack Obama has not outlined any program that he is promising that he would cut or that he would forego given this economic crisis.  Can you name me one in.

VAN HOLLEN:  Well, what Barack Obama has done is said he wants to look across the whole area of the federal government and make smart reductions.  And there are reductions.

GREGORY:  Doesn‘t everybody promise that?  Have you ever heard of a leader who doesn‘t promise that?

VAN HOLLEN:  Well, let me give you an example.  You talk about Medicare.  For example.  Right now, there are not enough incentives in the Medicaid payment formulas to push for more preventive medicine.  Right now, Medicare will come in and it pays for something once it has been broken.  Obama and others have talked about how you can redesign some of the incentives in Medicare, both to get better health outcomes but also by focusing more on prevention and giving more incentives for prevention you can save the taxpayer money. So those are the kinds of things he‘s outlined that we need to look at.  And when you‘re talking about things like that, you‘re talking about significant savings.  He‘s talked about savings from electronic medical health records within the health care area.  And so there are a number of areas he‘s actually outlined that would cost - that would provide savings, both to consumers as well as the federal government.

GREGORY:  All right.  Congressman Chris Van Hollen in Miami tonight from Maryland, representing Maryland.  Congressman, thank you very much.

VAN HOLLEN:  Good to be with you, David.

GREGORY:  Let‘s take a closer look at how the McCain campaign is using the final days on the trail in an attempt to turn the tide in their favor.  V.P. nominee Sarah Palin was across the Keystone State of Pennsylvania today and heads to battleground Ohio tomorrow where she will deliver her second big policy speech of the race. The focus, energy security and Iran.  Joining me now, Rosa Brooks, columnist with the “Los Angeles Times”, Michelle Bernard, president of the Independent Women‘s Forum and an MSNBC political analyst. Ladies, welcome, both.  I want to play a portion of the CNBC interview that Governor Palin and Senator McCain did.  Where they talked about their partnership.  They‘ve appeared together on the campaign trail so much, as you know.  Let‘s listen to that. And we‘ll have a reaction.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE:  How is the partnership going?  Governor Palin, when I spoke with you in August.  You weren‘t sure you were on anybody‘s short list and then days later, you get the call.  How did it all come down?

GOV. SARAH PALIN, ® VICE PRESIDENTIAL CANDIDATE:  It came down the way it was supposed to and it is all good.  The partnership is very good.

SEN. JOHN MCCAIN, ® PRESIDENTIAL CANDIDATE:  Can I just say, I couldn‘t be happier.  I couldn‘t be happier.  The enthusiasm, the support, the people who come.  Here are two mavericks.  Here are two mavericks.  Did anybody expect us to agree on every issue?  I think we would be pretty dull. We just, on ANWR, we continue a discussion about that.  We‘re not going to agree on every issue.  But that‘s the fun of our relationship.  And I am so, I can‘t tell you the excitement that she has generated and the role model she is.  I couldn‘t be happier.

(END VIDEO CLIP)

GREGORY:  You know, Rosa, when I listen to that, I think that is the best aspect of this pairing.  Of that relationship.  They‘re both feisty, they‘re both mavericks.  He talks about areas of disagreement.  He talks about where she‘s fired up the base.  But it seems like the chemistry has been overshadowed, not only by infighting in the campaign but by a judgment many voters seem to have made that she is just not qualified.  Adequately qualified for the job.

ROSA BROOKS, “LOS ANGELES TIMES”:  You know, David, I actually do not see any chemistry there.  What really struck watching that clip me was looking at their body language.  They looked like two people on a really bad blind date who couldn‘t stand each other but had to pretend that it was all going well for some reason. I‘m not sure those with ever had any chemistry to be honest.  I think they‘re having less and less as the days go by but it is absolutely if things are—if they never had much chemistry and things are getting worse, no question about it.  No question about that‘s fueled by the fact the sense that Palin has very much been a drag on McCain‘s chances so far.  That‘s certainly what the polling suggests.

GREGORY:  Like I said, Michelle, I don‘t think there is any chemistry between them.  But seriously, whether there is chemistry or there‘s not chemistry, the issues that we‘re seeing in these final days, do you think there is any sympathy?  All the criticism for Palin.  Is there sympathy for her now on the campaign trail that may inure to her benefit?

MICHELLE BERNARD, INDEPENDENT WOMEN‘S VOICE:  I think that there absolutely is sympathy for Palin right now.  She did a rally here.  Well, not here, in the Washington metropolitan area yesterday at the Independent Women‘s Forum.  We have received so many e-mails from people who say she has been trashed by the RNC, for example, over the clothes and the amount of money spent on the clothes.  That people have not allowed Sarah Palin to be Sarah Palin.  And quite frankly if you look at where Senator McCain‘s campaign was prior to the Republican convention, and where it was the day that he named Sarah Palin as his vice presidential nominee.  She brought the base back.  She energized the base.  Thousands of people come out to see not Senator McCain but Sarah Palin.  You will notice that quite often when we are talking about the final days of the campaign, we‘re not really focusing on Senator McCain and he is the man at the top of the ticket.  Not Senator Palin. I don‘t think that she is a drag on the campaign and I think that you will see a lot of sympathy generated for her by a lot of women in particular.

