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CNN LARRY KING LIVE

Economy Remains Growing Concern for Americans; Will Barack Obama be Forced to run Negative Campaign?; Housing Crisis Continues, How Will Candidates Respond?

Aired March 7, 2008 - 21:00   ET

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


LARRY KING, HOST, LARRY KING LIVE: Tonight, it's getting nasty -- name-calling, finger-pointing and finding fault -- is this the playbook for the presidential election?
Plus, the worst jobs report in five years. Stocks are way down and the cost of oil is way up.

Where are the finances headed? Some answers next on LARRY KING LIVE.

We begin with a top panel to kick things off, to look at the presidential sweepstakes. In Washington is Lanny Davis, the -- was special counsel to President Clinton. He's now a supporter of Hillary Clinton. Has known her, by the way, since law school.

In Washington is Jamal Simmons, Democratic strategist, president of the New Future Communications Company and a backer of Barack Obama.

In Columbus, Ohio, David Wilhelm. He managed Bill Clinton's 1992 presidential campaign, is now an Obama supporter.

And in New York, Lisa Caputo, who served as deputy assistant to the president, press secretary to First Lady Hillary Rodham Clinton, is supporting Hillary's presidential bid.

All right, Lanny, the development of the day -- what do you make of it, this campaign getting nastier as we have this aide to Obama having to resign today for calling Mrs. Clinton a monster? Is that a big story or a passing moment?

LANNY DAVIS, FORMER SPECIAL COUNSEL, PRESIDENT CLINTON: Well, the bigger story -- she should have resigned for using language like that. And Senator Obama was correct in encouraging that. And I don't blame Senator Obama for an assistant using that type of language.

But the more significant thing is about Senator Obama's position on the war in Iraq. Samantha Power went on to be interviewed by BBC and said don't really -- and I'm paraphrasing, but this is, in substance, correct -- don't really believe that Senator Obama intends to withdraw all troops in 16 months, despite the fact that he's criticized Senator Clinton for not making that clear deadline commitment many times and published many times. She said don't really believe that that's just campaign planning that was crafted.

He did the same thing on NAFTA. As you know, in Ohio when he campaigned against NAFTA while his senior adviser -- first the campaign denied it, now it's confirmed he...

KING: All right...

DAVIS: ...was meeting with a consulate general in Chicago, saying we don't really mean that. This is more of a problem for him than some assistant using language that obviously she shouldn't have.

KING: Jamal, why would he have someone tell people he's not going to pull out of Iraq when that's been his prime theme?

JAMAL SIMMONS, DEMOCRATIC STRATEGIST, SUPPORTS OBAMA: You know, I don't think he was. This is the issue here with the Clinton campaign on this issue.

They actually don't have much of a leg to stand on. Because what we know is that Senator Clinton, despite the advice of Carl Levin, who was the Armed Services Committee chair, despite the advice of Bob Graham, who was the Intelligence Committee chair, who said don't vote for this war in Iraq; she still chose to side with George Bush instead of Bob Graham and Carl Levin and voted for the war in Iraq.

So now she wants to make a claim that Barack Obama is -- and she won't apologize for it. And so now she wants to make a claim that Barack Obama is not going to pull out troops. Well, that's not what he's said. He's been against the war in '02, '03, '04, all the way through 2008. And, obviously, if there is some eruption that takes place, every candidate in the race, including Senator Clinton, has said we'll have to look at that if that happens.

But this is -- there's no news here. I think this is the Clinton campaign trying to find a way to get themselves out of the hole that they dug for -- that Senator Clinton dug for herself in 2002 when she voted for this war.

DAVIS: Time for a quick response?

KING: Lisa, Howard Wolfson, the campaign manager, compared the Obama campaign to Ken Starr's attack on Clinton. Was that fair?

LISA CAPUTO, FORMER DEPUTY ASSISTANT, PRESIDENT CLINTON: Well, I lived through Ken Starr's attack on Clinton, unfortunately. Look, I think no one wants to have any kind of a negative campaign here. But I think it's important to note that the facts get out on the table. And what the Clinton campaign is doing is drawing a distinct comparison between Senator Clinton's record -- foreign policy record and Senator Obama's lack of a foreign policy record.

And I think it's fair to say, clearly, Senator Obama, when he chaired the subcommittee on Afghanistan, never held those hearings. And let's be clear, Larry, Senator Obama was not in the Senate when the vote on the war came up. He didn't have to vote on the war. He didn't have to make the tough decision.

And it's also a matter of record that ever since he's been in the Senate, he and Senator Clinton haven't voted exactly the same way on the issues related to Iraq. So when you take a step back and you say who's ready to be commander-in-chief on day one, I think it's important to note that over 30 military generals and admirals have endorsed Hillary Clinton. I don't see Senator Obama with a long list of people with military brass backing his record, or lack thereof, on foreign policy.

