updated 10/30/2008 12:59:06 PM ET 2008-10-30T16:59:06

RACE FOR THE WHITEHOUSE

October 29, 2008

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

Guests: Bill Richardson, John Harwood, Pat Buchanan, Lawrence O'Donnell, Mike Murphy, Bob Shrum, Dick Armey, E.J. Dionne

DAVID GREGORY, HOST: Tonight, shock and awe. Senator Obama uses a huge financial advantage to go prime time with a 30-minute infomercial intended to close the sale with those undecided voters. But the McCain campaign argues tonight that Obama is getting ahead of himself, that this contest is tightening in the states that will prove decisive.

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

Just six days to go now in the race for the White House.

Welcome to the program. I'm David Gregory.

The headline tonight, "Obama's Big Blitz."

It's been a busy day for both candidates on the campaign trail, but it's going to be an even busier night for Senator Barack Obama. He plans to dominate the evening with two major events.

First, that highly anticipated 30-minute, multimillion-dollar television ad buy his campaign is scheduled to broadcast across the TV spectrum. You can see it right here on MSNBC at 8:00 p.m. Eastern Time. We'll show you a sneak preview of it at 6:30, at half past in our program tonight.

A senior campaign official tells NBC News that the ad will also feature a live appearance by the senator at a rally in Sunrise, Florida, teeing up the historic event that will follow, an 11:00 p.m. rally with President Bill Clinton, their first joint campaign appearance of the race where he is no doubt going to continue to hammer his rival for what he claims are unfair attacks against him, as he did before a Raleigh, North Carolina, audience earlier today.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Lately, he's called me a socialist for wanting to roll back the Bush tax cuts for the wealthiest Americans so we can finally give tax relief to the middle class. I don't know what's next. By the end of the week, he'll be accusing me of being a secret communist because I shared my toys in kindergarten.

That's his choice. That's the kind campaign he chooses to run. But you have a choice, too.

The fundamental question in this election is not, are you better off than you were four years ago? We know the answer to that. The fundamental question is, will we be better off four years from now?

(END VIDEO CLIP)

GREGORY: Senator McCain, meantime, spent his day in Florida as well, questioning Senator Obama's qualifications to protect America and slamming both Obama and running mate Joe Biden for being inconsistent on the issue of taxes.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama made a lot of promises. First he said people making less than $250,000 would benefit from his plan. And then this weekend, he announced in an ad that if you're a family making less than $200,000, you'll benefit.

But this week, Senator Biden said, tax relief should only go to middle class people. People making under $150,000 a year.

You know, with liberals like these, it's interesting how their definition of rich has a way of creeping down.

(END VIDEO CLIP)

GREGORY: McCain also accused Obama of acting as if he's already won this race. But new poll numbers from "TIME" magazine battleground states suggest that McCain has some reason to be worried, showing Obama in the lead in critical battlegrounds: Colorado, Florida, and Virginia. And up with some pretty good margins there as well.

Also, concern McCain appears to be struggling in his own backyard. A new poll from Arizona State University reveals a dead heat, with McCain ahead by only two points, 46-44 percent, which is down from a 7-point lead month ago and a double-digit lead this summer.

Joining me now from the neighboring state of New Mexico is its governor, former presidential candidate and Obama supporter, Bill Richardson.

Governor, welcome.

GOV. BILL RICHARDSON (D), NEW MEXICO: Thank you. Nice to be with you, David.

GREGORY: This is going to be unusual tonight, Barack Obama in prime time. He has got a lot of money and he's spending it. He wants to speak directly to the American people.

What is he going to say?

RICHARDSON: Well, a lot of it is going to be how he wants to unify the country, how he wants to bring the country together. There's going to be a lot of testimonials to his integrity, his intelligence, his values.

You know, Obama is communicating differently with the American people. He did it at the Democratic convention before thousands, INVESCO Field, let everybody come in and see him. And now he's doing this with this infomercial which I think has never been done, the scope of it. And it's going to be how he wants to tie the campaign together by bringing Americans together, bipartisan, getting things done.

GREGORY: But Governor, is it presumptuous at this stage when you have got late deciders who are clearly not-have not made up their minds and are on the fence? They can be pushed very easily both on issues or on temperament or on a perception. So is he getting ahead of himself with this?

RICHARDSON: No. The race is not over. This is going to be an interesting race.

The last six days, you yourself have reported the Republicans are throwing the kitchen sink at Senator Obama. They don't want to talk about the economy. They don't want to talk like Senator Obama is doing-bringing the country together. But no, the race is not over. We have to guard against overconfidence.

In the battleground states-I was just in Ohio. I was just in Florida. It looks good. You can sense the momentum, especially from early voting and massive new numbers of people who have registered to vote.

