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Jane Velez-Mitchell

Colin Powell Endorses Barack Obama; Sarah Palin Appears on "SNL"

Aired October 20, 2008 - 19:00   ET

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

(BEGIN VIDEOTAPE)
JANE VELEZ MITCHELL, HOST (voice-over): Tonight, a Republican icon jumps the aisle.

COLIN POWELL, FORMER SECRETARY OF STATE: I`ll be voting for Senator Barack Obama.

VELEZ MITCHELL: But what impact will Colin Powell`s endorsement of Barack Obama really have?

Plus, Governor Palin hops behind a news desk.

GOV. SARAH PALIN (R-AK), VICE-PRESIDENTIAL NOMINEE: That was really fun, too.

VELEZ MITCHELL: Will the former reporter`s appearance on "Saturday Night Live" help her campaign? Or does she have a future in comedy?

Also, are we throwing gas on a fire with yet another round of stimulus? We`ll talk about our consumer addictions.

And an in-depth look at porno. Is using the word a no-no? Why one movie is getting no love because they put "porno" right in the title.

You think you`ve got issues? We`ve got more.

(END VIDEOTAPE)

VELEZ MITCHELL: Good evening. I`m Jane Velez Mitchell. And I`ve got to tell you, we`ve all got issues. Who am I imitating? But possibly no one more so than John McCain. Could he have felt more betrayed? He turned on the TV yesterday morning and saw his old buddy of 25 years, General Colin Powell, Republican heavyweight, turn against him on "Meet the Press."

(BEGIN VIDEO CLIP)

POWELL: I`ve come to the conclusion that because of his ability to inspire, because of the inclusive nature of his campaign, because he is reaching out all across America, because of who he is and his rhetorical abilities -- we have to take that into account -- as well as his substance. He has both style and substance. He has met the standard of being a successful president, being an exceptional president. I think he is a transformational figure. He is a new generation coming into the world -- onto the world stage, onto the American stage. And for that reason, I`ll be voting for Senator Barack Obama.

(END VIDEO CLIP)

VELEZ MITCHELL: And now, just hours after Powell said those words, comes news from Obama himself that Powell will, quote, "have a role as one of my advisers." Gee, that was quick! Was it tit for tat? And what role exactly will Powell have? I think we can all have some fun speculating about that.

Today McCain said he is disappointed Powell didn`t call him first but added the endorsement did not come as a surprise. I guess he heard it through the grapevine.

However, the rest of what the former secretary of state had to say was a shocker. Powell`s endorsement of Obama came with a sharp verbal spanking for McCain over the selection of Sarah Palin as McCain`s running mate and the GOP`s seemingly hard shift to the right. And there was this stunner.

(BEGIN VIDEO CLIP)

POWELL: And the party has moved even further to the right, and Governor Palin has indicated a further rightward shift. I would have difficulty with two more conservative appointments to the Supreme Court, but that`s what we`d be looking at in the McCain administration.

(END VIDEO CLIP)

VELEZ MITCHELL: I`m so confused. A Republican has problems with adding more conservative appointments to the bench? What does that mean? Should he switch parties, perhaps?

Amy Holmes, a CNN political contributor and a former speech writer for Bill Frist. And Peter Fenn is a former Gore adviser and Democratic strategist.

Peter, what would you say to those who say this is not a particularly courageous time to endorse Barack Obama? He`s 15 days from the election. He`s ahead in the polls. Is it as simple as Powell is basically jumping off what he sees as a sinking ship?

PETER FENN, DEMOCRATIC STRATEGIST: No, heck know. I think you`ve got a guy, as Sarah Palin would say -- I think you`ve got a person there who clearly was conflicted all along. He -- he`s a Republican. He`s been a friend of John McCain`s for 25 years. He endorsed John McCain in the 2000 campaign.

And not only did he endorse Barack Obama in a long seven-minute piece, Jane, that you played a good part of it. But as you said, he really went after McCain. He was very concerned about him on the economic policy, said he`d flip-flopped all over the place, didn`t show consistency. He`s very concerned about Sarah Palin, said after seven weeks on the campaign trail, it`s clear that she`s not qualified to be president of the United States, which is the job of vice president.

So strong, strong statement and at a critical time two weeks before the election.

VELEZ MITCHELL: I don`t know if I buy it, Amy Holmes, CNN political contributor, the timing. Why didn`t he do this back in September? I mean, why wait so long and then, voila, the next day, suddenly, he`s going to have a role as an adviser in the administration?

AMY HOLMES, CNN POLITICAL CONTRIBUTOR: Well, a lot of inside the beltway wags are asking that very question.

But, Jane, I think you hit on an even more important question, which is why is a Republican complaining about the so-called rightward shift of the party? That was the least credible explanation I thought that Colin Powell gave for his endorsement.

Let`s remember this is someone who counts as his political godfather Ronald Reagan, who actually brought the Christian right and the Christian Coalition into the Republican tent. You know, he has served under three Republican presidents, all of whom are pro-life.

Colin Powell has always had an uneasy relationship with the right wing of the Republican Party. He is pro choice. He is staunchly pro affirmative action. He has said that.