KING: David, has this campaign gotten a little too tough?

DAVID WILHELM, MANAGER, PRESIDENT CLINTON'S 1992 CAMPAIGN: Well, we've had the kitchen sink thrown at Senator Obama. And he's got a tough conundrum from a campaign strategy standpoint. He's got to fight back at certain level, but he also needs to maintain the dignified tone that has marked his campaign from day one.

So I think the reference to Ken Starr was absolutely absurd. It is absolutely legitimate to request, as a matter of openness, that Senator Clinton reveal her tax returns. I think the second she loaned $5 million to her own campaign, that became absolutely fair.

But I think the thing that Senator Obama needs to do -- he's run almost a perfect race. He's entitled to have one week where he's a little bit off. But he needs to bring the race back to that central message that he, as the next president, can bring this country together, that he is not going to be put off by kitchen sink tactics and the same old kind of Washington, D.C. politics.

And he needs to move forward, get back on message. And when he does, he's going to do very well, as he's done every step of the way in this campaign.

KING: Lanny, why --

CAPUTO: Larry?

KING: All right, go ahead, Lisa.

CAPUTO: Larry, I just wanted to say something. I love David Wilhelm. He's a friend of mine. But it's important to note that it's not Senator Clinton here, you know, throwing the kitchen sink.

Let's take a step back for a second and remember back in Ohio, it was Senator Obama running the negative direct mails -- the misleading and false direct mails against Senator Clinton on the NAFTA issue and on the health care issue. So, you know, it's not one side going negative and not the other side. So I think we have to get the facts on the table.

WILHELM: I'm not sure what's false about anything that Senator Obama had to say on NAFTA or the health care program. On NAFTA, Senator Obama has been perfectly consistent. But I think it's almost impossible to argue that Senator Clinton, as part of the Clinton administration, did not support NAFTA.

And then on health care, the notion of having a requirement that everybody have health care -- a mandate requires that everybody, whether they can afford it or not, may have to pay into this thing. Senator Clinton has not been clear. She has not stated what her position is with regard to that. So there was absolutely nothing. It was totally fair game...

KING: All right, let me -- I've got to --

WILHELM: ...and I think we'll continue to do so.

(CROSSTALK)

KING: We've got to get a break, guys.

(CROSSTALK)

KING: We've got to get a break.

(CROSSTALK)

KING: We'll come right back. We'll come right back.

Who do you believe will get the Democratic presidential nomination? That's the quick vote right now on our Web site, CNN.com/larryking. Head there now and vote. Our latest pod cast, Janet Jackson, is also ready for downloading. It's all at CNN.com/larryking.

We'll be right back.

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D), PRESIDENTIAL CANDIDATE: Senator Obama campaigns on his plan to end the war. His top advisers tell people abroad that he will not rely on his own plan should he become president.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Don't be confused when Senator Clinton is not even willing to acknowledge that she voted for war. She says she voted for diplomacy, despite the title that said authorization to use U.S. armed forces in Iraq.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Lanny Davis, it's a simple yes or no, why doesn't she release her income tax returns?

DAVIS: The answer is yes, she will release her tax information since the year 2000 on April 15th. They're working on it. So the answer is yes.

And, if I could correct the record on what I heard before here, Larry, the facts are -- I have a great deal of respect for Senator Obama. He inspires a lot of young people and he's a great candidate. But he's not ready to be president, according to the voters of every major state, in the exit polls and in the hard data that are not disputable.

In Ohio, more than 60 percent of the voters thought that Senator Clinton was ready to be commander-in-chief. Only 30 percent thought that Senator Obama. That's a fact, Larry.

On the stewardship of the economy, in a landslide victory in the bellwether state of Ohio, more than two-thirds of the voters thought that Hillary Clinton was a better steward of the economy, as compared to about one third to Obama.

KING: Then --

DAVIS: That's the issue he's got to address. All the attacks that -- it's really ironic to hear kitchen sink used by my good old friend, David Wilhelm.

We see Senator Obama, immediately out of Ohio, rather than addressing whether he's ready to be commander-in-chief and can take care of the economy, which is why he lost by a landslide in that important state, he starts attacking Hillary Clinton on tax returns, for goodness sakes, when, for 20 years, the Clintons' financial information has been fully disclosed. And as governor...

KING: OK, I want to --

DAVIS: ...and as first lady, it's been disclosed throughout the (INAUDIBLE).

KING: All right, I want to get...

DAVIS: It's kind of silly.

KING: I want to get to (INAUDIBLE).

All right, David, today you were on...

