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CNN LARRY KING LIVE

Obama Calls McCain Erratic; Is Sarah Palin Helping or Hurting John McCain?

Aired October 9, 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: Tonight, they're rolling in the mud.
Dirty politics -- is it paying off?

Barack Obama calls his opponent a risk.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESUMPTIVE NOMINEE: You can't afford that kind of erratic, uncertain leadership in these uncertain times.

(END VIDEO CLIP)

KING: John McCain levels the liar charge.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Whether Senator Obama is telling the truth to the American people or not, that's the question.

(END VIDEO CLIP)

KING: Plus, the Palin factor. She's on the attack -- but is that strategy helping or hurting McCain's cause?

And on the lighter side of the campaign...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: As my mother would say, God love him, but he's a raging maniac.

(END VIDEO CLIP)

KING: All right now on LARRY KING LIVE.

Good evening.

We have an outstanding panel assembled to kick things off.

In Stanford, Connecticut is Ari Fleischer. Ari served as White House press secretary for President Bush. He's a supporter of John McCain.

In Washington is Paul Begala, Democratic strategist, author of "Third Term: Why George W. Bush Loves John McCain," and Barack Obama supporter.

Hugh Hewitt is in Irvine, California, talk radio host, law professor. By the way, he interviewed Sarah Palin last week. He's editor-in-chief of Townhall.com and he supports the McCain ticket.

And in Davie, Florida, Congresswoman Debbie Wasserman Schultz, Democrat of Florida, who supports Barack Obama.

Guys, both candidates went at each other today on the economy.

Let's watch.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama, a year ago, said these kinds of subprime loans are "fine with him." And the fact is that the same people that are now claiming credit for this rescue are the same ones that were willing coconspirators in causing this problem that it is. And you know their names.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: His first response to this crisis in March was that homeowners shouldn't get any help at all. That's what he said in March. Then, a few weeks ago, he basically put out a plan that basically ignored homeowners. Now, in the course of 12 hours, he has ended up with a plan that punishes taxpayers, rewards banks and won't solve our housing crisis. You know what, here's my point, Cincinnati. You can't afford that kind of erratic, uncertain leadership in these uncertain times.

(END VIDEO CLIP)

KING: Ari Fleischer, who is right here?

ARI FLEISCHER, FORMER WHITE HOUSE PRESS SECRETARY, PRESIDENT G.W. BUSH, SUPPORTS MCCAIN: Well, who is to say who's right, Larry?

When it comes to this financial meltdown we're in the middle of, I think both parties and the American people who took out loans that they never had any business taking out all bear the responsibility.

So what you have is in the October (INAUDIBLE) it could still be a very close election. Everybody is accelerating their attacks on each other on the only issue that at least counts today, and that's the economy.

KING: Paul Begala, is one of the keys the fact that we deregulated?

PAUL BEGALA, CNN POLITICAL CONTRIBUTOR, DEMOCRATIC STRATEGIST, SUPPORTS OBAMA: Well, you know, I certainly think so. I mean, you know, we had these large institutions for a long time and we had loans to poor people for a long time. And what happened was in Christmas of 2000, right before Congress left -- hours before Congress left town, Phil Gramm, a senator from Texas, then the chairman of the Banking Committee, pushed through an amendment that made it illegal to regulate derivatives, these complex financial instruments.

Then, a couple of years later, Chris Cox, the chairman of the Securities and Exchange Commission, who John McCain has called for -- to fire, he also repealed something called the Net Capital Rule, which was another piece of regulation that helped to protect us from overleveraged investment banks.

And so, yes, I think a culture of deregulation played a big part in it.

KING: All right...

BEGALA: Although, Ari is also right that we, the people, played a role in this, too.

KING: Hugh, with the economic issue clearly favoring Obama -- and all the polls say that -- what does McCain do now in the remaining weeks?

HUGH HEWITT, HOST, "HUGH HEWITT SHOW," SUPPORTS MCCAIN: Well, the economic issue, Larry, is also tied to the character issue. Barack Obama has been wrapped up with ACORN for a very long time. ACORN is at the heart of the financial crisis. And not only were there attacks launched today on economics today, on the ACORN connection, McCain- Palin launched a number of attacks on Bill Ayers and on Rasheed Khalidi and a number of questions that go to the judgment that Barack Obama would bring to him to Washington, D.C. .

And I think this was a double track that was scoring very, very positively overnight, as the American people begin to look and ask, who's going to take care of us in this crisis, who can we trust to bring the right people with them to Washington, D.C. and not the people like Bill Ayers and Tony Rezko, who have been surrounding Barack Obama all these many years.

KING: So Congresswoman Schultz, do you buy that forget the economic issues, Bill Ayers is turning the campaign around?

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA, SUPPORTS OBAMA: Well, more importantly, the American people don't buy it, Larry. I mean the average working family, the folks I represent in my Congressional district, what they care about is that in Publix, in the supermarket that I shop at, a gallon of milk is $6 now. It's about $75 to fill up the gas tank of a minivan.

They are dealing with day to day economics. And, you know, the McCain acknowledged over the weekend that if they don't turn the page on the economy, that they're going to lose.

So what they have to do now is in order to try to put some kind of a question mark in voters' minds about Barack Obama, they can't have the subject remain the economy, because they're wrong on the economy. A couple of weeks ago, Senator McCain said that the fundamentals of the economy were strong. Then he said no, what we really need is a task force so we can sit down and figure this out. Then he proposed a pretty irresponsible plan to try to give money to irresponsible lenders to supposedly help homeowners.

Did he read the bill that we passed last week?

There is a provision in that bill that does allow the government to work out terms with the homeowners who are facing foreclosure and write-down mortgages and readjust their terms.

So for someone who came in and supposedly suspended their campaign in order to rescue this package, he apparently didn't read the bill while doing that.