And I think that this endorsement wasn`t exactly for the reasons that he said on "Meet the Press." And as a black conservative, I`d be curious to learn more.

VELEZ MITCHELL: Peter Fenn, I want to ask you about this whole Supreme Court thing. It`s sort of cryptic to me. What issues are connected to his fear of more conservatives being appointed to the Supreme Court?

FENN: I`ll tell you, I think that Colin Powell is a very moderate, very judicious guy. And I think his concern was that what we need on this court are people who make decisions not on the basis of a strict ideology, right or left, but someone who really looks at the facts and the arguments and goes there. And he`s not seeing that.

And look, today Sarah Palin said she wants a constitutional amendment against gay marriage. Sarah Palin says she is not for the right to choose even in the cases of rape and incest, which of course, is also in the Republican Party platform.

These things concern someone who is moderate, who has a sense of the country, who even though a strong Republican over all these years, he basically, I don`t think, made his decision up, though, on this, because this has been true since August. If he was concerned about -- about that part of it, he could have made it a long time ago. It`s mainly the economy and the Palin pick that got him, I think.

HOLMES: But, no, Jane, what troubles me is he`s hanging this on Sarah Palin where, if we reflect back to April in an interview with Diane Sawyer, he was making very positive and supportive noises about Barack Obama back then. He was a committed undecided when the contest was between John McCain, Obama and Hillary Clinton.

VELEZ MITCHELL: But he wants...

HOLMES: He said all three of them were friend of his. That`s not something a Republican says when a Republican has just clinched the nomination for the Republican Party.

This is someone who has been looking at Barack Obama for quite some time, weighing whether or not he wants to make that endorsement. And on Sunday he decided to do that.

One more thing I`d like to add. He said that it was generational. Well, you know what? His son, Michael Powell, is a McCain supporter and a McCain surrogate. So his son sees it a little bit differently.

VELEZ MITCHELL: I can`t figure those Republicans out.

Hold on one second. You guys, you`ve got to stop right there. We`re going to pick up this discussion in 30 -- just 30 seconds.

(COMMERCIAL BREAK)

VELEZ MITCHELL: Back now with my terrific panel, Amy Holmes and Peter Fenn.

Powell also weighed in on the tone of McCain`s campaign and said he wasn`t handing out "A`s" for awesome, to put it mildly. Listen to this.

(BEGIN VIDEO CLIP)

POWELL: And I`ve also been disappointed, frankly, by some of the approaches that Senator McCain has taken recently, or his campaign has, on issues that are not really central to the problems that the American people are worried about. That`s not what the American people are looking for. And I look at these kinds of approaches to the campaign, and they trouble me.

(END VIDEO CLIP)

VELEZ MITCHELL: You know, Peter Fenn, I think that`s his most effective argument, because basically he`s saying that it`s scare tactics. We should be talking about the economy, and we`re talking about a Bill Ayers and accusing Obama of being a socialist. And he`s saying, basically, "No, guys, I don`t want to be in that party if that`s what that party is doing."

FENN: Exactly. I mean, he`s very concerned about where this economy is going, what the two candidates are saying about that. He finds this not the John McCain he knew. I think it takes -- you know, it takes a crazy kind of a campaign to move somebody like Colin Powell, and it did it.

And, you know, he gave money, as you pointed out, Jane, to the McCain campaign. So here`s a guy who recognizes, I think, that the John McCain of 2000 would not vote for the John McCain of the 2008 campaign, and that bothers him.

VELEZ MITCHELL: But, Amy Holmes -- yes, Powell`s got problems as well. I mean, he obviously was the one who made the case for invading Iraq before the United Nations Security Council back in 2003. Now he`s going to be an adviser to a guy who was always against the war? Are we going to see a lot of arguments in the Oval Office?

What role exactly is Powell go to play, I want to know. What do you think?

HOLMES: That is a long way off. I don`t think we can speculate about it.

VELEZ MITCHELL: Let`s speculate!

Holmes: Maybe he`s an ambassador to Africa or maybe he`s a national security adviser. Who knows?

But going back to the question about the tone of the campaign. Has he never been through a presidential campaign before? Has he never seen campaigns go at each other in pretty tough, difficult, you know, ads?

I mean, this is -- if you reflect back to 2000, Al Gore, the NAACP, and the truck-dragging ad the weekend before the election, almost accusing George Bush of supporting lynching.

FENN: That wasn`t -- that wasn`t Al Gore`s ad.

HOLMES: Well, it was an NAACP ad in support of Al Gore.

VELEZ MITCHELL: You know what, though?

HOLMES: It was nasty. Hold on. We saw Barack Obama put out an Hispanic language ad accusing McCain of having (SPEAKING SPANISH), two faces, as if he doesn`t want Mexicans coming into this country. That was pretty nasty.

VELEZ MITCHELL: You know what? I think actually quite the opposite. When I see Barack Obama during the debates, he is incredibly restrained, as if knowing that being the person he is, with his background, he has to be very careful about attacking a man who is senior to him. And he has to play it very safe, particularly because of who he is.