(CROSSTALK)

KING: ... David was on with Wolf Blitzer today, with James Carville. And Mr. Carville proposed, concerning Michigan and Florida, that each campaign put up $15 million and redo the election. Sound all right?

WILHELM: Are you talking to me?

KING: Yes.

WILHELM: I think it is an interesting proposal. It is one that should be considered. What was interesting to me was that James Carville seemed to be getting off the Senator Clinton's position, which, to this point, has been, I think, very, very destructive, potentially, for the Democratic Party.

And that is that the Michigan and Florida delegations -- the illegal delegations, the delegations that were selected contrary to Democratic National Committee rules and where every single presidential candidate signed a pledge not to campaign in those states -- the position of the Clinton campaign has been that delegation should be seated. If she were nominated on the basis of that, it would rip the party apart.

So I think James' proposal today was an interesting one. We have always said you know what, we're going to play by the rules. Whatever those rules are -- whatever Michigan wants to do, whatever Florida wants to do, in conjunction with the Democratic National Committee, we'll do.

Senator Clinton's campaign, by contrast, in Iowa they said we're not going to campaign in Michigan or Florida. Then they said oh, we're going to insist upon seating the Michigan and Florida delegations. And now maybe they're willing to talk about something else.

KING: All right, when is...

WILHELM: We're willing to be part of the solution.

SIMMONS: Larry...

KING: Jamal, before I get Lisa's view, Jamal, what do you think?

SIMMONS: Larry, there are so many places to start, I'll try to keep it brief. It's the slipperiness of the Clinton campaign that I think David was just sort of referring to. This notion that she can't release tax returns from five or sick years ago, I mean, does she have to go back to the Turbo Tax program on her home computer and try and pull them up?

She can just call the accountant and tell them to release the tax returns. It's not that hard. But this is the secrecy and the slipperiness and the evasiveness of the campaign that they're going to move the goal posts, maybe states don't count. Well, tell that to Al Gore.

You know, if Al Gore had won Missouri or had won New Hampshire or had won Colorado or Iowa -- these states that Barack Obama -- and even Senator Clinton won, New Hampshire -- if he had won one of these small states, Florida wouldn't have mattered.

If John Kerry had won a couple of these states -- Colorado and Missouri, for instance -- then Ohio wouldn't have mattered. Small states do count. And so this notion that because she's winning in Ohio -- she won Ohio, means that no other contest in the country matters, is just farcical. And, in fact, more voters across the country have decided Barack Obama is ready for the job of commander- in-chief than have decided that Hillary Clinton is.

KING: All right...

SIMMONS: So to argue that really argues against the facts.

KING: ... All right, Lisa, what's wrong with -- what would you do about Michigan and Florida, to be fair? CAPUTO: Well, I think, you know, in Michigan and Florida, I think you have a situation where, clearly, the Clinton campaign wants the voters of Michigan and Florida to be able to participate in the process and wants to have those people and their votes counted. So I think the position -- the right position is that there ought to be primaries in Florida and in Michigan. That is the fairest way to go to let everybody have a participation in the process.

Second, I would say, also, Larry, just in response to Jamal, you know, I find -- I do find it interesting, when you talk about these small states, if you go back and you look at it from a historical perspective, there isn't a Democrat who has won against a Republican in a presidential race since 1964 carrying those, what we call red states.

Let's remember, John Kerry lost 15 of them in the last go around. So you can't dismiss these battleground states, the big states, the Ohios, the Pennsylvanias, the Texas within this race. They're just too large.

And then one final point I want to make with regard to the kitchen sink comment. You know, I do find it fascinating that both Jamal and David, who served in the Clinton administration, who know what both Clintons have been through in terms of making records public, to say that they're not releasing records, I find unbelievable, frankly. Lanny said the tax returns are going to be released. They will. Twenty years of records have been released.

What I would like to know is why isn't Senator Obama releasing any of his dealings with Tony Rezko? We have a trial going on right now, but yet they're silent on the issue.

KING: All right, we'll get a break --

SIMMONS: Well, the question is (INAUDIBLE) --

(CROSSTALK)

KING: I'm going to get a break and we'll come right back.

(LAUGHTER)

KING: I've got to get a break. We'll come right back. Don't go away.

(BEGIN VIDEO CLIP)

OBAMA: What I say to people is I am ready to take this country in a new direction. But I can't do it by myself. I can't do it without you. I've got to have the American people involved in the process.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

CLINTON: I want the people of Mississippi to know that I'm for them, that I will work for you, that I will help you with your jobs, your health care, your education, your veterans.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Let's involve the public in this go-round.

We'll take a call from Kansas City, Missouri.

Hello.

CALLER: Hello.

KING: Hi.

