updated 12/28/2005 10:36:55 AM ET 2005-12-28T15:36:55

Guest: James Bamford, Dick Sauber, James Ridgeway, Roger Cressey, Leslie

Sanchez, George Taplin, John Harwood, John Dickerson

NORAH O'DONNELL, MSNBC CHIEF WASHINGTON CORRESPONDENT:  Why did President Bush bypass the secret federal court and order surveillance of domestic terror suspects?  And how much information did this super-secret NSA vacuum up in its spy operation?  Let's play HARDBALL.

Good evening, I'm Norah O'Donnell, in tonight for Chris Matthews.  Since the domestic spying story exploded little more than a week ago, we've learned a lot about a formerly top-secret spying program and the secret court that governs it. 

President Bush has come under fire for doing an end run around the court.  But he vigorously defends that decision, saying the terror threat we face demands it.  Now outraged lawmakers are calling for a congressional investigation into whether the president's actions were legal. 

And as more information about the secret court emerges, the “Seattle Post-Intelligencer” reports today that the court, far from being a rubber stamp, has actually changed or declined far more requests in this administration than in any of the past four administrations combined. 

We'll discuss that with attorney Dick Sauber and investigative reporter James Bamford in a minute.  But first, for more on the White House's reaction to this still-developing story, we turn to NBC's Kelly O'Donnell, who is with the president at his ranch in Crawford, Texas.   Kelly, how are you, and what's the White House saying today about this story?

KELLY O'DONNELL, NBC NEWS WHITE HOUSE CORRESPONDENT:  Good to see you, Norah.  The White House is maintaining that aggressive defense of the president's actions and declining not to comment on any of the subsequent reports that give a broader indication of the scope of the spying program, saying that they don't want to talk about operational details.

While they do say that the president had the right and stayed within the protections of civil liberties to take the actions he did: authorizing eavesdropping.  The White House says it is the president's solemn duty to protect the nation, especially at wartime, and they say his derives directly from the Constitution. 

And so while the defense has remained consistent, some new language today.  Trent Duffy, a White House spokesman who is on duty here in Crawford, described it this way.  He said, “This is a limited program.  This is not about monitoring phone calls designed to arrange Little League practice or what to bring to a pot luck dinner.  These are designed to monitor calls from very bad people to very bad people, who have a history of blowing up commuter trains, weddings, and churches.”

The White House is trying to give perspective to its decision, saying that this isn't about the kind of rights and responsibilities that are afforded to American citizens who are living lawfully.  Instead, they're trying to remind Americans they're taking action against so-called bad people. 

That answer is, of course, not enough to satisfy many of the critics who say that the administration could have used established measures like the FISA Court, which was designed to provide monitoring of these sorts of things. 

And the attorney general, in his briefings to us, when this first came out, had said that the administration had also sought permission from members of Congress and that they were notified that that kind of permission would not be forthcoming.  So they made a judgment call, one that the White House says it will stand behind, that the president can authorize these kinds of surveillance, monitoring, and so forth.

But no specific comment today, Norah, on some of the broader surveillance that we're learning about in a range of published reports.  So bottom line, the White House is trying to stand firm, trying to push back and trying to justify all of this in the sake of the president's duty to protect the nation—Norah?

O'DONNELL:  All right, Kelly O'Donnell in Crawford, Texas.  Kelly, thank you very much.  And for more on the domestic spying story, I'm joined by Dick Sauber, attorney and Georgetown University professor, specializing in national security law.  And James Bamford, investigative reporter and author of a book titled, “Body of Secrets: Anatomy of the ultra-secret National Security Agency.”

Welcome to both of you.  The big news today is that we learned, according to this Justice Department report to Congress, that in the past 20-so odd years, that FISA has been around, that they have approved a large number of requests, with modifying it only a couple of times. 

But since 2001 and since the Bush administration, they have modified 179 of more than 5,000 requests.  And they've rejected or modified at least six of these requests.  Why is the FISA Court rejecting so many of the Bush administration's requests, Dick, and does this suggest that's why this administration perhaps is doing an end run around the courts?

DICK SAUBER, FISA LEGAL EXPERT:  Well, I think it's a good question.  The numbers still aren't particularly significant.  There is still a very, very low number of FISA applications and warrants that are being either rejected or modified. 

But it does raise the question, why at this juncture has the president decided to bypass what Congress clearly meant to be the vehicle to establish these kinds of surveillances?  If it turns out that the court looked a stance at more and more of the government's applications, it seems to me that the decision at this point to bypass the court that was set up for that very purpose, makes the decision by the president even more questionable than it look at this point.

O'DONNELL:  James, we've all been asking the same question, why?  Why did the president need to bypass the courts?  Even secretary—former Secretary of State Colin Powell said he could have gone to the courts on this matter.  What does it mean that the FISA Court has amended, modified, so many of the requests by this administration?

JAMES BAMFORD, CONTRIBUTOR, ROLLING STONE:  Well, what it means is that it raises some serious questions about the requests that are being submitted. 