GREGORY: Right.

RICHARDSON: The enthusiasm, the organization, and so I think it's looking good. But this race by far is not over. And we have to guard against overconfidence.

GREGORY: Let's talk about New Mexico. I've spoken to advisers of the Obama campaign who say that in a movement year for a party, if there is a sweep that's going to happen for a party, New Mexico is going to go as part of that sweep.

So they've made the argument now for some time that they think New Mexico is squarely behind Obama because they believe it's going to be a big Democratic year not just in the White House, but in Congress as well. "The Albuquerque Journal," the paper I used to read every morning when I was working out there, shows this in terms of a spread-it's an Obama advantage of five points, but still just at 45 percent.

Are you prepared to say now that New Mexico is behind Obama?

RICHARDSON: Well, I believe that Senator Obama will win the state narrowly. But the good news is that he could sweep in three out of three members of Congress.

We've always had one Democrat who is elected from a northern district Democratic. But the other two have been Republican. We're going to most likely elect Tom Udall to the United States Senate, giving us potentially an all-Democratic delegation. And a lot of it is because these are great candidates, but the Obama organization, the momentum, the canvassing, the enthusiasm among young voters, we have close to 250,000 New Mexicans, David, that have early-voted.

GREGORY: Right.

RICHARDSON: The Obama organization, they also registered 36,000 new voters in 30 days. I mean, it's astounding what they're doing in bringing voters together, new voters to the poll. The organizational side is just outstanding.

GREGORY: Governor, let me ask you about some of the substantive charges being made by the McCain campaign against Obama at this point. We'll talk about taxes in just a minute, because, indeed, McCain is talking about the economy. But he also wants to make an experience argument here down the stretch.

And this is what he said on the issue of Osama bin Laden and threats to America today in challenging Barack Obama. Have a listen and we'll have you react.

(BEGIN VIDEO CLIP)

MCCAIN: In his four years in the Senate, two of them spent running for president, Barack Obama has displayed some impressive qualities. But the question is whether this is a man who has what it takes to protect America from Osama bin Laden, al Qaeda, and other grave threats in the world. And he has given you no reason to answer in the affirmative.

(END VIDEO CLIP)

GREGORY: The national security test is one that George Bush used very effectively against John Kerry, I don't have to tell you, in 2004. Could it work this time?

RICHARDSON: No, because it's not true. All you have to do is hear Colin Powell, Secretary Colin Powell, former Joint Chiefs of Staff chairman, Republican, soldier, saying that Barack Obama is qualified not just to be a commander-in-chief, but as a transformational figure, and endorsed Senator Obama over Senator McCain, his friend and member of his own party.

Secondly, what Senator Obama has done is displayed excellent judgment on foreign policy. He opposed the war at the beginning. And al Qaeda and the Taliban, if Senator McCain, who has a muddled policy on how to deal with them, while Senator Obama has said that if he has actionable intelligence and were able to find or spot bin Laden on the border in Pakistan and Afghanistan, he will be prepared to take that action.

So it's Senator Obama who realizes that the threat of the Taliban and al Qaeda and bin Laden is in Afghanistan and not in Iraq, yet Senator McCain continues to say we're going to be in Iraq for 100 years and has a "muddled policy," as he put it, towards Afghanistan.

GREGORY: All right. Let's talk about the economy and the issue of taxes.

Again, the charge here from Senator McCain is that Obama has the wrong economic philosophy, talking about raising taxes on upper income Americans during a recession. And the concern and a constructive criticism that a lot of people have brought up is, is it realistic for Obama, who promises to cut middle class taxes, is it realistic that he's going to be able to do that? Didn't Bill Clinton make a similar promise that he had to abandon in very tough economic time?

RICHARDSON: Well, David, here you have to look at the facts.

What Senator Obama is saying is that he's not going to make the Bush tax cuts for the upper 2 percent permanent. He is not going to make them forever, as Senator McCain wants to do. I wouldn't necessarily call that a tax increase.

What Senator Obama wants to do is, 95 percent of Americans, American middle class, gets a tax cut from him. Number two, if you're a small business, you're starting a business, no capital gains tax, a reduction in capital gains across the board for businesses in this country.

And also some creative new economic growth initiatives, like if a company hires a worker, you get a tax cut. If that worker gets higher than a prevailing wage, you get another tax cut.

This is positive economic growth. What Senator McCain...

(CROSSTALK)

GREGORY: Right, but the issue is the reality test. The reality test he faces is whether he can pull off that kind of tax cut in this economy. Can he pull it off economically? Can he pull it off politically when we're talking about such huge deficits?

