updated 1/2/2006 10:12:20 AM ET 2006-01-02T15:12:20

Guest: Wayne Downing, Rick Francona, Jim Warren, Charlie Cook, Douglas Brinkley

NORAH O‘DONNELL, MSNBC CORRESPONDENT:  The Justice Department is opening an investigation into who leaked classified information about the NSA‘s secret domestic spying program to “The New York Times.”  Will this leak investigation lead to the leaker or once again put reporters in jail for refusing to name their sources? 

And Generals Barry McCaffrey, Wayne Downing, and Colonel Rick Francona, a year end look at America at war from the HARDBALL war counsel.  Let‘s play HARDBALL.

Good evening.  I‘m Norah O‘Donnell in tonight for Chris Matthews. 

There is a new explosive development in the NSA spying story today.  The Justice Department has launched an investigation into who leaked classified information about the program to the press.  This comes on the heels of the Justice Department‘s probe into who leaked the identity of covert CIA operative Valerie Plame to reporters. 

The CIA leak investigation led to the jailing of “New York Times” reporter Judith Miller for refusing to reveal her source and ultimately the indictment of the vice president‘s chief of staff, Scooter Libby. 

What does this new investigation mean for “The New York Times” reporters who broke the story and their sources?  More on that in a moment. 

And we have convened our HARDBALL war council tonight to look at whether the Iraqi elections will diminish the strength of the insurgency next year and allow more of our troops to come home. 

But first for a quick look back at 2005 in Iraq.  Let‘s go to NBC News correspondent Tom Aspell in Baghdad. 

TOM ASPELL, NBC NEWS CORRESPONDENT:  Norah, Iraqis went to the polls three times in 2005.  Twice to vote for a parliament and once to approve a constitution. 

But their new experience with democracy was tainted by one of the most violent years yet, suicide bombings, IEDS, and shootings at American troops, Iraqi security forces and civilians. 

Some of the most violent attacks were in the spring.  Three hundred and sixty-four were killed in April, 642 in May, as insurgents tried to halt the build-up of Iraqi security forces. 

Even British troops in relatively peaceful southern Iraq weren‘t immune.  In October, the number of American service personnel killed in the war passed 2,000. 

Saddam Hussein was on trial for his life in 2005.  In courtroom appearances he challenged the legitimacy of the Iraqi court, and he and his seven co-defendants often disrupted proceedings with complaints against witness testimony and accusations of torture at the hands of his American captors. 

At Christmas, the Pentagon announced American troops levels would be brought down in 2006.  As the year closes, Iraqis wait to see what kind of government will run the country for the next four years, and they look forward to a more stable security situation—Norah. 

O‘DONNELL:  Thank you.  Tom Aspell in Baghdad.

Now joining me now is our HARDBALL war counsel. 

Retired General Barry McCaffrey commanded the 24th infantry division during the Desert Storm.  He is now a MSNBC military analyst. 

Retired General Wayne Downing commanded the special operations task force during the first Gulf War.  He later served as deputy national security adviser for combating terrorism under Condoleezza Rice.  And he‘s now an NBC News military analyst.

And retired Air Force Lieutenant Colonel Rick Francona was an adviser on Iraq‘s armed forces during the first Gulf War.  He also worked for the CIA and NSA and participated in a variety of sensitive operations in the Mid-East. 

And so let me begin with you first, colonel, about the NSA story because you have worked at the NSA.  Today, we learned the Justice Department beginning this investigation into who leaked this information.  There‘s only a small handful of people that actually knew that this domestic spying was going on.  How hard will it be to find out who leaked the information? 

LT. COL. RICK FRANCONA (RET.), MIDDLE EAST MILITARY ANALYST:  Well, I think that‘s the difference between this and the Plame case.  Whereas people who had access to her identity wasn‘t really documented.  These programs at NSA, they are called very restricted knowledge, VRKS.  And mere access to it requires a signature of an oath. 

So they‘ll be able to go to that list and start with that list and say who was aware of the program and who talked. 

O‘DONNELL:  And as a military man and as an intelligence analyst, someone who has spent time at the NSA, what do you make of the president‘s argument that he had to go around the FISA court because he needed speed and agility when it comes to fighting terrorism? 

FRANCONA:  Yes, this is problematic for a lot of people, both inside and outside the building there.  When I worked there, it was fairly easy to get a FISA warrant to do things.  In fact, you could actually start the operation and then retroactively get a FISA warrant. 

So the question many of us have is what situations have changed since 9/11 that requires him to go around the FISA court?  I think that‘s the question all of us want to know the answer to.  I have not heard it yet. 

O‘DONNELL:  The NSA story is a big story.  We‘re going to have more of that in the program. 

I also want to talk to our HARDBALL war counsel about what‘s really this amazing story today about the 16-year-old teenager, Farris Hassan, who pretty much walked his way into Iraq today, not letting his parents know where he was.  I mean, you can say he is definitely going to be grounded when he gets home. 