As a matter of fact, the presiding justice of the FISA Court, Judge Kollar-Kotelly, issued a stern warning to the administration that she was very worried that the information that was being presented for the warrant, for the FISA warrants, was coming from tainted evidence, evidence from illegal, warrantless surveillance.

And she actually ordered the administration to—when they present evidence before the court, in terms of where they're getting the information to request the warrants, that a Justice Department official has to actually swear under oath that the information is coming from details that are not obtained from warrantless eavesdropping.  So they're very worried about the source of the information from the administration, and the administration if what they said today, it's bad people to bad people,  then why would there be a worry about taking that before the court?

O'DONNELL:  But this is very, very important, because we now have the Senate saying that they're going to hold hearings on this at the beginning of the year.  And it's a question of motive to some people.  And the question this administration says, “Listen, before 9/11, we failed to connect the dots.”  And this president says, “I'm not going to let another 9/11 attack happen, and so maybe there are going to be some sacrifices here, but that's what I've got to do as commander in chief.”

BAMFORD:  The key thing is that even commander in chiefs have to obey the law.  When this law was established in 1978, they took into consideration almost every contingency.  They even took into consideration a declaration of war by Congress.  And what they did was, they said, “In the event of a war, the administration has 15 days to do warrantless eavesdropping, 15 days.”

It's been going on for four years now.  It's a clear violation of the law, and the administration hasn't even stopped it.  It's continuing to do it, so you know, when the NSA was—when the FISA Court was set up, there was only one protection between this powerful NSA that could eavesdrop on almost anybody and the American public.  And that was the FISA Court.  So by going around the FISA Court, the American public really has no protection from the NSA.

O'DONNELL:  Dick, you teach Georgetown University law students about national security law.  You've followed all of this very closely.  What troubles you about it?

SAUBER:  Well, I think what troubles me is that the FISA Court, while far from being a rubber stamp, is not traditionally a difficult court to obtain a warrant from.  So the idea that the government had to bypass the FISA Court because of some emergency or because all they really wanted to do was listen to bad people talk to bad people, just doesn't make sense.

The history of these programs is actually a fairly easy one to interpret.  When there are no controls, the programs spin out of control, and that's when you get abuses.

O'DONNELL:  But this administrations says, “Wait a minute, 9/11 was a whole different thing.”  And they have said, “When we have got to go after terrorists, we have to be very quick.  We need speed, we need agility, and we don't need to be filing a bunch of paperwork to some FISA Court.”  This is the argument the White House has made, and so we've got to we able to move quickly and the president has that authority under Article II.  Why shouldn't he have that authority?

SAUBER:  Well, two reasons.  One, FISA allows the government to move very, very quickly.  It has never been a problem in the past.  I don't see it as a problem now, and the statute was designed to let the government move quickly. 

And, again, when you start getting these kinds of arguments, that the current law is too bureaucratic, we can't be worried about filing paper, we can't be worried about asking an independent magistrate.  That's the time when people should be worried that the program is spinning out of control and that we're going to get abuses.

BAMFORD:  Well that's how they got in this in the first place, was because of the Nixon administration.  And even prior to that, the NSA was doing a lot of illegal spying.  And both the Democrats and the Republicans came together and spent several years crafting this legislation to prevent a president from directly ordering the NSA to eavesdrop on American citizens.

O'DONNELL:  James, you have suggested—and because you've been quoted in newspaper—you suggest that this means that our government is doing something very evil.

BAMFORD:  Well, I'm saying it's doing something illegal.  The penalty written into the law by the Congress was if you avoid this law, if you go around it, if you don't go through the FISA Act, just like if you speed 70 miles an hour in a 55 mile an hour speed limit, if you bypass the FISA Act, the law calls for five years in jail and a $10,000 fine.  That's what Congress said.

O'DONNELL:  Dick, I'm intrigued by all of this, because there won't be any accountability in the courts, because presumably this is secret information, and so they're not putting in the courts that they're prosecuting anybody.  So this is not going to make it to the Supreme Court likely.  The accountability is largely in the public court of opinion, if you will, and in Congress.  Do you think the president's power ultimately will be curbed on this? 

SAUBER:  Well, you're right.  The only way this is going to get into a court of law for review is if there's a criminal case that comes out of this, and that seems highly doubtful at this point.  The president does have power under the Constitution to conduct foreign affairs and to search for foreign intelligence. 

The Supreme Court has never actually addressed the limit of that power.  Congress has spoken in passing FISA, and the Supreme Court has said in those instances where Congress has spoken specifically, the president is at his weakest when he claims an inherent constitutional power. 

I think there should be hearings, I think there can be hearings without hurting our ability to conduct the war on terror, and I think at the end of the day there should be a political understanding of precisely what the president has done and whether that's consistent with the law. 

O'DONNELL:  All right.  Well, I know this debate will continue, and thank you to both of you for joining us, Dick Sauber and James Bamford. 

And coming up, what questions have gone unanswered about the 9/11 attacks? 