CALLER: Yes, I just wanted to ask Jamal, do you think that the Obama campaign might consider revisiting all the scandals of the Clinton administration to just remind people of what those years were like, because Hillary was involved in many of those?

KING: Would they --

CALLER: (INAUDIBLE).

KING: Would she -- would he go that far?

SIMMONS: I don't think Senator Obama has any interest in dredging up a bunch of bad history. I do think he does have an interest, though, in making sure that Democratic primary voters have as much information about Senator Clinton and President Clinton, where they've gotten their money from, what's in their tax records, what's the donor list over at the foundation, has anything been promised that we don't know about. Those are the kind of --

KING: All right.

SIMMONS: That's the kind of information, I think, that voters ought to have. And they ought to have it in the primary election. We shouldn't have to wait until general election to get all that information.

DAVIS: Larry, may I --

KING: Lanny, isn't implicit in that statement a question about ethics?

DAVIS: Some of the words that I hear used from the Politics of Hope campaign, like slipperiness and secrecy and personalized words like monster -- I'm here to talk about facts and facts only. And the fact is that Senator Obama and now my friend, John Wilhelm, is opposed to universal health care, which this party has stood for since Harry Truman. He would leave out 15 million people. That's a fact.

Senator Obama voted for the Dick Cheney energy bill and Hillary Clinton opposed it. That's a fact. In the State of Ohio, a bellwether state, as well as in the State of Texas, blue collar voters, senior citizens -- the Democratic core base supported Hillary Clinton by substantial margins. That's a fact.

The reason is that people are seeing Senator Obama as not ready to be president by overwhelming margins of Democrats. That's a fact. And he ought to be addressing those facts...

KING: All right...

WILHELM: (INAUDIBLE).

DAVIS: ...rather than using this kind of personalized attack language.

WILHELM: You're --

KING: David?

WILHELM: Here are some of the -- here are some facts. We're 80 percent of the way through the Democratic primary and caucus season and Senator Obama has a 150 delegate lead among elected delegates. That's a fact.

DAVIS: I agree.

WILHELM: Another fact --

DAVIS: For now.

WILHELM: I'll give you some other facts. Barack Obama has been able to energize Democratic voters, he's been able to bring in Independent voters, he's been able to build a stronger, more diverse primary electorate. It is historic. It is a great thing and people are responding, all over the country, to his message.

So those are some pretty -- pretty compelling facts. And the fact -- the other fact is that I think we have two candidates that are widely admired...

DAVIS: I agree.

WILHELM: ...by both the Democratic base and I hope the American people. And what we need to do somehow -- somehow -- is lift this debate back up and make it again relevant to the concerns of working families and middle class people in this country.

And, you know, I don't know exactly how Senator Obama's going to figure out how to do this, but, you know, on the one hand, we get the 3:00 a.m. ads. We do have the kitchen sink -- not my term, not my term, but the term of an adviser to Senator Clinton's campaign. So we somehow have to fend that off, even as we maintain a principled and high-minded effort.

DAVIS: Larry...

(CROSSTALK)

DAVIS: ... a rare moment of agreement that I applaud what David Wilhelm just said. We have two great candidates. I think that we have to debate these issues which you've heard debated tonight.

I do think that we have to have the same standard of transparency. It is true that Senator Obama has never sat with the press and answered all the questions about the purchase of his home by Mr. Rezko. It is also true that the Clintons should put out their tax returns. Those are two issues we ought to put aside, because we want transparency on both counts.

And on Florida and Michigan, I think the solution that you're hearing from all of us -- so there's some agreement here -- is that Florida and Michigan must be seated in a fair way. If those seats are empty, we cannot win the White House in 2008.

SIMMONS: Just a technical point, Larry. Tony Rezko didn't buy the house. Barack Obama bought the house.

DAVIS: Tony Rezko was responsible for that house being -- those two houses -- that's not true -- were bought at the same time because the seller wouldn't sell them unless they were bought at the same time. Mr. Rezko paid a retail price, Senator Obama paid a wholesale price. That is a fact and he's never explained that and I'd like to hear his explanation.

(CROSSTALK)

KING: Why is it --

CAPUTO: Sorry, Larry?

KING: I was going to say why is it relevant?

CAPUTO: It is.

DAVIS: It --

CAPUTO: It's relevant because if you have -- if you have full transparency, just as David said -- I mean, think about it, Larry. More people are getting involved in this election probably than we've seen in modern political times. When you look at voter turnout in these Democratic caucuses and the Democratic primaries, people are excited about both of these candidates.

And what I think Lanny is saying is there should be full transparency. And so if Senator Clinton will release her tax records, which she fully intends to do, and will put all of her financial information out there -- and has for the past 15 to 20 years -- we think it's only fair, certainly from the Clinton campaign side, that Senator Obama disclose what the relationship was with Tony Rezko.