KING: Ari, we have a blog, Ari, from Kevin. And Kevin blogs: "My question is in regards to the McCain camp portraying Senator Obama as a radical for palling around with a terrorist. What I want to know, as a former student of Bill Ayers at the University of Illinois, am I a terrorist for taking his class?"

FLEISCHER: Well, Larry, look, actually I do think this is a legitimate issue. I think it is absolutely horrible that when Barack Obama made his first run for office he was hosted for his first fundraiser at the home of a man who bombed the Pentagon, is anti- American...

WASSERMAN SCHULTZ: Excuse me.

FLEISCHER: ...and to this day...

WASSERMAN SCHULTZ: That is not true.

FLEISCHER: ...has no apologies for it.

If this had been a case where John McCain's...

WASSERMAN SCHULTZ: Because it's not true.

FLEISCHER: ...first fundraiser was held at the home of somebody who bombed abortion clinics, I guarantee you, Larry, the mainstream media -- this would be a massive story about John McCain's associations. Here it's said to be throwing mud or he's trying to link somebody to terrorism. It's because this is a legitimate issue and it should get full attention...

WASSERMAN SCHULTZ: Larry...

KING: Well, by legitimate, Ari, are you...

FLEISCHER: ...because it reflects on Barack Obama's character.

KING: ...are you saying that by...

WASSERMAN SCHULTZ: It's not (INAUDIBLE). KING: ...associating with terrorists, Barack Obama is going to support terrorism?

And what is the implication?

FLEISCHER: No. But, Larry, all I know is I wouldn't want to serve on a board, let alone go to somebody's home, if they were a terrorist...

WASSERMAN SCHULTZ: OK...

FLEISCHER: ...if they had bombed the Pentagon.

WASSERMAN SCHULTZ: ...so tonight, Larry...

FLEISCHER: Yet he's hosted by this person.

KING: All right, Debbie keeps trying to say something.

FLEISCHER: Time doesn't cleanse this.

WASSERMAN SCHULTZ: Yes, let me...

FLEISCHER: It's just as wrong now as it was then.

WASSERMAN SCHULTZ: First of all, Barack Obama did not have his first event at Bill Ayers' house. But more importantly, if we're going to find...

FLEISCHER: He had a fundraiser at his house...

WASSERMAN SCHULTZ: Excuse me.

FLEISCHER: ...and I thought it was his first.

WASSERMAN SCHULTZ: If we're going to follow -- it was a coffee. And if we're going to follow your logic...

FLEISCHER: Oh, good...

WASSERMAN SCHULTZ: If we're going to follow...

FLEISCHER: ...they didn't have food...

WASSERMAN SCHULTZ: Excuse me.

FLEISCHER: ...they just drank.

WASSERMAN SCHULTZ: If we're going to follow your logic, then John McCain associates with terrorists, also, because Mr. Annenberg's widow just endorsed John McCain and she allowed -- they allowed Bill Ayers to be on their board. So if we're going to do six degrees of separation here...

KING: Yes, that's true.

WASSERMAN SCHULTZ: ...then the palling around with terrorists applies to everybody. There might be...

FLEISCHER: There are no degrees of separation. It was the two of them shoulder to shoulder.

WASSERMAN SCHULTZ: No, no, no. You see there's some -- Mrs. Annenberg just endorsed McCain over the weekend.

KING: Yes.

WASSERMAN SCHULTZ: And they allowed Bill Ayers to serve on their board. So...

FLEISCHER: Did Mrs. Annenberg bomb the...

WASSERMAN SCHULTZ: So did they...

FLEISCHER: Did Mrs. Annenberg bomb the Pentagon?

Bill Ayers bombed the Pentagon.

WASSERMAN SCHULTZ: No, but she thought that Bill Ayers was a solid enough person on education to allow him to sit on their board.

FLEISCHER: (INAUDIBLE), if somebody had bombed an abortion clinic...

KING: All right, let me...

WASSERMAN SCHULTZ: This is just ludicrous.

(CROSSTALK)

FLEISCHER: ...John McCain...

KING: Let me get a break...

(CROSSTALK)

KING: We have...

(CROSSTALK)

KING: Let me get...

WASSERMAN SCHULTZ: This is ludicrous and you know it.

KING: They'll have something to say about what you're watching now.

FLEISCHER: Of course.

KING: If you do, go to CNN.com/larryking and get in on our blog. You can comment on the show and we'll react. And while you're there, take our quick vote about dirty campaigns.

Stay with us. (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: The notion that somehow he has been involved in my campaign, that he is an adviser of mine, that he -- I've palled around with a terrorist -- all these statements are made simply to try to score cheap political points.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

KING: Paul Begala, I'm still trying to figure out the implication of the relationship.

Is the implication that Obama supports terrorists?

BEGALA: Yes. This is why they're raising the point.

KING: That's what they're implying...

WASSERMAN SCHULTZ: They're trying to...

KING: So does anybody believe that?

BEGALA: No. This is -- but, you know, I've seen campaigns use desperate tactics before. I mean, you remember -- in fact, it was on your show, George W. Bush's father, President Bush, Sr., was on your show and was running the line of jive they had back then, which was that Bill Clinton's college student trip -- it was a backpacking trip to Moscow -- somehow made him like some kind of a KGB plant or something.

Do you remember that?

And he did it on your show, Larry.

KING: Yes.

BEGALA: And George Stephanopoulos called in back when George, he was working for us in that campaign. And it was silly and it was nonsensical. And Bill Clinton turned out not to be a KGB plant.

This whole thing, it's all guilt by association and it's something the McCain campaign needs not to get involved in. Senator McCain himself -- not somebody who he palled around with -- McCain himself was on the board of the U.S. Council for World Freedom, which was created by and supported by the World Anti-Communist League, which ADL, the Anti-Defamation League, said was a place that harbored and was a gathering place for anti-Semites and racists.

Now, does that mean McCain is somehow anti-Semitic or racist?