So he may just be left with a platform of raising taxes on upper-income Americans.

RICHARDSON: Well, no, I don't think it's raising tax. But what Senator Obama wants to do is, as a stimulus package, David, have some tax cuts for the middle class, for small businesses; create jobs through rebuild our infrastructure, our roads, our highways, our broadband, our electricity grid. This is pumping money into the economy, creating jobs, getting more spending out there, but giving the middle class the relief that they need.

I think what Senator Obama has done is taken away the tax cut argument of the Republicans. Senator Obama is the tax cutter in this race.

GREGORY: All right.

Governor Bill Richardson from New Mexico.

Thanks, as always.

RICHARDSON: Thank you. Thank you, David.

GREGORY: And coming next, Governor Sarah Palin gives her second policy speech talking about energy and al Qaeda today as the Obama campaign targets her in a new ad.

We'll come back with our panel when THE RACE returns right after this.

(COMMERCIAL BREAK)

GREGORY: Welcome back to RACE FOR THE WHITE HOUSE.

Governor Sarah Palin pumped up the crowds at her Ohio rally today by bringing in on stage with her a special guest, the now famous "Joe the Plumber." The rally followed a serious policy speech this morning in Toledo, where she focused on energy security. Governor Palin's second policy speech of the campaign.

Joining me now, John Harwood, CNBC's chief Washington correspondent and a political writer for "The New York Times"; Pat Buchanan, former presidential candidate, also an MSNBC political analyst; and Lawrence O'Donnell, an MSNBC political analyst.

Welcome, all.

John Harwood, let me start with you. Let me show you a portion of this new McCain memo from his pollster Bill McInturff that's gotten some discussion today.

The substance of it is that "Joe the Plumber" is a recognized figure out there, and the message surrounding him about taxes is starting to have some effect with those undecided voters that McCain would need to stage a comeback in these battleground states. This is how McInturff writes it...

"The McCain campaign has made impressive strides over the last week of tracking. The campaign is functionally tied across the battleground states, with our numbers improving sharply over the last four tracks."

"This has been the week where 'Joe the Plumber' has literally become a household name. An astounding 59 percent of voters in these battleground states have heard a lot about this story, 83 percent have heard a lot or some of this episode."

Is this real or is this spin, John?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT: I think a lot of it's spin. Look, Bill McInturff is one of the most respected pollsters in the business, but when I talk to others in his party and the Democratic Party, they regard this mostly as an attempt to pump up Republicans, try to create some positive press for John McCain, because when you say it's functionally tied in the battleground states, when you look at the battleground states that count the most, Virginia, Colorado, New Mexico, Iowa, the ones that Barack Obama wants to take way to get over 270 electoral votes, John McCain does not appear to be running close in those states.

And a lot of the tightening that Bill referred to in that memo was among right to life voters, among rural voters, men. These are parts of the Republican base. And so usually in these races at the end, as you know, David, they tighten up as bases come home for each party. But we still don't have any indication that it's getting tight in terms of the race for 270 electoral votes.

GREGORY: And that's the question, Pat. What do you do in the McCain campaign right now, where you're looking for ways to find a hole in the line and break through? Do you have it in some of these battle ground states where the margins are starting to grow on Obama's behalf?

PAT BUCHANAN, MSNBC POLITICAL ANALYST: I agree with John on this. I do think the race is closing in Florida and North Carolina. It looks even there. But there are battleground states like Ohio, as he mentioned, and Colorado, and states like that where it is not. You're seeing double-digit leads.

And Pennsylvania becomes vital if you lose Virginia, where he is behind. And I don't see any polls showing real closing there.

GREGORY: Yes.

BUCHANAN: So I think what McCain is going-he's going on basically his last run here. It's on economics. It's pushing Obama out to the left. And Obama's made some mistakes on that, and it seems to be closing nationally, but I don't think it's rampant enough, and it hasn't been reflected in those crucial states.

GREGORY: Lawrence, let me move on. I want to talk about Obama tonight. I also want to talk about this new ad where they're targeting Palin. We talked about the Palin factor here.

She's out campaigning with "Joe the Plumber." But this was a new ad from Obama really targeting Palin for the first time. Watch and I'll get your reaction.

You don't need words, Lawrence. That was a pretty tough ad, including the wink at the end by Sarah Palin. The first time they've gone directly at her.

LAWRENCE O'DONNELL, MSNBC POLITCAL ANALYST: Well, they have polling information, and we all have polling information about how vulnerable she is. Her negatives have skyrocketed. Her disapproval rating is now over 50 percent. She is the most unpopular candidate in the field.

