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STATE OF THE UNION WITH JOHN KING

State of the Union: Reliable Sources

Aired March 1, 2009 - 10:00   ET

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


JOHN KING, HOST: I'm John King, and this is our "State of the Union" report for this Sunday, March 1st. If you think the economy is bad now, well, get ready. It could get a lot worse. The latest numbers on the U.S. economy show that it's shrinking twice as fast as previously thought. What should you do -- what can you do to protect your family? Personal finance expert Suze Orman will be here with some real-world answers.

On Capitol Hill, the numbers are a lot higher. Try over $3.5 trillion, but the issues are much the same. Where should we spend? And how much can we save?

And it was the number-one topic across the Sunday talk shows. The best political team on television will be right here to analyze what's being promised and what will really get done.

It began by reporting on the gold rush. This week, and after almost a century-and-a-half, the Rocky Mountain News closed for ever. It's only one of many newspapers across the country facing bankruptcy. Howie Kurtz and his "Reliable Sources" look at what you'll miss if your local paper disappears, all ahead in this hour of "State of the Union."

And let's bring in my partner, Howie Kurtz.

Howie, a lot of people waking up this morning to the sad news that the broadcasting world lost a legend.

KURTZ: That's exactly right, John. Paul Harvey had an incredibly distinctive voice and a distinctive style, as well. His brief commentaries for ABC Radio, "Standby For News," have been airing almost without interruption since 1951. Harvey was doing opinion when radio was basically music and headlines.

Harvey, who got a presidential Medal of Freedom four years ago, was 90 when he died yesterday.

Let's listen to him sign off one last time.

(BEGIN VIDEO CLIP)

PAUL HARVEY, SYNDICATED COMMENTATOR: Paul Harvey. Good day.

(END VIDEO CLIP)

KURTZ: And good day to you, sir. Ahead, we'll look at coverage of the president's Iraq withdrawal plan. Why wasn't this a huge bombshell?

And we'll talk to gossip queen Liz Smith about her plans to stay in the game after getting a pink slip at the age of 86.

But first, with his big speech to Congress, with his health care plan, with his New budget over $3.5 trillion, Barack Obama must have known he was throwing a lot of complexity at the country, and at the journalists and pundits who would decipher it. He seemed to grouse earlier in the week that he, the president of the United States, might be getting drowned out.

(BEGIN VIDEO CLIP)

OBAMA: I just want us to not lose perspective of the fact that most of the things that have been the topic of argument over the last several days amount to a fraction of the overall stimulus package. This sometimes gets lost in the cable chatter.

(END VIDEO CLIP)

KURTZ: And there was plenty of chatter this week. Presidential speeches tend to be graded as theater performances, and on that score, Obama generally got good reviews.

(BEGIN VIDEOTAPE)

GEORGE STEPHANOPOULOS, ABC NEWS: I think he succeeded in convincing the country tonight that he has a strategy for getting us out of this.

DAVID GERGEN, CNN: The president's speech, I thought, was in many ways for him a tour de force politically.

UNIDENTIFIED MALE: It was not a great speech, but I think it was an extremely important speech.

KURTZ (voice-over): But the oratory was quickly overtaken by the arguments over the president's first budget, especially his plan to tax the affluent to finance expanded health insurance.

KATIE COURIC, CBS NEWS: Tonight, shifting the wealth. The president asks Congress to raise taxes for high-income earners.

JAKE TAPPER, ABC NEWS: President Obama is attempting to redirect vast sums of wealth from wealthy individuals and businesses to people from lower incomes.

UNIDENTIFIED MALE: Even if you take every penny that's earned by every American with an income over $250,000, you can't pay for all of this.

(END VIDEOTAPE)

KURTZ: Joining us now to talk about this and Rush Limbaugh's speech to conservatives yesterday, in New York, Keli Goff, author and political blogger. Here in Washington, Stephen Hayes, senior writer for "The Weekly Standard" and a CNN political contributor. And Steve Roberts, former "New York Times" reporter, now professor of media and public affairs at The George Washington University.

Steve Roberts, a presidential speech to Congress is a big deal, but the media coverage made me feel like the entire fate of the economy rested on this one address.

ROBERTS: Which is silly. And I do think that it was an important moment, because the president got over 50 million in audience, which is a huge number, and it's a very rare moment when you get a chance to speak directly to the public without the filter of comments and say, this is my priority, this is my strength. And he -- but he had to walk a very fine line between conveying a sense of confidence and also a sense of patience.

KURTZ: Right.

ROBERTS: That was the line he was trying to walk.

KURTZ: And I wonder, Steve Hayes, if you think the media overhyped this speech at all, because this whole drumbeat about, well, he's got to be optimistic but he can't appear to be out of touch.

HAYES: Right. Right. I think there's a lot of that, and there's some truth to what he said about the chatter in Washington.

What struck me about the speech, though, is one line that he didn't really get corrected on, and it's his line that he's not a believer in big government. We have seen nothing but big government for five weeks, and this is the kind of line that, had President George W. Bush uttered it a year ago or two years ago, we would have seen front page, above-the-fold analyses, saying, you know, the president's rhetoric does not match with his policies. And I've been a little surprised about that.

KURTZ: We'll come back to the policies.

Keli Goff, do you see a disconnect between the pundits and the public? I mean, the commentators sort of liked the speech, some didn't. But the insta-polls, CBS, CNN, showing 80 percent to 90 percent of the people liked the speech and liked Obama's plans for the economy.

GOFF: A disconnect between Washington insiders and pundits and average Americans, as Sarah Palin might have called them? No.