But General McCaffrey, let me ask you.  What do you make of the fact that a teenager shows up in Iraq?  And what does it mean for our military over there? 

GEN. BARRY MCCAFFREY (RET.), MSNBC MILITARY ANALYST:  Well, of course, it‘s horrendously irresponsible on his part.  At the end of the day he could have put other 19-year-old soldiers at risk trying to preserve his own safety.  He easily could have ended up as a hostage. 

This is the kind of action, it seems to me, we are going to have to be pretty rigorous in taking action about, and trying to prosecute people that endanger our own forces. 

O‘DONNELL:  General Downing, I was interested to hear today, of course, our reporters there in Iraq were asking the military, where is he?  We want to see him today, and one of the military spokesman said well, we have kept him away from the cameras because we‘re not going to reward stupidity with celebrity.  What do you thick of this 16-year-old teenager? 

GEN. WAYNE DOWNING (RET.), NBC NEWS MILITARY ANALYST:  Well, Norah, he‘s a pretty amazing kid.  I mean, I agree with Barry, he could have possibly put some people at risk.  But, boy, the kid has got tremendous innovation, tremendous drive.  You know, maybe we get him - let‘s mature him two or three years and I think the special forces guys might want to recruit him. 

O‘DONNELL:  You really mean that.  I don‘t know that he‘s exercising good judgment though is he? 

DOWNING:  Oh, absolutely.

No, but we can teach him good judgment with a little bit of maturity.    But, I mean, you know, he is obviously—he has got a great background probably fluent in the language.  He‘s an incredibly resourceful young man. 

I mean, what a gutsy kid.  I can‘t believe he would take that on.  I mean, maybe it‘s just the folly of youth, and he doesn‘t realize how dangerous it is.  But it seems to me he‘d be great raw material for some of our special forces guys. 

O‘DONNELL:  Well, that may be true.  But what if he had been kidnapped?  I mean, you know, they are calling it “Ferris Bueller‘s Day Off.”  Because his name is Farris Hassan.  But he‘s 16 year old. 

And what if he had been killed over there?  What if he had been kidnapped?  And our military and our resources on the ground there were then spending time looking for him?  And what if he had been beheaded by Zarqawi‘s people?  What then? 

DOWNING:  Well, it would have been terrible, Norah.  I mean, I don‘t want to make light of that.  Yes, I mean, you know, had those things happen, we would.  He‘s an American citizen. 

In fact, any friendly citizen, we are right now, Norah, spending an incredible amount of resources with some of our most well-trained and best military forces, looking for these people and in some cases, as you remember, we have had great success in rescuing them.  But every time we have to do this, of course, we put our soldiers‘ lives at risk. 

O‘DONNELL:  Let‘s turn to the progress being made in Iraq in 2005 and what‘s ahead in 2006.  We learned today that a soldier was killed when an IED struck his vehicle in southern Baghdad.  And that brings the internal NBC News count now to 2,178 dead. 

And according to our count, I mean, the 843 were killed in 2005.  And it‘s a grim coincidence to report that, in fact, that is the exact same number that was killed in 2004. 

General McCaffrey, does that mean we are making progress if we have had the same number killed this year as we did last year? 

MCCAFFREY:  Well, I think clearly it‘s a very dangerous war still going on.  It‘s 18,000 killed and wounded, by the way.  I think, you know, we ought not to underscore the fact that there is a real war going on. 

So if you are a captain or a staff sergeant that is third infantry division or out with the Marines in Anbar Province or special operations forces, it‘s a tough situation. 

I also think though to put it in context, you know, we have got the right people on the ground, a huge force, 160,000 people, a great ambassador, this guy Khalilzad.  General George Casey, the joint commander on the ground, knows what he‘s doing. 

It appears to most of us that the political integration of Iraq is moving head and that the security situation in terms of standing up security forces is actually starting to occur.  So, a tough year.  A lot accomplished. 

O‘DONNELL:  Let me ask you Colonel Francona.  Because it was interesting we heard from General Webster on the ground today, who is in charge of some of the security forces there, and he said the insurgency has weakened in Iraq despite the surge in violence since the December 15th elections in Iraq. 

He made an interesting point.  He said that while the number of attacks have gone up, these attacks are less successful.  That they only have about a 10 percent success rate.  A month ago it was 25 percent success rate.  Is that an indication we are making progress?

FRANCONA:  Well, I think it shows that there is some progress, but, you know, what we are saying are changes here.  We are seeing changes in the tactics on the side of the insurgency.  We are also seeing more success on our anti-insurgency tactics.  We are starting to discover more and more of the IEDS.  But the insurgents have switched from standard guerrilla tactics to more and more using these improved explosive devices and suicide bombers, both of which are very effective.  So it‘s very hard to defend against, but overall I think you‘re seeing a weakening. 

