Clinton Instructs Obama on Finance and Phil Gramm

In Wall Street Journal:

A running cliché of the political left and the press corps these days is that our current financial problems all flow from Congress's 1999 decision to repeal the Glass-Steagall Act of 1933 that separated commercial and investment banking. Barack Obama has been selling this line every day. Bill Clinton signed that "deregulation" bill into law, and he knows better.

In BusinessWeek.com, Maria Bartiromo reports that she asked the former President last week whether he regretted signing that legislation. Mr. Clinton's reply: "No, because it wasn't a complete deregulation at all. We still have heavy regulations and insurance on bank deposits, requirements on banks for capital and for disclosure. I thought at the time that it might lead to more stable investments and a reduced pressure on Wall Street to produce quarterly profits that were always bigger than the previous quarter.

"But I have really thought about this a lot. I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill."

One of the writers of that legislation was then-Senator Phil Gramm, who is now advising John McCain, and who Mr. Obama described last week as "the architect in the United States Senate of the deregulatory steps that helped cause this mess." Ms. Bartiromo asked Mr. Clinton if he felt Mr. Gramm had sold him "a bill of goods"?

Mr. Clinton: "Not on this bill I don't think he did. You know, Phil Gramm and I disagreed on a lot of things, but he can't possibly be wrong about everything. On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence.

"But I can't blame [the Republicans]. This wasn't something they forced me into. I really believed that given the level of oversight of banks and their ability to have more patient capital, if you made it possible for [commercial banks] to go into the investment banking business as Continental European investment banks could always do, that it might give us a more stable source of long-term investment."

We agree that Mr. Clinton isn't wrong about everything. The Gramm-Leach-Bliley Act passed the Senate on a 90-8 vote, including 38 Democrats and such notable Obama supporters as Chuck Schumer, John Kerry, Chris Dodd, John Edwards, Dick Durbin, Tom Daschle -- oh, and Joe Biden. Mr. Schumer was especially fulsome in his endorsement.

As for the sins of "deregulation" more broadly, this is a political fairy tale. The least regulated of our financial institutions -- hedge funds -- have posed the least systemic risks in the current panic. The big investment banks that got into the most trouble could have made the same mortgage investments before 1999 as they did afterwards. One of their problems was that Lehman Brothers and Bear Stearns weren't diversified enough. They prospered for years through direct lending and high leverage via the likes of asset-backed securities without accepting commercial deposits. But when the panic hit, this meant they lacked an adequate capital cushion to absorb losses.

Meanwhile, commercial banks that had heavier capital requirements were struggling to compete with the Wall Street giants throughout the 1990s. Some of the deposit-taking banks that were allowed to diversify after 1999, such as J.P. Morgan and Bank of America, are now in a stronger position to withstand the current turmoil. They have been able to help stabilize the financial system through acquisitions of Bear Stearns, Washington Mutual, Merrill Lynch and Countrywide Financial.

Mr. Obama's "deregulation" trope may be good politics, but it's bad history and is dangerous if he really believes it. The U.S. is going to need a stable, innovative financial system after this panic ends, and we won't get that if Mr. Obama and his media chorus think the answer is to return to Depression-era rules amid global financial competition. Perhaps the Senator should ask the former President for a briefing.

It's the Derivatives, Stupid!

Why Fannie, Freddie and AIG Had to Be Bailed Out

"I can calculate the movement of the stars, but not the madness of men."
– Sir Isaac Newton, after losing a fortune in the South Sea bubble

Ellen Brown writes:

Something extraordinary is going on with these government bailouts. In March 2008, the Federal Reserve extended a $55 billion loan to JPMorgan to "rescue" investment bank Bear Stearns from bankruptcy, a highly controversial move that tested the limits of the Federal Reserve Act. On September 7, 2008, the U.S. government seized private mortgage giants Fannie Mae and Freddie Mac and imposed a conservatorship, a form of bankruptcy; but rather than let the bankruptcy court sort out the assets among the claimants, the Treasury extended an unlimited credit line to the insolvent corporations and said it would exercise its authority to buy their stock, effectively nationalizing them. Now the Federal Reserve has announced that it is giving an $85 billion loan to American International Group (AIG), the world's largest insurance company, in exchange for a nearly 80% stake in the insurer . . . .

The Fed is buying an insurance company? Where exactly is that covered in the Federal Reserve Act? The Associated Press calls it a "government takeover," but this is not your ordinary "nationalization" like the purchase of Fannie/Freddie stock by the U.S. Treasury. The Federal Reserve has the power to print the national money supply, but it is not actually a part of the U.S. government. It is a private banking corporation owned by a consortium of private banks. The banking industry just bought the world's largest insurance company, and they used federal money to do it. Yahoo Finance reported on September 17:


"The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters."

Treasury bills are the I.O.U.s of the federal government. We the taxpayers are on the hook for the Fed's "enhanced liquidity facilities," meaning the loans it has been making to everyone in sight, bank or non-bank, exercising obscure provisions in the Federal Reserve Act that may or may not say they can do it. What's going on here? Why not let the free market work? Bankruptcy courts know how to sort out assets and reorganize companies so they can operate again. Why the extraordinary measures for Fannie, Freddie and AIG?

The answer may have less to do with saving the insurance business, the housing market, or the Chinese investors clamoring for a bailout than with the greatest Ponzi scheme in history, one that is holding up the entire private global banking system. What had to be saved at all costs was not housing or the dollar but the financial derivatives industry; and the precipice from which it had to be saved was an "event of default" that could have collapsed a quadrillion dollar derivatives bubble, a collapse that could take the entire global banking system down with it.

The Anatomy of a Bubble

Until recently, most people had never even heard of derivatives; but in terms of money traded, these investments represent the biggest financial market in the world. Derivatives are financial instruments that have no intrinsic value but derive their value from something else. Basically, they are just bets. You can "hedge your bet" that something you own will go up by placing a side bet that it will go down. "Hedge funds" hedge bets in the derivatives market. Bets can be placed on anything, from the price of tea in China to the movements of specific markets.

"The point everyone misses," wrote economist Robert Chapman a decade ago, "is that buying derivatives is not investing. It is gambling, insurance and high stakes bookmaking. Derivatives create nothing."*1 They not only create nothing, but they serve to enrich non-producers at the expense of the people who do create real goods and services. In congressional hearings in the early 1990s, derivatives trading was challenged as being an illegal form of gambling. But the practice was legitimized by Fed Chairman Alan Greenspan, who not only lent legal and regulatory support to the trade but actively promoted derivatives as a way to improve "risk management." Partly, this was to boost the flagging profits of the banks; and at the larger banks and dealers, it worked. But the cost was an increase in risk to the financial system as a whole.*2

Since then, derivative trades have grown exponentially, until now they are larger than the entire global economy. The Bank for International Settlements recently reported that total derivatives trades exceeded one quadrillion dollars – that's 1,000 trillion dollars.*3 How is that figure even possible? The gross domestic product of all the countries in the world is only about 60 trillion dollars. The answer is that gamblers can bet as much as they want. They can bet money they don't have, and that is where the huge increase in risk comes in.

Credit default swaps (CDS) are the most widely traded form of credit derivative. CDS are bets between two parties on whether or not a company will default on its bonds. In a typical default swap, the "protection buyer" gets a large payoff from the "protection seller" if the company defaults within a certain period of time, while the "protection seller" collects periodic payments from the "protection buyer" for assuming the risk of default. CDS thus resemble insurance policies, but there is no requirement to actually hold any asset or suffer any loss, so CDS are widely used just to increase profits by gambling on market changes. In one blogger's example, a hedge fund could sit back and collect $320,000 a year in premiums just for selling "protection" on a risky BBB junk bond. The premiums are "free" money – free until the bond actually goes into default, when the hedge fund could be on the hook for $100 million in claims.

And there's the catch: what if the hedge fund doesn't have the $100 million? The fund's corporate shell or limited partnership is put into bankruptcy; but both parties are claiming the derivative as an asset on their books, which they now have to write down. Players who have "hedged their bets" by betting both ways cannot collect on their winning bets; and that means they cannot afford to pay their losing bets, causing other players to also default on their bets.
The dominos go down in a cascade of cross-defaults that infects the whole banking industry and jeopardizes the global pyramid scheme. The potential for this sort of nuclear reaction was what prompted billionaire investor Warren Buffett to call derivatives "weapons of financial mass destruction." It is also why the banking system cannot let a major derivatives player go down, and it is the banking system that calls the shots. The Federal Reserve is literally owned by a conglomerate of banks; and Hank Paulson, who heads the U.S. Treasury, entered that position through the revolving door of investment bank Goldman Sachs, where he was formerly CEO.

The Best Game in Town

In an article on FinancialSense.com on September 9, Daniel Amerman maintains that the government's takeover of Fannie Mae and Freddie Mac was not actually a bailout of the mortgage giants. It was a bailout of the financial derivatives industry, which was faced with a $1.4 trillion "event of default" that could have bankrupted Wall Street and much of the rest of the financial world. To explain the enormous risk involved, Amerman posits a scenario in which the mortgage giants are not bailed out by the government. When they default on the $5 trillion in bonds and mortgage-backed securities they own or guarantee, settlements are immediately triggered on $1.4 trillion in credit default swaps entered into by major financial firms, which have promised to make good on Fannie/Freddie defaulted bonds in return for very lucrative fee income and multi-million dollar bonuses. The value of the vulnerable bonds plummets by 70%, causing $1 trillion (70% of $1.4 trillion) to be due to the "protection buyers." This is more money, however, than the already-strapped financial institutions have to spare. The CDS sellers are highly leveraged themselves, which means they depend on huge day-to-day lines of credit just to stay afloat. When their creditors see the trillion dollar hit coming, they pull their financing, leaving the strapped institutions with massive portfolios of illiquid assets. The dreaded cascade of cross-defaults begins, until nearly every major investment bank and commercial bank is unable to meet its obligations. This triggers another massive round of CDS events, going to $10 trillion, then $20 trillion. The financial centers become insolvent, the markets have to be shut down, and when they open months later, the stock market has been crushed. The federal government and the financiers pulling its strings naturally feel compelled to step in to prevent such a disaster, even though this rewards the profligate speculators at the expense of the Fannie/Freddie shareholders who will get wiped out. Amerman concludes:

"[I]t's the best game in town. Take a huge amount of risk, be paid exceedingly well for it and if you screw up -- you have absolute proof that the government will come in and bail you out at the expense of the rest of the population (who did not share in your profits in the first place)."*4

Desperate Measures for Desperate Times

It was the best game in town until September 14, when Treasury Secretary Paulson, Fed Chairman Ben Bernanke, and New York Fed Head Tim Geithner closed the bailout window to Lehman Brothers, a 158-year-old Wall Street investment firm and major derivatives player. Why? "There is no political will for a federal bailout," said Geithner. Bailing out Fannie and Freddie had created a furor of protest, and the taxpayers could not afford to underwrite the whole quadrillion dollar derivatives bubble. The line had to be drawn somewhere, and this was apparently it.

Or was the Fed just saving its ammunition for AIG? Recent downgrades in AIG's ratings meant that the counterparties to its massive derivatives contracts could force it to come up with $10.5 billion in additional capital reserves immediately or file for bankruptcy. Treasury Secretary Paulson resisted advancing taxpayer money; but on Monday, September 15, stock trading was ugly, with the S & P 500 registering the largest one-day percent drop since September 11, 2001. Alan Kohler wrote in the Australian Business Spectator:

"[I]t's unlikely to be a slow-motion train wreck this time. With Lehman in liquidation, and Washington Mutual and AIG on the brink, the credit market would likely shut down entirely and interbank lending would cease."*5

Kohler quoted the September 14 newsletter of Professor Nouriel Roubini, who has a popular website called Global EconoMonitor. Roubini warned:

"What we are facing now is the beginning of the unravelling and collapse of the entire shadow financial system, a system of institutions (broker dealers, hedge funds, private equity funds, SIVs, conduits, etc.) that look like banks (as they borrow short, are highly leveraged and lend and invest long and in illiquid ways) and thus are highly vulnerable to bank-like runs; but unlike banks they are not properly regulated and supervised, they don't have access to deposit insurance and don't have access to the lender of last resort support of the central bank."

The risk posed to the system was evidently too great. On September 16, while Barclay's Bank was offering to buy the banking divisions of Lehman Brothers, the Federal Reserve agreed to bail out AIG in return for 80% of its stock. Why the Federal Reserve instead of the U.S. Treasury? Perhaps because the Treasury would take too much heat for putting yet more taxpayer money on the line. The Federal Reserve could do it quietly through its "Open Market Operations," the ruse by which it "monetizes" government debt, turning Treasury bills (government I.O.U.s) into dollars. The taxpayers would still have to pick up the tab, but the Federal Reserve would not have to get approval from Congress first.