Meantime, McCain is ignoring him in the first debate, not looking at him in the face or referring to him in another debate as "that one" or saying, "Well, if you went down there, you might better understand." Condescension. So I`m not sure...

HOLMES: Like we`ve never seen that in a debate before. I mean, Al Gore rolling his eyes and sighing...

FENN: Oh, I thought that was a great idea, Amy.

Let me say one thing, though, about this. You know, I think in these three debates, I have to agree with Jane. I think poor -- poor John McCain was kind of auditioning for "Grumpy Old Men," and he got the lead after the third debate. The guy has to lighten up. He was much better in the Al Smith dinner...

VELEZ MITCHELL: He was great.

FENN: ... than he has been in those three debates, I`ll tell you.

VELEZ MITCHELL: I agree with you. He was -- McCain was great at the Al Smith dinner. And I was like where has this guy been? I like that John McCain.

All right. Hang on for one second, because we`re going to be right back.

Love her or hate her, we all agree lady Sarah Palin has done a fantastic job rallying the conservative base with such witticisms as, "It`s great to be in the pro-America parts of the country." So if this whole national office thing doesn`t work out, how about a career in comedy, Sarah?

(COMMERCIAL BREAK)

VELEZ MITCHELL: So on top of the grim poll numbers and this Colin Powell endorsement, it doesn`t seem like the campaign mojo is working in McCain`s favor. Right now, anyway. Chris Wallace put it a little more bluntly.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, HOST, "FOX NEWS SUNDAY": Have you considered, have you even dealt in your mind with the possibility that you could lose? And could you live with that?

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Oh, sure. I mean, I don`t dwell on it, but, look, I`ve got a wonderful life. I have to go back and live in and be in the United States Senate representing them. Don`t feel sorry for John McCain, and John McCain will be concentrating on not feeling sorry for himself.

(END VIDEO CLIP)

VELEZ MITCHELL: You know, he may have a point. Maybe we should be feeling sorry for Barack Obama. Between the anti-American socialist liberal, palling around with terrorists talk from the GOP, should he win, will they send an Obama administration literally limping into the White House?

I`m back with my fantastic panel, the always wonderful Amy Holmes, a CNN political contributor and a former speech writer for Bill Frist; and Peter Fenn, a former Gore adviser and Democratic strategist.

Peter, is this really a kamikaze attack or maybe we could also call it a scorched earth policy? Is the Republican mentality right now, if we`re going down, hey, we`re taking you with us?

FENN: Well, you know, I have talked to a lot of my Republican friends, Jane, and they`re very concerned about the Senate and the House. And they`re really afraid that there`s going to be a replay of 1998. You may remember that Newt Gingrich decided at that time that he was going to go after Bill Clinton and Monica Lewinsky, and they created ads about it, and it just led to a terrible result for the Republicans.

So they`re a little concerned that these personal attacks, that not concentrating on the economy, on the issues of experience and who can govern for the next four years, is going to hurt them.

So, you know, I think there is a little bit of that. And I that, you know, that in this case, that what John McCain is doing is he`s listening to advisers, as Bill Kristol says, he probably shouldn`t be listening to.

VELEZ MITCHELL: And, you know, Amy Holmes, every election season we hear all the candidates say we want a bipartisan approach. We want to unify the country. George W. Bush said it. And then it continues to be more and more divisive to the point where we have almost two countries, the red state and the blue state mentality, that are becoming ever more rigid and confrontational to the point can we have a reasonable discussion in government or out about anything?

HOLMES: Well, you know, George Bush did try bipartisanship. He passed the No Child Left Behind Act with Ted Kennedy and teachers unions, and Democrats turned around and attacked and attacked and attacked that.

I worked in the Senate for Senator Bill Frist when he put together the prescription drug plan with Democrats. It was passed, and Democrats turned around and attacked and attacked and attacked it. You know, some political scientists say, you look at the house, you look at those districts, the way they`ve been gerrymandered, they`ve been gerrymandered to the extremes.

So when you have -- whether it`s Republican or Democratic leadership in the House, it`s going to be extremely partisan.

But on the Senate side -- on the Senate side, you have people who are winning across the state, so maybe there`s more chance of bipartisanship there.

But if Barack Obama is elected on November 4 with Nancy Pelosi and Harry Reid in charge, and if Reid gets a filibuster-proof majority in the Senate, boy, I don`t think you`re going to see any bipartisanship. I think you`re going to see a liberal train just running way off the tracks.

VELEZ MITCHELL: Well, wait. I`ve got to give Peter Fenn, the Democratic strategist, a chance to respond to that.

First of all address the whole issue that George W. Bush has been this great uniter who was thwarted by the Democrats. I mean, can I say two words: Karl Rove? Karl Rove.

FENN: Amy, I love you, but, you know, the problem with No Child Left Behind was they left the money behind.

And as for prescription drug benefits, boy, you know, when the Democrats said, "Look, we ought to have the importation from Canada and other places," the Republicans shut it down.

So look, the trouble with this administration over eight years is it came in under the promise of bipartisanship, but it was quickly my way or the highway.