And later on the program, the immigration debate continues.  Is the administration doing enough to protect our borders?  You're watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

O'DONNELL:  Welcome back to HARDBALL.  The 9/11 Commission issued its final report card earlier this month and gave the federal government five Fs and 12 Ds for stalling on measures that would better protect the homeland from another terrorist attack. 

And on the heels of this report card, Washington journalist James Ridgeway of “The Village Voice” says that there are still lingering questions about 9/11.  He's written a book about this subject, called “The Five Unanswered Questions About 9/11:  What the 9/11 rMD+IN_rMDNM_Commission Report Failed To Tell Us.”

And Roger Cressey is also joining us.  He's served under the National Security Council under both President Bush and both President Clinton, and worked in the White House situation room on the morning of 9/11.  He's now an NBC counter-terrorism analyst.  Thank you, both of you.

You have written this very critical book, James.  What did the 9/11 Commission fail to tell us? 

JAMES RIDGEWAY, “THE VILLAGE VOICE”:  Well, they didn't tell us anything about Saudi Arabia.  They didn't tell us anything about Pakistan. 

Those countries clearly had some bearing on all of this.  They didn't tell

us why the FAA didn't protect the public, even though the FAA had endless

warnings from the intelligence community

O'DONNELL:  So are you saying this was a cover up by the 9/11 Commission? 

RIDGEWAY:  Well, I don't know whether you want to call it a cover up, but they didn't get to the bottom of it, and the whole idea here is to try to get to the bottom of what happened, you know, and hold people accountable.  There is no accountability of any kind.  Some of these people have actually been promoted and gone forward.  Mr. Tenet got the Freedom Medal.  Condoleezza Rice has now been promoted. 

O'DONNELL:  Well, who should have been held accountable in your view? 

RIDGEWAY:  Well, I think in the first place that the administration—the upper ranks of the entire administration, should be held accountable for not paying attention and not answering these various warnings that we had received.  I mean, we received warning after warning. 

O'DONNELL:  Roger, why is that do you think that no one has been held accountable in this administration for the multitude of failures for 9/11? 

ROGER CRESSEY, NBC COUNTER-TERRORISM ANALYST:  Well, I think there is just a general feeling both in the White House and in Congress that the mistakes that were made—and there were numerous—leading up to 9/11 were such that it was an institutional failure.

And as a result, no one was willing to hold individuals accountable.  We can debate whether or not that was the right thing to do, but that's the reality.  There is no cover up here or grand conspiracy.  There is no appetite in Washington for holding individuals accountable.  It's as simple as that, Norah. 

O'DONNELL:  Well, James, why write this book?  I mean, why write about what the 9/11 Commission did?  It's—because everything I've read about the 9/11 Commission—at one time it was the number one best seller, people were buying this book.  And they just came out a couple of months ago, they put out a new report card, they are holding this government accountable. 

They are saying you get an F when it comes to radio spectrums for even the people in New Orleans, any first responders, you've done a bad job.  They are ringing the bell, they're blowing the horn and saying come on, we have got to do a better job.  Why are you saying that the 9/11 Commission is so horrible? 

RIDGEWAY:  Well, they didn't ring the bell when they put out their report.  You know, they said you couldn't hold anybody accountable.  Let me give you an example of what they are up to here.  I mean, they did a staff study on the FAA and the failure of air security in 2004, in the summer of 2004. 

It was in—hidden, and not released until after the election, because it would have made the Bush administration look bad.  Now, how come?  I mean, if you have a basic factual staff study that goes point by point over these things, why can't it be released to the American public? 

O'DONNELL:  Well, you're saying that's a cover up.  You're saying because politicians, the members of this committee who were chosen by politicians, were essentially investigating politicians.  You are claiming there's a cover up. 

RIDGEWAY:  Well, yes, I'm claiming in that case there's a cover up.  And there's another major cover up in where former Senator Bob Graham, you know, investigated and found this informant.  This chief FBI informant, on the West Coast, was renting an apartment to one of the hijackers and was socializing with two of them. 

O'DONNELL:  Roger, what good does this do, do you think, to kind of look back at what were their—if there were failures of 9/11 Commission?  I think the question that many Americans ask are, well, are we any safer today? 

CRESSEY:  Well, Norah, we should always continue to examine what happened, because new information will be uncovered.  And the 9/11 Commission was very clear in the preface of their report, which was this was not the final word, this was the first word.  And so we need to keep in mind that this was a consensus document, the Republicans and Democrats working together. 

They had to make decisions as to what goes into this report, but it was very comprehensive.  As someone who spent multiple hours being interviewed, let me tell you, their attention to detail was tremendous.  So the idea that this is a cover up or a conspiracy or that the commission was in the pocket of the White House, it's just absolute garbage. 

O'DONNELL:  James, do you want to respond to that?

RIDGEWAY:  Well, you're saying I guess that Senator Graham's account of what happened was garbage, which I kind of doubt. 

I mean, you know, how is it possible, I'll ask you again—how is it possible to have an informant for the FBI, a major informant in the Muslim community renting an apartment to two of the hijackers and not hold people accountable?  Isn't the head of the FBI to be held accountable for these things?