Time for a 21st Century New Deal?

Another hole has been plugged in a very leaky boat, keeping it afloat another day; but how long can these stopgap measures be sustained? Professor Roubini maintains:

"The step by step, ad hoc and non-holistic approach of Fed and Treasury to crisis management has been a failure. . . . [P]lugging and filling one hole at [a] time is useless when the entire system of levies is collapsing in the perfect financial storm of the century. A much more radical, holistic and systemic approach to crisis management is now necessary."*6

We may soon hear that "the credit market is frozen" – that there is no money to keep homeowners in their homes, workers gainfully employed, or infrastructure maintained. But this is not true. The underlying source of all money is government credit – our own public credit. We don't need to borrow it from the Chinese or the Saudis or private banks. The government can issue its own credit – the "full faith and credit of the United States." That was the model followed by the Pennsylvania colonists in the eighteenth century, and it worked brilliantly well. Before the provincial government came up with this plan, the Pennsylvania economy was languishing. There was little gold to conduct trade, and the British bankers were charging 8% interest to borrow what was available. The government solved the credit problem by issuing and lending its own paper scrip. A publicly-owned bank lent the money to farmers at 5% interest. The money was returned to the government, preventing inflation; and the interest paid the government's expenses, replacing taxes. During the period the system was in place, the economy flourished, prices remained stable, and the Pennsylvania colonists paid no taxes at all. (For more on this, see E. Brown, "Sustainable Energy Development: How Costs Can Be Cut in Half," webofdebt.com/articles, November 5, 2007.)

Today's credit crisis is very similar to that facing Herbert Hoover and Franklin Roosevelt in the 1930s. In 1932, President Hoover set up the Reconstruction Finance Corporation (RFC) as a federally-owned bank that would bail out commercial banks by extending loans to them, much as the privately-owned Federal Reserve is doing today. But like today, Hoover's ploy failed. The banks did not need more loans; they were already drowning in debt. They needed customers with money to spend and invest. President Roosevelt used Hoover's new government-owned lending facility to extend loans where they were needed most – for housing, agriculture and industry. Many new federal agencies were set up and funded by the RFC, including the HOLC (Home Owners Loan Corporation) and Fannie Mae (the Federal National Mortgage Association, which was then a government-owned agency). In the 1940s, the RFC went into overdrive funding the infrastructure necessary for the U.S. to participate in World War II, setting the country up with the infrastructure it needed to become the world's industrial leader after the war.

The RFC was a government-owned bank that sidestepped the privately-owned Federal Reserve; but unlike the Pennsylvania provincial government, which originated the money it lent, the RFC had to borrow the money first. The RFC was funded by issuing government bonds and relending the proceeds. Then as now, new money entered the money supply chiefly in the form of private bank loans. In a "fractional reserve" banking system, banks are allowed to lend their "reserves" many times over, effectively multiplying the amount of money in circulation. Today a system of public banks might be set up on the model of the RFC to fund productive endeavors – industry, agriculture, housing, energy -- but we could go a step further than the RFC and give the new public banks the power to create credit themselves, just as the Pennsylvania government did and as private banks do now. At the rate banks are going into FDIC receivership, the federal government will soon own a string of banks, which it might as well put to productive use. Establishing a new RFC might be an easier move politically than trying to nationalize the Federal Reserve, but that is what should properly, logically be done. If we the taxpayers are putting up the money for the Fed to own the world's largest insurance company, we should own the Fed.

Proposals for reforming the banking system are not even on the radar screen of Prime Time politics today; but the current system is collapsing at train-wreck speed, and the "change" called for in Washington may soon be taking a direction undreamt of a few years ago. We need to stop funding the culprits who brought us this debacle at our expense. We need a public banking system that makes a cost-effective credit mechanism available for homeowners, manufacturing, renewable energy, and infrastructure; and the first step to making it cost-effective is to strip out the swarms of gamblers, fraudsters and profiteers now gaming the system.


*1. Quoted in James Wesley, "Derivatives – The Mystery Man Who'll Break the Global Bank at Monte Carlo," SurvivalBlog.com (September 2006).

*2. "Killer Derivatives, Zombie CDOs and Basel Too?", Institutional Risk Analytics (August 14, 2007).

*3. Kevin DeMeritt, "$1.14 Quadrillion in Derivatives – What Goes Up . . . ," Gold-Eagle.com (June 16, 2008).

*4. Daniel Amerman, "The Hidden Bailout of $1.4 Trillion in Fannie/Freddie Credit-Default Swaps," FinancialSense.com (September 10, 2008).


*5. Alan Kohler, "Lehman End-game," Business Spectator (Australia) (September 15, 2008).


*6 Ibid.

Alaska's 'First Dude' Digs Into Job Creation

The Associated Press reports:

Todd Palin _ oil worker, champion snowmobiler, hunter and commercial fisherman _ also has been boning up on mining lately in his role as Alaska's first spouse.

On two separate occasions last fall, the husband of the Republican vice presidential candidate boarded planes chartered by mining companies that want to dig for gold, zinc and lead in remote Alaska valleys.

The trips cost $1,005, according to Gov. Sarah Palin's financial disclosure forms, which described them as gifts. The travel showcased the niche Palin has filled in his wife's administration _ helping find jobs for Alaskans who, like him, didn't graduate from college.

Palin, a member of the United Steelworkers Local 4959, himself learned on the job. He began working in oil fields on Alaska's North Slope for BP Exploration Alaska in 1989, a year after he eloped with his high school sweetheart.

He took a leave from his position as a production operator at a Prudhoe Bay facility where oil is separated from water and natural gases when his wife became governor but returned six months later.

During the summer, Palin heads west to his birthplace in Dillingham to work in the Bristol Bay commercial salmon fishery.

In 2007, he earned $46,791 working part-time on the oil fields and fishing.

"For those of us who learn by touching and tearing stuff apart and for those who don't have the financial background to go to college, just being a product of that on-the-job training is really important," Palin told the Associated Press in an interview last year.

Todd Palin joined with state officials on the two mining trips, and the costs of his travel were disclosed by his wife as gifts in compliance with state ethics laws. The excursions coincide with a mini metals boom in Alaska fueled by high prices. Two new hard-rock mines are scheduled to open soon, and three more are on the drawing board. There are only four large metal mines active in Alaska now.

The companies that paid for the flights, a normal means of travel to remote and often roadless parts of Alaska, are both in the early stages of a lengthy approval process. Barrick Gold Corp. spent $805 flying Todd Palin in September 2007 to Donlin Creek, where it hopes to build an open-pit gold mine on Native-owned land. The company hasn't submitted any permit applications yet.

Palin, who sometimes refers to himself as "first dude," traveled with other state officials to the site. The company anticipates employing 150 people, making it the largest employer in the area.

An environmental consultant for the project, William Jeffress, also donated $1,000 to Gov. Sarah Palin's gubernatorial campaign. A company representative said that donation has little relevance in a process that requires hundreds of permits from federal and state authorities.

"It's hard to image what influence any governor would really have ... other than wanting to be kept informed," said Greg Johnson, a vice president for NovaGold Resources Inc., Barrick's partner in the project.

A month after the first visit, Todd Palin toured the Red Dog Mine, a lead and zinc operation in the northwestern part of the state. The $200 trip, which he took with Alaska's labor commissioner, was paid for by Teck Cominco Alaska Inc. and included a stop at a technical training center. That company is currently seeking permission to mine a new deposit, which would extend the life of the mine to 2031.

John Bitney, a childhood friend of the governor's who worked on her campaign and served as her legislative liaison until last summer, said Todd Palin was a common fixture in her office on the third floor of the state Capitol when he was in Juneau. But his role wasn't a formal one.

Bitney said that besides workforce development, Todd Palin showed interest in oil and gas issues and the shooting of wolves from aircraft to boost caribou and moose herds.

Palin's spokeswoman, Sharon Leighow, said Thursday that Todd Palin does not attend high-level cabinet meetings.

He does participate in the ceremonial duties of a first gentleman and recently hosted a tea at the governor's mansion in Juneau for former first ladies of the state.

Palin Accused Of Using 'Bridge To Nowhere" Issue To Gain Stature

The AP reports:

Before Alaska Gov. Sarah Palin was tapped by Sen. John McCain to be his presidential running mate, she made a shrewd political move, using the infamous "Bridge to Nowhere" issue to catapult herself onto the national political stage, critics say.

In her acceptance speech Friday, Palin described herself as a champion reformer who put a stop to the $400 million bridge project in Alaska in her effort to "end the abuses" of earmark spending in Congress.

With McCain at her side, Palin received thunderous applause when she mentioned the bridge during her acceptance speech in Dayton, Ohio.

"I have championed reform to end the abuses of earmark spending by Congress," Palin said. "In fact, I told Congress, I told Congress 'thanks but no thanks' on that Bridge to Nowhere.

"If our state wanted a bridge, I said we'd build it ourselves," she said.

Palin pulled the plug on the project last fall. The bridge would have connected the city of Ketchikan to its airport on a nearby island in southeast Alaska. The only way to the airport now is by water taxis.

McCain, Washington's most outspoken critic of pork barrel spending, frequently uses the Alaska bridge project to illustrate what's wrong with out-of-control special interest spending in Washington.

Andrew Halcro, who ran as an independent and came in third to Palin in the 2006 gubernatorial election, said Palin sang a different tune on the campaign trail, an accusation backed up by news stories.

According to the Ketchikan Daily News, the bridge issue came up on Sept. 20, 2006, during an appearance the gubernatorial candidates made in Ketchikan.

"The money that's been appropriated for the project, it should remain available for a link, an access process as we continue to evaluate the scope and just how best to just get this done," Palin is quoted as saying in the paper's edition on Sept. 21, 2006. "This link is a commitment to help Ketchikan expand its access, to help this community prosper."

The newspaper quotes Palin as saying, "I think we're going to make a good team as we progress that bridge project."

Not only did she express support for the bridge but seemed less concerned than himself and Democrat Tony Knowles, who finished second, over the cost, Halcro said Saturday.

Halcro, who has a Web site and blog that frequently takes shots at Palin, said it took bloggers hardly any time at all to zero in on her comments about the bridge in Friday's speech.

"It took bloggers less than two or three hours to pick up on her comments in her speech yesterday in Dayton and say, 'Wait a second, this is not what she said,'" Halcro said. "She has obviously changed her position for political purposes."

Halcro said Palin used the bridge project for political purposes. She timed the release of the news to make a big splash on the East Coast, he said.

"This was a shrewd political move. The thought was that she would establish a name for herself," he said.

The history of the bridge goes back several years. Former Republican Gov. Frank Murkowski, who had served as an Alaska senator for 22 years, wanted the bridge. Murkowski's longtime colleagues, U.S. Sen. Ted Stevens and Rep. Don Young, pushed the project through Congress. They secured $452 million in a federal transportation bill for two bridges, the one in Ketchikan and the other in Anchorage.

With pressure mounting over pork projects, Congress stripped the earmark, requiring instead that some of the money be used for an airport. Alaska eventually received about half the money. Palin last fall directed that money to transportation projects statewide instead of for Ketchikan's bridge.

Ketchikan Mayor Bob Weinstein, who campaigned for Knowles, said he was there in September 2006 when Palin visited Ketchikan with the other candidates and the bridge issue came up.

"She was asked about the bridge and she supported it," he said.

Then, last year she pulled the project without telling anyone in Ketchikan first, Weinstein said.

Palin "absolutely" used the issue for political purposes, Weinstein said, accusing the governor of playing to media outlets on the East Coast when she killed it.

"Look at how she communicated the decision to the community. It went east at 5 a.m. (Alaska time). That was the beginning of her effort to promote herself as a candidate for national office," he said.

Weinstein said at the time there was talk that Palin would challenge Stevens in this year's GOP primary.

Bill McAllister, Palin's press secretary, asked how could Palin have used the Bridge to Nowhere issue to propel herself into national politics when the overriding response to Friday's announcement was surprise?

"How could she have foreseen that she would be at this point now? Everybody is surprised by this development," McAllister said.

McAllister, who was a reporter for Anchorage television station KTUU during the 2006 campaign, said he remembers well Palin's position on the bridge project. She was lukewarm as a candidate and cooled to it as governor, he said.