Of course not. It just means that they've got to be real careful about playing this guilt by association.

KING: All right, Hugh...

BEGALA: It's a bad strategy.

KING: Hugh, is the implication that he makes bad choices?

What -- what's the implication?

HEWITT: The implication is if he's president, he brings 3,000 people with him to executive branch in Washington, D.C....

KING: Right.

HEWITT: ...and what kind of judgment would he exercise?

And I think it's important to know that today, Senator Obama changed his story again about Ayers...

WASSERMAN SCHULTZ: (INAUDIBLE).

HEWITT: ...on Philadelphia radio, talking about the fact that...

KING: Don't interrupt, Congresswoman.

WASSERMAN SCHULTZ: Sorry.

HEWITT: ...that Bill Ayers had been -- he thought Bill Ayers had been rehabilitated. Well, look, in 1998, Bill Ayers went on ABC News with his wife and said he wished he could do it again. In 2001, he stood on the American flag in a photo shoot on 9/11. In 2007, less than a year ago, he went to the SDS reunion in Michigan and denounced the United States in the most uncertain terms.

And it's not just Ayers. It's Rashid Khalidi. It's Tony Rezko, who's convicted and in jail right now. It's Jeremiah Wright. And it's ACORN. And I'd like to ask the Congresswoman, Larry, does she know Rashid Khalidi is, does she know how close he is to Bill Ayers and how close he is to Barack Obama and does that bother her?

WASSERMAN SCHULTZ: You know that -- what I think we're talking about here, if it comes to judgment, you can point to John McCain's cynical choice of Sarah Palin...

HEWITT: Is that a yes on Rashid Khalidi, Congresswoman?

WASSERMAN SCHULTZ: No.

KING: But you interrupted her.

WASSERMAN SCHULTZ: I was going to say... KING: Let her respond.

WASSERMAN SCHULTZ: Because, if we're talking about judgment and what really matters, is John McCain shows the person who he thinks should be one heartbeat away from the presidency, someone who is wholly unqualified for the job, who really knows precious little about the issues that we're facing at the federal level, very little except the memorized talking points that she's been able to spit back and has been, you know, a pretty good attack dog, trying to distract the American people from the issues that matter the most to them.

So when we're questioning someone's judgment, let's talk about John McCain, who picked someone and made a very cynical choice, instead of finding one of the myriad of qualified Republican women that he could have chosen. Instead, he chose to show off his face and, you know, tried to reach out to women. Instead, he gave them the back of their -- the back of their hand.

KING: OK. Our panel will be back...

WASSERMAN SCHULTZ: That's what's (INAUDIBLE).

KING: Our panel is not going away. They'll be back with us in a little while.

You're watching LARRY KING LIVE.

We'll be back in 60 seconds.

(COMMERCIAL BREAK)

KING: The campaign, of course, has had its funny moments. Joe Biden, appearing on "Good Morning America," was asked to respond to that hilarious "Saturday Night Live" spoof of his debate performance.

Watch.

(BEGIN VIDEO CLIP FROM "GOOD MORNING AMERICA," COURTESY ABC)

UNIDENTIFIED FEMALE: Getting your reaction to Joe Biden on "Saturday Night Live." Here it is.

(BEGIN VIDEO CLIP FROM "SATURDAY NIGHT LIVE," COURTESY NBC) UNIDENTIFIED MALE: OK, let's be frank, John McCain -- and, again, this is a man I would take a bullet for...

(APPLAUSE)

UNIDENTIFIED MALE: ...is bad at his job and mentally unstable.

(LAUGHTER)

UNIDENTIFIED MALE: My mother would say, God love him, but he's a raging maniac.

(END VIDEO CLIP) (LAUGHTER)

SEN. JOSEPH BIDEN (D), VICE PRESIDENTIAL NOMINEE: Oh, God. I wish I had that much hair.

(LAUGHTER)

BIDEN: Oh, these guys are incredible.

(LAUGHTER)

BIDEN: I don't know what to say.

UNIDENTIFIED FEMALE: All right. We can leave it...

BIDEN: Thank you.

UNIDENTIFIED FEMALE: Had you watched it before?

BIDEN: I had watched it before. But every time I watch it -- they are good, man. They are so good.

(END VIDEO CLIP)

KING: We'll get back to serious political business right after the break.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R), VICE PRESIDENTIAL CANDIDATE: We are going to send John McCain to the White House.

(APPLAUSE)

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: You and I together, we're going to win this election.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

PALIN: ...president of the United States, John McCain.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MCCAIN: I have plans to reform Washington and get this country moving again.

(APPLAUSE) (END VIDEO CLIP)

KING: All right, let's meet our next panel.

In Washington, Kathleen Parker, the nationally syndicated conservative columnist.

Also in Washington, Michelle Laxalt, a lifelong Republican consultant. Her father is, of course, the former senator, Paul Laxalt.

And in Des Moines, Iowa, Bay Buchanan, Republican strategist and CNN contributor.

Now, Kathleen, made a lot of news last month when she urged Sarah Palin to step down. And here's what you wrote: "Only Palin can save McCain, her party and the country she loves. She can bow out for personal reasons, perhaps because she wants to spend more time with her newborn. No one would criticize a mother who puts her family first. Do it for your country."

Kathleen, do you stand by that?

KATHLEEN PARKER, CONSERVATIVE COLUMNIST: Well, I'm never going to outlive it, that's for sure.

(LAUGHTER)

PARKER: You know, at the time -- this is pre-debate, by the way.

KING: Right.

PARKER: And this was right after she had had her third interview, the final one being with Katie Couric. And based on that information at the time, I felt like it was -- it would be a great idea if she would step aside and let somebody else come in. For one thing, I didn't think I could live through the debate myself. But for another, I didn't -- you know, time was of the essence, if that was even a remote possibility, to replace her.