Yes, I think that not only do I see a disconnect, but I think that the White House has largely seen a disconnect. And I think that that's why you've seen their media strategy be really not that different, I think, in some ways, as Frank Rich pointed out, as it was during the campaign, which is that, instead of focusing on what the chattering classes were doing here in D.C. -- which, by the way if you look up "irony" in the dictionary, I think it might be all of us talking about the Washington chatter as we're sitting here chatting -- but I think that the Obama administration has really been smart about focusing on taking their message directly to voters, and they're paying attention to these poll numbers.

KURTZ: Well, let me jump in here, because I want to play a sound bite.

One person who did not think much of the coverage, Bill O'Reilly, over at Fox. Let's roll that tape.

(BEGIN VIDEO CLIP)

BILL O'REILLY, FOX NEWS: CNN and MSNBC are openly rooting for President Obama's big government vision. "The New York Times" and other far-left newspapers want the government to impose quasi socialism. The network news presentations in the morning and at night are largely sympathetic to the liberal big spending view.

(END VIDEO CLIP)

KURTZ: Steve Roberts, I'm not openly rooting for anybody, but here -- "The New York Times," just to take an example, said that Obama put his stamp on liberalism, wants to move domestic policy leftward, radical departure.

Didn't all the news organizations report on the big taxes and the huge spending in this...

ROBERTS: Yes. And look, has there been a pro-Obama tilt in the media until now? Yes. Have a lot of reporters and editorial pages and liberal columnists been entranced with the chosen one? Yes.

But I thought that they were starting to apply a pretty strict scrutiny here. Among other things, the coverage very strong in pointing out this guy has not told us how he's going to pay for a lot of these things, that it is going to add for a deficit, and I think the media did a pretty good job of pointing that out.

KURTZ: Show me, Steve Hayes, where the left-wing press is rooting for this, or overlooked the fact that this is LBJ-style big government and is socking it to the affluent.

HAYES: Well, I think there's a very good actually deconstruction of "The New York Times." In particular, on deficits, on this matter of deficits, where The Times has, I think, pointed out, as you say, that we will be running deficits. They were obsessed with deficits...

KURTZ: But you're talking about...

(CROSSTALK)

HAYES: ... under George W. Bush. I'm not. I'm actually talking about the news pages in many respects.

KURTZ: You're saying...

HAYES: Obsessed... (CROSSTALK)

HAYES: Obsessed with deficits under George W. Bush. Now, today they're pointing it out, and they've done a good job -- a better job of pointing it out in the past 24, 48 hours. But they have not been obsessed about it the way that they were in the Bush administration.

GOFF: Howard...

KURTZ: Well, we, of course, are in an economic crisis.

Let me throw you this question, Keli Goff. Bill O'Reilly and Neil Cavuto are sitting around -- and O'Reilly make more than $10 million a year -- talking about how they're going to get hammered under the tax plan. Is the coverage influenced at all, in your view, by anchors and big-name correspondents who make more than $250,000, and therefore will be in this select group of Americans, just two percent, who will pay higher taxes under Obama's plan?

GOFF: I actually think that that's less to do with the issue. And speaking of someone who does not make more than $250,000 a year, or close to it.

But I actually think that that's less of the issue than more of what you and I have talked about before on this very program, which is the media sort of chasing its tail between, we're getting accused of liberal bias, so let's bend over backwards the other way. And the reason I bring that up is I'm actually going to break with the other panelists here and say that just two weeks ago, I was interviewed about, isn't the Obama administration really sinking under the weight of all of these earmarks and all of this pork, and aren't they really in trouble here with this budge? Are Americans really going to get on board? And as we just discussed, the Obama administration said -- paid attention to voters, paid attention to the polls, didn't pay attention to the pundits and the media classes that were beating them up on this, and the poll numbers reflected that Americans who don't make $250,000 are in agreement with them. So I really think that there's more of a class issue there.

KURTZ: Right. OK. Fascinating to hear the president of the United States talk about cable chatter. I guess you have to factor that in now.

Now, Rush was here in town yesterday, Rush Limbaugh, talking to CPAC. That's the Conservative Political Action Conference. A long speech with a lot of read meat in it.

Let's watch some of it.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: There are going to be more controls over what you can and can't do, how you can and can't do it, what you can and can't drive, what you can and can't say, where you can and can't say it. The people that do want control look at us as the enemy, and we're always going to be. Don't ever measure your success by how many drive-by media reports you see that are fair to us. It's never going to happen.

(END VIDEO CLIP)

KURTZ: Now, I don't know what he's talking about, Steve Roberts, on control of what you can say. Obama's opposed to bringing back the Fairness Doctrine, the Equal Time rule.

ROBERTS: Right.

KURTZ: And the Senate voted against it this week. But when CNN and other news outlets convene these panels on, is Rush Limbaugh the New leader of the Republican Party, isn't there a little bit of, who does this guy think he is?

ROBERTS: Sure. But the fact is, this guy has proven to be a very important figure in American politics, and a lot of liberals have not understood that.

They have not understood that he found an audience, he found a grievance in a part of a lot of conservatives who believe that they were not getting a fair shake, fairly or unfairly, from the establishment media. He found a New way to communicate with conversation audiences. And I think he has to be respected for that.

Where I think the criticisms is fair, is that he -- you know, what do his audience call themselves? Ditto heads. That means they're cheerleaders. You never get a contrary opinion. Real journalism has to have contrary opinion. KURTZ: No, it's not true that you never get it, but let me go to Steve Hayes.

I heard Limbaugh on the radio Friday saying, "I love to tweak liberals." So he comes to CPAC, gives this fiery speech, attacks Obama, attacks Biden, attacks the drive-by media, and we give him exactly what he wants, which is lots of attention.