CRESSEY:  I don't disagree with that, but the idea that there is a broader conspiracy here is simply ludicrous.  Should there be greater accountability?  Of course.  Was that the 9/11 Commission's responsibility to call out individuals?  Perhaps. 

That is a point for debate, but the fact that there are people that believe there are some hidden movement involved here, hidden event somehow being covered up is just absolutely wrong. 

O'DONNELL:  All right, very interesting debate.  Thank you to James Ridgeway and Roger Cressey. 

Coming up, is the government doing enough to stop illegal immigration? 

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O'DONNELL:  Welcome back to HARDBALL.  Despite the 9/11 attacks, illegal immigration in this country is actually on the rise.  And it's going to continue to be a hot-button security and economic issue for 2006. 

President Bush says he will hit had it head on with immigration reform.  I recently spoke with Homeland Security Secretary Michael Chertoff on what the president is planning. 

(BEGIN VIDEO CLIP)

O'DONNELL:  Immigration reform is one of the president's top priorities in 2006.  Do you predict the president will get the bill he wants out of Congress in 2006? 

MICHAEL CHERTOFF, SECRETARY OF HOMELAND SECURITY:  What the president wants is common sense.  The president wants a secure border, wants to make sure we have vigorous internal enforcement, but the president also recognizes to make this work, there has to be a legal channel for temporary workers, otherwise we're putting much too much pressure on our border patrol.  We're asking them to do a job with only half of the tools that they need. 

(END VIDEO CLIP)

O'DONNELL:  But despite Secretary Chertoff's call for a guest worker program, Republicans are divided.  House Republicans this month passed a bill without such a program.  They did pass a bill to tighten the border. 

Leslie Sanchez in the former Bush Adviser on Hispanic Education and George Taplin is the President of the Herndon Minutemen here in Virginia.  Good evening to both of you. 

George, let me start with you.  The president says he wants this guest worker program.  Why do you oppose such a program? 

GEORGE TAPLIN, PRES., HERNDON MINUTEMEN:  A program like that won't work until you secure the border.  Simply enough, the border is not secure.  We have anywhere from 13 to 20 million illegal aliens in our country already.  What do you do about the people here already? 

O'DONNELL:  The president has also called groups like yours, The Minutemen, he's called them vigilantes, and Secretary Chertoff has told me in conversation he calls the Minutemen amateurs.  What is your reaction to that when the administration has called groups like yours who are trying to tighten the border, if you will, or toughen up when it comes to immigration, they call you those names? 

TAPLIN:  I think the names are misplaced.  We're not trying to tighten up the borders, we're trying to bring attention to the problem.  We've done so.  If you've noticed, the president has shifted his position on immigration, and Congress is now working on it. 

We're the fist group that's way ahead of the politicians on this. 

O'DONNELL:  Leslie, how do the explain this divide in the Republican party on immigration?  Tom Tancredo, who is a Republican from Colorado, is now the star in the House of Representatives, a man that Karl Rove says, don't darken the door of the White House by showing up here with your proposals, now he's the head guy in the House making law on immigration? 

LESLIE SANCHEZ, FMR. BUSH ADVISER ON HISPANIC EDUCATION:  You know, I'm not going to speak ill of a another Republican.  I will say that the problem with Tancredo's proposals is it's a thee-legged stool that's missing one leg. 

He doesn't want to talk about a guest worker program or what to do with the 11 to 13 million undocumented workers here.  I agree with Mr.  Taplin that there has to be something done about the undocumented individuals who are rampant in all 50 states of this country. 

But the president is trying to deal with it in a realistic way and not just a bunch of bar room banter.  Which is what, I almost believe, some of the House proposal is, unless you can realistically deal with all three elements of it.  Dealing with interior enforcement, border security, and what to do with individuals already in the country, you're not going to have a realistic chance to have immigration reform. 

O'DONNELL:  George, one of the things House Republicans wanted to do, it didn't pass, was deny birth right citizenship.  If you are an illegal in this country and you have a child here, that child has immediate citizenship. 

Do you think Republicans would be better off and that this Congress should move forward, the president should support denying birth right citizenships? 

TAPLIN:  I believe that's true.  It removes another motivation for people to try to enter the country illegally.  If we remove the motivations, we'll have less of a problem, we can secure the borders for the safety of the country and not worry about the illegal aliens coming across. 

O'DONNELL:  Leslie?

SANCHEZ:  Norah, that's nonsense.  To think that the people are trying to do this anchor baby issue, where they think that people are coming over undocumented to have children here and then somehow gain U.S. citizenship is just not realistic.  That's a 25-year investment. 

The reality, if you want to stop and curb the flow of immigrants, you've got to look at Mexico and these Latin American countries.  What are we doing to curb poverty and unemployment there? 

I have met airline pilots who are making more money doing construction work in Northern Virginia than they are flying planes back home. 