GREGORY:  But is it enough, Rosa, at this point for them to pick off Hillary Clinton supporters in a state like Pennsylvania?  That‘s the offensive play that they‘re making.

BROOKS:  It is not clear they are succeeding in doing that.  It is not clear that it will be enough if they do succeed in doing that.  And I have to disagree Michelle on one point.  I agree with Michelle absolutely that it is hard not to have some sympathy for Palin and for McCain, frankly, at this point.  It cannot be fun to be on that campaign bus.  They‘re tearing each other apart.  It is never fun to be on the losing campaign. But what I disagree with, I think that the evidence at this point really does suggest that Palin absolutely has been a drag on McCain.  I actually think that McCain would probably be losing anyway at this point.  He would be down in the polls regardless.  Everything has been against him, including the economy.  But it seems almost impossible to contradict the assertion at this point that Palin has been a further drag.  That her unfavorables have increased dramatically the more people have gotten to know her. That you can say let Palin be Palin but the more people see her, the less they like her.

GREGORY:  All right.  Got to end it there.  Got to take a break.  Thank you both. Coming up next, I‘m going to go inside McCain‘s war room with two insiders for a look at the end game strategy when RACE FOR THE WHITE HOUSE returns right after this.

(COMMERCIAL BREAK)

GREGORY:  Back now in RACE FOR THE WHITE HOUSE.  Time to go inside the McCain war room with just one week left.  To close the gap in the polls Senator McCain fiercely forges ahead on his mission to turn the race around.  His final battle cry has been fixated on the economy as we‘ve been talking about but is this really the winning issue for him now? Joining me now to weigh in, Michael Gerson, former Bush speechwriter, of course, and author of “Heroic Conservatism.”  Veteran Republican strategist Ken Khachigian, former senior adviser to Senator McCain‘s 2000 campaign, also an adviser to Bush/Cheney.  But an adviser to Nixon and Reagan, too.  Ken reminds me it his 40th year since his first campaign. Also with us Eugene Robinson, columnist and associate editor at “The Washington Post.”  He‘s also an MSNBC political analyst.  Welcome all. Ken, you look far too young to have been in politics for 40 years.  I want to say that at the outset.

KEN KHACHIGIAN, REPUBLICAN STRATEGIST:  I didn‘t do Coolidge.

GREGORY:  You were with McCain in 2000 before you supported George Bush.  Is he a different candidate now and has that hurt him?

KHACHIGIAN:  Well, I don‘t know that he is all that different.  Running the primary in a New Hampshire in 2000 is different than a general election.  General elections are always different than primaries.  But he has got different challenges now than he had then.  Then he had a central message.  He was not Bill Clinton.  It was an integrity issue.  And he had integrity going for him against the years of Bill Clinton.  And now he has a different thing.  He‘s got the head wind of George Bush.

GREGORY:  And Mike Gerson, somebody who worked so close with George Bush.  You see McCain now desperate to separate himself from the president.  And he is in a position where he is making an ideological closing argument built around taxes.  Which is not a very comfortable place for John McCain to be.  A guy who didn‘t even support the Bush tax cuts initially.

MIKE GERSON, BUSH ADVISER:  No.  In fact, he opposed tax cut in 2001, 2003.  Said in 2004, he would be willing to take back the bush cuts.  You know, one of the ironies of the campaign that really this deficit hawk is campaigning at the end as a tax cutter.  It is an appropriate message.  There really is no economic theory that would taxes going into a serious recession.  Obama has been left over with this message from his own primary campaign.  Doesn‘t fit our economy very well now.  And McCain is trying to take advantage of that.  That‘s fully appropriate even though it doesn‘t fit exactly right.

GREGORY:  And Gene, is there some resonance for McCain in a closing argument to say, you can‘t trust Obama‘s economic philosophy.  Both because he would raise taxes on upper income Americans which is the wrong thing to do in a recession.  Oh, and this promise of a middle class tax break is not something he might actually deliver on.  It raises some doubt here at the end of the campaign.

EUGENE ROBINSON, “WASHINGTON POST”:  It muddies the waters, is what it does. Actually to tell the truth, I‘m not sure what sort of resonance all this calling him Mr. Redistributor has.  It sounds like an auto mechanic or something like that.  I‘m not sure whether the repetition of Joe the Plumber, Joe the Plumber, Joe the Plumber.  While it clearly attracts attention and it is an easy hook, it just seems to be the latest in the series of themes the McCain campaign has cycled through.  And the question is what they add up to.

GREGORY:  And that‘s the question, Ken.  By their own admission, “The New York Times” piece in the magazine section over the weekend.  All the different narratives for the campaign, this Joe the Plumber business is something they sort of stumbled upon at the end.  It was not like Bush/Cheney in 2004, what they set out to do against John Kerry, they did for months.  And it worked.