HAYES: Yes. I mean, this works exactly -- this is exactly what he wants, is to have us talking about him talking about us.

Look, in a certain way, I mean, what's remarkable about Rush Limbaugh is that he has remained as influential as he has for 20 years. I mean, this is extraordinary, for him to be doing the kinds of things and having the kind of influence that he's had.

HAYES: Now, some of that, to be sure, is the result of Democratic politicians and commentators. I mean, Paul Begala I don't think ever goes on television without mentioning Rush Limbaugh leading the Republican Party.

KURTZ: And Al Franken...

(CROSSTALK)

HAYES: But he loves it. It works for everybody.

KURTZ: Now, Keli Goff, you may disagree with 99 percent of what Limbaugh says...

GOFF: How'd you guess?

KURTZ: ... but would you agree that he is a showman who knows how to seize the media spotlight?

GOFF: In a word, yes. Absolutely.

I mean, it's very similar to Ann Coulter; right? Which is that a lot of conservatives balk at the idea of either one of them being seen as their figureheads, and rightly so, I think, because I actually don't believe that they represent the majority of Republicans, as someone who grew up in a largely Republican district. I grew up in Tom DeLay's district, in fact. And there are a lot of Republicans who don't think that they speak for them. But, you know, we all know how it works when you have a vocal minority, particularly one that has a media platform as big as they do.

ROBERTS: And one of the things about Rush is, he's much happier in opposition. You know, he is thriving because he doesn't have to deal with compromise. He doesn't have to deal with nuance.

GOFF: Right.

ROBERTS: He can be totally out there right now. He loves it. He loves being in opposition.

KURTZ: A week before the inauguration, he was at the White House. George Bush threw him a lunch. And now, of course, he talks about taking the country back. It's only been a month since Obama took over.

Let's look at some of what he said. He talked about "Obama portrays America as a soup kitchen." "Obama wants people in fear, anger, crisis." "They destroyed poor families through welfare, women having more babies." That sounded very Reaganesque. I thought that Bill Clinton and the Republican Congress reformed welfare.

So what do -- does he push the envelope with some of these phrases?

HAYES: Well, certainly he pushes the envelope. I mean, I think...

GOFF: On purpose.

HAYES: He does it on purpose. Yes, exactly.

He wants to be controversial. He wants to spark this kind of a discussion. But look, some of those things, I think it's hard to dispute the fact that the Obama administration views this crisis in some ways as an opportunity. I've heard that from Obama people. This is an opportunity to do the kinds of things that they want to do. So he's not far off on that.

KURTZ: And Keli, Limbaugh referred to the TARP program -- that's the bank bailout program -- as unconstitutional. Didn't mention that that started under one George W. Bush.

GOFF: Well, a showman, yes. A renowned constitutional scholar, I'm not so sure.

You know, I think that Limbaugh's good at doing what he does best, which is getting all of us to talk about him, selling more books than a lot of us do. And that's his specialty. I think that sometimes the policy aspects and the specifics are really just sort of icing on the cake for him.

(CROSSTALK)

HAYES: But to be fair to Rush, I mean, he was criticizing the TARP program when George W. Bush was in office.

KURTZ: Right.

HAYES: And he was smacking Republicans for it.

KURTZ: I've got 15 seconds here.

He called the media a bunch of hacks. Are you offended?

ROBERTS: No.

(LAUGHTER)

KURTZ: There's a short answer. All right. When we come back, on the way out. The president says two-thirds of American troops will be out of Iraq by the summer of 2010. Why isn't that a political earthquake of a story?

Plus a deal on Dover. The Pentagon lifting the veil on covering fallen soldiers. But will these solemn homecomings hold (ph) the media's attention?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: So let me say this as plainly as I can. By August 31, 2010, our combat mission in Iraq will end.

(END VIDEO CLIP)

KURTZ: President Obama at Camp Lejeune.

And joining our discussion now, CNN Pentagon Correspondent Barbara Starr. Barbara, I was stunned on Friday. The cable networks covered Obama's speech, talked about it for a bit, and then it was on to Citigroup and CPAC and Michelle's White House portrait, and Octomom. "The New York Times" didn't even put the story on the front page the next day. That was yesterday.

Why isn't this a dominant story right now?

STARR: I think you just answered it -- the economy. I mean, clearly, months ago, the news media turned its attention -- Iraq started getting better, less violence, less Americans died. Economy is the issue now that is front and center. This reflected that.

KURTZ: Here's my theory, Steve Roberts. TV is sick of this war, thinks it's a downer, just wants it to go away. The "CBS Evening News" didn't even lead with it on Friday.

ROBERTS: Well, I think that's partly true. As Barbara said, you know, when the election campaign started, 36, 38 percent of Americans said Iraq was the number one issue. By the time they voted, it was under 10 percent.

And so the election was not fought on Iraq. It was fought on the economy, and that has continued to dominate.

But I also think that there is a sense of fatigue, and there is a sense also that this did not represent a major shift in policy. A few months, so it was widely expected and foreshadowed.

KURTZ: Right. Right. Obama was doing essentially what he said he was going to do during the campaign, but it's still an absolute sea change when we've got 140,000 troops there.

Here's another thought I have, Steve Hayes. Because the Republicans, especially John McCain, are not denouncing this plan, the media are less interested, because we love conflict.

HAYES: Well, I think there's definitely something to that. I also think that our news cycle, the 24-hour news cycle, or 12-hour, or six-second, or whatever news cycle we're in right now, doesn't do context very well. And one of the things that I think was missing from the coverage of this was a discussion of the surge and the fact that, really, the surge is what made this speech possible, and made it possible to put the speech on page A24, as opposed to covering it on the front.

ROBERTS: McCain liked the speech better than Nancy Pelosi.