"Of course when you become governor things come into much sharper focus than when you are a candidate," he said. "Then she is forced to pay very close attention to the fiscal realities of it."e

Palin Unqualified To Serve As Vice President

At Newsminer.com, Dermot Cole writes:

Sarah Palin’s chief qualification for being elected governor of Alaska was that she was not Frank Murkowski.

He was at a low point when he took out ads saying “Maybe I should consider a personality transplant,” but his presence in the 2006 GOP primary helped her capture the nomination and go on to beat Tony Knowles.

She did not win because of her conservative credentials, her grasp of policy details or because of her track record as the mayor of Wasilla, an office she won in 1996 by collecting 617 votes.

National GOP spokesmen—including the VP also-rans—went on and on Friday about how Palin is to “the right” of John McCain, that she is an “economic conservative” and that she will attract supporters of Hillary Clinton to the Republican party.

She is an engaging and charming politician and I have nothing negative to say about her character, her tenacity or her service to our state.

I don't even have major concerns about her performance as governor. She is smart and excels in dealing with people one-on-one.

I like what she did on oil taxes and think her gas line plan may work in the long run, though that won’t be clear for years.

This is one of the most stunning news events in the history of Alaska.

However, in no way does her year-and-a-half as governor of Alaska qualify her to be vice president or president of the United States.

One of the strange things Friday was that so many commentators and politicians did not know how to pronounce her name and had no clue about what she has actually done in Alaska.

Some claimed that she has gotten a gas pipeline going after three decades of inaction, which is far from the truth, while others said she is the most popular governor in the nation, so she must be doing something right.

What the national pundits didn’t say was that Palin has served as governor of Alaska during a time of unprecedented oil wealth, which has helped preserve her popularity.

She has not had to make difficult budget and tax decisions of the sort that cost Murkowski at the polls.

Perhaps the strangest claim repeated endlessly on the news channels is that she has proven she can cut taxes and reduce the size of government in Alaska. She may have cut taxes as mayor of Wasilla, but that's not the same as cutting taxes as governor of Alaska, where there is no state income tax or sales tax to cut.

When he was governor, faced with a growing gap between oil income and expenses, Murkowski proposed a series of budget cuts and tax increases that—along with the selection of his daughter Lisa to replace him in the Senate—made him the most unpopular governor in Alaska history.

By contrast, record oil prices since her election have helped Palin avoid anything as sensitive as cutting off the Longevity Bonus or proposing a tire tax or wildlife viewing tax.

The comments from GOP politicians about how she championed budget cuts, reduced spending and “stood up” to Sen. Ted Stevens on the “bridge to nowhere” are a distortion. The Alaska budget is growing, not shrinking. To claim that the $1,200 payouts due to Alaskans in September have anything to do with restraining government growth, as McCain supporters are doing, is false.

It's true that she deserves credit for collecting much of the excess cash rolling into the state treasury. She championed a multi-billion-dollar oil tax increase, against great opposition from the oil industry and leading power brokers in the GOP, at a time when oil prices were rising and the previous tax law had become suspect.

The old law was at the center of the political corruption scandal that continues to ensnare politicians other than Palin.

The tax increase proposed by the governor and approved by the Legislature has temporarily taken all pressure off the state government to reduce spending.

With her selection by McCain, Palin will be subjected to intense scrutiny by the national news media for the first time. It will be unlike anything she has seen in Alaska.

I may be proven wrong, but the decision announced by McCain strikes me as reckless. She is not prepared to be the next president should something happen to McCain.

The main charge against Democrat Barack Obama is that he dose not have the track record to be president. The choice of Palin effectively removes that from the GOP arsenal.

Palin said Friday, in an exchange carried on CNN, that her 13 years as a member of the Wasilla City Council from 1992-96, mayor of Wasilla from 1996-2002 and governor for a year-and-a-half add up to “good experience” for the vice presidency.

McCain and Palin will have to prove that to the American people before November.

HALCRO: Blogger Andrew Halcro, the former state representative and 2006 candidate for governor, said: "McCain has put one of the least qualified politicians in the country a heartbeat away from the presidency."

"With Republicans on the verge of spending the next 40 years wandering in the desert because of their inability to manage government, McCain's choice highlights that he just doesn't get it," Halcro said.

BEGICH: U.S. Senate candidate Mark Begich responded to the Palin news this way with a prepared statement: “This is a proud day for the people of Alaska. Congratulations to Governor Palin for making history for women, our state and our country.”

OBAMA: Democratic Presidential Nominee Sen. Barack Obama and running mate Sen. Joe Biden released the following statement:

"We send our congratulations to Governor Sarah Palin and her family on her designation as the republican nominee for Vice President. It is yet another encouraging sign that old barriers are falling in our politics. While we obviously have differences over how best to lead this country forward Governor Palin is an admirable person and will add a compelling new voice to this campaign."

RESPONSES: The Web site thehill.com said "Democrats jumped at the opportunity to frame Alaska Gov. Sarah Palin (R) as inexperienced and unqualified minutes after John McCain announced the Alaska Republican will be his running mate."

The Web site quoted Obama spokesman Bill Burton as saying: "Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency," Barack Obama spokesman Bill Burton said.

"Governor Palin shares John McCain's commitment to overturning Roe v. Wade, the agenda of Big Oil and continuing George Bush's failed economic policies — that's not the change we need, it's just more of the same," he said.

The Web site said Sen. Charles Schumer (D-N.Y.) also issued a statement attacking Palin's inexperience, calling the pick "troubling."

"Certainly the choice of Palin puts to rest any argument about inexperience on the Democratic team and while Palin is a fine person, her lack of experience makes the thought of her assuming the presidency troubling," Schumer said.

Schumer added, "I particularly look forward to the Biden-Palin debate in Missouri."

YOUNG: Rep. Don Young said: "Congratulations to Governor Palin. This is an historic event for Alaska and the nation, and I will actively support the McCain-Palin ticket to be elected our next President and Vice-President.

STEVENS: Sen. Ted Stevens said: "It’s a great day for the nation and Alaskans. Governor Palin has proven herself as a bright, energetic leader for our State and will bring the same energy to the Vice Presidency. She will serve our country with distinction – the first Alaskan and first woman on the Republican ticket. I share in the pride of all Alaskans."

MURKOWSKI: Sen. Lisa Murkowski said:

“John McCain has taken a bold step today in choosing Gov. Sarah Palin as his vice presidential running mate. Gov. Palin has risen to every challenge she’s faced, and her choice is historic for Alaska and for the women of America. Sarah brings a great deal of excitement to the campaign and she makes Alaskans proud."

OUTSIDE COMMENT: Boston Globe columnist Joan Vennochi writes:

"McCain is treating women voters as if all they care about is gender. Views and experience don't matter. Elected in 2006, Palin is governor of a state with a population that is one-tenth the size of Massachusetts. Her prior political service was as mayor of a town of 5,700 people.

"What about Alaska is at all similar to the rest of the country? The Iditarod is fun, but it's not the answer to the country's infrastructure problems.

"McCain may believe the pick shores up his own credentials, demonstrating that he doesn't need a Joe Biden to buff up his resume.

"But given his age, voters need a special comfort level with McCain's running mate. If McCain wins, the next vice president would be a heartbeat away from a man in his seventies."

FACE TO FACE:A report on CNN suggests that McCain and Palin met in person for the first time at a conference in February and that the governor traveled to Flagstaff this week and met McCain a second time. The network said he told her that she was his choice for the ticket Thursday.

PALIN BOOK: This from the Associated Press.

NEW YORK (AP) _ John McCain's surprise choice of Alaska Governor Sarah Palin (PAY'-lin) as his running mate has given a biography of her the kind of boost that her Democratic counterpart, Joe Biden's memoir received when he joined the ticket.

The book titled "Sarah: How a Hockey Mom Turned Alaska's Political Establishment Upside Down," has jumped into the top 200 on Amazon.com, where shoppers now have to wait one to three weeks for shipment.

The book written by author Kaylene Johnson was released in April, and had sold out a small first printing of around 7,000 copies.

Publisher Kent Sturgis says a paperback version will be hurried out, with an expected printing of 50,000.

Sturgis tells The Associated Press that he was "happy as a clam even before today," but this is "unbelievable

OBAMA CALL:A Fox News reporter offers this account of Obama offering congratulations to Palin.

"At 4:50 p.m. EDT Obama called to congratulate Palin from his campaign bus. According to senior adviser Robert Gibbs, Obama told Palin she would be 'a terrific candidate and that he looked forward to seeing her on the campaign trail.' Gibbs also said Obama wished Palin 'good luck, but not too much luck.'"

ARNOLD: California Gov. Arnold Schwarzenegger said, in an interview on KCRA-TV: "She has the strength to go and push back. She had the strength up there to fix the budget problem that they had, to reform the system and also to push back really hard on the bridge to nowhere. I think that she's cleaning up the mess up there and I think she has tremendous courage."

An Insider's Tip Sheet To Gauge Polls

From Seattlepi.com, Steve Kircher writes:
We're less than two weeks away from Labor Day, the traditional start of the fall presidential campaign. So it's a good time to take a breath and understand what the polls can tell us as Election Day nears and where they may mislead or even be wrong.

As a pollster for 30 years, I generally trust election polls, but I know they're not infallible. At first blush, there seemed to have been a lot of errors this year. After all, weren't the polls wrong in primary after primary?

Well, here is the first fact check: Of 26 Democratic primary contests this year, the polls were correct in 23 states and wrong in three (New Hampshire, California and Missouri).

You remember New Hampshire. Hillary Clinton defeated Barack Obama when every poll said Obama would win. That was a high-profile primary, coming shortly after Obama's win in the Iowa caucuses, so when all the polls indicated Obama would win comfortably, political commentators pounced, declaring the New Hampshire Democratic primary as evidence that polls cannot be trusted.

On the contrary, I think it's remarkable how accurate polls are, given all of the ways they could differ from the actual election results. And let's be aware of this important caveat: I'm talking only about scientifically designed polls that use random sampling, not Internet surveys or other amateur efforts that do not purport to represent an entire electorate.

That said, here is a user's guide in what to watch for in the polls to come and what can cause a poll to go wrong.

Low response rates: Most interviews are conducted over the telephone, and a big challenge for pollsters is reaching someone to be interviewed. One major national poll, ABC News/Washington Post, reported a 32 percent response rate in one survey. That means they were able to interview one of every three people they called. The good news is that studies have shown that the lower response rates do not lead to major differences in survey results. The biggest challenge is getting someone to answer the phone. Many of the phone numbers dialed just reach an answering machine, which means no one is at home or if someone is at home, they are screening their calls. Older adults and women are more likely to be interviewed and most polls "weight" or adjust their data so this bias is corrected.

Cell phones: In 2007, one in every seven homes had only a cell phone and no landline. Many polls do not include cell phones because it's more complicated and costly to conduct cell phone interviews. Fortunately, cell-phone-only households are similar to landline households in political attitudes. But this may not hold true as the number of households with only cell phones grows. Some pollsters, such as CBS News/New York Times, are interviewing people with cell phones.

Online and recorded interviewing: While most survey interviews are done over the phone with a live interviewer asking questions, some pollsters conduct interviews over the Web or use recorded voices to ask the questions. Pollsters who use these approaches claim their methods are better than the traditional live-phone interview. I'm skeptical. People who participate in online surveys volunteer to participate and they tend to be more motivated and less of a cross section of voters.

Lying: As we can best determine, people are truthful in public opinion surveys, but there are times when the truth is stretched a bit. A recent Wall Street Journal story reported that in a 2005 Harris Poll, 58 percent of interviewees told a live telephone interviewer that they exercise regularly, but in an online survey only 35 percent reported exercising regularly.

People are known to exaggerate when it comes to sensitive matters such as education, household income and sex, and that normally doesn't matter in getting accurate answers in political surveys. But this year may be different because of Barack Obama's racial background. Some people are reluctant to say they're voting against a candidate because of race and as a result, polls tend to overstate the level of support for a black candidate by five to 10 points. This gives an advantage to the more anonymous polls, such as the Rasmussen poll, which uses a recorded voice rather than a live interviewer to ask the questions. In early August, Rasmussen had Obama ahead by one point, while an average of other national polls had him ahead by four points.

Likely voters: Nearly every national poll interviews only registered voters, but some try to identify those people who are most likely to vote. Of eight national polls in early August, five polls of registered voters showed Obama ahead by five points; three polls of likely voters showed Obama ahead by less than a point. That's been the pattern this season, with John McCain doing better among surveys of likely voters.