My sense of Barack Obama, I will say this -- my sense of Barack Obama is that he is a very, very moderate, moderating influence, that this is a very pragmatic person. He`s shown it his entire life. And I don`t think you`re going to have any runaway trains here. And I think he`s going to work very closely with -- with the leaders of both parties because these problems are so tough, so severe, so hard, we have got to get together on this economy. We cannot do it with slings and arrows.

VELEZ MITCHELL: Well, that`s his -- that seems like it`s his approach as a consensus builder, he always seems to find a commonality.

HOLMES: This is someone who would be considered the most liberal senator in the United States Senate, who has not reached across aisles.

VELEZ MITCHELL: No, no, socialist, remember? We`re calling him a socialist now.

HOLMES: Well -- well, let`s face it. Last week he said that he favors income redistribution. That is -- that is a socialist mindset right there.

(CROSSTALK)

HOLMES: He has a moderate face -- he has a moderate face, but I think his politics are much further to the left than he`s willing to admit.

VELEZ MITCHELL: Amy, I have to just ask you about this whole anti- American thing. I mean, all those comments about the pro-American parts of the country, and it`s being -- it`s resonating with all -- a lot of the GOP operatives. Is that really the way to go, sort of -- it smacks to some people of McCarthyism almost.

HOLMES: No, I don`t think that that`s the way to go, and I think that whoever becomes president is president of all of us. And I said on Friday, you know what? I`m a blue state gal with red state politics. I like radicchio and arugula and mozzarella and proscuitto. I like all of those things.

VELEZ MITCHELL: That makes you Italian, honey.

HOLMES: I just happen to be conservative in my politics.

And one of the great appeals of Barack Obama from his speech in 2004 was his promise to bring us together. Whether or not he`s going to be able to do that, particularly given his left-wing politics, I don`t know if that`s true.

But I think that John McCain and Sarah Palin need to be talking about how they`re going to bring this country together after a very difficult, divisive war in Iraq where you see public opinion turning against it because we still need to win there and need a commander in chief to do that.

VELEZ MITCHELL: All right. Well you...

FENN: I`ll agree with that.

VELEZ MITCHELL: Get the last word on that. And we`re going to wrap it there. Thank you so much. Sarah Palin rocked the Alaska rap this weekend. "SNL" fabulous ratings. We`re going to show you and debate it all, next.

(COMMERCIAL BREAK)

VELEZ MITCHELL: Love her or hate her, we`ve got to give credit where credit is due. Sarah Palin went on "Saturday Night Live," and she was brilliant. She was hilarious. She did a great job. Quite frankly, it`s a lot more than I can say for most of the skits they`ve been putting out the air in the last few years.

But did busting out to Alaska rap do more for her as a person, as a personality, than it did for her campaign? Back again -- we liked this panel so much, we`re bringing them back for another segment: Amy Holmes and Peter Fenn.

Peter, "SNL" got its highest rating since something like 1994, stupendous numbers. So it`s great for "SNL," but was it good for Sarah Palin?

FENN: Listen, any time you can get those kind of ratings, I suppose it`s good.

I wish she`d done the rap song, though. She declined to do the rap song. I think the problem with Sarah Palin is, you know, it`s great she went on "Saturday Night Live" but how about going on "Meet the Press" or "Face the Nation" or maybe, you know, George Stephanopoulos or maybe come on your show, Jane? I mean, come on, Sarah, answer a few questions.

VELEZ MITCHELL: Sarah, you`re invited. You`re officially invited. Please come on over. You can rap. You can do this. You can do whatever you want. We want to ask you a couple of questions.

Amy, do you think this helped her, hurt her? Was it a wash? Is she going to become sort of the Al Gore of comedy like Al Gore lost an election, and yet he`s known for his environmentalism? She perhaps might lose an election, perhaps not, but if she does she`ll be known for her comedic skills?

HOLMES: Well, she may lose an election but I think she certainly won the public`s fascination and interest in her. I mean, she has been just gangbusters for television business, whether it was for "Saturday Night Live" or for the vice-presidential debate that got historically huge numbers. I think that this was great for her in terms of, you know, getting that name idea. Politicians, they fight tooth and nail and claw just to get the public to know who they are. Sarah Palin is not going to have that trouble.

And, you know, it`s where does she go from here, whether that`s, you know, into the White House with John McCain or a political future in the Republican Party in 2012, in the Republican primary then. It`s all up to her.

But I think that "Saturday Night Live" showed her to be charming, gracious, and having confidence and courage to go into the lion`s den and I think come out smiling.

VELEZ MITCHELL: Well, I think, Peter Fenn, no matter how you feel about her, you got to admit she has got spunk.

FENN: She`s got spunk.

VELEZ MITCHELL: She definitely doesn`t -- she`s not timid. She`s not going to win the timidity award.

FENN: Tina Fey is pretty busy. I mean, maybe she can go substitute now for Tina Fey in future editions. But it is interesting to see now -- maybe we ought to create a celebrity ad here on the Democratic side about Sarah Palin, you know. I don`t think I`ll be comparing her to Paris Hilton, though.

VELEZ MITCHELL: Well, how about in four years, Palin for president, Paris Hilton for vice president?

FENN: There you go. What a ticket.