KURTZ: That's a fair point about the surge, which, of course, was very controversial when President Bush implemented it.

Keli Goff, the war has dragged on four six years, more than 4,200 Americans have died. And I know Obama said he was going to do this, but TV's reaction was sort of, like, ho-hum, OK. What else is going on? GOFF: Well, you know, and I hate to just be blunt here, but we all know the doomsday scenario going on in most newsrooms right now. I'm sure you saw "The New York Times" piece about the three major broadcast networks really struggling. And, you know, yet another newspaper folds, as we heard at top of the show.

And I think that the reality is, news outlets are trying to figure out how to give the public what they want so they can stay in business. And, you know, unfortunately, polls show that Americans are much more concerned about the economy, and sadly, probably about Octomom than they are at the moment about the war. And we can continue to debate whether or not the job of the news is to educate or to give the public what they want, which unfortunately is infotainment, but the reality of the bottom line is, you know, if you want to attract viewers and readers, you give them what they're interested in reading about, unfortunately.

KURTZ: And just briefly, Barbara Starr, Tom Ricks, the author of "Fiasco," was on MSNBC. He's got a new book out. He says he doesn't believe that Obama is going to be able to get all American troops out by 2010. Maybe he's wrong, maybe he's right, but where's that debate?

STARR: I've got to tell you, while the speech was going on, I get an instant message from a friend in the media business who says, "Are we now watching Obama's 'Mission Accomplished' speech?" Are we -- you know, no banner, but he's essentially saying the same thing -- combat mission is over.

The key question, how many young Americans troops are actually going to die in combat from this point forward? It's not over.

KURTZ: I also want to talk to you, but first I'll go to Steve Roberts on defense Secretary Robert Gates announcing this week that the Pentagon is changing the policy, the longstanding ban on photographing returns coffins, fallen soldiers at Dover Air Force Base, but that coverage will now be allowed. Is this a belated victory for press freedom?

ROBERTS: Yes. There is absolutely no doubt. Yes, there were issues of respect and dignity in terms of the military families.

KURTZ: And families can still say we don't want coverage.

ROBERTS: At the core of this policy was an attempt to manipulate public opinion, to sanitize the war, to minimize America's understanding of how costly this was in terms of lives. It is definitely a victory for press freedom and for Americans understanding what the true cost of the war is.

KURTZ: All right, Barbara Starr. So CNN and every other news organization on the planet, when families give their permission, can now go out and cover these returning soldiers at Dover.

How much interest will the media have to do this?

STARR: What are we going to do with this victory that we have achieved? I am very hard-nosed about all of this. I have sat with parents who are burying their children. The heartbreak is unbelievable.

My question to myself, all news organizations -- we will be there when the first plane returns, and we will say great words on TV, and we will show the unbelievable respect that this ceremony has for those who have fallen -- are we going to be there six hours later when the second plane comes in? What happens when a family says, "Yes, I want the media, I want my loved one remembered," and nobody shows up? That's my question.

GOFF: Howard?

KURTZ: Go ahead, Keli.

GOFF: And the other interesting thing is, is that no one's really talked about the Pentagon policy about wounded soldiers. You know, they were enforcing a lack of photographs about that, and I think I saw maybe two articles about that from a couple years ago, and no one has really touched it sine. And that's definitely a part of the story.

HAYES: But what happened -- the other question is, the flip side of what Barbara's point is, what happens when a family says no? I mean, do we respect the family or do we...

KURTZ: Well, of course. HAYES: Do we really? Do we really?

ROBERTS: Absolutely.

HAYES: Well, I'll tell a personal story. When my friend Scott Schrader (ph) died in the Gulf War in 1991, I was there while local news stations stood in front of his house, filming his house, one after the other, this cross-town rivalry, trying to get the family to speak, and going what I thought was beyond what was a proper pursuit of a story for a news organization. Now, if I had confidence that we were beyond that and that that would never happen, I'd be much, much more sympathetic to the journalist argument.

ROBERTS: Within the limits of official Pentagon coverage at Dover, at the military funerals, I do think they will be totally respected. And one of the reasons is, I also think Michelle Obama has made a tremendous priority of respecting military families. And I think that will be part of it.

KURTZ: OK. I've got to go, but I do want to ask Barbara, do you agree that the whole reason for this policy was to minimize the coverage of casualties?

STARR: I find that very problematic. It may have been the original one, but let's face it, the American public opinion against the war was massive and turned against the war -- coverage of the coffins, of the returning remains, of the whole ceremony. Americans were against this war with or without that policy.

KURTZ: All right.

Barbara Starr, Keli Goff in New York, Stephen Hayes, Steve Roberts, thanks for joining us.

And still to come on this Sunday morning, gossip girl, the legendary Liz Smith, on parting ways with "The New York Post" and the rise of celebrity stalking journalism.

Plus, dealing with downsizing. "The Rocky Mountain News" shut down on Friday. We'll talk to three journalists, one of them from the Denver paper, on life after layoffs.

And then even big-deal anchors are twittering. Is it a waste of time or the next big thing?

And 11:00 Eastern, John King talks with personal finance expert Suze Orman about staying afloat in a sinking economy.

(COMMERCIAL BREAK)

KING: I'm John King, and this is STATE OF THE UNION.

Here are some stories breaking this Sunday morning.

The Israeli prime minister, Ehud Olmert, threatens a "painful, harsh, strong" response if Palestinian rocket attacks don't stop. Militants fired nine rockets into southern Israel this weekend. One slammed into an empty school.

Secretary of State Hillary Clinton is on her way to the Middle East. It's her second overseas trip as the nation's top diplomat. She'll hold meetings in Egypt, the West Bank and Israel this week before heading on to Europe.