So, that's a direct communication with that majority of voters out there who have expressed to pollsters that she is not qualified for the job. And so they're using that drag on the ticket that has been detected in these polls to go after what they think is a very soft spot in the McCain ticket. And obviously, adjoining it to McCain's statements in the past about not knowing that much about economic policy.

GREGORY: Pat, good idea?

BUCHANAN: David, let me respond to that very briefly.

GREGORY: Yes.

BUCHANAN: Well, you'll notice they didn't use Sarah Palin's name.

They're still very wary of going after her.

But is she an asset to the ticket? Ask yourself how the top of the ticket is dealing with her.

McCain is going to rallies with her. She is giving these big speeches. "Joe the Plumber" is there.

She is drawing out the crowds, whereas Biden, for example, is going into the witness protection program after one gaffe after another. And you don't see Obama campaigning with him.

I think McCain realizes this is an asset. Has she been cut badly?

Sure, she has. But overall, she is an asset to this ticket.

O'DONNELL: Pat, how do you explain her having a negative rating that's over 50? How do you call that an asset?

BUCHANAN: Why would McCain be campaigning with her if he agreed with the holly (ph) left? He doesn't.

O'DONNELL: He's got nothing else. It's a sad situation.

GREGORY: Let me get John Harwood in here real quickly.

BUCHANAN: She's a star.

GREGORY: Talk to me tonight, John, about what Obama does tonight with this prime time speech. Very unusual to see it, but he's got the money to spend. He's not going to leave anything on the table.

HARWOOD: I think it's more of what did he during debates, trying to sum up his argument, reassure people, remind them. There will be a presidential feel to this to some degree, because some of this is going to be live with Barack Obama speaking to the nation.

So I think he is simply going to try to sort of hold serve here. He's got a strong advantage.

And I've got to say though, I do agree with Pat Buchanan. I think you've got to ask yourself, as bad a situation as John McCain is in right now, would it be worse without Sarah Palin and the enthusiasm she's drawing from the Republican base?

GREGORY: Do you think there's blowback tonight, Pat, on this prime-time speech?

BUCHANAN: I think-no, here's what Obama's going to do. Obama's going to do, he's going to take the snap and put one knee on the ground.

He has got this thing won. And boy, you don't change your game now. You don't go to the air now when you're two touchdowns ahead and you have got about four minutes left. And I think it will be a reassuring, repeating the themes that he's had. And that's what he's going to do, and it's a smart thing.

GREGORY: All right. I've got to get a break in here. We're going to come back and look at what's on THE RACE's radar tonight.

The question of where is Hillary Clinton in an Obama administration, if it comes to that? Would she stay in the Senate, or is there something else that they may have in mind?

We'll talk about it on THE RACE's radar when we come right back.

(COMMERCIAL BREAK)

GREGORY: Tonight Obama takes the airwaves by storm at 30-minute prime time campaign commercial focusing on the economy before heading to a rally with Bill Clinton. Voters will see a once and future president together.

Meanwhile, the McCain campaign says they're actually seeing some traction thanks to Joe the Plumber. An elite memo from McCain's top pollsters says don't believe the numbers. This race will be too close to call on Tuesday.

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

We're back now on RACE FOR THE WHITE HOUSE, the back half. I'm David Gregory from Washington. Tonight we're less than one week away from the election. And less than two hours from now, at 8 o'clock p.m., Eastern Time, Barack Obama's much-talked about 30-minute campaign ad war - ad, rather, will air across the television networks, including right here on MSNBC. The campaign released this early clip. Take a look.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: What struck me most about these stories you'll see tonight is not just the challenges these Americans face, but also their resolve to change this country.

I'm worried about the couple that is trying to figure out how they'll retire. I'm worried about the guy who has worked in a plant for 20 years and suddenly sees his job shipped overseas. That's who I'm worried about. That's who I'm going to be fighting for and thinking about every single day that I'm in the White House.

GREGORY: Let's go into the war room now with Democratic strategist Bob Shrum, as well as Republican strategist and NBC News analyst Mike Murphy.

All right, guys, welcome.

Mike Murphy, let me ask you. Does anybody like infomercials? What do undecided voters think they'll get by watching this thing tonight?

MIKE MURPHY, REPUBLICAN STRATEGIST: Well, I'm starting to think Senator Barack Obama's secret service code name should be "Overkill". Unlimited money, unlimited advertising. I fell asleep during the clip. I'm not sure how many people are going to watch it. But I have to tell you, as media guy, advertising works. It is not going to hurt Obama and some people may be persuaded by this. Last week in the "Time" blog I do, I wrote that I actually thought John McCain was the guy who needed a half-an-hour show, because it becomes a big event you can break a message through. I'm not sure Obama needs it but I can't tell you I think it will hurt him at all.