O'DONNELL:  We're going to continue this debate in just a second, when we come back from this break.  More with George Taplin and Leslie Sanchez when we come back.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

O'DONNELL:  Welcome back to HARDBALL.  We are talking to Herndon Minutemen President George Taplin and Leslie Sanchez, Republican strategist and a former adviser to President Bush.  Let's hear once again from Homeland Security Secretary Michael Chertoff, from my recent interview with him on illegal immigration reform.

(BEGIN VIDEO CLIP)

O'DONNELL:  This month the House voted to make all 11 million illegals in this country felons.  Does the president support that?

CHERTOFF:  Well, of course, you know, we've got a House piece of legislation that's got to go through the Senate.  Again, we have to be practical here.  The ability to round up and imprison 11 million illegal aliens is—well, we'd have to double or triple the total prison system, federal and state.

That's plainly not practical.  I think though, Congress has sent an important message, which the president agrees with.  We really have to get serious about a problem that's been there for 20 years, which is uncontrolled migration into the country. 

We're starting to get serious.  I think Congress has passed some very positive measures.  And we're looking forward to seeing them enacted.  We want to be common sense though, and don't want to spend money foolishly.  We want to be wise in the way we spend money.

(END VIDEO CLIP)

O'DONNELL:  George, do you support rounding up the 11 million illegals in this country, making them felons and trying to deport them immediately?

TAPLIN:  No, we don't support that all.  But we do need more enforcement here in this country.  This is not just a border issue.  It's an international security issue as well.

O'DONNELL:  Leslie, how do you explain that then?  When Republicans, members of your own party, want to engage in something like that.  And Secretary Chertoff says: I hope common sense will prevails, it would just be physically and financially implausible to try to round up so many immigrants.  Is this—do you think your party is involved in immigrant bashing?

SANCHEZ:  You know, Norah, I would say there's a very small fraction, a group on the fringes that actually believe that could be the case.  But it's not realistic, and I don't think anybody thinks that you can cattle call 11 million people out of this country.  It's not feasible. 

I think homeland security secretary told us that's not—even something that's on the table.  And what's interesting—I speak to a lot of voters across this country, and most of them will come at it very particularly.  They say, “If we can trade in goods and services, why can't we trade in labor?”  I mean, they want to do something about these 11-to-13 million undocumented individuals.  They want to know who they are, where they are, find a way for them to work legitimately in the country, pay taxes and go home.

O'DONNELL:  But Leslie, as you know, the debate is, what to do with illegals in this country.  Because before you can get to a guest worker program, which this president wants, members of his own party say, “We are not going to grant amnesty to people who are in this country illegally.  That's not the way our country works, and we shouldn't do that.”  So then how do you deal with all these—in this country?

SANCHEZ:  You know, Norah, I think you hit on a great point.  That is what I call political spin 101.  I think there are many folks, maybe even political consultants on my side of the aisle, that use this as a wedge issue.  They think it's something that can really motivate some in our base to look at this issue.

But I don't believe that that is the direction where this party is going.  I think America overall is inclusive, not exclusive.  The president and voters are going to go with folks that understand we have to hold these folks accountable, we have to find a realistic way to address this situation. 

And that isn't just calling names and what I call, bar room banter.  It is something that—a practical solution, whether people agree or disagree with the president has said on his guest worker program, one thing is true.  It's not amnesty and two, they can call him whatever names they want.  He is taking on a very tough issue with he's taking it on within his party, and he's offering a solution.  And I think if the Democrats have a better solution, I would like to see what it is.  But so far they're mute and that's a critical point here.

O'DONNELL:  George, why is it then, like people like you who are on the front lines of this immigration debate and this battle, don't support the president's proposal?

TAPLIN:  Well, it's not just a matter of whether it's the president or they're Democrats or Republicans.  This is affecting every person in this country.  And you're talking about, it's not fiscally feasible or financially feasible to round up 11 million people.  Nor is it fiscally or financially feasible to let 11 million people work in an underground economy?

O'DONNELL:  Why not?

TAPLIN:  Well, they're not paying taxes, and yet they're using benefits.  If you look at the report that was given to the...

O'DONNELL:  Leslie, is that true, that most of these people are not paying taxes, or do most of them have fake Social Security numbers and are actually paying taxes?

SANCHEZ:  Both of them, not only do they have fake Social Security numbers, but they're also paying consumption taxes.  I mean, they're putting a lot of money into their local and state municipalities and putting money into a Social Security system that they'll never see in return.

TAPLIN:  The governor of Minnesota was given a report two weeks ago that said it's costing the state of Minnesota approximately $2,250 per illegal, and they have 80 million illegals, to the tune of $180 million a year.  If you put that here in Northern Virginia, that's $516 million a year that it's costing this economy.  That is not helping the economy.

SANCHEZ:  Mr. Kaplan, I think you raise—no, I think you raise a great point.  Reality is, you'd have to agree, nobody has a good sense of those numbers.  I see two or three reports, I've seen the similar reports you're talking about, Center for Immigration Studies, whatever you want to call it.

There are no real numbers, not only on the number of immigrants who are in this country, but the economic effects that they have.  What is real is there is a demand for labor.  There has to be a legitimate, legalized way for workers and employers to work together so they can get out of this underground economy, which I agree with you on. 