The likely voter surveys are considered to be more predictive of the actual election results because about six of every 10 registered voters will go to the polls in November. On the other hand, the "likely voter" models tend to discount the candidate preferences of younger voters and since younger voters favor Obama over McCain, the "likely voter" polls may be understating Obama's support if younger voter turnout is higher than in prior presidential elections.

Convention "bounce": John Kerry gained about three points coming out of the 2004 Democratic convention and he kept a lead over George W. Bush until just before the Republican convention. Bush gained three points after the Republican convention and kept that point lead until he won the November election. The Democrats will hold their convention first this year, starting Aug. 25. Any bounce for Obama is likely to be short-lived because Republicans will meet just a week later. The size of any McCain postconvention bounce may be a good clue of how strong a candidate McCain will be.

It's also been the pattern that polls trend in favor of Republican presidential candidates after Labor Day, but that might not hold true this year given the unusually high unpopularity of President Bush and with Republicans losing several congressional races earlier this year in areas that usually favor Republicans.

Timing: Timing looks like it was a major factor in why polls were wrong in three of the 26 Democratic races last spring. In California and Missouri, three polls were wrong and one was right. In both states, the poll that correctly predicted the election included interviews up to the day before the election, enabling it to capture last-minute changes in voter opinions. The polls that were wrong conducted their last interviews two to five days before the election. If one day makes such a difference in poll results, how accurate can polls be three months before an election?

Wall Street Journal columnist John Fund recently observed that summertime polls often differ from the actual election results. In 1976, Gerald Ford was far behind Jimmy Carter in the summer, but lost by only two points. In 1988, Michael Dukakis led George H.W. Bush during the summer, but lost by eight points. In July-August 2004, Kerry led George W. Bush by two to three points, but he lost by 2.5 points.

Why conduct surveys so far in advance of the election? Cynics will say it helps fill the cable news channels and political columns of newspapers. While that's a likely factor, more important is that polls generally are accurate, and even this far out they are helping to track the dynamics of the presidential race, even if the dynamics today are quite a bit different from what they will be in November.

Transcript of Saddleback Presidential Forum, August 16, 2008

Full Transcript: Saddleback Presidential Forum, Sen. Barack Obama, John McCain; Moderated by Rick Warren:


PASTOR RICK WARREN, SADDLEBACK CHURCH: Welcome to the Saddleback Civil Forum on the Presidency. I guess you got my invitation. We’re here in Saddleback Church in Lake Forest, California. Tonight, we’re going to use the interview format with these two candidates. We believe in the separation of church and state, but we do not believe in the separation of faith and politics, because faith is just a world view, and everybody has some kind of world view. It’s important to know what they are.

Now, what I decided is to allow for proper comparison, I’m going to ask identical questions to each of these candidates. So you can compare apples to apples. Now, Senator Obama is going to go first. We flipped a coin, and we have safely placed Senator McCain in a cone of silence. Now, each of the interviews will be segmented into four different sections. We’re going to look at four different things, and the number of questions answered in each segment will depend on how succinct the senator is.

I have to tell you up front, both of these guys are my friends. I don’t happen to agree with everything each of them teach or believe, but they both care deeply about America. They’re both patriots. And they have very different views on how America can be strengthened. In America, we’ve got to learn to disagree without demonizing each other and we need to restore civility — Yes. We need to restore civility in our civil discourse, and that’s the goal of the Saddleback Civil Forum.

So let’s get started. And will you welcome Senator Barack Obama.

Thank you. Good to see you.

SEN BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: Good to see you.

WARREN: Thank you for being here.

OBAMA: Thank you. Pretty good crowd you’ve got here.

WARREN: We’re going to talk about four different issues tonight, Barack. The first issue is on leadership.

OBAMA: All right.

WARREN: These first set of questions deal with your personal life as a leader, and I’m not going to do this with any other segment. But as a pastor, I’ve got some verses that have to do with leadership. And the first issue is the area of listening. There’s a verse in proverbs that says, “fools think they need no advice but wise listen to other people.” Who are the three wisest people you know in your life, and who are you going to rely on heavily in your administration?

OBAMA: First of all, let me thank you for having he here, Rick.

WARREN: You’re welcome.

OBAMA: I love the ministries that are taking place here at Saddleback. This is the second time I have been here. The first time we had a wonderful time. Excluding you of course –

WARREN: And your wife.

OBAMA: I was going to say — you know, there are so many people that are constantly helping to shape my views and my opinions. You mentioned one person I’d be listening to, and that’s Michelle, my wife, who is not only wise, but she’s honest. And one of the things you need, I think, any leader needs is somebody who can get up in your face and say boy, you really screwed that one up. You really blew that.

WARREN: Your wife’s like that, too?

OBAMA: So that’s very helpful. Another person in that category is my grandmother, is an extraordinary woman. She never went to college. She worked on a bomber assembly line during World War Ii while my grandfather was away, came back, got a job as a secretary and worked her way up to become a bank vice president before she retired. And she’s a very grounded, common sense, no fuss, no frills kind of person. When I’ve got big decisions I often check in with her. Now in terms of the administrations or how I would approach the presidency, I don’t think I’d restrict myself to three people. There are people like Sam Nunn, a Democrat, or Dick Lugar, a Republican, who I’d listen to on foreign policy. On domestic policy, I’ve got friends ranging from Ted Kennedy to Tom Colburn, who don’t necessarily agree on a lot of things, but who both have a sincere desire to see this country improve.

What I found is very helpful to me is to have a table where a lot of different points of view are represented, and where I can sit and poke and prod and ask them questions, so that any blind spots I have or predispositions that I have, that my assumptions are challenged. And I think that that’s extraordinarily important.

WARREN: OK, all right. Let’s talk about personal life. The Bible says that integrity and love are the basis of leadership. This is a tough question. What would be, looking over your life — everybody’s got weaknesses. Nobody’s perfect — would be the greatest moral failure in your life? And what would be the greatest moral failure of America?

OBAMA: Well, in my own life I’d break it up in stages. I had a difficult youth. My father wasn’t in the house. I’ve written about this. You know, there were times where I experimented with drugs. I drank in my teenage years. And what I traced this to is a certain selfishness on my part. I was so obsessed with me and, you know, the reasons that I might be dissatisfied that I couldn’t focus on other people. And I think the process for me of growing up was to recognize that it’s not about me. It’s about –

WARREN: I like that. I like that.

OBAMA: Absolutely. So — but look, you know, when I — when I find myself taking the wrong step, I think a lot of times it’s because I’m trying to protect myself instead of trying to do god’s work.

WARREN: Fundamental selfishness.

OBAMA: So that I think is my own failure.

WARREN: What about America?

WARREN: I think America’s greatest moral failure in my lifetime has been that we still don’t abide by that basic precept in Matthew that whatever you do for the least of my brothers, you do for me, and that notion of — that basic principle applies to poverty. It applies to racism and sexism. It applies to, you know, not having — not thinking about providing ladders of opportunity for people to get into the middle class. There’s a pervasive sense, I think, that this country, as wealthy and powerful as we are, still don’t spend enough time thinking about the least of us.

WARREN: We’ve talked about this before, about the common good, and the common ground and common good. Can you give me an example of a time — you know, I’ve seen that a lot of good legislation gets killed because of party loyalty. Can you give me a good example where you went against party loyalty, and maybe even win against your own best interest, for the good of America?

OBAMA: Well, you know, I’ll give you an example that, in fact, I worked with John McCain on, and that was the issue of campaign ethics reform and finance reform. That wasn’t probably in my interest or his, for that matter, because the truth was that both Democrats and Republicans sort of like the status quo. And I was new to the Senate and didn’t necessarily engender a lot of popularity when I started saying, you know, we’re going to eliminate meals and gifts from corporate lobbyists. I remember one of my colleagues, whose name will be unmentioned, who said, where do you expect us to eat, McDonald’s? I thought, well, actually, a lot of your constituents probably do eat at McDonald’s, so that wouldn’t be such a bad thing.

But I think that we were able to get a bill passed that hasn’t made Washington perfect, but at least has started moving things forward. I guess the other example where I’m not sure that this was a — more of a partisan issue, but it was something I felt very deeply, was when I opposed the initial decision to go into war in Iraq. That was not a popular view at the time. And I was just starting my campaign for the United States Senate. And I think there were a lot of people who advised me, you should be cautious. This is going to be successful. The president has a very high approval rating and you could end up losing the election as a consequence of this.

WARREN: Let me ask it this way. A lot of times candidates are accused of flip-flopping, but actually sometimes flip-flopping is smart because you actually have decided on a better position based on knowledge that you didn’t have.

OBAMA: Right.

WARREN: What’s the most significant position you held ten years ago that you no longer hold today, that you flipped on, you changed on, because you actually see it differently?

OBAMA: Because I actually changed my mind.

WARREN: You changed your mind. Exactly.

OBAMA: Well, you know, I — I’m trying to think back ten years ago. I think that a good example would be the issue of welfare reform, where I always believed that welfare had to be changed. I was much more concerned ten years ago when President Clinton initially signed the bill that this could have disastrous results. I worked in the Illinois legislature to make sure that we were providing child care and health care, other support services for the women who were going to be kicked off the roles after a certain time.

It had — it worked better than, I think, a lot of people anticipated. And, you know, one of the things that I am absolutely convinced of is that we have to work as a centerpiece of any social policy.

WARREN: OK.

OBAMA: Not only because — not only because ultimately people who work are going to get more income, but the intrinsic dignity of work, the sense of purpose.

WARREN: We were made for work.

OBAMA: We were made for work, and the sense that you are part of a community, because you’re making a contribution, no matter how small to the well-being of the country as a whole. I think that is something that Democrats generally, I think, have made a significant shift on.

WARREN: What’s the most significant — let me ask it this way. What’s the most gut-wrenching decision you ever had to make and how did you process that to come to that decision?

OBAMA: Well, you know, I think the opposition to the war in Iraq was as tough a decision as I’ve had to make. Not only because there were political consequences, but also because Saddam Hussein was a real bad person, and there was no doubt that he meant America ill. But I was firmly convinced at the time that we did not have strong evidence of weapons of mass destruction, and there were a lot of questions that, as I spoke to experts, kept on coming up. Do we know how the Shia and the Sunni and the Kurds are going to get along in a post-Saddam situation? What’s our assessment as to how this will affect the battle against terrorists like al Qaeda? Have we finished the job in Afghanistan?

So I agonized over that. And I think that questions of war and peace generally are so profound. You know, when you meet the troops, they’re 19, 20, 21-year-old kids, and you’re putting them into harm’s way. There is a solemn obligation that you do everything you can to get that decision right. And now, as the war went forward, there are difficult decisions about how long do you keep on funding the war, if you strongly believe that it’s not in America’s national interest. At the same time, you don’t want to have troops who are out there without the equipment they need.

So all those questions surrounding the war have been very difficult for me.

WARREN: We’ll be back and we’re going to talk about world view in the next section.
(COMMERCIAL BREAK)

WARREN: Everybody’s got a world view, a Buddhist, a Baptist, a secularist, an atheist, everybody’s got a world view. I wrote or invited people who get newsletter to write in their questions. We have about 200,000 questions that came in. And I only have 500 in this section. So no matter how you answer these world view questions, somebody’s not going to like it, because we’re all different kinds of world views in America. But as — people want to know what your world view is. So as we go through this, these mine fields, let’s just kind of tick them off, the mine fields of America.

The first one is Christianity. Now, you’ve made no doubts about your faith in Jesus Christ. What does that mean to you? What does it mean to you to trust in Christ? And what does that mean to you on a daily basis? What does that really look like?

OBAMA: As a starting point, it means I believe in — that Jesus Christ died for my sins, and that I am redeemed through him. That is a source of strength and sustenance on a daily basis. Yes, I know that I don’t walk alone. And I know that if I can get myself out of the way, that I can maybe carry out in some small way what he intends. And it means that those sins that I have on a fairly regular basis, hopefully will be washed away.

But what it also means, I think, is a sense of obligation to embrace not just words, but through deeds, the expectations, I think, that god has for us. And that means thinking about the least of these. It means acting — well, acting justly, and loving mercy, and walking humbly with our god. And that — I think trying to apply those lessons on a daily basis, knowing that you’re going to fall a little bit short each day, and then being able to kind of take note and saying, well, that didn’t quite work out the way I think it should have, but maybe I can get a little bit better. It gives me the confidence to try things, including things like running for president, where you’re going to screw up once in a while.

WARREN: Yes. Let’s go through the tough ones. Now, the most –

OBAMA: I thought that was pretty tough.