GREGORY: I remember the criticism back in 2004, Bob Shrum, about money left on the table by your campaign. This is shock and awe by the Obama campaign. There is not going to be much left on the table, right? They're going to shoot it all.

BOB SHRUM, DEMOCRATIC STRATEGIST: It was primary money that we couldn't spend. I think we shouldn't have taken federal funding in the general and we might have been in a position to spend a lot more during the general election.

GREGORY: Right.

SHRUM: But look, this, I think, will be a very good ad. It has been made primarily by Davis Guggenheim, who worked with Al Gore on "An Inconvenient Truth" and is the son of an old friend of mine, Charlie Guggenheim, one of the great political ad makers of all time. I suspect it will be emotional, moving and reassuring.

And I think, Mike, if he could have had the chance to make one of these for John McCain, maybe people would have stayed up and watched it. I think people will stay up and watch this and I think it will help Obama.

GREGORY: Let's talk about the master narrative here, Mike Murphy, because Bill MacInturf (ph) and old colleague of yours, a colleague of ours well, our pollster, is writing about the fact that they see the race tightening. They see undecided voters really paying attention to the Joe the Plumber message. They have Wal-Mart moms, they have rural voters who are moving over to them. Is this anything other than a bit of a pep rally for a demoralized party, right now? The McCain campaign has to worry about people thinking this is over early and not showing up in the numbers that they have to.

MURPHY: Well, with all due respect to my old friend, Bill MacInturf (ph), when you're in a tough position in the campaign, you kind of use your pollster like Russian infantry. You send them in there no matter what. I think part of that memo, though, is true. I think the undecided vote is going to break heavily for McCain, two or three to one. I think McCain will close over the last weekend. I think it is still possible for a McCain upset.

But some of the other stuff in the memo about a big movement to McCain, now, I'm just not seeing it in the public polls. But who knows what the private polls show? I would say the bottom line is big questions. What will the new Obama turnout be? The new voters? It will definitely help him. Will that undecided surge be enough for McCain in a few of the swing states? We are wait and see. Obama has the edge, but I don't think the race is completely in the bag for him.

GREGORY: So, Bob, if you look at some of the messages right, now, these last-week messages by McCain. He wants to hit the experience argument. Try to use what George Bush, President Bush used in 2004. He wants to use an economic argument, the Joe the Plumber, don't raise taxes in the middle of a recession. And they're raising the specter of one-party rule in Washington as being bad for the country. Which of these arguments, if you're in the Obama campaign, do you really have to be concerned about at this stage? Any of them? All of them?

SHRUM: You don't have to worry that much about them, because they have too many arguments. The one thing the McCain campaign should have done and should have done this some time ago, given the situation they're in, they should have boiled this down to one argument. The problem is that, Obama, unlike a lot of Democrats, went out there, and from the beginning, talked about taxes. He's planted two numbers in the American psyche, $250,000, you don't pay more taxes; 95 percent of the American people get a tax cut.

I think an awful lot of people know that. That's made John McCain's task much harder. The result of that is you see McCain wandering into territory where he is talking about socialism, radicalism. They have him out there saying all sorts of stuff that John McCain can't conceivably and in the meantime, you have a Republican Party that is melting down around him. Mitch McConnell, the Senate minority leader, in Kentucky, who is in trouble, basically making an ad, throwing McCain under the bus. That tells you what's really happening in this race.

GREGORY: So, Mike, then, evaluate what we're going to hear from Senator McCain tonight as a response to this 30-minute ad. He'll have a much shorter ad. The public financing equivalent of a response ad.

MURPHY: Right.

GREGORY: But the language in the ad is interesting. Let's play it and I'll get reaction to it.

(BEGIN VIDEO CLIP)

ANNOUNCER: Behind the fancy speeches, grand promises, and TV specials, lies the truth. With crises at home and abroad, Barack Obama lacks the experience America needs and it shows. His response to our economic crisis is to spend and tax our economy deeper into recession. The fact is, Barack Obama is not ready-yet.

GREGORY: It is a strong ad with a very strong message that goes to the heart of the case they wanted to make against Obama. The question is whether voters are with them on the argument. What do you make of the inclusion of the word "yet".

MURPHY: I'm sorry, David. I didn't their last part of the question?

GREGORY: The fact that he says in the ad, that he's not ready "yet", seems to be a new formulation.

MURPHY: I actually like that message. I've always thought among independent voters, kind of selling psychology ought to be, McCain and Obama are both reformers, they have a lot in common. McCain now, maybe Obama later. You vote against Obama, what happens? He goes back to the Senate, he only gets better if you like Obama as a kind of a moderate swing voter.