I'm still not convinced that she's ready to lead the free world, if that should become necessary. So I guess I stand by my original column.

KING: Michelle, the last time you were with us, you had doubts about the ticket because of her.

Where do you stand now?

MICHELLE LAXALT, GOP CONSULTANT: I have increasing doubts, Larry, about the ticket. And my doubts center around what I see the McCain management team doing with Governor Palin. I see a team who brought a young governor onto a national scene, tossed her into the deep end five weeks before November. I see them managing her. I hear from inside the McCain campaign that she is essentially being treated like a secretary or a staffer, not a genuine vice presidential running mate. And I think it is absolutely confirmed that when they send her out, this good 'ole boy team -- some of whom, parenthetically, Governor Reagan and my father, Senator Laxalt, fired from the Reagan campaign for these kinds of dirty tricks.

They have sent this young, naive, very confident, perhaps, in Alaska, young woman out with the most incendiary talking points, the most dangerous...

KING: All right...

LAXALT: ...racist talking points. And I think they should be ashamed of themselves.

KING: All right. The content of her -- Bay, the concept of her being an attack dog, let's watch this and get Bay to comment.

(BEGIN VIDEO CLIP)

PALIN: I think the phoniest claim in a campaign that's been full of them is that Barack Obama is going to cut your taxes.

(LAUGHTER)

PALIN: He's not willing to drill for energy, but he's sure willing to drill for votes.

(LAUGHTER)

PALIN: And you mean to tell me that he didn't know that he had launched his own political career in the living room of a domestic terrorist?

(END VIDEO CLIP)

KING: All right, Bay, is all fair in love and war?

Is that fair?

BAY BUCHANAN, CNN CONTRIBUTOR, SUPPORTS MCCAIN: Sarah Palin is point for this campaign. She is doing a remarkable job. It is the vice presidential's job to be the attack dog. And she does an exceptional one -- with a sense of humor, with grace, but she makes the point extremely tough. I mean she goes right for the throat against this guy, raises very, very legitimate issues and causes the national media to start to talk about this, something they've seemed, up to this point, refused to do...

KING: All right, is she...

BUCHANAN: ...what's the true character of Barack Obama?

KING: Is she helping?

BUCHANAN: Oh, I mean you can't -- there's no argument there whatsoever. She has clearly done a remarkable job. Not only did she energize the base, she delivered the base to John McCain. What she now still holds, over 90 percent of Republicans behind this ticket.

KING: But...

BUCHANAN: She basically brought tens of thousands of people to rallies -- Obama level rallies now, because of Sarah Palin. Seventy million people, Larry, turned in to see that debate. Seventy million. They weren't looking at Biden, I'll guarantee you.

KING: But, Kathleen, since the debate, Obama is 9 points ahead.

PARKER: Yes. I don't think Sarah Palin is helping McCain. I really don't. Absolutely, she's animating the base. The base is practically hysterical with animation. But he already has the base. You know, the base is not going to vote for Obama.

So she's not helping him with people he needs, which are women voters, who have left him en masse to go back to Obama and with Independents and moderates, who are leaving the McCain camp. And I think many of them were leaning toward him, but now because of her and because of some of this incendiary language, they're moving the other way.

So I don't think that's helpful...

BUCHANAN: Larry...

PARKER: And...

UNIDENTIFIED FEMALE: We're over.

PARKER: Yes?

BUCHANAN: Larry, that's just -- she's completely inaccurate. I hate to tell you this, but number one, McCain never had the base -- never, until Sarah Palin. That was Sarah Palin's job and she did it perfectly.

And the second point is, for three weeks after that convention, we were climbing. She, Sarah Palin, managed to basically eliminate the bump the Democrats got out of their convention. And we moved ahead because of Sarah Palin.

The day we started to drop was the day the banks collapsed. And you can look at all of the polls you want and blame it on Sarah, but it has a whole lot more to do with the environment than it does Sarah.

KING: Michelle, are you not supporting the ticket?

LAXALT: Look, I think -- I can't believe the tone of this conversation. Here we are, three conservative, loyal Republican women. And we are talking about a female who could be the vice president of the United States of America.

In my estimation, she is being used unfairly as a tool by a team who, by the way, do not even support, nor does their candidate, equal pay for women for equal work. So if she is going to be the traditional vice presidential attack dog -- which I concur with Bay, that's very much a traditional role -- why didn't her male running mate, i.e. the candidate himself, man up and speak to those issues, calling his opponent essentially unpatriotic, calling him a terrorist?

I'm sorry. This is not the Republican Party that Bill Buckley, that Paul Laxalt, that Ronald Reagan raised me on. And I don't believe the American people like this kind of dirty politics. If they can't win fair and square, they shouldn't trash the other guy.

BUCHANAN: Michelle...

KING: All right, Bay. There's more to come. We'll come right back with Bay. We'll be back with Kathleen Parker, Michelle Laxalt and Bay Buchanan.

Sarah Palin's close-up cover photo -- why is "Newsweek" taking heat over that?

We'll talk about that.

Stay there.

(COMMERCIAL BREAK)

KING: You can get interactive with our newest Web feature, the LARRY KING LIVE blog. It's really heated up right now. Tell us what you think as the show airs and goes on. It's at CNN.com/larryking.

And Michelle Obama is our new pod cast. You can download that right now.

We're back with our group.

And, Bay, you wanted -- all right, Bay, before we get -- all right, let's go back to Bay.

And what do you make of this "Newsweek" controversy?

They're slamming it, saying -- conservatives say they didn't touch up her face and picture on the cover. There you see the cover.

Is this just another blip in the campaign or do you make something real out of it?

BUCHANAN: No, I don't make anything real of that. The picture looked pretty good to me, actually.

KING: It looked good to me, too.

BUCHANAN: But, you know, I...

KING: I don't get it.

BUCHANAN: I don't get that at all. I saw it. I thought it was a very legitimate cover.