WARREN: That was a freebie. That was a gimme. That was a gimme, OK? Now, let’s deal with abortion; 40 million abortions since Roe v. Wade. As a pastor, I have to deal with this all of the time, all of the pain and all of the conflicts. I know this is a very complex issue. Forty million abortions, at what point does a baby get human rights, in your view?

OBAMA: Well, you know, I think that whether you’re looking at it from a theological perspective or a scientific perspective, answering that question with specificity, you know, is above my pay grade.

WARREN: Have you –

OBAMA: But let me just speak more generally about the issue of abortion, because this is something obviously the country wrestles with. One thing that I’m absolutely convinced of is that there is a moral and ethical element to this issue. And so I think anybody who tries to deny the moral difficulties and gravity of the abortion issue, I think, is not paying attention. So that would be point number one.

But point number two, I am pro-choice. I believe in Roe v. Wade, and I come to that conclusion not because I’m pro-abortion, but because, ultimately, I don’t think women make these decisions casually. I think they — they wrestle with these things in profound ways, in consultation with their pastors or their spouses or their doctors or their family members. And so, for me, the goal right now should be — and this is where I think we can find common ground. And by the way, I’ve now inserted this into the Democratic party platform, is how do we reduce the number of abortions? The fact is that although we have had a president who is opposed to abortion over the last eight years, abortions have not gone down and that is something we have to address.

WARREN: Have you ever voted to limit or reduce abortions?

OBAMA: I am in favor, for example, of limits on late-term abortions, if there is an exception for the mother’s health. From the perspective of those who are pro-life, I think they would consider that inadequate, and I respect their views. One of the things that I’ve always said is that on this particular issue, if you believe that life begins at conception, then — and you are consistent in that belief, then I can’t argue with you on that, because that is a core issue of faith for you.

What I can do is say, are there ways that we can work together to reduce the number of unwanted pregnancies, so that we actually are reducing the sense that women are seeking out abortions. And as an example of that, one of the things that I’ve talked about is how do we provide the resources that allow women to make the choice to keep a child. You know, have we given them the health care that they need? Have we given them the support services that they need? Have we given them the options of adoption that are necessary? That can make a genuine difference.

WARREN: There’s a lot more I’d like to ask on that. We have 15 other questions here. Define marriage.

OBAMA: I believe that marriage is the union between a man and a woman. Now, for me as a Christian — for me — for me as a Christian, it is also a sacred union. God’s in the mix. But –

WARREN: Would you support a Constitutional Amendment with that definition?

OBAMA: No, I would not.

WARREN: Why not?

OBAMA: Because historically — because historically, we have not defined marriage in our constitution. It’s been a matter of state law. That has been our tradition. I mean, let’s break it down. The reason that people think there needs to be a constitutional amendment, some people believe, is because of the concern that — about same-sex marriage. I am not somebody who promotes same-sex marriage, but I do believe in civil unions. I do believe that we should not — that for gay partners to want to visit each other in the hospital for the state to say, you know what, that’s all right, I don’t think in any way inhibits my core beliefs about what marriage are. I think my faith is strong enough and my marriage is strong enough that I can afford those civil rights to others, even if I have a different perspective or different view.

WARREN: OK, how about this, what about stem cells? We’ve had this scientific break-through of treating these pluarpotent (ph) stem cells in adult cells. Do we still need federal funding for research? Would you still support that for embryo stem cells?

OBAMA: Keep in mind the way the stem cell legislation that was vetoed by the president was structured. What it said was you could only use embryos that were about to be discarded, that had been created as a consequence of attempts at in vitro fertilization. There were very tightly circumscribed mechanisms that were permitted. I think that that is a legitimate moral approach to take. If we are going to discard those embryos, and we know that there’s potential research that could lead to curing debilitating diseases, Alzheimer’s, Lou Gherig’s Disease, you know, if that possibility presents itself, then I think that we should, in a careful way, go ahead and pursue that research.

Now, if, in fact, adult stem cell lines are working just as well, then of course we should try to avoid any kind of moral arguments that may be in place.

But I want to make a broader point, Pastor Rick, on an issue like stem cell research. It’s not like people who are in favor of stem cell research are going around thinking to themselves, you know, boy, let’s go destroy some embryos. All right? That’s not the perspective that I think people come to that issue on. I think what they say is, we would not tolerate a situation in which, you know, we’re encouraging human cloning or in some ways diminishing the sacredness of human life and what it means to be human. But that in narrow circumstances, you know, there is nothing inappropriate with us pursuing scientific research that could lead to cures, so long as we’re not designing embryos for that purpose.

WARREN: OK, we’ve got one last time — I’ve got a bunch more, but let me ask you one about evil. Does evil exist? And if it does, do we ignore it? Do we negotiate with it? Do we contain it? Do we defeat it?

OBAMA: Evil does exist. I mean, I think we see evil all the time. We see evil in Darfur. We see evil, sadly, on the streets of our cities. We see evil in parents who viciously abuse their children. I think it has to be confronted. It has to be confronted squarely, and one of the things that I strongly believe is that, now, we are not going to, as individuals, be able to erase evil from the world. That is God’s task, but we can be soldiers in that process, and we can confront it when we see it.
Now, the one thing that I think is very important is for to us have some humility in how we approach the issue of confronting evil, because a lot of evil’s been perpetrated based on the claim that we were trying to confront evil.

REV. RICK WARREN, SADDLEBACK CHURCH: In the name of good.

OBAMA: In the name of good, and I think, you know, one thing that’s very important is having some humility in recognizing that just because we think that our intentions are good, doesn’t always mean that we’re going to be doing good. ` WARREN: OK. All right. Let’s move on to some domestic issues. Don’t give me your stump speech on these. Try to - let’s go through it.

OBAMA: All right, this is hard. I’ve been stumping for a long time.

WARREN: I know it is.

OBAMA: All right.

WARREN: OK. The courts. Let me ask it this way. Which existing Supreme Court justice would you not have nominated?

OBAMA: That’s a good one. That’s a good one. I would not have nominated Clarence Thomas. [ applause ] I don’t think that he - I don’t think that he was as strong enough jurist or legal thinker at the time for that elevation, setting aside the fact that I profoundly disagree with his interpretations of a lot of the Constitution. I would not nominate Justice Scalia, although I don’t think there’s any doubt about his intellectual brilliance, because he and I just disagree. He taught at the University of Chicago, as did I in the law school.

WARREN: How about John Roberts?

OBAMA: John Roberts, I have to say was a tougher question only because I find him to be a very compelling person, you know, in conversation individually. He’s clearly smart, very thoughtful. I will tell you that how I’ve seen him operate since he went to the bench confirms the suspicions that I had and the reason that I voted against him, and I’ll give you one very specific instance and this is not a stump speech.

WARREN: All right.

OBAMA: I think one of the -

WARREN: I think –

OBAMA: Right, exactly. I’m getting the cues. I’m getting the cues. One of the most important jobs of, I believe the Supreme Court is to guard against the encroachment of the executive branch on the other, the power of the other branches.

WARREN: OK.

OBAMA: And I think that he has been a little bit too willing and eager to give an administration, whether it’s mine or George Bush’s, more power than I think the Constitution originally intended.

WARREN: OK. The role of faith-based organizes, recent poll says 80 percent of Americans think faith-based organizations do a better job at community services than the government, helping addictions, you know, [ applause ] all the different homelessness, poverty, things like that. The civil rights act of ‘64 says that faith-based organizations have a right to hire people who believe like they do. Would you insist that faith-based organizations forfeit that right to access federal funds?

OBAMA: Well, first of all, I think you’re aware of, Pastor Rick, that I gave a speech earlier this summer promoting faith-based initiatives. I think that we should have an all hands on deck approach when it comes to issues like poverty and substance abuse and as somebody who got my start out of college working with churches, who are trying to deal with the devastation of steel plants closing in the south side of Chicago, I know the power of faith-based institutions to get stuff done. What I have said is that when it comes, first of all, to funding faith-based organizations, they are always free to hire whoever they want, when it comes to their own mission, who the pastor is, various ministries, that they want to set up, but, and this has been a longstanding rule.

WARREN: College Christians?

OBAMA: Yes, absolutely. When it comes to the programs that are federally funded, then we do have to be careful to make sure that we are not creating a situation where people are being discriminated against, using federal money. That’s not new. That’s a concept that was true under the Clinton administration. That was true under the Bush administration. There are, in 95 percent of the circumstances, it’s not an issue because people are careful about how they use the funds. There are some tough issues. Five percent of the situations where people might say I want to hire somebody of my faith for a program that is fully funded by the federal government and we’re offering services to the public, and my –

WARREN: In relief, like in Katrina.

OBAMA: Right.

WARREN: If I took people to Katrina, and I wanted to hire some people to do relief, if I took federal money to help in that relief, I wouldn’t be able to say, I only want people who believe like we do.

OBAMA: Well, you know, it’s one of those situations where the devil’s in the details. I think generally speaking, faith-based organizations should not be advantaged or disadvantaged when it comes to getting federal funds, by virtue of the fact that they’re faith-based organizations. They just want a level playing field. But what we do want to make sure of is that as a general principle we’re not using federal funding to discriminate, but that is only when it comes to the narrow program that is being funded by the federal government. That does not affect any of the other ministries that are being taken, that are taking place.

WARREN: OK. Let’s go to education. America right now ranks 19th in high school graduations. We’re first in incarcerations.

OBAMA: Not good.

WARREN: Not good. 80 percent of Americans recently polled said they believe in merit pay. Now, for teachers, do you - I’m not asking do you think all teachers should get a raise. Do you think better teachers should be paid better? They should be paid more than poor teachers?

OBAMA: I think that we should - and I’ve said this publicly, that we should set up a system of performance pay for teachers, negotiated with teachers, worked with the teachers to figure out the assessments, so that they feel like they’re being judged fairly, it’s not at the whim of the principal. That it’s not simply based on a single high stakes standardized test but the basic notion that teaching is a profession, that teachers are underpaid, so we need to pay them all more, but - and create a higher baseline, but then we should also reward excellence.

WARREN: Reward excellence.

OBAMA: I think that is a concept that all of us should embrace. [ applause ]

WARREN: OK. Taxes, this is a real simple question. Define rich. [ laughter ] I mean give me a number, Is it $50,000, $100,000, 200,000? Everybody keeps talking about who we’re going to tax. How can you define that?

OBAMA: You know, if you’ve got book sales of $25 million, then you qualify.
[ laughter ] [ applause ]

OBAMA: Yes.

WARREN: No, I’m not asking about me.

OBAMA: Look, the - here’s how I think about it. Here’s how I think about it. And this is reflected in my tax plan. If you are making $150,000 a year or less, as a family, then you’re middle class or you may be poor. But $150,000 down you’re basically middle class, obviously depends on the region where you’re living.

WARREN: In this region, you’re poor.

OBAMA: Yes, well - depending. I don’t know what housing practices are going. I would argue that if you’re making more than $250,000, then you’re in the top three percent, four percent of this country. You’re doing well. Now, these things are all relative. And I’m not suggesting that everybody is making over $250,000 is living on easy street. But the question that I think we have to ask ourselves is, if we believe in good schools, if we believe in good roles, if we want to make sure that kids can go to college, if we don’t want to leave a mountain of debt for the next generation. Then we’ve got to pay for these things, they don’t come for free, and it is irresponsible.

I believe it is irresponsible intergenerationally for us to invest or for us to spend $10 billion a month on a war and not have a way of paying for it. That, I think, is unacceptable. So nobody likes to pay taxes. I haven’t sold 25 million books but I’ve been selling some books lately, and so I write a pretty big check to Uncle Sam. Nobody likes it. What I can say is under the approach I’m taking, if you make $150,000 or less, you will see a tax cut. If you’re making $250,000 a year or more, you’re going to see a modest increase. What I’m trying to do is create a sense of balance, and fairness in our tax code. One thing I think we can all agree on, is that it should be simpler so that you don’t have all these loopholes and big stacks of stuff that you’ve got to comb through, which wastes a huge amount of money and allows special interests to take advantage of things that ordinary people cannot take advantage of.

WARREN: OK. We’ll be right back.

(COMMERCIAL BREAK)

WARREN: Welcome back to the Saddleback Civil Forum on the presidency. In this last section, I want us to talk about America’s responsibility to the rest of the world. We are the most blessed nation in the world, and we’re blessed to be a blessing, to whom much is given, much is required. So let me - let’s just go down some of the issues, international issues. First thing, let’s just talk about war. As an American, what’s worth dying for? What’s worth having sacrifice of the American lives for?