VELEZ MITCHELL: Oh, my gosh. You know what was really wild is that I couldn`t really tell the difference between Tina Fey and Sarah Palin. In fact, when she walked off and the other walked on, I was like, "I`m all confused. What`s going on here."

It`s fascinating that comedy is so brilliant. And I always say that the smartest people I have ever met are the comedy writers. I mean, you meet them in Hollywood. They`re bitter. They`re sarcastic. But they`re so smart and so funny.

Amy, have they just stolen the show this election season?

HOLMES: Well, clearly "Saturday Night Live" has done very well this election season with Sarah Palin. We weren`t talking about it before Sarah Palin. I mean, you know, "Saturday Night Live" was just a show on Saturdays that some young people watch, but it wasn`t really that influential in terms of what politicians were talking about. A little bit with Hillary Clinton, the Democratic primary and some of the spoofs and skits about her.

And she went on "Saturday Night Live." But certainly Sarah Palin has been Tina Fey`s best moves.

VELEZ MITCHELL: Got to leave it there. Fabulous people.

Now a question. It`s always sunny in Philly, right? Wrong, at least not when you`re talking about porn. I will explain.

(COMMERCIAL BREAK)

VELEZ-MITCHELL: How the heck do we crawl out of this economic nightmare? Basically, the powers that be, a one trick pony suggesting the same thing they always suggest. Let`s spend, spend, spend our way out of this. The Federal Chairman today, high-fived the idea of a new round of government stimulus.

We just had a round not long ago remember, which resulted in those $600 to $1,200 tax rebate checks. That didn`t helped, people. And now they want to give us consumers another zinger of stimulation.

It`s kind of like offering somebody who has had three cups of coffee a fourth cup of coffee. You can get over-stimulated. The hope that we Americans spend, spend, spend and spend and that`ll get the economy up and running again.

You know it makes sense in that most of our economy is based on consumer spending. But there are a couple of enormous problems with this idea.

Problem Numero Uno, wild out of control consumer spending is what got us into this mess in the first place, remember? People bought overpriced houses they couldn`t afford and then they looted them by taking out home equity loans and second mortgages so they could buy more giant TV screens and cappuccino makers that look like spaceships and all the other stuffs they didn`t really need. Then when the housing bubble burst they were left upside down and underwater.

Problem Numero Dos, most Americans already have all the stuff they need. They really don`t need to go out and shop more.

And problem number three, all that unnecessary consumption is a massive, massive contributor to global warming, which both candidates have vowed to do something about.

Now, that brings me back to my original question. How the heck do we get out of this economic mess? Does it have to be by spending?

With me now Chris Hayes, Washington editor for "The Nation;" Bob O`Brien, stocks editor for Barron`s online and John Tamny, editor for Real Clear Markets and senior economist at H.C. Wainwright Economics. Thank you, gentlemen.

Let`s start with you, Chris Hayes, do we need to take a totally fresh look at the economy and examine some of our fundamental underlying belief systems and premises like the biggest premise of all, that domestic consumer spending is the only key to economic prosperity?

CHRISTOPHER HAYES, THE NATION EDITOR: Yes, I think we do. I mean, I think that there`s a few things that we have to look at.

One, we`ve seen tremendous underinvestment or investment in very sort of fleeting things like McMansions and X serve during this housing boom. And we need investments in things that will increase in the productive capacity of this government, and of the economy and also do things like reduce our carbon footprint.

And number two, I will disagree a little bit in so far as I think the problem wasn`t so much consumerism it was the leverage that was created whereby consumers were taking on more and more debt. And a lot of the reasons that was happening was that wages were just stagnating for ordinary working people. We need an economy that works for working people so that you don`t have people mired in this debt and people actually saving and investing, which is what pushes an economy forward.

MITCHELL: Well, Bob O`Brien, you`re the editor on stocks. Explain something to me because I`m just the average Jane, like -- remember that average Joe, Joe the plumber. I`m Jane, the journalist, trying to make a living here.

And it seems like we`re all drowning in debt and the first stimulus plan didn`t work. We already gave people checks. It didn`t help. Look where we`re at.

So why another stimulus plan?

BOB O`BRIEN, STOCKS EDITOR, BARRON`S ONLINE: Yes, it`s a silly idea. I mean the only purpose behind it is a nakedly political one, which is let`s at least leave people with the impression that this administration is doing something for them in the hopes that we can at least get a couple more Republicans elected this November and try and neutralize some of the advantages that the Democrats apparently have heading into this election.

But ultimately this is going to be, if it goes forward, a very failed process because of the liquidity risks out there in the market. Take a look at it -- if the government gives another, what, $150 million, $200 million to those consumers but the strapped consumers don`t spend it the way they didn`t spend the first round of stimulus, then all of a sudden, the Fed has pulled the trigger on the last bullet in the gun and it`s got nothing left to do here and you`re going to end up exacerbating what`s already clearly a recessionary environment in this economy.

MITCHELL: But John Tamny, I want to ask, why is that the last bullet in the gun?