But I will want to get back to what my friend Michelle Laxalt was just commenting on. And that is, it's to say that character is a very legitimate issue that should be brought up in every campaign. And the press is not asking these kinds of questions of Barack Obama.

He practiced in a church that preached black liberation theology. Somebody should ask him if he thinks this has a legitimate role at all in America -- at all.

I mean his relationship with Bill Ayers, this is a domestic terrorist. Imagine if John McCain had some association with white supremacists who had blown up churches down in the South. You know, this would be a major issue, and as well it should have been.

So I think it's time to take off the gloves and let's really find out who Barack Obama is. It's fair enough to ask who Sarah Palin is. It's time to ask who Barack Obama is. It's fair enough to ask who Sarah Palin is. Time to ask who Barack Obama is.

LARRY KING, CNN ANCHOR: So, Bay, you're asking if John McCain were a member of a group that in that same group was someone like an anti-Semite, that should blame McCain. That should be held against him.

No, are you saying that?

BUCHANAN: No. We should -- I am saying that if he associates with somebody as he has...

KING: Right.

BUCHANAN: ... with this fellow, to the extent that he has, that it's very legitimate. And then you can say, the next point is, why did you lie about it, Barack? If it really was so innocent, why did you lie about this relationship?

KING: Kathleen, is this...

BUCHANAN: That goes to your integrity?

KING: Have we left issues here?

KATHLEEN PARKER, CONSERVATIVE COLUMNIST, SAYS PALIN "CLEARLY CUT OUT OF HER LEAGUE": I'm sorry? What was the question?

KING: Have we left issues?

PARKER: Yes, we've left issues.

KING: Or is Ayers is a fair issue?

PARKER: I -- you know, I think Ayers -- his association with Bill Ayers is of concern. It definitely shows poor judgment on his part. I know that he had this coffee fund-raiser at Bill Ayers house, but as far as his service on that board for Bill Ayers -- by the way, another person who is on the Annenberg board was the president of Northwestern University who served in the Nixon administration.

So it was quite a mixture of individuals. I'm not sure that's enough to disqualify Barack Obama on the basis of character.

I would be much more concerned, and I think the question that someone should ask Senator Obama is does he agree with Ayers' radical he had occasional reform ideas. That is -- that's important. And that's a question that needs to be addressed.

KING: Michelle, let's see a clip of Tina Fey on "Saturday Night Live" having some fun with Palin's debate performance and get your thoughts.

Watch.

(BEGIN VIDEO CLIP)

TINA FEY, "SATURDAY NIGHT LIVE": I would like to talk about taxes, because with Barack Obama, you're going to be paying higher taxes. But not with me and my fellow maverick. We are not afraid to get mavericky in there and ruffle feather and not got to allow that -- and also to -- the great Ronald Reagan...

(END VIDEO CLIP)

KING: Michelle, are they -- are they hitting a satirical note well?

MICHELLE LAXALT, GOP CONSULTANT, IS CONCERNED ABOUT PALIN'S ROLE IN CAMPAIGN: Sure, they are. They're nailing it. That's what they do so well. And I, having been a "Saturday Night Live" devotee for a number of years, seeing the original troop type performances coming out of these guys, this Tina Fey is just doing a terrific job.

But just remember, the objective is, can we laugh at ourselves? The answer is yes. Is it important that she looks good on a magazine cover? Are you kidding me? Where are we in the stock market today? Is it relevant, as Bay suggested, that questions on the issues such as tax increases are broached? Yes.

But character assassination, guilt by association, falsehoods about a candidate's character, that people know to be untrue are not the way that we should be conducting our campaigns. And it's not the way to win.

KING: Bay, honestly, was she the best choice for vice president?

BUCHANAN: Well, she just has done such a remarkable job. She is certainly the most interesting. I don't know anyone else that would have brought 20 million people -- viewers to the vice presidential debate.

What she has accomplished, I think, is phenomenal for a vice president. And here we are, Larry, and people are saying, is she going to be able to bring these votes over, these votes over, what can she do here? My golly, she's the vice presidential candidate. In the past nobody ever expect --

KING: That wasn't the question.

BUCHANAN: ... the (INAUDIBLE) they're going to bring the whole move.

KING: Is she the best person to be vice president?

BUCHANAN: You know, I think -- yes, I think she has been phenomenal. I don't know how you could have done better. Yes.

PARKER: Wow.

LAXALT: So much for answering the question, Bay.

BUCHANAN: Well, I said she is the best person, yes. I mean I was all for Mitt Romney. Would he have done a remarkable job, too? Very likely. I don't know if he could have brought 70 million people. Could he have brought 60,000 people cheering for rally after rally for McCain? I don't know. Maybe he could have.

But I can say one thing. She's done a terrific job, and I think you have to give her credit...

KING: Kathleen -- Kathleen, does this mean...

BUCHANAN: ... for being a terrific choice.

KING: Kathleen, we've only got a couple seconds. Does this mean, Kathleen, that you will not vote?

PARKER: Oh, no, I'll definitely vote. I couldn't possibly not vote. I wouldn't be able to sleep. But it's going to be difficult.

KING: I understand. We'll have you back before.

Thank you all very much, Kathleen Parker, Michelle Laxalt and Bay Buchanan.

Does Sarah Palin have a political future if the Republicans don't win the White House? We'll discuss that next.

(COMMERCIAL BREAK)

KING: We're back, Ari Fleischer and Paul Begala remains. We're joined now joined by Andrea Tantaros, Republican commentator who supports McCain, and Tanya Acker, Democratic strategist who supports Obama.

Before we go an, Andrea did want to comment, we'll get her give a comment on that "Newsweek" cover. You've got a problem with it, Tanya -- I mean, Andrea?

ANDREA TANTAROS, CONSERVATIVE COMMENTATOR, SUPPORTS MCCAIN: Yes, you know, it's very difficult to see on TV, it's very difficult to see online, but everybody who's been criticizing me and others for pointing this out, I encourage you, before you speak, take a look at that actual cover.