I think the problem with the McCain campaign, though, the position they're in is kind of what Bob got to. If McCain, my dear friend McCain a Secret Service name, my joke would be Kitchen Sink. They're throwing everything right now, trying to catch up. I think they have made some traction on the tax issue. They have on the one-party runaway rule, they ought to combine them. Experience is a good attack on Obama. The problem is they haven't been able to make it over the last couple of weeks.

GREGORY: Right.

MURPHY: And I'm not sure at this late time in the campaign it will get enough traction to do some good.

GREGORY: Look, I just have about a minute left. I want to ask both of you to think in your minds about the map and election night. What stands out to you?

Bob, I'll start with you. What are the states that you think are decisive? It could be just one or two, do you think ultimately will tip the scale. I'm not asking you which are the real battlegrounds? But what are the real story makers for election night?

SHRUM: Well, people will watch early on, North Carolina, Virginia, if Virginia closes at 7 and counts its votes pretty fast. Indiana counts its votes very fast. If by any chance - which I don't think will happen - Obama won Indiana, it is close, but if he won it, I think we would all be sitting around trying to figure out how we wanted to say what we couldn't say, because the polls are still open all over the country.

Those will very powerful early indicators of what's happening. If, on the other hand, McCain wins those states, or those states are very close, then we could have a very long night waiting for Colorado, waiting for the West, where Obama has real prospects to pick up old red states that formally have been red.

GREGORY: Mike, what are the states for you? Is Florida one of them.

MURPHY: Yes, it absolutely is. I think McCain will carry Indiana. I think there is a good chance for Obama to win Virginia. Virginia may go early for Obama. Then I think we'll make bee line for those Ohio and Florida numbers. If Florida goes, there goes the franchise. I think that, once again, it could come down to Florida, among early states that votes.

Bob is right about the Western states, but as far as number that come in quick, Florida and Virginia will be right in the middle of it.

GREGORY: All right. Mike Murphy, Bob Shrum, thank you both, as always.

Coming next, win or lose, what is the road ahead for the Republican Party? Former House Majority Leader Dick Armey, MSNBC's Joe Scarborough, and "Washington Post" columnist, E.J. Dionne is going to join me for that forward-looking conversation for both parties when we return right after this.

(COMMERCIAL BREAK)

GREGORY: Going back to the race. No matter what happens on Tuesday, both parties face a challenge either in governing, or rebuilding. Joining me now for a look at the road ahead. Former House Majority Leader Dick Armey, a McCain supporter, E.J. Dionne, columnist for "The Washington Post", and Joe Scarborough, host of MSNBC's "Morning Joe", of course. Thanks to all of you for being here.

And, Joe, for sticking around, I want to start with you.

I want to talk about the Republican Party and a conversation I remember having with a lot of Bush advisers in 2004, when they talked about where the party had to go if it was going to remain competitive. It was going to build on this idea of a permanent Republican majority. If you look at the exit polls in terms of where Bush was with key voting groups as compared to McCain today, it tells a lot of the story.

Look at the diversity. Hispanics, back in 2004, President Bush carried 44 percent. McCain is polling at 33 percent, down 11 points. African-Americans, Bush was at 11 percent. That wasn't very high. McCain down 2 percent, of course he's running against an African-American candidate. That maybe expected. Women, white women, Bush was at 55 percent, McCain is at 45, a loss of 10. Catholics, Bush at 52 percent, McCain at 44 percent.

It all leads to the question, Joe, have the - is the McCain campaign, and by extension the Republican Party, made a mistake in this campaign of running more of a base campaign when in fact they have to find a way to expand the party to keep pace with what's happening demographically in the country?

JOE SCARBOROUGH, MSNBC ANCHOR, MORNING JOE: We keep hearing that. They run a base campaign. Of course, they appointed a-you have Sarah Palin, who is certainly is a conservative.

GREGORY: Right.

SCARBOROUGH: Bu the Republicans over the past four, five, six years, and Dick Armey, I'm sure will repeat this, haven't been acting like Republicans. 2001, we had a $155-billion surplus. Today it is a $500-billion surplus. We've taken a $5-trillion debt that we were paying down, it is now an $11.7 trillion debt. We haven't been playing to our base. What is the Republican brand right now? It hasn't been over the past five years, about less spending, less taxes, less regulations. That's why the Republicans face the economic crisis that they're having to face right now, as well as the rest of Americans. They don't have their own distinct message. Because it has been more spending. It has been more regulations and it has been a lot less fiscal discipline. The Republican Party of this century was not the Republican Party of the 1990s.