One of the reasons people aren`t spending is that they`re finally getting the idea, maybe I have all the junk I need, it`s filling up my garage, it`s filling up all my closets, I don`t use the stuff that I already have. I`ve got an SUV that they tricked me into buying by saying how glamorous it was and it gets 14 miles to the gallon. I`ve got to get rid of that, too.

So people don`t really want to spend more and they don`t need to spend more. Yet, around the world, there are people in India, for example, millions of them, living without as much as a single toothbrush. There are millions of people around the world who could benefit from having cell phones.

Ok. Why don`t we retool our economy to give the people who really need stuff, stuff instead of trying to force stuff down the throats of people who already have too much stuff?

JOHN TAMNY, REAL CLEAR MARKETS: Well, I would say a couple things there. I think stimulus is actually worse than the Fed`s final bullet. The stimulus is nothing more than legalized thievery whereby the government reaches into one set of pockets, takes money out and puts it into another set of pockets.

So it does nothing work for economic growth, is consumption itself is not economic growth. Work is. If we want to get the economy moving again, what I think we need to do here, the bullet the Fed and Treasury have is to stabilize and strengthen the dollar. That has eviscerated middle class incomes for years and has made the average American far poorer as a result.

So you could fix that and probably some of panelists would agree. I think you can always use tax stimulus as in lowering the penalty on success yet people are going. But this idea that we can give people money forcing the economy and get them to spend to grow the economy is laughable; it`s never work before and it won`t work this time.

MITCHELL: Well, Bob O`Brien, I`m going to get back to my point again. And I`m saying it over and over again.

Do we really need to rethink our society? Is this crisis an opportunity for us to reinvent ourselves? Instead of being a consumer society, maybe an of service society, we have all this knowledge and expertise, perhaps by exporting it around the world we could profit and we could also help all these third world countries that need so much.

O`BRIEN: Well, and how about becoming a saving society. We have the lowest rate of real savings of any developed nation around the globe. I mean, people make comparisons to our economy versus, say, Japan in the early 1980s. The difference is Japan -- Japanese citizens typically save up to 25 percent of their salary. We don`t save anywhere near that. And that`s the lesson we should be reinforcing here.

You know, one of the things that convince people to simply spend all the money that they were taking in was the presumption that they had this pillow of their investment income that was going to cushion them.

My 401(k) is fine, my retirement account is fine. Well, guess what, folks, your 401(k) is worth 40 percent less than it was a year ago and you`re going to have to make up some of that by saving.

MITCHELL: You`re damn tooting about that. Chris Hayes of "The Nation," we just hit on a great point, that people don`t regard their home as their hearth and something emotional. It`s an investment vehicle to be used. Is the consumer mentality making us make crazy decisions like looting the value of our home by taking out all of these loans on it?

HAYES: Yes, I`m not quite sure it`s the consumer mentality so much. I mean, clearly there is a cultural aspect, right? We live in a consumer society, it`s very consumer driven. But actually think that there`s a lot of structural factors.

I mean, look, interest rates were low. It was rational to take out home equity loans when you could -- when your house value was going up.

MITCHELL: No, but here`s what I`m saying, I`m going to jump in. My dad, his whole goal in life was to pay off the house. Now that`s what idiots do. They pay as little as possible so they can have the deductions and they can leverage this and leverage that. And look what happened.

HAYES: Yes. But a lot of that was -- we should be clear, right? A lot of that was policy mechanisms. I mean, here people -- because a lot of consumers made very rational choices. When you have a house that`s going up in value and when interest rates are historically low -- I mean, let`s remember, Greenspan kept these interest rates very, very low. Even when people said there was a housing bubble, right?

People made, they`re in aggregate, people were making I thought rational decisions. You`re right, there is that sort of debt culture that`s part of all this but there`s also structural policy things that are part of this and we`ve got to take a look at them as well.

MITCHELL: All right, that`s it.

Hang in right there, guys, but let`s try to go up here and change the mentality a little bit. And I`m talking to myself, too. We all have to do it.

It`s time to talk about the "S" word, socialism; conservatives use the term every time they mention Barack Obama practically. Fair charge or smear tactics? We`re going to discuss that hot issue next.

RICHELLE CAREY, HEADLINE NEWS CORRESPONDENT: I`m Richelle Carey. This is your "Headline Prime Newsbreak."

You could be getting another check from Uncle Sam. Federal Reserve Chairman Ben Bernanke told Congress Monday that another stimulus package may be needed to boost the economy. Experts say Bernanke`s testimony increases the chances that a stimulus package will be passed.

Beginning next year, if not before, Nebraska`s safe haven law could change to protect "babies" only up to 3 days old. Right now, there`s no age limit, so parents have been abandoning kids as old as 17 at hospitals without facing prosecution. Nebraska speaker of the legislature says 40 out of 49 Senators support the new age limit.

And a school bus carrying dozen of preschoolers overturned Monday in New Jersey while going around a curve. New York police say four adults and 25 children were on board when the bus flipped on an interstate highway exit ramp. No one was seriously hurt but about half the kids have minor injuries.

Keep it here and thanks for watching.

I`m Richelle Carey.