KHACHIGIAN:  McCain‘s message is right right now.  Now that‘s all that counts.  The last six days, he has to have a sharp message and he is focused.  What did he today, setting out the choice between the two campaigns is critical to him.  What happened the last week or last six weeks or four weeks really doesn‘t matter at this point.  Right now you‘re going to the finish.  He has to show there are two forks in the road at the end of November 4 and one fork takes you down Obama‘s path and one takes you down McCain‘s path. So he‘s working on perceptions.  Perception that‘s Obama is risk.  That he means risk, he means higher taxes, a weaker economy.  And with McCain, you get lower taxes and smaller government. So we can‘t get into the weeds at this point about all the details of the economic plans.  You‘re talking about perceptions and he wants to raise the risk factor to raise doubts and create buyer‘s remorse among Obama‘s people.  Absolutely the right thing.

GREGORY:  All right, we‘re going to take a break, come back with this group and talk about the future of the Republican Party.  The fought for what we may be facing in Washington.  This warning about one party rule.  What will this election mean politically in this country?  We‘ll come up and talk about that as well as Obama‘s 30 minute planned media blitz tomorrow in prime time when THE RACE continues after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, BARACK OBAMA‘S WIFE:  Wednesday he is airing this, he is on all the networks.

JAY LENO, TALK SHOW HOST:  The commercial.

M. OBAMA:  I don‘t know what they‘re calling it.  He is all over the place.  He is describing this to my mother.  We‘re at the kitchen table.  And Malia is sort of over here, she‘s 10.  She says, you‘re going to be on all the TV?  She said are you going to interrupt my TV? And he said, he is sitting like this and said no, we didn‘t buy time on Disney. And she said, oh, good.  And she got up and walked away.  She‘s just like, don‘t mess with my TV.

(END VIDEO CLIP)

GREGORY:  That was Michelle Obama on “The Tonight Show” last night having a laugh with Jay Leno over this upcoming 30-minute ad which is set to air nationally in prime time at 8:00 p.m. tomorrow night.  Still with me, Michael Gerson, Ken Khachigian and Eugene Robinson. We‘ll talk about this 30 minute speech in just a minute.  Mike Gerson, I want to start with you.  Let‘s just agree, we dope know what is going to happen on Election Day.  If McCain does prevail, it will be in the face of incredible head wind facing the Republican Party.  And the movement that I have noticed politically from the vantage point have having covered the White House to me goes back to 2005.  Bush is reelected.  But there was that white paper that came out from the British government on weapons of mass destruction. And I noticed the left in America really getting organized for the first time in their opposition to the war.  Then you had Katrina.  Then you had the mid-term elections and on and on and on.  So there has been a political movement here that has butted heads with this idea of a Republican realignment in government.

GERSON:  I completely agree with that.  I think being out of power, particularly for eight years, builds an appetite for victory.  And the left is very much in that situation.  Republicans from the long term ideological perspective are in some ways, victims of their own success.

The issues that brought them success from the time of Reagan like crime and welfare and the Soviet Union have largely been solved.  The new issues of our time, whether it is climate or demographic changes or health care challenges.  They don‘t seem as much Republican ground.

Republicans are not going to be able to solve that problem by going back to Reagan or some other previous figure.  They‘re going to have to apply their ideas to these problems in our own time.  And that is going to be the challenge moving forward, whether McCain wins or not, it is going to be a debate.

GREGORY:  So, Ken, what is that rebuilding process like?  If McCain doesn‘t win.  If you have one party win in Washington.  Where do Republicans start from?

KHACHIGIAN:  Well, they start by focusing on the 2010 elections.  The thing that brings the party together is winning the next election campaign.  So they‘re going to focus, you know, part of will be just opposing what Obama is doing and part of it will be seeing where your strengths are.  Looking for new talent.  Looking for, probing for ways to advance the party again.  And it will probably be economic issues all over again, in my judgment.

GREGORY:  Is Sarah Palin part of that future?

KHACHIGIAN:  Sure she is.  We have a lot of talent in this party.  And it will be on display over the next few years.  She is a part of that future.

GREGORY:  And Gene Robinson, this is a tremendous challenge.  If Obama gets what he wants, if Democrats get what they want in terms of control of Congress.  They are going to now have power in a very difficult time.  And as Ken suggests, there will be a two-year time horizon where Republicans will be laying in wait saying what have the Democrats done for you?

ROBINSON:  Right.  Be careful what you wish for.  I think the Democrats clearly if they have their druthers will win the election.  What do you do at a time of economic crisis?  Can you, for an example, go ahead and rescind the Bush tax cuts for upper income people in the face of what look like it will be a very deep recession?  That is not a judgment call for a lot of economists.  It is going to have to be a judgment call for the Democratic Party.  Nothing is going to be easy. On the other hand, being out of power certainly did build not just a hunger for victory but the Democrats are more together, I think, in terms of ideas than they have been in a long time.

GREGORY:  All right.  I have to leave it there.  Gene Robinson, Ken Khachigian, Michael Gerson.  Thank you all.  A conversation that will continue.  That does it though, for now for RACE FOR THE WHITE HOUSE. Tonight just one week until Election Day.  I‘m David Gregory in Los Angeles tonight.  Thank you very much for watching.  We‘ll be back here from Washington.

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

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