Civilian deaths in Iraq are up. The Iraqi Interior Ministry says at least 211 civilians were killed in February. That's up from 138 in January, which had been the low since the U.S.-led invasion.

Meanwhile, the chairman of the Joint Chiefs of Staff says he's comfortable with President Obama's plan to pull U.S. forces out of Iraq by the end of 2011. Admiral Mike Mullen was our guest last hour.

That and much more ahead on STATE OF THE UNION.

Time now to head it back over to our friend Howie Kurtz and RELIABLE SOURCES.

Hi, Howie.

KURTZ: Hi, John.

Hey, you were at the White House this week having lunch with President Obama, along with the other Sunday hosts, and Brian Williams and Katie Couric and Charlie Gibson, and the lunch was on background. But I heard you and others talk about their view of the economy and the president liked "Slumdog Millionaire." Just what were the restrictions on what you could report?

KING: It was very interesting, because the restrictions were sort of ambiguous in the sense that we could report we had lunch with the president, but then we were supposed -- the conversation was on background, so you can't directly attribute any quotes to the president. And if you look at the different postings by all of our colleagues, everyone sort of interpreted that a little bit differently.

KURTZ: All right.

KING: But it was a little bit awkward. You're at a lunch with the president where you know you're there, you can say you're there, but you can't quote him. It's a little strange.

KURTZ: All right. Well, thanks very much, John. We'll talk to you later.

Now, gossip is big business these days, and no one is a bigger bold-faced name than Liz Smith. She started writing a column 33 years ago for "The New York Daily News" and has been going strong ever since. But this week came the disconcerting, indeed earth-shattering news, that "The New York Post" has given the pink slip to the 86-year- old gossip queen.

So is the sidelining of Liz Smith the end of an era? I spoke to her earlier from New York.

(BEGIN VIDEOTAPE)

KURTZ: Liz Smith, welcome.

SMITH: How are you, Howard?

KURTZ: Doing very well. I'd call you an institution, but I don't want to make you feel old. Are you feeling a little bruised at losing your tabloid home in New York?

SMITH: Actually, it has been very exhilarating being fired at age 86, because, you know, everybody already thought you were all washed up.

(LAUGHTER)

KURTZ: You mean you're getting all this attention and you're kind of reveling in it?

SMITH: I am. I was sorry to -- nobody wants to lose the power and the fun of a daily column, but it's all worked out pretty good for me. And I'm going to move to on to the Internet, to my wowOwow.com site, and I'm going to hope to get another print medium, because I love newspapers.

KURTZ: That makes two of us. Let's stick with The Post for a minute. The paper was paying you $125,000 a year. Rupert Murdoch apparently signed off on this, it wasn't his idea.

Does this mean you were no longer in the "in" crowd as far as "The New York Post" was concerned?

SMITH: I don't think I was ever in the "in" crowd as far as their editor was concerned. I really wasn't his cup of tea, Howard. I was too, you know, maybe laid back. He thought I was too friendly with my sources. And I just wasn't -- you know, I didn't have that killer instinct that they love on "The New York Post."

Also, I love New York and I care about New York. And I don't think these Australians understand or love New York.

KURTZ: Now, I've heard that before about you, about, oh, Liz Smith, she's just too nice to the people she writes about.

Has gossip become meaner these days and maybe you're a little out of step with the new culture?

SMITH: It has become more obvious.

SMITH: I mean, more vulgar. You can say more things, you can -- you know, you can say things you weren't able to say.

I remember back when "The Best Little Whorehouse in Texas" was a big hit. I wasn't allowed to say that on the air. I couldn't -- I had to say "Whohouse," and that was only about 10 years ago or 15.

KURTZ: I don't think we'll bleep that.

Now, I remember living in New York in the late '80s when you were working at The Daily News, and you broke the story that Donald Trump was getting divorced from his then-wife Ivana, and you were sort of on Ivana's side, and Cindy Adams with "The New York Post" was with "The Donald" side.

And was that a weird situation to be in, taking one side sort of in a divorce?

SMITH: He wouldn't talk to me, so I had to take the side I could get. And that went on for about three months, and it made me very famous, and it made a lot of money for The Daily News and for WNBC.

So they -- my editors wouldn't let me quit that story even when there was nothing more to say. And looking back on it, I see it was just a divorce quarrel between rich people. It had no significance. But the public loved it because Donald was a character.

KURTZ: It seemed earth-shattering at the time. Now...

(LAUGHTER)

KURTZ: ... there is so much gossip now. I mean, you were part of a long tradition going back to Walter Winchell, but now you have magazines, TV shows, Web sites, blogs, "US," "In Touch," "OK," "Gawker."

Has that kind of drained the mystery out of the rich and famous?

SMITH: Boy, I'll say. And the rich and famous and the big stars, they are really -- they have disappeared. You -- name me a really big star. There are only about 25 of them now. But when I was in the Winchell era, there were really famous people, and you didn't have to have them explained to you.

When people said Katharine Hepburn or Elizabeth Taylor, Clark Gable, people knew what you were talking about. I think gossip now is intensely vitiated because there is so much media. There are so many people gossiping.

So it has lost its meaning. It's like anything in excess. You get so you don't care about it. I have -- I am now a philosopher of entertainment.

(LAUGHTER)

KURTZ: Well, maybe that explains why I read some of these glossy magazines, and I don't know who half the people are.

Are gossip writers -- particularly with so many of them chasing the remaining celebrities and sort-of-famous and wannabe famous -- are they used and manipulated by the "Brangelinas" of the world, the big stars and their P.R. people?