GREGORY: And yet, Dick Armey, Matthew Dowd, pollster for Bush in '04, Ken Mehlman, chairman of the party, and of course, worked on the Bush re-election campaign. They made the case that if the Republican Party can't extend its reach among Latino voters, among African-American voters, it is going to have a very difficult time keeping pace politically.

DICK ARMEY, FMR. HOUSE MAJORITY LEADER: I'm sure that case is a fairly obvious case. But what did they do? My heart goes out to John McCain. There has probably been no Republican that has been more right in both his mind and his heart on immigration, than John McCain. And he is paying for the carelessness, the recklessness of his party.

The fact of the matter is John McCain deserves to be held in endearment by the Hispanic community in America. And yet he is not receiving the appreciation he ought to have.

The Republican Party basically made a bunch of fools of themselves over immigration. I laughed the other day, I wrote myself a note. Democrat politicians create the illusion of a problem by which they then politically prosper. Republicans create the illusion of a problem by which they then die. And that's what they did with immigration.

GREGORY: Talk about a group that you've written a lot about and cared a lot about, Catholics. And some of the motion you've seen, the movement we've seen there, away from the Republican Party.

E.J. DIONNE, COLUMNIST, "THE WASHINGTON POST": I always like the joke that there is no Catholic vote-and it is important. Because Catholics are kind of 40-40-20 group. They tend to vote for the candidate who wins the election. Partly because they're a diverse group, a lot of Latinos. About 10 percent African-American. They're a little less Republican than white Protestants, the Catholics who are white. And when you see this kind of inroad being made there, you're seeing the kind of realignment that is going on overall.

I think you raised it right at the beginning. We look back and the Republicans, after President Bush won with less than 51 percent of the vote. We're saying, this is an enduring Republican majority. I think what you may have seen a holding action against a tide that was swinging the other way. Because the country is more diverse, Latinos, the vote is bigger. And in a lot of these suburbs and exurbs, these are moderate voters who really don't identify with the Republican right. And so you've really got baked in the cake now, I think, the potential for realignment the other way.

SCARBOROUGH: But David -

GREGORY: Yes, go ahead, Joe.

SCARBOROUGH: That assumes, though, that the country is center left.

The country is not center left. It is center right.

GREGORY: That was going to be my question.

SCARBOROUGH: This country is more conservative than it was when we took over in 1994 after two years of calamitous Democratic rule. It is a center-right country and especially on economic issues. You talk about people in the suburbs of Philadelphia. They're more economic libertarians. And the fact is, the Republicans lost the high ground on spending. We're not talking about religious right issues and a lot of people you've scared are suburban moderates. On fiscal issues, they agree with the Republican Party, when the Republican Party protects their pocketbooks. And the party hasn't done that.

GREGORY: But Dick Armey, if we see, if the polls today are born out on election day, are we still going to believe that it is the center-right country?

ARMEY: I believe that. From watching politicians for a lot of years,

and they do crack me up. I've been saying to the Republicans, when we're

like us, we win. The public wants us to be the idea of big policy ideas and

a bold assertion of small governments. And they have been just the opposite

in office. And so what they've looked at is an aberrant Republican Party and they said we don't want you. If we were going to have the party of big government, we might as well take the Democrats, they're professional at it.

And so, when the Republicans come back and say we are once again the party of Goldwater, the party of Reagan, the party of the contract, that is big policy ideas about America rather than small political ideas about ourselves. The public will come back to us.

GREGORY: It gets to this question in my mind, which is, is there something big that is about to happen this election day or will this be a referendum, still, like 2006, on President Bush. And if it is just that, is that not limiting?

DIONNE: You know, with these two distinguished conservatives, I feel like I'm not on "Crossfire" but on "Firing Squad".

(LAUGHTER)

Because I disagree the notion that we are still a center-right country. We may have been a center-right country. But I think what you're seeing here, John McCain is running very clearly against Barack Obama as a redistributionist and a socialist. And if the country votes for Barack Obama , I think the country will be saying not that they move far to the left, but we're not center right anymore. They want some government action to solve some of these problems.

And so, if you have a substantial victory on Tuesday, and we don't know yet whether it will be, or even how it will come out. But if you did, I think that's a real indication that we're moving somewhere. Now that's not the realignment. The realignment would happen if Obama is successful. It is like Reagan in '80, who was elected because people were discontented. But he was reelected because people thought the country was doing better in 1984. What the Democrats need to realign the country is that two step.

GREGORY: Joe?

SCARBOROUGH: Well, I think there are Republican strategists out there that understand Tuesday is going to be one of the bleakest days since 1974. But a smile went across their face. And they're praying to Jesus that Democrats that run the House and the Senate agree with E.J. Dionne, that there has been an ideological shift leftward. And they're going, please, overreach! Read a mandate into this!