KING: He said --

(CROSSTALK)

CAPUTO: Tony Rezko is on trial --

(CROSSTALK) KING: Hold it right there.

(CROSSTALK)

KING: Hold it.

SIMMONS: There have been 200 articles about Rezko.

KING: I've got to get a break.

(CROSSTALK)

CAPUTO: Tony Rezko...

KING: I've got to get a break. Hold it. Hold it.

CAPUTO: ...is on trial. He's on trial.

KING: Hold it, guys.

Lanny and David are saying good-bye now.

Lisa and Jamal remain with us, as we reconfigure our political panel during the break.

It's Republicans versus Democrats when LARRY KING LIVE returns.

Don't go away.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: The next president of the United States must encourage the greater participation and cooperation of our allies in the fight against Al Qaeda and the Taliban in Afghanistan. We must do that.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Lisa Caputo and Jamal Williams remain with us. We're joined now by Kellyanne Conway, president and CEO of The Polling Company, a Republican strategist, and our old friend Jonah Goldberg, editor at large at "National Review" online and author of "Liberal Fascism, The Secret History of the American Left From Mussolini to the Politics of Meaning."

We're going to discuss John McCain first. We're going to show you a tape of McCain's new web ad. It looks like a preview of his message for the fall campaign. Watch and we'll discuss it.

(BEGIN VIDEO CLIP)

WINSTON CHURCHILL, FMR. BRITISH PRIME MINISTER: We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields and in the streets. We shall fight in the hills. We shall never surrender.

MCCAIN: Keep that faith. Keep your courage. Stick together. Stay strong. Do not yield. Do not flinch. Stand up. We're Americans. We're Americans and we'll never surrender. They will.

(END VIDEO CLIP)

KING: What do you make, Kellyanne, of introducing Winston Churchill into this?

KELLYANNE CONWAY, THE POLLING COMPANY: It is great for John McCain to be allying himself with such a strong historic figure, particularly at a time when Obama and Clinton seem to be in a protracted knife fight, lacking in the kind of dignity and maturity you would think that would make a great president.

There's John McCain. I think he's the greatest beneficiary of what's going on on the left right now, and for him to be able to be out there, Larry, running web ads that recast him as the person who is truly ready on day one, and in the mold of a Winston Churchill --

And what he's doing, too, is for all those who are out there, very unfairly, and cryptically trying to accuse him of being too old to be commander in chief, he is hearkening back to other famous leaders in history who have been successful in war efforts who have had that age and that wisdom, that experience and that seasoning.

KING: Now we'll talk about another side of him, his temper. Let Jonah comment. He got into a testy discussion with a "New York Times" reporter today on his campaign plane when she questioned him about whether he'd ever talked to John Kerry about becoming Kerry's running mate in 2004. Watch.

(BEGIN VIDEO CLIP)

MCCAIN: Everybody knows that, that I had a conversation. There is no living American in Washington that knows that. There's no one. And you know it, too. No, you know it. You know it. So I don't even know why you'd ask.

UNIDENTIFIED FEMALE: I have to ask --

MCCAIN: No, you do know it. I don't know what you read or heard of, and I don't know the circumstances. Maybe in May of '04, I hadn't had a conversation.

I don't know, but it's well known that I had the conversation. It was absolutely well known by everyone. If you have another question on the issue.

(END VIDEO CLIP)

KING: Jonah, that doesn't look great. Does it?

JONAH GOLDBERG, AUTHOR "LIBERAL FASCISM": No, it doesn't. John McCain needs to be careful because he does have a temper. It is sort a well known fact in Washington. I agree with Kellyanne to a certain extent, that I think he's got this moment now.

I don't know if that web ad with Winston Churchill is going to do much for him, one way or the other, but I think he's got this moment where he has this luxury of introducing himself to the American people, of telling his story. I think it is going to disappear sooner than he would like. So he should really be as aggressive as he can in sort of introducing himself in a positive way to the American people, which is all the more reason why he should keep his temper under wraps for a while.

KING: Kellyanne, you think he is enjoying this Obama-Clinton fight?

CONWAY: He ought to be. I have to slightly disagree. I don't know that he showed his temper. It's not like he hauled off and let her have it, or called her a monster or a liar like the other two are doing. But she really didn't have a follow-up question, Larry. He sort of politely gave her an opening to change the subject and she was tongue-tied in doing so.

John McCain is in New Orleans tonight addressing the Council on National Policy. It's been reported these are just the cream of the crop conservatives. This is what he's doing behind the scenes now while Hillary and Obama argue about whether she should let him sit on the back of the bus of her presidential ticket, or he argues whether or not she lied us into war in 2002.