SMITH: Well, at least those big people that are using them like "Brangelina," they are using them for a good cause. They've just learned that if they want to raise money for this or that, they have to expose themselves to some extent.

I think the real problem is that there is no control on the way people gossip now. There are no editors, publishers, lawyers aren't -- the Internet is just wild. So these kids who are running gawker.com or Perez Hilton, they are very clever and they deserve a lot of credit for making fabulous careers for themselves.

But I don't believe a word any of them write.

KURTZ: Well, if Liz Smith doesn't believe it, then I need to be skeptical too.

Now, Sean Penn is a pretty big star. He just won an Oscar and he made a big speech in defense of gay marriage. He is not one of your big fans, is he?

SMITH: Well, when I was introduced to him, he turned and ran out of the building without saying hello. And I thought...

(CROSSTALK)

KURTZ: How often does that happen? (LAUGHTER)

SMITH: But I am very full of admiration for him. I didn't care. I thought it was funny.

KURTZ: Now, you said earlier you were a co-founder of this women's Web site wowOwow. You said a few years ago that you had no time to read blogs, that you didn't really think much of the whole blog phenomenon.

What made you change your mind? SMITH: Well, I mean, I'm like one of those people who had fabulous horses back when they invented the combustion engine. You know, I was just a Luddite. I was resisting moving forward.

But now I've embraced the Web totally, even though I'm really inept at making it work. But fortunately, people come along and they help those of us senior citizens who are still trying to work.

KURTZ: The digitally-impaired get a little bit of assistance.

(LAUGHTER)

SMITH: Exactly.

KURTZ: All right. You're 86, you've done this for a long time.

SMITH: Yes.

KURTZ: Why aren't you writing on a beach somewhere? Why do you still want to be in the gossip game?

SMITH: I don't have very many real personal aspects of my life, so I fell in love with my work. And I just enjoy it, Howard. I don't want to get out of the game yet. I want to declare myself invalid when I feel like I can't do it -- cut it anymore.

KURTZ: All right. Well, as long as you're writing, we will find some platform, some place to read you.

Liz Smith, thanks very much for joining us.

SMITH: Thank you, Howard.

(END VIDEOTAPE)

KURTZ: And speaking of "The New York Post," the tabloid's taking plenty of heat, all of it well deserved, in my view, from running a cartoon about President Obama's stimulus bill that just happened to feature a monkey. The Post offered a qualified apology after critics ripped the drawing as racist, but this week, Rupert Murdoch himself felt compelled to address what his paper had done.

"Last week, we made a mistake. We ran a cartoon that offended many people. Today I want to personally apologize to any reader who felt offended and even insulted. It was not meant to be racist, but unfortunately it was interpreted by many as such."

Murdoch doesn't apologize often. In this case, he really didn't have much choice.

Up next, becoming the story. From covering the struggling economy to landing in the unemployment line, with local TV stations and newspapers trimming their staffs, I'll ask three journalists about the personal impact of being canned and what it means for the shrinking news business.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICH BOEHNE, PRESIDENT, SCRIPPS: Certainly not good news for any of you, and certainly not good news for Denver.

(END VIDEO CLIP)

KURTZ: That was Rich Boehne, president of the Scripss chain, telling staffers at "The Rocky Mountain News" that he was pulling the plug on their newspaper. The 150-year-old tabloid published its final edition Friday. Most of the 200 journalists there losing their jobs. We'll talk to one in a moment.

But there is grim news throughout the newspaper business. "The Philadelphia Inquirer" and "Daily News" declared bankruptcy this week, joining the Tribune Company and "Minneapolis Star Tribune" in Chapter 11. Hearst said that unless the "San Francisco Chronicle" made major cutbacks soon, it would sell or shut down the paper. "The Seattle Post-Intelligencer" facing a similar shutdown. And local television stations across the country are quietly trimming their staffs.

KURTZ: Joining us now to talk about being on the receiving end of such corporate downsizing, in Denver, M.E. Sprengelmeyer, who found himself out of work Friday when "The Rocky Mountain News" folded. In Colorado Springs, Ernie Bjorkman, who lost his job as an anchor for KWGN. And here in Washington, Andrea McCarren, who was recently let go by WJLA, the ABC affiliate here in the nation's capital.

M.E. Sprengelmeyer, you knew for three months this was a possibility, but what did it feel like when you learned that The Rocky had finally come to the end of the road?

M.E. SPRENGELMEYER, LET GO FROM "ROCKY MOUNTAIN NEWS": Well, I'm really thankful that I got back in time. I'm based in Washington, D.C., and it was odd, because I'm one of the few that wasn't in the newsroom doing my normal job before the surprise came -- if it was a surprise.

I had to actually wait outside and try to sneak past the camera crews that were already waiting outside, and some of those were my friends. And so I had to -- I hid at a bus stop and just found a moment when I thought I could getting without my friends saying, "Oh, no. M.E. is here. It's true."

KURTZ: Oh, your friends were covering the funeral.

Andrea McCarren, we all know the news business is hurting. You've been in local TV for quite a while. But you don't expect it to happen to you.

ANDREA MCCARREN, RECENTLY LET GO FROM WJLA: You never expect it to happen to you. And that is one of my major regrets, is I didn't have a Plan B, because like a lot of these guys, I worked hard, was fiercely loyal to my company, was available for work and volunteered for extra shifts 24/7. You don't think it's going to happen to you.

And as one of the viewers had written to me, you don't understand what it feels like until you've gotten the word. And he described it, I think appropriately, as it feels like somebody has ripped your heart out and stomped on it.

KURTZ: Ernie Bjorkman, after 26 years, you were a fixture on the airwaves in Denver. Were you surprised to be laid off?