(COMMERCIAL BREAK)

MITCHELL: The Republicans are throwing that "S" word around as in socialism. John McCain has attacked Barack Obama for telling Joe the Plumber-- which is a phrase I swore I would never use -- but he did tell Joe the Plumber it would be good for everybody if we quote, "spread the wealth around."

McCain seized on that choice of word to conclude that Obama wants a redistribution of wealth which the GOP candidate calls, quote, "one of the tenets of socialism." Now many in McCain`s base are feeling super energized by this, they love it, it`s like a swing of red bull.

But a lot of other people, even some Republicans, are livid that McCain made that leap. Was that the straw that broke Colin Powell`s allegiance to the Republican Party? Who knows, but suffice it to say Powell considers McCain`s labeling of Obama as a socialist a wildly unfair stretch.

(BEGIN VIDEO CLIP)

COLIN POWELL, FORMER SECRETARY OF STATE: And now I guess the message this week is we`re going to call him a socialist. Mr. Obama is not a socialist because he dares to suggest that maybe we ought to look at the tax structure that we have.

Taxes are always a redistribution of money and there`s nothing wrong with examining what our tax structure is or who should be paying more or who should be paying less. And for us to say that that makes you a socialist is I think is an unfortunate characterization that isn`t accurate.

(END VIDEO CLIP)

MITCHELL: We`re back with our fabulous panel, Chris Hayes, Washington editor for "The Nation;" Bob O`Brien, stocks editor for Barron`s online; and John Tamny editor for Real Clear Markets and senior economist at H.C. Wainwright Economics.

Let`s begin with Chris Hayes, I have some trouble saying that Wainwright, let me say that three times.

Chris, socialist is a very emotionally loaded word. It conjures up, for me anyway, a bunch of not so happy people in matching green applets and caps marching toward communes. Is using the "S" word basically the same thing as using a slur?

HAYES: Well, no, I mean I think it`s a silly, silly exaggeration. I mean now look, I actually have actual friends who are actual socialists -- and let me tell you they don`t think Barack Obama --

MITCHELL: You do?

HAYES: I do. And I`m saying this on national television; they don`t believe Barack Obama is one of them. I`ll tell you that much.

I mean, look, what Colin Powell said is right. Progressive taxation has been a hallmark of the American economic project. Andrew Carnegie paid the government 100 percent inheritance tax. Dwight Eisenhower provided over a tax structure that on top marginally of 90 percent. Milton Friedman developed the earned income tax credit. Nixon toyed with the guaranteed minimum income.

All of these by John McCain`s own light would make all of these men from Carnegie to Eisenhower to Nixon to Friedman, socialists. It`s a ludicrous and patently absurd charge.

MITCHELL: Well, beyond that, Bob O`Brien, who is the stocks editor over at Barron`s, critics are saying how could you possibly call Barack Obama a socialist when the Bush administration has presided over this massive federal deficit and the federal debt is getting to the point we have to use phrases like quadrillion, on top of that was just bailed out of banks or in a process of it to the tune of $250 billion which is part of a $700 billion rescue of these financial services sector. Is that not socialism?

O`BRIEN: Oh, it`s absolutely is socialism.

But the Republicans, the administration has had a problem with nomenclature since this entire process began. Henry Paulson appeared on Capitol Hill three weeks ago and said, let`s bail out Wall Street banks and then was surprised to find out that that was not a populist sentiment that`s shared by an electorate out there or by all those Republicans and Democrats that are running for re-election this time out.

They were horrified at what he said. And the curious thing is, in some ways, we`re not being socialistic enough with this program. If you look at what Europe is doing, Europe is at least, when it`s giving the money to these banks, it`s at least taking positions on the board. It gives them the authority to do things like limit executive compensation.

We`re not doing that. We`re specifically saying, we`re not going to influence the control or direction of these companies, which means that these executives are free to plunder the company the way they did for months.

MITCHELL: It`s sort of like saying I`m going to buy the house but you can live there and you can keep destroying it as a renter. I got you. Yes.

Sarah Palin actually managed to work in the world socialism on the campaign trail yesterday. Listen to this.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN, (R) VICE PRESIDENTIAL CANDIDATE: But Joe the Plumber and Ed the Dairyman, I believe that they think that it sounds more like socialism. Friends, now is no time to experiment with socialism.

(END VIDEO CLIP)

MITCHELL: Now, Chris Hayes of "The Nation," is this equivalent to somebody on the left turning around and calling McCain a fascist? I`m not calling him a fascist, please understand that. But I`m saying, if you look at one side and you think socialists and on the other side maybe fascist, wouldn`t people be up in arms and outraged if somebody turned around and called McCain a fascist?

HAYES: Yes. I mean, I would say its equivalent in so far as they both have the same truth value which is to say absolutely none. I actually -- I don`t want to stand there and sort of go into disquisition on the fine grain distinctions on socialisms but there have been great Americans who have been socialists.

And Barack Obama is not one of them. Socialists do not have any power in the Democratic Party, I can tell you that on someone who does a lot of reporting on the party.

But its also -- there are libertarians all over Washington, D.C. Who think all sorts of radical things like we should get rid of public education or get rid of Social Security; and they`re part of polite society. There`s no reason that this has to be a slander of the same magnitude.