I think there's a bigger issue that Norah eluded to earlier, and that is that this argument of vigilantism, this argument that you say you're getting sensationalism in the press with the minutemen effort on the border. 

I mean, if you look at it, the concern that folks have with this kind of new wave of border security, whatever you want to call it, is you've got individuals on the border in a very dangerous situation where they're not trained.  We have no criminal investigation on the folks that are on the border.  We don't know if they are stable or not.

TAPLIN:  OK, that's not true.  Every minuteman has gone through a criminal investigation prior to joining the minuteman.  That's No. 1.

SANCHEZ:  And who is monitoring that?

TAPLIN:  And there isn't another organization in the country that can say that.  That's No. 1.  The other thing is, no minuteman has ever done any law enforcement at all in the guise of a minuteman. 

You're stretching the point here to make a—you keep saying the larger point.  The largest point is that the minutemen were responsible for bringing and elevating this discussion to the level it is brought to right now. 

Prior to a year ago, nobody was even looking at this issue.  Now the president has backtracked and he's done what he should have done a long time ago, and that's address this issue.  We have a problem with illegal immigrants or illegal aliens in this countries.  And we need to do something about it now, before it gets worse.

SANCHEZ:  There is...

O'DONNELL:  ... George, let me ask you, because one of the things that's going on here is, what is the role of—there's a security issue, OK?  So we need to tighten our borders. 

There's also a business issue.  The president's proposal is, “Let's set up a guest worker program so workers and businesses can meet in a legal way.”  You are saying, one of the things is enforcing businesses, and you're working on your own to crack down on businesses.  Tell us exactly what you're doing.

TAPLIN:  What we're doing is going back and tracking the people that are hiring these illegal aliens and reporting them for not being—not paying business taxes, not having contractor's license, not having insurance, not paying the taxes on the employees.

O'DONNELL:  And who are you reporting those to?

TAPLIN:  To the various agencies.  Right now in Virginia, the local, the state and the federal agencies like the IRS.

O'DONNELL:  Isn't that a form of vigilantism? 

TAPLIN:  I don't call it vigilantism at all.  If you are there in a neighborhood watch situation and you see somebody committing a crime and you report it to the police, is that vigilantism?  That's called neighborhood watch and we have a great neighborhood watch system in this country.

That's all we're doing.  We are doing nothing else.  We don't get into confrontations.  We ignore people that try to bait us, we are serving the local and state and federal community. 

O'DONNELL:  Leslie, why shouldn't businesses face tougher standards, too? 

SANCHEZ:  Two points there, Norah.  One, yes, they face tougher standard.  That's what's unique about the reform.  For the first time, we're talking about interior enforcement in a meaningful way.

I was part of the 1996 effort and other immigration efforts.  That was never part of the discussion in a way that really made sense, so I think—

I commend the fact that that's part of the discussion. 

But as to the point of Mr. Taplin, you know, you're going out there photographing individuals who happen to be of Hispanic decent, speak Spanish, how do you know the difference between somebody who is legal and not legal? 

Is standing outside a 7-11, taking pictures of folks, writing down people's license plates numbers, thinking that you're doing something.  I think it's tarring an entire group of people with a brush stroke. 

TAPLIN:  We don't have to know if they're illegal or not.  All you have to know is employers are not hiring people using regular employment services.  If they are not paying taxes—

SANCHEZ:  I'm sorry, but people—

TAPLIN:  That is a federal offense.  That is a felony to not pay taxes. 

(CROSS TALK)

SANCHEZ:  How they go about hiring and recruiting individuals versus what they do with their internal book keeping. 

TAPLIN:  If these people were here legally, they would be able to use the regular employment services in the state of Virginia.  And they can't because they're not here legally.  They know even with fake I.D.'s they can't get services through the state employment services. 

SANCHEZ:  I'm sorry.  There are ads in papers.  There are numerous ways to recruit workers. 

(CROSS TALK)

SANCHEZ:  How do we know that they are not?  That's what I'm saying. 

You are tarring an entire group. 

TAPLIN:  Because they are standing out outside of 7-11 trying to get work. 

O'DONNELL:  This has been a great debate, I have to wrap it up.  It sums up very well the debate that will be raging in Congress with this president.  He is making immigration one of his top priorities in 2006. 

Leslie Sanchez, George Taplin, thank you very much.  Up next, a look back at some of the scandals that shaped 2005, and what this president can do to improve his overall job approval rating in 2006. 

This is HARDBALL, only on MSNBC 

(COMMERCIAL BREAK)

O'DONNELL:  Coming up, with a year almost over, what can President Bush expect to accomplish in 2006?  When HARDBALL returns. 

(COMMERCIAL BREAK)

O'DONNELL:  And we are back.  John Dickerson is “Slate” magazine's chief political correspondent and John Harwood is political editor of The Wall Street Journal. welcome to both of you, the two Johns today. 

NSA story.  Big story for the president.  He's trying to leave behind a disappointing 2005.  He's going to begin 2006 with a major story in front of him.  John, do you think it's a political liability for him? 