Larry, this image was sharpened. That's what they call in photography. That you can see so much. And I'm not talking just a couple natural imperfections. I'm talking very embarrassing facial features that, look, the stigma with women. I mean you're talking about black heads and pores and a mustache.

And look, the history -- look, the history is that pictures of Obama are perfect when they come out. If they would show a picture of him with razor burn and nose hairs coming out, the left would go crazy.

KING: You're saying "Newsweek" was out to damage her.

TANTAROS: Look, Larry, the title speaks for itself.

KING: No, that's what you're saying. OK.

TANTAROS: Image aside, image aside, Larry, the title speaks for itself, it said "Sarah Palin is one of the folks," and in parentheses, it says, "and that's the problem." So...

KING: All right.

TANTAROS: You know, it's just another dig at her.

KING: Tanya, you have a comment?

TANYA ACKER, DEMOCRATIC STRATEGIST, SUPPORTS OBAMA: I think the least of Sarah Palin's problems is that she might be portrayed as unattractive. She is attractive. She's good VP material.

TANTAROS: She's beautiful.

ACKER: She's absolutely beautiful. That's not why she is not qualified to be a vice president. I mean, the fact, Andrea, that -- I didn't see any black heads on that cover. But that's completely irrelevant.

Look, the stock market plunged 690 points today. This woman and John McCain have yet to articulate a coherent economic theory. I don't think that the cover of a "Newsweek" article, where, frankly, I mean, look, she looks fine, I mean, and I point out that...

TANTAROS: Tanya, you would...

ACKER: Hang on one second -- hey, Andrea, hang on one second.

KING: One at a time.

ACKER: There have been plenty of instances where we've seen Senator Obama's pictures darkened or where there's, you know, been some sort of dramatic effect... TANTAROS: Lightened.

ACKER: There are bigger issues at play in this election.

TANTAROS: No question. No -- Tanya, no question there are bigger issues.

KING: Well, come on.

TANTAROS: No question. But this is just -- that title, coupled with that cover shot, if you look at it, any woman would look at that cover -- I mean, you have to look at it. I showed it to men...

KING: OK. I want to go on to other things.

TANTAROS: ... they said this is cruel.

KING: Ari, by the way, do you think she has -- let's say the Republicans lose, she have a big future in the party?

ARI FLEISCHER, FMR. PRESS SECY., PRESIDENT G.W. BUSH, SUPPORTS MCCAIN: Absolutely, Larry. You know, the irony is her future will be even brighter if John McCain loses and I'll tell you why.

If John McCain wins, he is going to really govern as a moderate president. He's going to cut deals with the Democrat Congress, and then when it comes her turn to want to run in the primary, conservatives are going to say how could you have supported what moderate McCain did, and conservatives usually will sway in a Republican primary.

If John McCain loses, there's no question, she is the rising star of the Republican Party, a new face, a new image. It will also, as a sitting governor, give her a lot more time to get more experienced, especially on foreign policy.

She will be the most sought-after speaker in the Republican constellation. And she has a very bright future ahead of her.

KING: Paul, you're a strategist. Do you buy that?

PAUL BEGALA, DEMOCRATIC STRATEGIST: Oh, absolutely. Ari is right. He knows the Republican Party better. By the way, my party called the Democratic Party, Ari. It's been in politics 20 years, you should know that, it's not the Democrat party.

But...

(CROSSTALK)

FLEISCHER: I try not to talk about your party.

BEGALA: Excuse me. You did.

FLEISCHER: And I think you're beautiful, too, Paul. BEGALA: Very soon, it'll be the presidential party. The thing about Palin that struck me in the debate, Larry, was that she seemed to be throwing McCain under the bus. In other words, her job in the debate was to attack Barack Obama and defend John McCain.

She did a little of both, but mostly what she did is rehabilitate her own image. Now, she needed to do that after the Katie Couric interview. But the difference between the mission that Joe Biden was on and that Sarah Palin was on was striking to me.

Joe Biden looked like a guy who was just trying to get his top ticket guy, Barack Obama, elected. I think Governor Palin is already running in 2012, and the primary is already beginning.

Mike Huckabee has already criticized the McCain/Palin ticket. I think Mitt Romney is going to be in the middle of this. You watch Newt Gingrich, get him on a show, he'll announce for president this time tomorrow.

So the Republican infighting -- the finger-pointing has already begun, and I couldn't be happier.

KING: OK. We'll get everybody to think about that. And -- first, we're going to pause and we'll be -- we'll be back. I don't believe this show. I think I've got a plan. Never mind. I'll be back in 60 seconds.

(COMMERCIAL BREAK)

KING: You know just when you thought it couldn't get any wackier, Paris Hilton is back with her presidential bid. Watch.

(BEGIN VIDEO CLIP)

PARIS HILTON, HOTEL HEIRESS: My fellow Americans, as you know, I'm running for president, and I've sought out the advice of an expert.

MARTIN SHEEN, ACTOR: I don't usually go to this kind of party.

HILTON: It's actually a pre-party. It's the party I'm throwing for the after-party.

M. SHEEN: I don't know what that means.

HILTON: I plan to bring a state balanced approach to these real problems. For example, FoPo.

M. SHEEN: What is FoPo?

HILTON: Foreign policy, silly.

M. SHEEN: Of course. Oh, yes, I should have known that one.

HILTON: If we're looking for victory in Iraq, haven't we already found it? Iraq has a democratic government and asking for us to leave. It seems that we've done our job and we should bring our troops home safely.

M. SHEEN: Loves it and makes perfect sense. But what about the economy?

HILTON: Well, this is the biggest depression since the (INAUDIBLE). How about helping the people losing their homes? Maybe lower the inflated interest rate so it's not impossible for them to pay their mortgage. I know it's not as much money for the banks, but it's better than no money at all.