So there he is doing something out of the headlines. For all the arguments that John McCain's not a part of the headline and the byline and the story line now, he's going to suffer. Hey, if the headlines are who is a monster, McCain's better off being in New Orleans, addressing these top of the line conservatives.

SIMMONS: Larry, we have to address that. We have to address that. This back of the bus comment is beyond the pale. I think Senator Clinton, whatever our disagreements are between the two candidates, Senator Clinton has never done or said anything that would imply that she would rather have Barack Obama sitting in the back of her campaign bus.

CONWAY: No, as V.P. You aren't paying attention.

SIMMONS: No, you are not speaking clearly, because that's out of line.

CONWAY: No, she doesn't want him to be the first black president. She wants him to be her V.P. She said that this week. She would consider putting him on her ticket, but I guess he wouldn't consider putting her on his ticket, would he?

KING: Did you use the term back of the bus?

CONWAY: I did. I just said --

KING: Meaning? CONWAY: Meaning that she wants -- she has said she would have Barack Obama as her V.P. Thereby she is denying something that many Republicans are not denying, that Barack Obama has a very strong chance of becoming this country's first black president, that someone like me respects.

SIMMONS: We can move along. I was there for a lot of Bill Clinton and Al Gore's time and Al Gore never sat in the back of the bus.

KING: Lisa, how tough a competitor will senator McCain be?

CAPUTO: I think he'll be a formidable competitor. There's no doubt about it. I have to tell you, having watched that ad, Larry, I'm a little surprised. I find it somewhat hollow.

Let's remember, I mean this is a man who said we should stay in Iraq for 100 years. So I'm not sure introducing himself the way he is going to ring true with any American.

Secondly, he's aligned himself with a president who's very unpopular. He's got a failed economic policy. I mean, when you look at the job numbers that came out today, 63,000 jobs lost, unemployment at 4.8 percent, and oil and gas at 104 dollar a barrel, why would this Republican candidate align himself with a president with a failed foreign policy and a failed economic policy? It's beyond me.

So, you know, if you look at candidates Clinton and Obama, despite where they may disagree, they predominantly agree on most of the issues. And it is very clear, I think, certainly from an economic policy standpoint, which is -- let's remember, it is about the economy, stupid. An Obama presidency or Clinton presidency is by far better than a Bush-McCain presidency.

KING: Let me get a break and come back and ask Jonah about that tie-in with President Bush and the Bush campaigning for him, the Bush endorsement, right after this.

(BEGIN VIDEO CLIP)

MCCAIN: We make the future better than the past. We don't hide from history. We make history.

CLINTON: You know what they say; as Ohio goes, so goes the nation.

OBAMA: We have nearly the same delegate lead as we did this morning, and we are on our way to winning this nomination.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KING: Jonah Goldberg, President Bush for McCain -- plus or minus? GOLDBERG: Right now I think a plus. What John McCain needs to do is consolidate his support among conservatives and among Republicans, and this is the time to do it. Everyone is paying attention to the cat fight and all that.

Lisa wants to do these nice Democratic talking points about how the economy is bad and all the rest. The economy is bad right now, but the economy won't be -- it won't be this economy come election day.

McCain actually has a wonderful moment right now of being able to consolidate his support among conservatives, consolidate his support among the Republican party, and work on his message without the kind of competition that Hillary an Barack are going through. I think he is in a very good position right now. George Bush is still popular among Republicans.

KING: But when the general campaign begins, is he going to want President Bush going through the country with him?

GOLDBERG: I don't think so. My guess is he's going to have President Bush raising a lot of money for him, raising a lot of money for the cause, but I doubt we'll see him on the stump.

CAPUTO: I was just going to say, Senator McCain actually made a statement today about today's economic news that I found kind of interesting, which was, he didn't think it was terrible news. I mean, we are on the cusp of a recession. How is that not terrible news?

You know, that perplexes me and also troubles me as a voter. There's an economic stimulus package before the Congress. I know that Senator Clinton supports that package, and wants to see it go further, and extend unemployment insurance to people and invest in green jobs. So it would seem to me it would behoove Senator McCain certainly to start talking about the economy and acknowledging that we are in terrible times.

CONWAY: In fairness to him though, Lisa, I think part of it was because some type of stimulus package was signed into law, and it was bipartisan, three weeks ago, so the idea is this is just starting to kick in at the time that we are faced with some very difficult economic news.

There are credits and incentives for entrepreneurs. There are tax breaks. There are refunds for Americans. And again, it is a Democratic Congress that passed that and the Republican president signed into law. I think we need to give that a little bit of time to take hold.