JOHN DICKERSON, SLATE MAGAZINE:  It depends how they play it.  The White House came charging out on this story.  They didn't shrink behind it.  They want to talk about this.  They want to talk about the war on terror.  It's something the president believes in.  They think when regular folk here about this, they'll think about the president working hard to protect them. 

The downside is if the president tells a story that doesn't match up with the facts and that fits into the Democrats narrative that the President and the White House hasn't been straight with the country about the war on terror or the war in Iraq. 

O'DONNELL:  I was interested in these new government documents which said that the FISA court has second guessed this administration more than any other previous administration. 

They have gone to go get court warrants, they have been modified or rejected and this has not happened to this degree in previous administrations.  Is that one reason that Bush may have decided to go around the courts? 

JOHN HARWOOD, THE WALL STREET JOURNAL:  It certainly is a piece of ammunition for the Bush administration to use in explaining why they went around the court.  The White House says they used FISA on occasion, and went around it when it was more expedient to do so and when the facts called for that. 

There were problems with the FISA court of course before 9/11.  This was a bipartisan issue.  The White House thinks they have an upper hand on this story because at the end of the day, as John said, the American people want presidents to protect them.  But he doesn't quite have a post-9/11 upper hand. 

He's in a weakened state.  His credibility is less.  We saw that in the debate over The Patriot Act, in which a lot of White House people said we're ready to have the fight again, just like we fought over homeland security in 2002. 

Look who backed down at the end of the session.  It was the Republicans, not the Democrats. 

O'DONNELL:  It's so interesting because the president is facing congressional investigation over this.  A lot of lawmakers upset about it.  Both of you make the point, when this president plays the commander-in- chief card, he says I'm trying to protect Americans, he usual wins in that debate. 

Yet, there was a new poll out, CNN-USA Today Gallup poll that showed that 32 percent -- 31 percent say that the government should take all steps necessary to stop terrorism, while 65 percent say that the government should not violate basic liberties. 

Given that, why would not the American public be worried that the president is sacrificing civil liberties for security? 

HARWOOD:  Civil liberties as themselves are not especially popular. 

You remember the famous charge against Mike Dukakis in the 1988 campaign?  A card-carrying member of the American Civil Liberties Union.  That played pretty well at the time. 

The White House starts out from the position, this has been their hole card ever since 9/11, I'm the commander-in-chief, I'll do what's necessary to protect the country.  Democrats, if you want to fight me on that, go ahead. 

DICKERSON:  This is safer ground for the president.  He's authentic when he talks about these issue.  On some of these other issues, the president gets tangled in his words. 

When you looked at him in his press conference before he left on Christmas holiday, he was enthusiastic and passionate about this issue. 

O'DONNELL:  In fact, he said, do I have the authority?  Absolutely, I do.

DICKERSON:  He kept coming back to it.  He was obsessed about it.  What the White House is banking on is that Americans will look at that and say, he's on the case.  He may have broken a few rules, but, hey, we're at war.  And the president is allowed to break a few rules and that authenticity will win over intellectual arguments about civil liberties.

O'DONNELL:  When we come back we're going to talk more about this and the CIA leak investigation, the high stakes for the president in Iraq, plus why Iraqi voters rejected Ahmed Chalabi.  More with John Dickerson and John Harwood, and a reminder.  For the best political debate, go online to hardblogger, our political blog Web site.  And now you can download podcasts of HARDBALL.  Just go to our Web site, hardball.msnbc.com.  . 

(COMMERCIAL BREAK)

O'DONNELL:  We're back with John Dickerson of “Slate” magazine and John Harwood of the “Wall Street Journal.”  2006, we're probably going to see special prosecutor Patrick Fitzgerald wrap up his investigation and decide whether or not to indict Karl Rove.  Dickerson, do you think Rove's defense makes sense? 

DICKERSON:  Well, it's unclear.  What happened was Karl Rove said at first that he didn't remember talking to Matt Cooper and then he said he did.  His lawyers now come forward and said another “TIME” magazine journalist, Viveca Novak, helped jog Rove's memory about who he talked to. 

What's odd about that is there were a number of instances in the line, where you think, since Karl Rove has always been at the center of this, that his memory might have been jogged somewhere along the way.  So it's very unclear. 

One of the defenses seems to be that Karl is a very busy guy, which, of course, we all know him to be, and that he might forget a phone call that happened, but this wasn't just any old phone call. 

This was a phone call that was at the center of a big, national story and so it seems odd and implausible that he would have forgotten about it so long, and that seems to be where the case is right now, at least as Fitzgerald investigates. 

O'DONNELL:  Because the key is there's 10 months from his first grand jury to his second grand jury appearance.  In the first one he said, no, no, I wasn't talking to Matt Cooper about Valerie Plame. 

And then he went back, 10 months later, to the second grand jury—his second grand jury appearance—and admitted, in fact, I had talked to Matt Cooper.  You think that his out to lunch theory, if you will, that he just couldn't remember, is not plausible.  And so you think Fitzgerald thinks that he was trying to obstruct justice? 