Just ask M.C. Hammer.

M. SHEEN: You're going to make a great fake president.

HILTON: Thanks.

CHARLIE SHEEN, ACTOR: Hey, guys, guys. Listen. They're playing "Rock Lobster," you know -- what are you doing here?

M. SHEEN: Well, I'm getting some fake advice to the next fake president.

C. SHEEN: All right. Want to get in the hot tub.

M. SHEEN: Peace all.

HILTON: Peace out.

M. SHEEN: Peace out. Yes. There we go.

(END VIDEO CLIP)

KING: Do these spoofs have any impact on the campaigns? That's next.

(COMMERCIAL BREAK)

KING: Before we get back with our panel, let's check in with Anderson Cooper, the host of "AC360". What's up tonight?

ANDERSON COOPER, CNN ANCHOR: Larry, a lot of breaking news tonight. The Dow dropping again and now it's below 9,000 for the first time in five years. You heard Suze Orman saying on our show last time we might enter this territory. It is happening.

The international markets are now responding and so far not so good. Many are completely tanking right now. The question on a lot of minds is where is the bottom? We'll talk to Ali Velshi and get some personal finance inside about what you should be doing if you're watching your 401(k) evaporate.

Plus on the trail, supporters on some of the McCain/Palin rallies voicing outrage that their candidate is falling behind in the polls. The voters today urging McCain to attack Obama's relationship with Reverend Wright and Bill Ayers. We'll tell you what McCain says in response. All that plus tonight's edition, the 10 most wanted culprits of the collapse. We are naming names, holding people accountable. The folks who got us into this mess. Tonight, a new name put on to the list.

It's a busy night, Larry, and starts in about 12 minutes.

KING: That's Anderson Cooper, 10:00 Eastern, 7:00 Pacific.

Back with our panel.

Andrea, we have a question from Jody on our blog on CNN.com to Larry King.

"Hi, Larry, why is there such a disconnect between the American people and presidential candidates? Most people will tell you they hate negative politics, but presidential campaigns always turn negative. Almost every person I know wants the candidates to focus on platforms and policies."

Why, Andrea, does it get negative?

TANTAROS: Because negative campaigning, sadly, it works. But the risk with negative campaigning is you drive your own negatives up, oftentimes, when you choose to do it. But right now, look, I think the American people are so angry that the mudslinging back and forth that's going on, it's not getting John McCain anywhere with this Ayers stuff, because people are saying, I want to hear about the economy. I want to hear about the issues.

Barack Obama, he's just playing not to lose right now, so he doesn't have to go as negative. But I agree, it's turning off a lot of the voters, they feel disconnected from the entire political process and they blame Congress for getting them into this mess.

KING: Tanya, could it defeat you?

ACKER: I think that Andrea is right. Negative campaigning, unfortunately, does work. I think that, right now, when we're in these economic waters, which are so perilous, when, you know, you've got the Dow now poised to lose 17 percent this week, people's retirements are in jeopardy, people are in foreclosure, they're losing their homes.

So I don't think it's going to work this time. But I would like to point out, Larry, it's so interesting how we talk about these associations. You know, John McCain has called G. Gordon Liddy a friend. You know, I mean, he shared a stage with a woman who offered prayers and support of another domestic terrorist.

But nobody thinks that John McCain is a terrorist. Nobody thinks that -- notwithstanding the fact that he voted three times against making bombing abortion clinics a federal crime. Nobody thinks that he supports those bombings.

I think the idea of raising these issues that are truly irrelevant -- and by the way, which also happened when Barack Obama was 8 -- this is simply not what the American people care about right now.

KING: Ari, this just in. On the eve of a report on a legislative panel's abuse of power investigation into Alaska governor Sarah Palin, campaign officials released their own report, clears her of any wrongdoing.

That's the campaign official saying that. Apparently the legislature will announce it tomorrow.

Do you think they have prior information?

FLEISCHER: Have no idea, Larry. I think that this will be a footnote to this campaign. I don't think anybody really is paying attention to this issue involving her husband and private family. So I don't think this has been much of a focus.

I do think what's fascinating is that Sarah Palin looks like she's going to be the first vice-presidential nominee since 1960 when Kennedy put LBJ on the ticket to make a difference, to have an impact.

I think she's been a powerful message and messenger for John McCain reinforcing his maverick credential. What amazes me the most is how much people from Washington really don't want anybody from outside Washington come into that town to stay and change Washington.

That's why I like her.

KING: But LBJ brought him Texas and therefore brought him the victory.

FLEISCHER: Yes, for that point, she's...

KING: Paul, we have a...

FLEISCHER: She's also moving voters, too, not just one state. She's moving voters.

BEGALA: Yes, she's moving voters.

KING: Paul, we have a blog from Michigan's (INAUDIBLE), Rick blogs in, "Bill Ayers is a non-issue and all but the most radical conservatives know it. They should really stop making fools out of themselves and their candidate. I always thought Senator McCain was above all this. Each time he brings it up he loses respect and confidence of the people and votes. Talk to real issues, not desperate fights of fancy."

Do you think McCain is hurting himself with the Ayers issue, Paul?

BEGALA: Oh there's no doubt. I mean -- mostly he's hurting himself because he's not talking about the economy. The opportunity cost when talking about Bill Ayers is very high. We all want these candidates to talk about the economy. So far, Barack Obama is talking about the economy and John McCain is off in Bill Ayers land. You know, a few weeks ago, he accused Barack Obama of wanting to teach kindergartners about sex before they could read. That was completely bogus, too.

I -- hate to say this, I actually do. But looks like McCain is kind of more interested in winning a campaign than keeping his honor and his sense of honor is a great man. This is a man, you know, Naval Academy grad, a war hero, suffered grievously for us and our country.

And I'm worried he's going to lose a lot more than an election. He's going to lose a lot of the respect that a lot of people had for him across all party and ideological lines.