OBAMA: Well, obviously American freedom, American lives, America’s national interests. You know, I was just with my family on vacation in Hawaii and visited the place where my grandfather is laid to rest, the Punch Bowl National Cemetery.

WARREN: Punch Bowl, yes.

OBAMA: And then went out to Arizona, out in Pearl Harbor and you’re reminded of the sacrifices that have been made on behalf of our freedom. And I think that is a solemn obligation that we all have. I think that we also have forged alliances with countries, NATO being a prime example, where we have pledged to act militarily for the common defense, that is in our national interest and that is something that I think we have to abide by.

WARREN: What would be the criteria that you would commit troops to end the genocide, for instance, it’s like what’s going on in Darfur or could happen in Georgia or anywhere else?

OBAMA: You know - I don’t think that there is a hard and fast line at which you say, OK, we are going in. I think it is always a judgment call. I think that the basic principle has to be that we have it within our power to prevent mass killing and genocide, and we can work in concert with the international community to prevent it, then we should act.

Now, we have to do so - [ applause ] we have to do so - I think that international component is very critical. We may not get 100 percent agreement.

WARREN: The war without U.N. approval?

OBAMA: Yes, absolutely, but I think you take an example like Bosnia, when we went in and undoubtedly saved lives. We did not have U.N. approval, but there was a strong international case that had been made that ethnic cleansing was taking place, and under those circumstances, when we have it within our power, we should, you know, we should take action.

WARREN: OK. This one is dear to my heart. Most people don’t know that there are 148 million orphans in the world. 148 million kids growing up without mommies and dads. They don’t need to be in an orphanage. They need to be in families. But a lot of families can’t afford to take these kids in. Would you be willing to consider and even commit to doing some kind of emergency plan for orphans, like President Bush did with AIDS, almost a president’s emergency plan for orphans, to deal with this issue?

OBAMA: I cheated a little bit. I actually looked at this idea ahead of time, and I think it is a great idea. I think it’s something that we should sit down and figure out, working between non-governmental organizations, you know, national institutions, the U.S. government and try to figure out what can we do. I think that part of our plan, though, has to be, how do we prevent more orphans in the first place, and that means that we’re helping to build a public health infrastructure around the world, that we are, you know, building on the great work that you, and by the way, this president has done when it comes to AIDS funding around the world. I think it helps. I’m often a critic of President Bush, but I think the PETFAR program has saved lives and has done very good work and he deserves enormous credit for that.

WARREN: Religious persecution, what do you think the U.S. should do to end religious persecution, for instance, in China, in Iraq, and in many of our supposed allies? I’m not just talking about persecution of Christianity, but there’s religious persecution around the world that persecutes millions of people.

OBAMA: Well, I think the first thing we have to do is to bear witness and speak out, and not pretend that it’s not taking place. You know, our relationship with China, for example, is a very complicated one. You know, we’re trading partners. Unfortunately, they are now lenders to us because we haven’t been taking care of our economy the way we need to be. I don’t think any of us want to see military conflict with China.

So we want to manage this relationship and move them into the world community as a full partner, but we can’t purchase that by ignoring the very real prosecutions, persecutions that are taking place, and so having an administration that is speaking out, joining in international forums, where we can point out human rights abuses, and the absence of religious freedom, that, I think, is absolutely critical. Over time, what we are doing is setting up new norms and creating a universal principle that people’s faith and people’s beliefs have to be protected.

And as you said, it’s not just Christians, and we’ve got to make sure, you know, one thing I think is very important for us to do on all of these issues is to lead by example. That’s why I think it’s so important for us to have religious tolerance here in the United States. That’s why it’s so important for us, when we are criticizing other countries about rule of law to make sure that we’re abiding by rule of law, and habeas corpus, and we’re not engaging in torture, because that gives us a moral standing to talk about these other issues.

WARREN: OK. Another issue, the third largest and the fastest growing criminal industry in the world is human trafficking. $32 billion a year. A lot of people don’t know that there are about 27 million people living in slavery right now. Many of them in sex trafficking than any others. How do we speak out and how do you plan to do something about that?

OBAMA: This has to be a top priority and this is an area where we’ve already seen bipartisan agreement on this issue. What we have to do is to create better, more effective tools for prosecuting those who are engaging in human trafficking and we have to do that within our country. Sadly, there are thousands who are trapped in various forms of enslavement, here in our country.

Oftentimes young women who are caught up in prostitution. So we’ve got to give prosecutors the tools to crack down on these human trafficking networks.
Internationally, we’ve got to speak out and we’ve got to forge alliances with other countries to share intelligence, to roll up the financing networks that are involved in them. It is a debasement of our common humanity, whenever we see something like that taking place.

WARREN: OK. In a minute, in one minute, because I know you could take the entire hour on this, tell me in a minute why you want to be president.

OBAMA: You know, I remember what my mother used to tell me. I was talking to somebody a while back and I said the one time that she would get really angry with me is if she ever thought that I was being mean to somebody, or unfair to somebody. She said, imagine standing in their shoes. Imagine looking through their eyes. That basic idea of empathy, and that, I think, is what’s made America special is that notion, that everybody has got a shot. If we see somebody down and out, if we see a kid who can’t afford college, that we care for them, too.

And I want to be president because that’s the America I believe in and I feel like that American dream is slipping away. I think we are at a critical juncture. Economically, I think we are at a critical juncture. Internationally, we’ve got to make some big decisions not just for us for the next generation and we keep on putting it off. And unfortunately, our politics is broken and Washington is so broken, that we can’t bring together people of goodwill to solve these common problems. I think I have the ability to build bridges across partisan lines, racial, regional lines to get people to work on some common sense solutions to critical issues and I hope that I have the opportunity to do that.

[ applause ]

WARREN: I’m going to skip over a couple of these other important ones and just ask you, what do you say to people who opposed me asking you these questions? That will be the last one.

OBAMA: These are the kinds of forums that we need, where we have a conversation, and I think based on — [ applause ] — based on these conversations, the American people can make a good judgment. I mean, one of the things, if you’re a person of faith like me, I believe that things will work out and we will get the president that we need. What you want, though, is just to make sure that people have good information, that they’re not just consuming negative ads or the kind of nasty tit-for-tat that has become so common in politics.

You know, I want people to know me well and I want people - I’m sure John McCain feels the same way. And that if we are both known and people know where we stand on issues. You know, I trust in the American people. They’re going to make a good decision and we’re going to be able to solve the big problems that we face.

WARREN: OK. I’ve got 30 seconds. What would you tell the American public if you knew there wouldn’t be any repercussions?

[ laughter ]

OBAMA: Well, you know what I would tell them? Is that solving big problems, like for example, energy, is not going to be easy and everybody is going to have to get involved. And we are going to have to all think about how are we using energy more efficiently and there’s going to be a price to pay in transitioning to a more energy- efficient economy and dealing with issues like climate change. And if we pretend like everything is free, and there’s no sacrifice involved, then we are betraying the tradition of America.

I think about my grandparents’ generation, coming out of a depression, fighting World War II, you know, they’ve confronted some challenges we can’t even imagine. If they were willing to make sacrifices on our behalf, we should be able to make some sacrifices on behalf of the next generation.

WARREN: Senator, thank you.

OBAMA: Thank you.

WARREN: Would you stand? Would you stand? And thank Senator Barack Obama.

OBAMA: Thank you. Thank you.

WARREN: Thank you.

OBAMA: Thank you so much.

WARREN: And while you’re still standing, would you welcome at the same time Senator John McCain, would you welcome him, as he comes out here.

Hi, John. Good to see you.

SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: Good to see you.

WARREN: Thank you guys. Thank you so much.

(COMMERCIAL BREAK)

RICK WARREN, PASTOR, SADDLEBACK CHURCH: Welcome back to the “Saddleback Civil Forum on the Presidency.”

And welcome, Senator John McCain.

SEN. JOHN MCCAIN, (R), PRESIDENTIAL CANDIDATE: Thank you. Good to be here.

WARREN: My first question, was the cone of silence comfortable you were in just now?

MCCAIN: I was trying to hear through the wall.

WARREN: This first set of questions deals with leadership and the personal life of leadership. The first question, who are the three wisest people that you know that you would rely on heavily in an administration?

MCCAIN: First one, I think, would be General David Petraeus, one of the great military leaders in American history, who took us from defeat to victory in Iraq, one of the great leaders (inaudible).

Fourth of July a year ago, Senator Lindsay Graham and I were in Baghdad. Six hundred and eighty-eight brave young Americans, whose enlistment had expired, swore in reenlistment to stay and fight for freedom. Only someone like General David Petraeus could motivate someone like that.

I think John Lewis. John Lewis was at the Edmund Pettis Bridge, had his skull fractured, continued to serve, continues to have the most optimistic outlook about America. He can teach us all a lot about the meaning of courage and commitment to causes greater than our self- interest.

Meg Whitman, Meg Whitman, the CEO of eBay. Meg Whitman, 12 years ago, there were five employees. Today, they’re 1.5 million people that make a living off eBay in America, in the world. It’s one of these great American success stories. And in these economic challenges times, we need to call on the wisdom and knowledge, the background of people like Meg Whitman, who have been able to make such a great success such as eBay part as the American folklore.

WARREN: OK, let me ask you this. This is a character question.

MCCAIN: I hope they get easier.

WARREN: Well, this one isn’t any easier. We’ve had a lot of leaders, because of their weaknesses, character flaws, stumble, become ineffective, are not even serving anymore, serving our country. What’s been your greatest moral failure, and what has been the great — what do you think is the greatest moral failure of America?

MCCAIN: They don’t get any easier.

WARREN: No, they don’t get any easier.

MCCAIN: My greatest moral failing — and I have been a very imperfect person — is the failure of my first marriage. It’s my greatest moral failure.

I think America’s greatest moral failure has been. Throughout our existence, perhaps we have not devoted ourselves to causes greater than our self-interest, although we’ve been at the best at it of everybody in the world.

I think after 9/11, my friends, instead of telling people to go shopping or take a trip, we should have told Americans to join the Peace Corps, AmeriCorps, the military, expand our volunteers, expand what you’re doing —

(APPLAUSE)

— expand what you’re doing, expand the current missions that you are doing, that you are carrying out here in America and throughout the world, in Rwanda. And I hope we have a chance to talk about that later on.

And you know — a little pandering here. The first words of your very successful book is “this is not about you.” you know what that also means? Serve a cause greater than your self-interest.

WARREN: John, you know that a lot of good legislation dies because of partisan politics, and party loyalty keeps people from really getting forward on putting America’s best first. Can you give me an example of where you led against your party’s interests — oh, this is hard —

(LAUGHTER)

— and really, maybe against your own best interests for the good of America?

MCCAIN: You know, by a strange coincidence —

(LAUGHTER)

— I was not elected Miss Congeniality again in the United States Senate. I don’t know why. I don’t know why. I don’t know why.

Climate change, out of control spending, torture, the list goes on, on a large number of issues that I have put my country first and I’ve reached across the aisle. but I’d probably have to say that one of the times that probably was one of the most trying was, when I was first a member of Congress, and I’m a new freshman in the House of Representatives and very loyal and dedicated to President Reagan, whom I still think is one of the great, great presidents in American history —

(APPLAUSE)

— who won the cold war without firing a shot, in the words of Margaret Thatcher. He wanted to send troops to Beirut for a peacekeeping mission. My knowledge and my background told me that a few hundred Marines in a situation like that could not successfully carry out any kind of peacekeeping mission. And I thought they were going into harm’s way. Tragically, as many of you recall, there was a bombing in the Marine barracks and well over 100 brave Marines gave their lives. But it was tough, that vote, because I went against the president I believed in, and the party that believed that maybe I was disloyal very early in my political career.

WARREN: There’s a verse in the Bible that says intelligent people look for ideas, in fact, they search for them. What is the most significant position that you’ve held, ten years ago, that you know longer hold today. I think the point I’m trying to make is that leaders are not stubborn. They do change their mind with additional information.

So give me a good example of something, ten years ago, you said that’s the way I feel about and now, ten years later, I changed my position. That’s not flip-flopping. Sometimes that’s growing in wisdom.

MCCAIN: Offshore drilling, we’ve got to drill now and got to drill here and we’ve got to be (inaudible). (APPLAUSE).

And I know that there’s some here in California that disagree — (LAUGHTER) — that disagree with that position. Could I also mention very seriously about this issue. My friends, you know that this is a national security issue. We’re sending $700 billion a year to countries that don’t like us very much, that some of that money is ending up in the hands of terrorist organizations. We cannot allow this greatest transfer of wealth in history and our national security continuing to be threatened. (APPLAUSE).