CAPUTO: Yes, I hear what you are saying, Kellyanne. But I think clearly, certainly Senator Clinton would like to see it go much further.

KING: Jamal, do you expect if it is your candidate against McCain -- do you expect a very spirited, fair race? SIMMONS: I do expect a very spirited and fair race. I mean Senator McCain has certainly led his campaign in a way that seems like it is not going to be very dirty. I don't know what will happen with the rest of the Republican party.

I don't think he has much control over all the groups, the Swift Boat types, the RNC, all that stuff. But I know Barack Obama is looking forward to having a very spirited, issue-based campaign.

As one group said, if Bush and McCain -- McCain wants to run with George Bush, it's the Mc-same. If he wants to carry around the Bush recession, if he wants to carry around the Iraq war, which he already has, he wants to carry around the reaction to the Katrina catastrophe, he can feel free to have all of that, but we're going to have a campaign based on how to take the country forward.

KING: Thank you all very much, Kellyanne Conway, Jonah Goldberg, Lisa Caputo, Jamal Simmons. We'll be seeing lots of them in the weeks and months ahead.

Gerri Willis, our own financial guru, is next. Don't go away.

But first, let's check in -- I almost forgot her!

SOLEDAD O'BRIEN, CNN ANCHOR: I noticed that.

KING: That would be a bad, bad move.

O'BRIEN: Not at all.

KING: Soledad O'Brien is sitting in for Anderson Cooper tonight. Looking lovely. I like that color.

O'BRIEN: Well, thank you. Thank you very much.

KING: What's up?

O'BRIEN: At the top of the hour on 360, taking a look at the raw politics of this race. It really only seems to be getting tighter and, frankly, nastier. Hillary Clinton in an attack mode today. Barack Obama trying to fire back. The question is, is he really up for that style politics? We're going to dig deeper on that.

And also, we're going to talk about that mess in Florida and Michigan. Will they hold their primaries again? If they do, who exactly is going to pay for it? Everybody's pointing fingers on that.

All that, plus a close profile of a lady who could be our next first lady, Cindy McCain. Details about her life that you've never seen or heard before, coming up at the top of the hour on 360 -- Larry?

KING: I will never miss you again. Soledad O'Brien, she'll host "AC 360" at 10:00 Eastern, 7:00 Pacific.

Big economic news today, the jobs report was a bad one and it had an effect across the board. CNN's own Gerri Willis will tell us what it means for the economy and you when LARRY KING LIVE returns.

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GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: So am I. So am I. We recognized the problem early and provided the economy with a booster shot.

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KING: We now welcome one of the best financial advisers in the business, Gerri Willis, CNN's personal finance editor, host of CNN's "OPEN HOUSE" and author of a terrific new book, "Home Rich, Increasing the Value of The Biggest Investment of Your Life." There you see its cover.

Bad economic news today, Gerri -- 63,000 jobs lost in February, worst if five years, stocks tanked. Oil went to 106 dollars a barrel. How bad is it?

GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: It's bad out there. Most economists are now saying we are in recession and they don't know how long it will last. There's a big disagreement out there between this is going to be a short, shallow recession, or a long and deep one.

But I got to tell you, consumers already know this. They know we're in recession. They are feeling the effects of this. They're the ones whose home values are going down. They are facing high prices at the gas pump. It is no mystery to voters out there.

KING: Is the stimulus going to work?

WILLIS: It is not the entire answer to the problem, certainly not. We're not even going to get the checks until the second week in May. So we're yet to see if it's really going to help much. But I don't think you can say that that's going to solve the whole problem, because it is so deep and in so many sectors.

You know, home prices were down nine percent year-over-year. That is a huge move. You know home prices usually don't move that much, certainly not down. We got numbers this week; the average American, their equity in their home has fallen below 50 percent for the first time since 1945. It's a very big number.

KING: Gerri, take a look at John McCain's assessment of where the economy is. Watch.

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MCCAIN: The main factor out there is Americans are hurting right now. They don't care too much whether it's technically a recession or not. So I would say that it's very likely, and more and more economists are saying that we are probably in a recession.

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KING: You agree with him, Gerri?

WILLIS: Well, I absolutely agree that we're in recession. The smartest minds, the smartest folks I know who study the economy out there say, we're already in recession. Growth is negative. You know what that means? It means fewer jobs. We could be in a situation where we have high prices and slow to no growth, stagflation. That's even worse than a conventional recession.

Larry, we got spoiled in the last few years because recessions tended to be very short, maybe six months, maybe nine, then they were over. This one could be longer.

It could take longer for us to get out of it. Interesting to hear John McCain say we're in recession, because as late as January 18th, he was saying, maybe not; maybe we'll manage to avoid recession. But now he's signing on, too.