And so an appeal to McCain would be, yes, attack. I'm actually for negative campaigning, but it has to be fair, factual, about the public record, not this nonsense about stuff when Barack Obama was 8.

KING: All right. And we'll be back with the remainder of the show right after this.

ANNOUNCER: CNN Heroes is sponsored by...

Get involved at CNN.com/heroes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ANNOUNCER: This is CNN HEROES.

CINDY LAUPER, SINGER: I hate crime. It sends terror to a community. You could die just because of who you are.

I'm Cindy Lauper. And my hero is Cathy Nelson because she fights for the rights of all people.

CATHY NELSON, COMMUNITY CRUSADER: In 1989, I went to work for a human rights campaign, an organization that represents the LGT community. Events are a vital part of what we do.

Please welcome, Cindy Lauper.

Cindy's "True Colors Tour" was an amazing opportunity to educate about the upcoming hate crimes bill in Congress.

LAUPER: She has this whole idea if we could take a postcard and send it to your congressman.

NELSON: Becoming an activist starts with one simple step.

LAUPER: We have to erase hate. It's a lose-lose situation. Let you know about things that are going on. Right now, we could change.

NELSON: So what drives me is fighting for fairness and equality.

LAUPER: Cathy has helped a lot of people. And that's a hero.

ANNOUNCER: Vote now at CNN.com/heroes.

(END VIDEOTAPE)

KING: We're back and Tanya Acker wanted to say something about voter suppression, which is what?

ACKER: Very quickly, we're getting reports about tens of thousands of people who are being illegally purged from rolls, who are being told that they're not entitled to be -- they're not entitled to vote.

In Michigan, for instance, there's been an effort by the GOP chairman of a local county to actually suggest that people who are in foreclosure not be allowed to vote because they're not at the same residence at which they were residing when they registered to vote.

So a common cause, which is a nonpartisan organization, is really leading a very strong effort to ensure that if folks have questions about the registration status, if they're concerned, that because they moved or perhaps in foreclosure, that they, nevertheless, be entitled to cast their vote.

KING: Who do they contact?

ACKER: You can go to www.commoncause.org or dial 1-866-OURVOTE. 1-866-687868.

KING: Common Cause, haven't heard about them in a long time.

ACKER: It's a...

KING: Andrea, is that a GOP strategy, to purge people from voting?

TANTAROS: Come on, Larry. We don't have enough time to get the other side about what's been going on in ACORN. But I see it reported all over CNN today. There is a lot of voter fraud going on, people signing up numerous names. This ACORN group, you know, I don't know why the McCain campaign is wasting its time with Ayers.

They have the ACORN organization that is -- that links directly to this Freddie and Fannie scandal, that Barack Obama has given $800,000 to, and it goes right to the heart of this financial crisis. He's been involved with them before. They were in the foyer of banks pressuring people to give -- pressuring people who worked at the banks to give loans to people who didn't have jobs.

I mean, come on, this is a valid campaign issue. I agree with we need...

KING: OK.

TANTAROS: ... what Paul said before, the Ayers thing is a bit of a stretch, but this is pertinent. KING: Paul, what do you make of ACORN?

BEGALA: Yes, they represent poor people, Larry. Anybody who thinks poor people causes economic collapse while the McCain/Bush/Wall Street lobbyists...

TANTAROS: Come on, Paul.

BEGALA: ... are getting rich, is I want a case of what you're drinking, Andrea. The notion that poor people are responsible for this, my god, Bush must not hate the poor because he's created so many of them. That's the only good thing I can say about Bush and the poor.

KING: Ari, you want to...

BEGALA: Ari is not a bad group, my goodness gracious.

KING: ... want to throw your two cents in?

FLEISCHER: Larry, let me go back to Bill Ayers for a second, because I'll tell you why do we think this is...

(LAUGHTER)

FLEISCHER: You know Paul said this happened when he was 8. It happened when he was in his 30s and he wanted the honor of being a state senator, so he asked him to host him for a fund-raiser.

It goes to a person's judgment of what is right, what is wrong, what is acceptable, what is not acceptable.

ACKER: What Bill Ayers did happen when Obama was 8. He was not 30, he was 8.

FLEISCHER: And it shouldn't be not acceptable to have a fundraiser at their home for somebody who is...

KING: He wasn't when they bombed...

ACKER: (INAUDIBLE) had a fundraiser for Barack...

FLEISCHER: ... seeking office when they bombed the military.

ACKER: ... for John McCain.

FLEISCHER: That's what's wrong about it. And that's why...

ACKER: G. Gordon Libby a Watergate burglar...

KING: Hadn't he gotten his -- hadn't he gotten his good name back?

FLEISCHER: Who's right and who's wrong.

KING: Ari, hadn't he gotten a good name back when they... FLEISCHER: How can you bomb the Pentagon and ever get your good name back? If I were in the military, no, that man would never, ever have a good name.

KING: He was citizen of the year.

(CROSSTALK)

ACKER: How can you be the Watergate burglar?

FLEISCHER: I don't care, Larry. The man bombed the Pentagon and is...

ACKER: How can you be a Watergate burglar?

FLEISCHER: You know, I never interrupted you. You need to hold on. And in 2001, he said he regrets that he wasn't able to do more bombings. No, he doesn't have a good name to get back.

KING: OK. All right.

ACKER: Ari, I agree with you that it's a valid issue, I agree that it's a fair point.

KING: We're out of time, guys.

ACKER: But I'm afraid that in this election cycle, it won't work.

KING: We got a lot more coming up. We got a lot going on our Web site, CNN.com/larryking. You can download our latest podcast, Michelle Obama. Take our quick vote about nasty campaigning. I wonder where that came from?

And check out our blog. You can talk directly to us about the show every night as it airs.

Time now for Anderson Cooper and "AC360."

Anderson?

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