DIONNE: I'm trying to make you feel better, Joe.

SCARBOROUGH: Please, listen to E.J. No, E.J., that's what Republicans are saying. Because, listen. Dick will tell you this. The reason we got elected in 1994 is because Bill Clinton overreached in '93 and '94. The reason why Clinton got elected in '96, quite frankly, we overreached in some ways in '95 and '96. This country lives in center.

ARMEY: Let me say -

GREGORY: A quick comment and we'll come back after a break.

ARMEY: The legislation that the nation will see does not start with Barack Obama in the White House. It starts, for example, with George Miller, as the chairman of the Education Committee exercising his pent-up emotion over such things as car check (ph). Now, one thing Barack Obama will do for the Democratic Party, early, by executive fiat, is give them a crooked census. That will upset the public who believe we should count, not estimate and dummy up the census, which the Democrats have been wanting to do since before Bush.

GREGORY: Let me get a break in here. We are going to come back I want to talk in our final minutes about what's happening tonight. About Florida, about this big prime time infomercial. We are going to look ahead to all of that with our three guests, when RACE FOR THE WHITE HOUSE returns, right after this.

(COMMERCIAL BREAK)

GREGORY: We are back here, final moments with Joe Scarborough, Dick Armey and E.J. Dionne.

Joe, I have to start with you. Florida, big night, it is the first time Obama is going to be at an event with Bill Clinton on the night he's got this 30-minute address. So, he's pulling out the big stops tonight. What is the impact?

SCARBOROUGH: Well, big impact. I mean, Barack Obama will spend close to a quarter of a billion dollars on advertising by the time this campaign ends. I'm very excited, I know E.J. is a big champion, has long been a big champion of getting big money out of politics, campaign finance reform. I'm very excited to see, as we move beyond this, where we have somebody who has literally bought states like Florida with 30-second ads, outspending John McCain by 234 percent, according to the latest study.

I'm excited to see how E.J. thinks we'll drive big money out of politics in the future.

DIONNE: Do you want me to answer?

SCARBOROUGH: Sure, I'm excited. How do we do that, E.J.?

DIONNE: First of all, I think what you're seeing is what will be a Republican trope after the election. If Obama wins big, it will be he did not really win big, he bought this election. And I don't think that will be the whole explanation.

But I do think there is some real concern about this. I mean, I'm not

I love the small money raised by Obama. And I think that's the key to the future. He raised some big money, too and that troubles me. And I think what you want to do is have a system that pushes all candidates toward the small money.

GREGORY: Dick Armey?

ARMEY: I think one of the real revelations we will have when the smoke clears and we get a chance to dig in, is the amount of big money that he raised by gimmick to make it appear like small money.

DIONNE: I think he raised plenty of big money right up front.

ARMEY: These dummy credit cards and so forth.

Look, -- this race will probably be a reflection of the disappointment that American voters have had comprehensively with the Republicans, in office, the last four or five years. It is not the first time. We saw it two years ago. We saw it two years before that. The fact is, the Republican Party has lost its bearing. And it has to reconstruct itself. And I think it has to do that as we did in '94 with the bottom up. John Boehner is a marvelous person and he inherited a horrible situation, done the best job anybody could have done in that circumstance. But there has to be a reconstruction on this.

SCARBOROUGH: And, David, they just haven't been acting like conservatives. You go back to Hurricane Katrina - this really started - George Bush got the low 30s and high 20s in the approval rating after Hurricane Katrina and went from that to Harriet Miers, it went from to more deficit problems, Iraq was in complete turmoil. This is not been a conservative president, either at home or abroad. There have been some pretty radical policies and it spent this country into debt.

GREGORY: E.J., let me end on this point, though, which is Obama tonight, who is he speaking to? Who does he reach this kind of event? Is this a posture at being presidential with a 30-minute address? Or is there something more targeted in this approach?

DIONNE: I think he is doing what he did in the whole campaign. The striking thing in the debates is that McCain was still talking to the base. Obama has spent almost this whole campaign talking to swing voters. And I think his debate strategy was aimed at them. I think tonight is aimed at persuading who is left, but then also reminding those who are already for them, why they are for him.

GREGORY: All right, we'll leave it there. E.J. Dionne, Dick Armey, Joe Scarborough, "Morning Joe" thanks for coming in later in the day.

SCARBOROUGH: Thank you.

GREGORY: I appreciate it. That will do it for RACE FOR THE WHITE HOUSE for tonight. Just six days before election day. I'm David Gregory. Thank you for watching. See you back here tomorrow night. Meantime, stay tuned for "Hardball" with Chris Matthews, coming your way next. Good night.

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

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