DICKERSON:  Well, this is Fitzgerald's—the question for Fitzgerald.  He has to say what made Karl Rove change his mind?  Did he change his mind and remember that he talked to Cooper because he saw Cooper might testify, or did he have an actual recollection that he's forgotten for so long? 

People in Karl's defense will say hey, you know, on any given day, can you remember what you had for lunch?  And so we—things slip our mind.  But this wasn't just any old, small piece of information.  This was the subject of a rather intense piece of national scrutiny. 

And remember the president, for whom Karl works, was on the hook for who among his staff had been leaking this information.  So Fitzgerald has to figure out whether the “I forgot” defense is plausible. 

O'DONNELL:  Harwood, the president is going to try and, you know, start 2006 with his big State of the Union, start putting out some domestic policy proposals, try and turn the corner.  What happens if Rove's indicted? 

HARWOOD:  Well, it would be a calamity if Rove's indicted.  Karl Rove is important than other single individuals to the success of this president.  More important, I dare say, than Dick Cheney, the vice president.  But, you know, there's a good bit of confidence in the White House that that's not going to happen, that Pat Fitzgerald does not have a strong case against Karl Rove. 

I think we might have seen that when he announced the charges against Scooter Libby, and there was a suggestion from Fitzgerald that he was, in effect, in a wrap-up phase.  He's prolonging the investigation and we've had new disclosures—Woodward, Viveca Novak—but it's not clear to me that he's headed toward getting charged. 

O'DONNELL:  Really?  You really—then why is he prolonging this and why did he open up a new grand jury? 

HARWOOD:  I think Fitzgerald is running out the string, trying to satisfy himself that there isn't a case to be made.  That's not to say it's impossible.  I mean, if it was done, he would tell Luskin he could go out and say that he was cleared.  That hasn't happened yet, but I think the odds remain in Rove's favor. 

O'DONNELL:  It'll still be one of the biggest stories of 2006 if Rove escapes indictment, right?

HARWOOD:  Well, I think ...

O'DONNELL:  And remains in the White House? 

HARWOOD:  Well, I think things that don't happen tend to fade rather quickly and we'll get onto other things like the Jack Abramoff scandal, which is hanging over the entire Republican majority right now. 

O'DONNELL:  Talking about something that won't happen in 2006, Ahmed Chalabi, who wanted to be part of the Iraqi government.  And according to the preliminary results of these elections, this international carpetbagger, this favorite of the neocons looks like he's not going to get a seat in the parliament.  How big a deal is this, Harwood? 

HARWOOD:  Well, I think it's actually—could be good news for the Bush administration.  Ahmed Chalabi is a reminder of some of the worst moments of president's Iraq policy, the intelligence that didn't pan out, the predictions of how post-war Iraq would look. 

A quite different picture was painted by Ahmed Chalabi than what actually happened, and I think not having him on the scene as a reminder of pitfalls in U.S. policy might not be such a bad thing for the Bush administration. 

O'DONNELL:  Do you agree? 

DICKERSON:  I think that's right.  You want to shed the ugly past.  Although it's a sign of how bad things got at one point that administration were saying, you know, Chalabi's not so bad, after having abandoned him.

O'DONNELL:  Well, they recently welcome him back.

DICKERSON:  That's right.  They dumped him.

HARWOOD:  They dumped him and then they sort of welcomed him back. 

DICKERSON:  They loved him, they hated him, they loved him again because things had gotten so troublesome that they thought well, the devil you know is better than the devil you don't know. 

And so he's a troublesome character, but he's getting some things done and he's efficient and we can work with him and he understands our language.  And in a place where everything else is so inky right now, well, we've got a guy in there at least we understand where he's coming from. 

O'DONNELL:  Big prediction from ...

HARWOOD:  But the bigger question, Norah, is if we get, in effect, the

Shiite theocracy which complicates the U.S. effort to bring about people

...

O'DONNELL:  Which it looks like we're going to get. 

HARWOOD:  Could be.

O'DONNELL:  That there are—there are going to be more—there will be fewer Sunni seats than this administration had predicted.  They said there was going to be high Sunni participation and there would be more seats, right? 

HARWOOD:  They've got to do whatever they can to broaden the participation of the government, change the constitution in a way to minimize the imperative among the Sunni population to rebel. 

O'DONNELL:  And just turning to troop levels, do you think by the midterms in 2006 that they'll be under a 100,000 troops in Iraq? 

DICKERSON:  I think that's certainly the White House's hope and goal, and there was no clear sign, it seems to me, that they were going to announce troop withdrawals, and then the president's insistence that he wasn't going to move on a political timetable.  He wants to set that marker so when he does move, people don't think it's purely for political reasons. 

O'DONNELL:  All right.  Awesome to talk to you guys.  I appreciate it, Dickerson and Harwood.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. 

Right now, it's time for the “ABRAMS REPORT,” tonight hosted by Lisa Daniels.  Thanks for watching.  We'll see you back here tomorrow night.

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

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