And Rick, I know we’ve got a lot of issues to cover but let me say it. At the town hall meetings that I have every day, that’s the issue on people’s mind is energy. If I could take one, 30 seconds. One, we’ve got to do everything. We’ve got to do wind, tide, solar, natural gas, hydrogen cars, hybrid cars, electric cars. And we have to have nuclear power in order to reduce greenhouse gas emissions, and save on our energy costs.

By the way, in case you hadn’t noticed it, the French, 80 percent. We love to imitate the French. 80 percent of their electricity is generated by nuclear power. If they can do it and reprocess, we can, too, my friends. And by the way, if you hadn’t noticed, we now have a pro-American president of France, which shows if you live long enough, anything can happen in America. (LAUGHTER).

WARREN: Well, you just took the — I had that question later on but now we don’t have to ask it. What’s the most gut-wrenching decision you’ve ever had to make? And what was the process that you used to make it?

MCCAIN: It was long ago, and far away, in a prison camp in North Vietnam. My father was a high-ranking admiral. The Vietnamese came and said that I could leave prison early. And we had a code of conduct. It said you only leave by order of capture. I also had a dear and beloved friend, who was from California, named Ebb Alvarez, who had been shot down before me. But I wasn’t in good physical shape. In fact, I was in rather bad physical shape. So I said no. Now, in interest of full disclosure, I’m happy I didn’t know the war was going to last for another three years or so.

But I said no, and I’ll never forget sitting in my last answer, and the high-ranking officer offered it, slammed the door and the interrogator said, “Go back to your cell. It’s going to be very tough on you now.” And it was. But not only the toughest decision I ever made, but I am most happy about that decision, than any decision I’ve ever made in my life. (APPLAUSE).

WARREN: Great, great.

MCCAIN: Could I finally say, it took a lot of prayer? It took a lot of prayer.

WARREN: Great. We’ll be right back with John McCain. (COMMERCIAL BREAK)

WARREN: Welcome back. Welcome back. And we’re here with Senator John McCain.

Now, John, in this next section we’re going to talk about world view. And I actually invited a couple hundred thousand people of my personal friends to send me their questions. And these are heartland questions that came in from all over America. No matter how you answer them, somebody’s not going to like them, because we have many world views, obviously, in America. But let’s walk through these minefields together.

First, you’ve made no doubt about the fact that you are a Christian. You publicly say you’re a follower of Christ. What does that mean to you and how does faith work out in your life on a daily basis? What does it mean to you?

MCCAIN: It means I’m saved and forgiven. We’re talking about the world. Our faith encompasses not just the United States of America but the world. Can I tell you another story real quick?

WARREN: Sure.

(LAUGHTER)

MCCAIN: The Vietnamese kept us in prison in conditions of solitary confinement, or two or three to a cell. They did that because they knew they could break down our resistance. One of the techniques that they used to get information was to take ropes and tie them around your biceps, loop the rope around your head and pull it down beneath your knees and leave you in that position. You can imagine it’s very uncomfortable.

One night, I was being punished in that fashion. All of sudden the door of the cell opened and the guard came in. The guy who was just — what we call the gun guard — just walked around the camp with the gun on his shoulder. He went like this and loosened the ropes. He came back about four hours later and tightened them up again and left.

The following Christmas, because it was Christmas day, we were allowed to stand outside of our cell for a few minutes. In those days we were not allowed to see or communicate with each other, although we certainly did. And I was standing outside, for my few minutes outside at my cell. He came walking up. He stood there for a minute, and with his sandal on the dirt in the courtyard, he drew a cross and he stood there. And a minute later, he rubbed it out, and walked away.

For a minute there, there was just two Christians worshipping together. I’ll never forget that moment. (APPLAUSE). So every day.

WARREN: Let’s go into the tough ones. That was just a gimme.

MCCAIN: All right.

WARREN: Let’s deal with abortion. I, as a pastor, have to deal with this all the time, every different angle, every different pain, all of the decisions and all of that. Forty million abortions since Roe v. Wade. Some people, people who believe that life begins at conception, believe that’s a holocaust for many people. What point is a baby entitled to human rights?

MCCAIN: At the moment of conception.

(APPLAUSE).

I have a 25-year pro-life record in the Congress, in the Senate. And as president of the United States, I will be a pro-life president. And this presidency will have pro-life policies. That’s my commitment. That’s my commitment to you.

WARREN: OK, we don’t have to beleaguer on that one. Define marriage.

MCCAIN: A union — a union between man and woman, between one man and one woman. That’s my definition of marriage.

Could I — are you - are we going to get back to the importance of Supreme Court Justices or should I mention –

WARREN: We will get to that.

MCCAIN: Okay, alright, okay.

WARREN: You’re jumping ahead. You know all my questions, good.

MCCAIN: When we speak of the issue of the rights to the unborn, we need to talk about judges. But, anyway, go ahead.

WARREN: Let me ask you a question related to that. We have a bill right here in California, Proposition H, that’s going on, because the court overturns this definition of marriage. Was the Supreme Court of California wrong?

MCCAIN: I believe they were wrong, and I strongly support preserving the unique status of marriage between man and woman. And I’m a federalist. I believe that states should make those decisions.

In my state, I hope we will make that decision, and other states, they have to recognize the unique status between man and woman. And that doesn’t mean that people can’t enter into legal agreements. That doesn’t mean that they don’t have the rights of all citizens. I’m not saying that. I am saying that we should preserve the unique status of marriage between one man and one woman.

And if a federal court — if a federal court decided that my state of Arizona had to observe what the state of Massachusetts decided, then I would favor a constitutional amendment. Until then, I believe the states should make the decisions within their own states.

WARREN: OK.

(APPLAUSE).

All right.

Another issue, stem cells. We’ve had the scientific break-through of creating pluri-potent (ph) stem cells through adult stem cells.

MCCAIN: Yes.

WARREN: So would you favor or oppose the federal funding of embryonic stem cell research since we had this other break-through?

MCCAIN: For those of us in the pro-life community this has been a great struggle and a terrible dilemma because we’re also taught other obligations that we have as well. I’ve come down on the side of stem cell research. But I am wily optimistic that skin cell research, which is coming more and more into focus and practicability, will make this debate an academic one.

WARREN: How about the issue of evil. I asked this of your rival, in the previous debate. Does evil exist and, if so, should ignore it, negotiate it with it, contain it or defeat it?

MCCAIN: Defeat it. A couple of points. One, if I’m president of the United States, my friends, if I have to follow him to the gates of hell, I will get bin Laden and bring him to justice. I will do that. And I know how to do that. I will get that done.

(APPLAUSE).

No one, no one should be allowed to take thousands of American — innocent American lives.

Of course, evil must be defeated. My friends, we are facing the transcended challenge of the 21st century — radical Islamic extremism.

Not long ago in Baghdad, al Qaeda took two young women who were mentally disabled, and put suicide vests on them, sent them into a marketplace and, by remote control, detonated those suicide vests. If that isn’t evil, you have to tell me what is. And we’re going to defeat this evil. And the central battleground according to David Petraeus and Osama bin Laden is the battle, is Baghdad, Mosul, Basra and Iraq and we are winning and succeeding and our troops will come home with honor and with victory and not in defeat. And that’s what’s happening.

And we have — and we face this threat throughout the world. It’s not just in Iraq. It’s not just in Afghanistan. Our intelligence people tell us al Qaeda continues to try to establish cells here in the United States of America. My friends, we must face this challenge. We can face this challenge. And we must totally defeat it, and we’re in a long struggle. But when I’m around, the young men and women who are serving this nation in uniform, I have no doubt, none.

WARREN: All right. These next questions have to deal with domestic issues. I believe that leadership is stewardship, not ownership. And for a few years, you’re asking to us place a stewardship or our freedom and our security and our economy and the environment and everything into your hands. So here, I have about 500 questions in this category.

The first one is on the courts. Which existing Supreme Court Justices would you not have nominated?

MCCAIN: With all due respect, Justice Ginsburg, Justice Breyer, Justice Souter, and Justice Stephens.

WARREN: Why? Tell me why.

MCCAIN: Well, I think that the president of the United States has incredible responsibility in nominating people to the United States Supreme Court. They are lifetime positions, as well as the federal bench. There will be two or maybe three vacancies. This nomination should be based on the criteria of proven record, of strictly adhering to the Constitution of the United States of America and not legislating from the bench. Some of the worst damage has been done by legislating from the bench.

(APPLAUSE).

And by the way, Justices Alito and Roberts are two of my most recent favorites, by the way. They really are. They are very fine.

(LAUGHTER).

And I’m proud of President Bush for nominating them.

WARREN: All right, let’s talk about the role of faith-based organizations. There was a recent poll that came out, it said over 70 percent of Americans believe that faith-based organizations do a better job at community services…

MCCAIN: Because Americans are right.

WARREN: … than the government. You know, addictions, homelessness, poverty, all of these, prisoner rehab, things like that. The Civil Rights Act of 1964 allows religious organizations, not just churches but faith-based organizations to keep and hire the people that they believe share common beliefs with.

MCCAIN: Yes.

WARREN: Would you insist that faith-based organizations forfeit that right to access federal funds?

MCCAIN: Absolutely, not. And if you did, it would mean a severe crippling of faith-based organizations and their ability to do things so successfully.

Life is full of anecdotes. And I’m sorry to tell you so many anecdotes. But I went to New Orleans after Katrina. The Resurrection Baptist church was doing tremendous work with thousands of volunteers. I’m sure probably from here at Saddleback, coordinating efforts of thousands of volunteers, including my own church, the North Phoenix Baptist church, who came from all over America. And various authorities, off the record, told me, off the record, that they were doing so much more good than the government organizations, that it was incredible. And New Orleans could not have been on the path — and they’ve got a long way to go — on the path to recovery if it hadn’t have been for the faith-based organizations who are still operating in New Orleans, much to their credit, AND thank God.

WARREN: First in, last out.

MCCAIN: Yes.

WARREN: Let’s talk about education. America ranks 19th in high school graduations, but we’re first in incarcerations. Everybody says they want more accountability in schools.

MCCAIN: Um-hum.

WARREN: About 80 percent of America says they support merit pay for the best teachers. Now, I don’t want to hear your stump speech on education.

MCCAIN: Yes, yes, and find bad teachers another line of work.

(APPLAUSE).

WARREN: You know, we’re going to end this, you’re answering so quickly. You want to play a game of poker?

MCCAIN: Can I — choice and competition, choice and competition, home schooling, charter schools, vouchers, all the choice in competition. I want — look, I want everyone American family to have the same choice that Cindy and I made and Senator Obama and Mrs. Obama made as well, and that was, we wanted to send our children to the school of our choice. And charter schools work, my friends. Home schooling works. Vouchers in our nation’s capital works. We’ve got thousands of people in Washington, D.C., that are applying for a voucher system. New York City is reforming.

I go back to New Orleans. They were — as we know, the tragedy devastated them. They have over 30 charter schools in the city of New Orleans, and guess what? It’s all coming up. It’s all coming up. It’s a simple principle, but it’s going to take dedicated men and women, particularly in the teaching profession, to make it happen.

And by the way, here — I won’t go any further, but the point is, it’s all based and it’s being proven that choice in competition for every American family. And it is the civil rights issue of the 21st century, because every citizen’s child now has an opportunity to go to school.

But what kind of opportunity is it if you send them to a failing school? That’s why we’ve got to give everybody the same opportunity and choice.

WARREN: OK. All right, let’s move on.

MCCAIN: You’re sorry you mentioned that my answers were short, aren’t you?

WARREN: No, no, actually, this is great because I may actually get to ask you a couple of extra questions, which are good. They’re the “lightning bonus round” actually.

(LAUGHTER)

Ok, on taxes, define “rich.” Everybody talks about taxing the rich, but not the poor, the middle class. At what point - give me a number, give me a specific number - where do you move from middle class to rich?

Is it $100,000, is it $50,000, is it $200,000? How does anybody know if we don’t know what the standards are? MCCAIN: Some of the richest people I’ve ever known in my life are the most unhappy. I think that rich should be defined by a home, a good job, an education and the ability to hand to our children a more prosperous and safer world than the one that we inherited.

I don’t want to take any money from the rich — I want everybody to get rich.

(LAUGHTER)

I don’t believe in class warfare or re-distribution of the wealth. But I can tell you, for example, there are small businessmen and women who are working 16 hours a day, seven days a week that some people would classify as - quote - “rich,” my friends, and want to raise their taxes and want to raise their payroll taxes.