ERNIE BJORKMAN, LET GO FROM KWGN: I was surprised, Howard, in the fact that I had just signed a one-year contract. And as Andrea says, you never expect it to happen to you. But I did have a Plan B. I think I've gotten a lot of publicity over the last two months simply because I went back to college two years ago, knowing that this would end some time, hopefully on my own terms. But it did end on somebody else's terms. And I went back to college to become a veterinarian technician.

So I start next week in my new job as a vet tech. So I'm going to trade in my anchor suit for scrubs.

KURTZ: Well, congratulations on that.

BJORKMAN: Thank you.

KURTZ: It happened to me, too, when "The Washington Star" went down. I was on that ship as it sunk.

M.E., is it hard to cope with not just losing your job, hard enough, but to see the very newspaper that you were dedicated to and all of your friends suddenly be put out of work?

SPRENGELMEYER: Oh, and just a few weeks before our 150th anniversary. It's killer. It's just killer. And it just shows where cutting-edge paper all the way to the end, that we're setting this new trend.

It's very painful, and I was thinking to myself that the hardest part about it is actually, like all good disasters that we cover as reporters, you always think about what are you going to -- how would parents tell this to their children? And I put it in the context of, how do we explain to the young journalists who are starting out that had the same instincts to become a storyteller, you know, that I had when I was a kid, how do we explain it to them that they should stick with their dream? I think they should stick with the dream.

KURTZ: Yes. I get asked that question a lot these days.

Andrea McCarren, one minute you're covering the presidential inauguration, the next you're out on the street. You wrote about this in an opinion piece in "The Washington Post," and you got an awful lot of reaction, didn't you?

MCCARREN: It was amazing, Howie. I had been cover the economy on a daily basis, interviewing autoworkers who were in fear of losing their jobs, interviewing retailers who were seeing their sales plummet. And then three day after the inauguration, I was pink- slipped.

"The Washington Post" asked me to write an essay about covering the economy and becoming a victim of it. I did. Within 48 hours, I had received more than 400 e-mails from around the world.

KURTZ: Wow.

MCCARREN: And what was so touching is a lot of them were from autoworkers that I had covered, e-mailing me, asking, "What can we do to help?" And so many wonderful stories emerged of absolute resiliency.

The American people bounce back, and I was really touched by their offers of help, their job suggestions. Strangers were asking for my resume. It was an amazing experience.

KURTZ: Yes. The average autoworker who loses his job doesn't obviously get to do that.

Ernie Bjorkman, you've met the pope in your career, you've flown on Air Force One with the first President Bush. Is it a bit of an adjustment now to become a private citizen again?

BJORKMAN: It is an adjustment. I'm looking forward to it though. I think my life will be a lot more simpler working with animals. As somebody says, you're going up the revolutionary train, going from reptiles to animals in the workforce.

Anyway, I do. I think the quality of news gathering will be seen -- will be -- will hurt. I think it's going to be a lack of quality news gathering because, like, my station merged with another and they got rid of competition. "The Rocky Mountain News" going away, the competition is dying out there. Younger people are taking over with less experience, so I don't think you're going to have the quality of news gathering as you had the last 10 or 20 years.

KURTZ: And that's exactly the point I wanted to get to. Some people think we in the media pay too much attention to media downsizing when you have Citigroup and Home Depot and General Motors and Circuit City laying off thousands of people.

But M.E., what will be lost for the city of Denver? Obviously, "The Denver Post" survives the competition there, but it won't have The Rocky on its heels. SPRENGELMEYER: Well, it's competition. And I've got to tell you that, as much as we fought tooth and nail with "The Denver Post" all these years, and the hatred boils over, and fistfights in the press box once in a while, I'm rooting for that paper. And I'm rooting for -- they've got some good people going over there from "The Rocky Mountain News" staff. Denver needs that paper, and not only does it need that paper, it needs that paper to step it up.

KURTZ: Right. Exactly.

SPRENGELMEYER: And it needs them to do the work of two, because we need the watchdog element.

KURTZ: Andrea, your former station, WJLA, here, laid off 26 people at the time that you lost your job.

MCCARREN: Right.

KURTZ: And that's not atypical at this point. What is the impact on local TV coverage?

MCCARREN: Well, I think like these two gentlemen are saying, it's not just local television, but an informed public, it's a key component of our Democratic process. And it's really so sad, because it's the public losing these people that have this great breadth of experience, insight. And we inform, we educate the public, and that's being slowly chipped away.

KURTZ: And Ernie, isn't it true that stations with fewer bodies are more likely to just go to the crime scene, to the city council meeting, but not do much real digging or enterprise reporting because they just don't have the troops?

BJORKMAN: Exactly. I was going to mention that.

A news director just a couple of months ago said it really well. He says they're hiring younger and cheaper, and not only do I have to tell people, reporters what's going on inside city hall, I have to tell them where it is. And I think that's -- I think that's the problem.

And you are going to have, you know, your typical stories, your murders, your fires, your car crashes, but the stories that you're not going to see, and you probably won't miss because you don't know it's happening...

KURTZ: Right.

BJORKMAN: ... is, you know, a city council guy giving money to his brother-in-law to stuff his pocket. So it's the experienced reporter who doesn't have the sources anymore in the newsroom to uncover those stories. That's what happens going to be hurting.

KURTZ: All right.

Well, good look as a vet. BJORKMAN: Well, thank you.

KURTZ: And good luck to M.E. and Andrea McCarren on the journalism front.

Before we go to break, a Baltimore TV reporter has lost his job over a sickening smear against Fox News commentator John Gibson. WBAL's John Sanders thought it would be funny to mix together Gibson talking about Attorney General Eric Holder with some on-air chatter at Fox about an escaped monkey with an identifiable physical characteristic.