MITCHELL: I hear you. Now, in response, Obama had this to say. Listen to this.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D) PRESIDENTIAL NOMINEE: Lately he and Governor Palin have actually accused me of socialism. And you know why? This is his argument. This is his argument. Because I want to give a tax cut to the middle class. Because I want to give a tax cut to 95 percent of American workers.

(END VIDEO CLIP)

MITCHELL: John Tamny, essentially, what Colin Powell and Obama are saying, is that all taxation is some form of wealth redistribution. You take taxes from somebody and you take money from them and then you spend it.

So the question is who`s benefiting? Would it be fair to say that it was sort of socialism for the rich under Bush and it might be socialism for the poor and middle class under Obama or not?

TAMNY: Well, it would be hard to say when the top one percent of taxpayers under Bush were paying, I want to say 30 percent of all federal revenues, that somehow this is a vacation for them. But I think that one thing that has to be pointed out, when Obama says he`s going to tax the rich, what he`s saying is he`s going to tax those who have capital, those who have money that might put it in the bank and might invest it.

So make no mistake about this, when you`re saying you`re going to tax the rich, what you`re doing is putting a bull`s eye on the wages of the poor because without capital there are no wages.

MITCHELL: Wait a second; we`ve been hearing that for eight years unfortunately --

TAMNY: And it`s true.

MITCHELL: We`ve had greatest gap between the super rich and poor, since the days of the robber barons.

Bob O`Brien, I`ll give you the last word on that one.

O`BRIEN: Yes, it certainly has been an era of great disparity here. But this whole argument, you wait for the moment when one of these guys is just going to break down and say, I`m rubber and you`re -- you know, I`m rubber, and you`re glue, and anything I say sticks to you.

VELEZ-MITCHELL: Yes. I got you; like I can do anything better than you can. It`s a childish phase that we`re going through in the campaign.

Thank you, gentlemen, Bob, John, Chris; fabulous guests. Thank the culture warriors are suiting up as we speak.

This time, the target is porno -- not that stinky (ph) genre of cinema -- I`m talking about the actual word, porno! Find out why it`s gotten folks so hot. And I`m not talking that kind of hot I`m talking hot, as in angry, next.

(COMMERCIAL BREAK)

VELEZ-MITCHELL: What two-syllable word starts with a p and ends with an o, and has been banned from a new movie`s advertising? Here`s a hint. It`s not psycho, but maybe that`s what we should be calling the nut jobs who have decided that stick figures and the word porno are too risque for movie titles.

Joining me now, Kim Serafin, senior editor of "In Touch Weekly." Who, Kim, is saying we cannot place ads for this movie called "Zack and Mary Make a Porno," because they`re offended by the word "porno." And I want to say it again, "Zack and Mary Make a Porno.

See, I said it, the sky didn`t fall down and I did not spontaneously combust.

KIM SERAFIN, SENIOR EDITOR, IN TOUCH WEEKLY: I know, I can`t believe you said it, I have to hold my ears!

Look, in fairness, I am not a parent to a young kid these days and I think it would be very tough to be a parent to a young child these days, because there are so many bad images that kids today are exposed to that I wasn`t exposed to when I was a kid.

However, I do feel that the anger towards this movie specifically and these movie posters -- it`s not even really the movie -- it`s the movie posters is kind of misplaced, because if you think about the other posters that are out there, the other titles of movies, this kind of seems not so bad in the long run. And the overall picture of it.

You know, I was thinking here in L.A., there is a big billboard I know they`re probably around the country, that for "Gossip Girl" that has a very risque kind of pose on it.

VELEZ-MITCHELL: I was thinking about how about "Saw?" A chain of films that`s all about torturing women and chopping them up and nobody cares, nobody is protesting.

SERAFIN: Yes, I can`t even watch when the trailers come on my TV, I grab for the remote to turn it, so I`m more offended by that. But even the "Gossip Girl" that says OMFG, I think you`d be more concerned for your child to say I know what OMG means, mom, but what does OMFG mean?

Even on the billboards, they say every parents` worst nightmare.

VELEZ-MITCHELL: It`s like saying I`m against murder so you can`t advertise "Murder She Wrote"?

SERAFIN: Exactly. Or you think about all the movies, "Apocalypse Now" and war movies and things that have drugs in them. For every Beverly Hills Chihuahua, there is a movie called "Sex Drive."

I think there are certainly a lot of bad images out there, but to put it all on this one movie seems a bit misplaced. Although, again, in fairness to other people, I think, obviously, the fact that there are stick figures --

VELEZ-MITCHELL: All right.

SERAFIN: Do make kids say, oh, what is that, because it looks like a cartoon.

VELEZ-MITCHELL: You have been very diplomatic, but I get it. It`s idiotic. Thank you, dear.

SERAFIN: They don`t mind the publicity, I`m sure.

VELEZ-MITCHELL: Thank you so much for stopping by tonight.

You know, there`s two kinds of conversations, one that happens on TV, and the other happens everywhere else. My goal is simply to be real. I`m trying!

Have a great night. And I will see you tomorrow.

END