KING: How about home equity? What, the average homeowner's equity is dropping? Where did that go?

WILLIS: This is bad news, because, look, you don't own the bricks and mortar in your house in all likelihood. What you own is the equity. That's the good stuff. That's the part of the loan that you paid off, maybe gains from appreciation from home improvements. As that goes down, your commitment to the property goes down.

The big fear, I have to tell you, among regulators right now are those people who bought houses in the last couple of years who maybe didn't put anything down, maybe they had a loan that they put zero percent down. There is a big fear those folks are going to start walking away from those homes, leaving the homes abandoned. That's just bad for neighborhoods, bad for communities and families.

KING: Her book is "Home Rich, Increasing the Value of the Biggest Investment of Your Life." We'll have some more moments with Gerri Willis right after this.

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UNIDENTIFIED MALE: As Americans are losing wealth, they're also paying more at the gas pump. The national average is up to $3.18 a gallon, the result of skyrocketing oil prices, which briefly touched a new record of nearly $106 a barrel Thursday. And consumers will soon be paying more for imported goods because of the declining dollar, which hit yet another record low Thursday.

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KING: Back with Gerri Willis. Simply put, what do you tell the average American to do?

WILLIS: I think right now you've got to have savings on hand, if you can. That and you want to really protect your job. In a recession, that's something you got to be worried about, that employers are cutting jobs out there. They might cut yours.

Now is the time to get on that project at work that's really high-profile, to make sure you are doing things that your employer will recognize and know and send out feelers. Talk to other people in your business who you know, re-establish contact, get your network together because you may need it.

KING: This a good time to buy a house?

WILLIS: Yes, definitely. And it will be for the rest of year, I think. Depending on the market you're in -- we've seen coastal areas where prices went up so far, so fast, they're coming down aggressively now. Florida, California, you're really seeing big changes there.

If you've got cash on hand, interest rates now, mortgage rates, are below six percent. I mean, think about it. That's very good news if you have a great credit score. Now is the time to start shopping around and seeing what is out there? Is it in your price range? But even with the price declines we've seen, even folks with median incomes -- say you are a cop or a firefighter or a nurse, you still may not be able to afford some of the homes out there.

KING: Is there less consumer spending now?

WILLIS: Yes. People are pulling in their purse strings. I think retailers are certainly feeling that. We've seen that, retailers reporting results that are not impressive here.

Folks are getting concerned. I think they're starting to stay home a little bit more, think a little more carefully about spending money. That's exactly the right thing to do.

When you get that money from the stimulus package, I don't think you go out and spend it. I think you save it. So, save it for a rainy day. That's what you're going to need with the economy tightening.

KING: Politically, this can't be good for the Republicans.

WILLIS: No, you know, their prescription for solving this problem has been to leave it to industry, let the industry solve it. With the mortgage meltdown, they wanted bankers to solve that.

Mortgage bankers and we've been trying this for months now. The results have not been impressive. There's been huge criticism of the Bush administration's efforts to solve the mortgage crisis with bankers.

Now we're starting to think about broader prescriptions for change. It's a really nutty problem for them, very difficult to solve, because their typical solution is to cut taxes, cut taxes, cut taxes. You got to ask yourself at this point if that's really going to bail us out of this problem.

KING: Are the lenders less inclined to foreclose because of the situation?

WILLIS: Well, you know, the foreclosures, 900,000 people currently in foreclosure. That's the biggest number on record. I don't think they're reluctant to foreclose. I think that they're reluctant to lend out there. That's the real problem.

We can get this economy moving again if bankers would start lending. People are going out there trying to get mortgages right now, Larry, and they can't, and they have a decent -- it is just very difficult for them.

KING: Bankers don't want to own homes, do they?

WILLIS: They don't want to own homes. That's the big secret. If you are in trouble out there with your mortgage, you need to call your lender, talk to your lender and get them to help you, because they really don't want to own a lot of houses. It costs them a lot of money to sell them, put them on the market.

KING: Gerri, it is always great to see you. You are terrific at what you do.

WILLIS: You're so nice. Thank you, Larry.

KING: This is a terrific book; "Home Rich, Increasing the Value of the Biggest Investment of Your Life." CNN's personal finance editor and the host of CNN's "OPEN HOUSE," Gerri Willis.

WILLIS: Thank you, sir.

KING: You're welcome.

Check out CNN's number one show page, CNN.com/LarryKing. You can email upcoming guests, send us an I ask question or download our latest podcast, Janet Jackson. We've got a political quick vote too. It's who do you believe will get the Democratic presidential nomination. Vote right now at CNN.com/LarryKing.

Now here she is, the one and only Soledad O'Brien with "AC 360."

Go get them.

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