(BEGIN AUDIO CLIP)

JOHN SANDERS, WBAL: I just kept hearing the words "bright blue scrotum"; I thought that was hilarious. I just wanted to share that with a friends. To the extent that it became political, I would like to think that that was done -- that others made it political and not me.

(END AUDIO CLIP) KURTZ: The end result led people to believe John Gibson was comparing Holder to the monkey. Absolutely not true. Gibson told me he was angry, mainly at "The Huffington Post," which unknowingly (ph) trumpeted the doctored tape. The liberal Web site did not call Fox for comment, but it has apologized to Gibson.

And after the break, a bunch of twits? Anchors, reporters, pundits, bloggers can't stop talking about it or doing it. But is posting your every passing thought on Twitter really such a hot idea?

(COMMERCIAL BREAK)

KURTZ: Journalists, you may have noticed, can be longwinded. I mean, we can go on and on. But there's a new arena in which we have to be brief, and some of TV's biggest stars are rushing to sign up.

(BEGIN VIDEOTAPE)

KURTZ (voice-over): It's called Twitter, and every message posted on your page has to be 140 characters or less. For a small, bare-bones Web site a fraction of the size of Facebook, it's generating a pretty loud buzz. I first wrote about Twitter last summer. And now, even network anchors are talking about it.

CHARLES GIBSON, ABC NEWS: Finally tonight, what are you doing? That simple, four-word question has sparked a new Internet phenomenon called Twitter.

KURTZ: You may have heard about Twitter on Rick Sanchez's CNN program.

RICK SANCHEZ, CNN: Robert, show them that comment coming in right now. This is from Paul Segretto (ph) on our Twitter board. He says, "The daily national conversation with Rick Sanchez is definite proof that social media works." KURTZ: "Nightline" co-anchor Terry Moran is a presence on Twitter. When he spent the day with President Obama, his followers, as they're called, got a blow-by-blow account.

"On board Air Force One, pancakes, bacon and eggs on the menu. Twix and Snickers for snacks."

"Waiting for the big interview. Cooking up my first question. Got to go with Wall Street's reaction to the banks plan, no?"

David Gregory tweets about his guests on "Meet the Press," as well as the quality of the lox in the green room.

"Thinking about Bobby Jindal, who was on Sunday. What would you like to know about him that would determine if he's a serious contender for the White House?"

Gregory has even posted pictures from the set.

And George Stephanopoulos twittered about the menu at the president's luncheon this week for the angers. "Lobster bisque sounded good."

Some of the guests on this program have been twittering away -- Ana Marie Cox, John Dickerson, Jeff Jarvis, Amanda Carpenter, Eric Deggans, Karen Tumulty, and me. Members of Congress have also gotten into the game, as was embarrassingly evident this week when some of them twittered away during President Obama's address in the House chamber.

(END VIDEOTAPE)

KURTZ: The allure of Twitter -- sorry, I was just filing an update -- isn't that it gives pundits another place to pop off. It's that it gives you a chance to talk back to us, to have an actual dialogue with people on this side of the camera, just as long as you know how to keep it short.

Well, still to come, harassed by Hannity. Sean calls us out as supposed supporters of socialism. We'll have something to say about that, next.

(COMMERCIAL BREAK)

KURTZ: I'm sure you remember that on-air rant by CNBC's Rick Santelli challenging the Obama mortgage bailout with his pals at the Chicago Board of Trade. Well, John King and I are getting a little bit of flak for our skeptical reaction last week.

Here's the instant replay.

(BEGIN VIDEO CLIP)

KURTZ: Now, he has every right to take on Santelli after that diatribe. Santelli may or may not have a populist point. But isn't he supposed to be a reporter? I guess ranting on television is one way to get attention.

KING: I think you just hit the nail on the head there, Howie. A way to get attention. And I think there's probably a little bit too much.

(END VIDEO CLIP)

KURTZ: That, it seems, was enough to set off Fox's Sean Hannity.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS: Now it seems CNN talking heads Howard Kurtz and John King were brutally (ph) offended by CNBC's Rick Santelli's emotional reaction to President Obama's socialist housing policies.

(END VIDEO CLIP)

KURTZ: Let's bring back my partner in crime, John King.

John, I said Santelli may or may not have had a point. I don't recall supporting the president or embracing -- what did Hannity call it -- socialism. How about you?

KING: No, I don't think we embraced or rejected anything, Howie, because we were trying to be reporters. My point and your point is that Mr. Santelli's job is to go find that outrage if it exists, if is a factual portrayal.

My opinion -- and maybe we're dinosaurs, Howie -- is that we cover the news, we don't try to make the news. That's, I think, what our job is.

KURTZ: Right. And I love when right-wingers or left-wingers beat up on journalists. I mean, Hannity doesn't have Alan Colmes any more to balance him. His guests this week included Ann Coulter, Karl Rove, Republican Congressman Eric Cantor, and Mitt Romney.

So, again, we were not really taking any side. This wasn't a debate about the substance of the proposal, it was debate about how far should journalists go -- and you get a lot of attention when you crank up the volume, John -- how far should they go in talking about the president's plans?

KING: It's a great point you make. And again, we should make the distinction, what Sean Hannity does -- and I respect him, he's a good guy -- he does something very different from what John King and Howie Kurtz do.

He is a political commentator. We are reporters. There's room in the business for both, but he has more license to do things that you and I simply aren't comfortable with. And like I said, I might be a dinosaur, but I'll stick in my mud pit.

KURTZ: He's got plenty of license as a commentator.

All right, John. We'll turn it back over to you. Thanks very much.

KING: Thank you, Howie. Take care.

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