Let’s have - keep taxes low. Let’s give every family in America a $7,000 tax credit for every child they have. Let’s give them a $5,000 refundable tax credit to go out and get the health insurance of their choice. Let’s not have the government take over the health care system in America.

(APPLAUSE)

So, I think if you are just talking about income, how about $5 million?

(LAUGHTER)

But seriously, I don’t think you can - I don’t think seriously that - the point is that I’m trying to make here, seriously — and I’m sure that comment will be distorted — but the point is that we want to keep people’s taxes low and increase revenues.
And, my friend, it was not taxes that mattered in America in the last several years. It was spending. Spending got completely out of control. We spent money in way that mortgaged our kids’ futures.

(APPLAUSE)

My friends, we spent $3 million of your money to study the DNA of bears in Montana. Now I don’t know if that was a paternity issue or a criminal issue…

(LAUGHTER)

… but the point is, it was $3 million of your money. It was your money. And, you know, we laugh about it, but we cry - and we should cry because the Congress is supposed to be careful stewards of your tax dollars.

So what did they just do in the middle of an energy crisis when in California we are paying $4 a gallon for gas? Went on vacation for five weeks. I guarantee you, two things they never miss - a pay raise and a vacation — and we should stop that and call them back and not raise your taxes. We should not and cannot raise taxes in tough economic times.

So, it doesn’t matter really what my definition of “rich” is because I don’t want to raise anybody’s taxes. I really don’t. In fact, I want to give working Americans a better shot at having a better life, and we all know the challenges, my friends, if I could be serious.

Americans tonight in California and all over America are sitting at the kitchen table — recently and suddenly lost a job, can’t afford to stay in their home, education for their kids, affordable health care. These are tough problems. These are tough problems. You talk to them every day…

WARREN: All the time.

MCCAIN: … everyday. My friends, we’ve got to give them hope and confidence in the future. That’s what we need to give them, and I can inspire them. I can lead, and I know that our best days are ahead of us.

(APPLAUSE)

WARREN: All right. Thank you.

Now, we’ve got a couple minutes left in this section. Here’s a security question I didn’t get to with Sen. Obama. We didn’t have enough time. When is our right to privacy, when our right to privacy and our right to national security collide?

MCCAIN: It does…

WARREN: How do you decide what takes precedent?

MCCAIN: It does collide, and there are always competing priorities. We must preserve the privacy of all of our citizens as much as possible because that is one of the fundamental and basic rights we have - and, by the way, including a secret ballot for union organizers, a secret ballot, not a ballot that someone comes around and signs you up.

That’s a different subject, but the point is that we have now had technological advances over the last 20 or 30 years in communications that are remarkable. It is remarkable ability that our enemies have to communicate, so we have to keep up with that capability.

I mean, there are too many ways - through cyberspace and through other ways - that people are able to communicate with one another. So we are going to have to step up our capabilities to monitor those. Sometimes there are calls from outside the United States, inside the United States. There are all kinds of communications of every different kind.

So you need Congress to work together. You need a judiciary that will review these laws that we pass; and at the same time, it’s just an example of our failure to sit down, Republican and Democrat, and work these things out together for the good of the nation’s security instead of this constant fighting, which, according to our director of national intelligence, until we finally reached an agreement not long ago, was compromising our ability to keep America from attack. And so, there is a constant tension; it is changing with changes in technology, and we have to stay up with it.

WARREN: We’ll be right back with Sen. John McCain.

(APPLAUSE)

(COMMERICAL BREAK)

WARREN: Welcome back to Saddleback’s Civil Forum on the Presidency, and we are here with Sen. John McCain.

John, these last questions are about America’s responsibility to the world. We are without a doubt the most blessed nation in the world. We are blessed to be a blessing, and the Bible says to whom much is given much has been required. So I want to talk about what is our stewardship to everybody else, and let’s first talk about freedom and war. As an American, what is worth dying for, and what is worth committing American lives for?

MCCAIN: Freedom — our national security, our security as a nation. Wars have started in obscure places that have enveloped us. We also must temper that with the ability to effectively and beneficially cause the outcome that we want.

In other words, there is tyranny and there is tragedy throughout the world — and we can’t right every wrong, but we can do what America has done throughout our history, and that is be a beacon of hope and liberty and freedom for everyone in the world — as Ronald Reagan used to quote, “a shining city on a hill.”

And so there are conflicts that we can’t settle. The most precious asset we have is American blood, and throughout our history Americans have gone to all four corners of the world and shed that blood in defense of someone else’s freedom. No other nation on earth has ever done that, but we have also succeeded in other ways.

We won the Cold War, as I mentioned earlier, without firing a shot because of our ideology that communism was wrong and evil and we can defeat it, just as we can defeat radical Islamic extremism.

Can we talk just a second about the latest in Georgia?

WARREN: Let me ask you this: What would be the criteria for which you would commit troops to…

MCCAIN: American national security interests are threatened.

WARREN: … I understand that, but what about like genocide in Darfur, or if mass killings took place in Georgia?

MCCAIN: Our obligation is to stop genocide wherever we can. We all know about Rwanda. No one knows that better than you and the Saddleback Church who have been so active. By the way, Cindy was just there with Mike Huckabee and Dr. Bill Frist and have seen what the women of Rwanda are doing. The women are taking charge of the future of Rwanda because they’re saying “Never again,” and they are doing an incredible job.

(APPLAUSE)

Darfur our most respected former Secretary of State Colin Powell called genocide some years ago. The question is how can we effectively stop it? And obviously we’ve got to do more, and we’ve got to try to marshal the forces all over the world to join us.
I think one of the things we ought to explore more carefully is us supplying the logistics and equipment and the aid, and the African countries step forward with the personnel to enforce a genuine ceasefire. It’s a very complicated situation, as you know, but we’ve got to be committed to never saying “never again” again. Now…

WARREN: Now, but what about, you know, you are seeing Russia re-assert itself in Georgia and maybe now Poland. What’s happening?

MCCAIN: I am very saddened here to be with you and talk about Russian re-emergence in the centuries-old ambition of the Russian Empire to dominate that part of the world — killings, murder, villages are being burned, people are being wantonly ejected from their homes, the latest figures from human rights organizations 118,000 people in that small country. It was one of the earliest Christian nations. The king of then-Georgia in the third century converted to Christianity. You go to Georgia and you see these old churches that go back to the 4th and 5th century.

My friends, the president — the present, Saakashvili, is a man who is educated in the United States of America on a scholarship. He went back to Georgia, and with other young people who had also received an education, they achieved a revolution. They had democracy, prosperity and a great little nation, and now the Russians are coming in there in an act of aggression, and we have to not only bring about ceasefire, but we have to have honored one of the most fundamental rights of any nation, and that is territorial integrity.

We must respect the entire territory of Russia - excuse me - the Russians must respect the entire territorial integrity of Georgia — and there’s only 4 million people in Georgia, my friends. I’ve been there. It is a beautiful little country. They are wonderful people.

They are suffering terribly now, and there are two other aspects of this, very quickly. One of them — don’t think it was an accident that the presence of Lithuania — the presidents - Lithuania, Latvia, Estonia, Poland and Ukraine - flew to Tbilisi to show their solidarity with the president of Georgia because they all have something in common with Georgia. They lived under Russian domination for a long period of time.
Second of all, of course, it is about energy. There’s an oil pipeline that goes across Georgia that up until now had not been controlled by the Russians, and, my friend, energy the Russians are using as a tremendous lever against the Europeans.

So keep them in your prayers. Let’s get the humanitarian aid as quickly as possible to them and send the message to the Russians that this behavior is not acceptable in the 21st century.

(APPLAUSE)

WARREN: Related to that, America’s responsibility in the world, religious persecution - what would you do in your administration to end — put pressure on the Chinese and Iraq and all the other places, so-called allies of ours, that will allow - will not allow religious freedom, whether it’s Christian or any other faith?

MCCAIN: The President of the United States’ greatest asset is the bully pulpit. The president of the United States — and I go back again to Ronald Reagan - he went to the Berlin Wall and said, “Take down this wall,” called them an “evil empire.”

Many said don’t antagonize the Russians, don’t cause a confrontation with the Soviet Union. He stood for what he believed, and he said what he believed, and he said to those people who were then captive nations, the day will come when you will know freedom and democracy and the fundamental rights of man.

Our Judeo-Christian principles dictate that we do what we can to help people who are oppressed throughout the world, and I’d like to tell you that I still think that even in the worst places in the world today, in the darkest corners, little countries like Belarus - they still harbor this hope and dream someday to be like us and have freedom and democracy.

And we have our flaws, and we have our failings, and we talk about them all the time, and we should, but we remain, my friends, the most unusual experiment in history, and I’m privileged to spend every day of my life in it. I know what it’s like to be without it.

(APPLAUSE)

WARREN: John, most people don’t know that there are 148 million orphans in the world growing up without parents.

What should we do about this, and would you be willing to consider or even commit to something similar to the President’s Emergency Plan for AIDS — which he said AIDS is an emergency — a PEPFAR. Could we do a PEPFAR for the emergency plan for 148 million orphans?

Most of these - they don’t need to grow up in orphanages. They need to be in families, and many of those families could take them in if they had some kind of assistance.

MCCAIN: Well, I think we have to make adoption a lot easier in this country. That’s why so many people go to other countries to get - to be able to adopt children.

(APPLAUSE)

My great hero and role model Teddy Roosevelt was the first modern American president to talk about adoption and how important it was, and I promise you this is my last story.

Seventeen years ago Cindy was in Dhaka, Bangladesh. She went to Mother Teresa’s orphanage. The nuns brought her two little babies who were not going to live. Cindy came home. I met her at the airplane. She showed me this 5-week-old baby and said, “Meet your new daughter.” She’s 17, and our life is blessed - and that’s what adoption is all about.

(APPLAUSE)

WARREN: All right, you’ve got one minute to answer this one, and that is, why do you want to be president?

MCCAIN: I want to inspire a generation of Americans to serve a cause greater than their self-interest. I believe that America’s best days are ahead of us, but I also believe that we face enormous challenges, both national security and domestic, as we have found out in the last few days in the case of Georgia.

And I want to be - make sure that everybody understands that this is a time to come together. Throughout my life from the time I was 17 and raised my hand and was sworn in as a midshipman at the United States Naval Academy, I’ve always put my country first. I put my country first when I had the honor of serving in the military, and I had the honor of serving my - putting my country first as a member of the House of Representatives and then the United States Senate.

America wants hope. America wants optimism. America wants us to sit down together. I have a record of reaching across the aisle and working with the other party, and I want to do that, and I believe, as I said, that Americans feel it is time for us to put our country first.

And we may disagree on a specific issue — and I won’t reveal them now…

(LAUGHTER)

… but I want every American to know that when I go to Gee’s Bend, Alabama, and meet the African-American women there who are so wonderful and lovely, an experience I’ll never forget, and when I go to places where I know they probably won’t vote for me, I know that my job is to tell them that I’ll be the president of every American and I’ll always put my country first.

(APPLAUSE)

WARREN: Thank you. Thank you. All right, 20 seconds left.

What would you say to people who oppose me asking you these questions in a church?

MCCAIN: I say to them that I’d like to be in every venue in America. This is an important - this is a very important election. Our nation was founded on Judeo-Christian values and principles.

I’m happy to be here in a church. I’m happy to be here in a place that with your programs such as PEACE, such as your help throughout the world, such as your outreach to so many thousands of Americans. I’m honored to be here, and I thank you.

WARREN: Would you stand and welcome - thank Sen. John McCain?

(APPLAUSE)

(COMMERCIAL BREAK)

WARREN: … America is the freedom of speech - even the freedom to protest this meeting. That’s a good thing. But we have to learn how to have civility in our civilization, how to stop being rude, how to stop demonizing each other, how to have a discussion and a debate because we all want America to be a greater place.

God bless you.

(APPLAUSE)

JOHN KING, CNN ANCHOR: The farewell there from Pastor Rick Warren of the Saddleback Church out in Lake Forest, California.

Two remarkable conversations tonight led by Pastor Warren. First it was Barack Obama, the Democratic candidate for president, then John McCain, the Republican candidate for president sharing a stage - not a debate - but sharing a stage in an event for the first time tonight, the Presidential Civil Forum on Leadership and Compassion.

You just saw it wrap up there in Lake Forest, California. In just a moment the best political team on television will join me with complete analysis of these fascinating conversations right here on CNN and CNN.com as well. Please stay with us.

(COMMERCIAL BREAK)