O‘DONNELL:  That‘s so interesting that you bring that up.  And I want to ask General Downing about that.  Because one have the of the things we have heard from military commanders on the ground is that this insurgency is, of course, engaging in asymmetric warfare as we know.  And employing different tactics.  We‘ve been more successful about combating these IEDs on the ground.  And in fact, now, these insurgents are using drive-by shootings, more—different types of attacks.  So, they are adjusting, as well, even while we think we‘re getting better and finally getting some success with the IED‘s they‘re changing, as well. 

DOWNING:  Yeah.  Norah, I mean, that shouldn‘t surprise us.  I ,mean.  that‘s the nature of warfare.  It is always tactics, countertactics and countercountertactics.  Both sides continually learn the spiral of sophistication, violence continues to go up. 

O‘DONNELL:  So then what‘s the end game.  I mean, people look at this

right, if we can‘t combat this insurgency just as we try and get better at combating their tactics, and they get better at combating us, where is the end game?  When are we going to get out? 

DOWNING:  The end game—and I‘m glad you asked this question—the military is not the solution to the end game.  The military plays in the solution.  They create the conditions. 

Don‘t ever forget we are over there has political, has economics, has social ramifications.  And this is what has to be done.  That‘s why these three elections that have taken place this year, their impact is so profound.  It‘s so important. 

The fact now that the Iraqis are going to have an elected four-year government.  The fact that we have some of the Sunnis who have put down their Kalashnikovs and joined the political process.  Norah, this is absolutely huge.  This is what you want to happen. 

But this isn‘t about military things.  It‘s a much broader effort.  And the end game over there is to create a stable, economically viable, Iraqi state who is a peaceful neighbor and who is a bulwark within that region.  That‘s what we‘re over there for.

We‘re not over there just to conduct combat operations for the sake of conducting operations. 

O‘DONNELL:  All right.  We‘re going to have more on the end game and more on the political and military strategy.  More with the HARDBALL war council after the break.

And later on the show, a look back at the biggest political stories of 2005 followed by some political predictions for 2006.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  We‘ve adapted our tactics.  We have fixed what was not working.  And we have listened to those who know best: our military commanders and the Iraqi people. 

(END VIDEO CLIP)

O‘DONNELL:  That was President Bush earlier this month addressing the mistakes made in Iraq.  We are back with the HARDBALL war council.  retired General Berry McCaffrey, retired general Wayne Downing and retired lieutenant colonel Rick Francona.

General McCaffrey, I have to ask you, because I know you were smiling during that Bush bite, is Rumsfeld listening to the guys with stars on their shoulders on the ground? 

MCCAFFREY:  Well, I certain am glad we have a new chairman, General Peter Pace, a marine—a guy who started his life as a rifle platoon leader in combat in the city Wey in Vietnam.  I think the advice will be blunt, hard-nosed and correct out of the chairman. 

I think the president‘s a genuinely popular figure with the armed forces.  I do believe, particularly among the senior military leadership, there has been growing animosity toward Secretary Rumsfeld and his senior civilian leadership: Doug Feith, Steve Cambone, that group.  They got us in trouble.  There is resentment about it. 

But I now think General Abizaid does have control of the war with General George Casey.  So, we have come out of it, we‘re doing the right thing.  That‘s good. 

O‘DONNELL:  Speaking of chairman of the Joint Chiefs of Staff Pete Pace, he is on his first trip to the Middle East as chairman of the Joint Chiefs of Staff while we speak.  And he did once again repeat what we heard Rumsfeld say which is that we‘re go from 160,000 troops to 138,000 by March. 

Let me ask you, Colonel Francona.  Is that a matter of that security situation is getting better on the ground and that the Iraqi security forces are better, or quite frankly, are our troop levels there unsustainable? 

FRANCONA:  I think both.  I think it‘s unsustainable to keep that many

forces in country.  I think right now we are artificially at 160,000.  When

it‘s going to come down to the normal 138,000 and then down from there. 

The Iraqi security situation is what is going to have to drive this.  The Iraqi security forces are getting better.  That is going to be the key to this.  As the Iraqi forces stand up, that‘s going to free up a lot of our forces to come back. 

And I think we‘re already seeing this take effect out in the Euphrates Valley where American forces had been clearing these cities.  We‘re now putting Iraqi forces in there to hold them.  In the fast it was we go from city to city and the insurgents came back.  So, I think the security situation across the area is improving.  And that allows this draw down. 

O‘DONNELL:  General Downing, I have to ask you, because I did go back and read some of Secretary Rumsfeld‘s comments when he was in Iraq last week very carefully.  And there was one particular comment that he made in Fallujah that particularly struck me.  He said we have to make sure our footprint is not so large as to antagonize the people of Iraq.  Sounds a little bit like Jack Murtha in Congress.  There is a recognition in the Pentagon that having such a large force in the cities may be antagonizing or fueling the insurgency. 

DOWNING:  That‘s exactly right, Norah.  And you know, I saw the secretary had said that also.  And of course, I would tell you that John Abizaid recognized this two years ago. 

O‘DONNELL:  Well, why wasn‘t anyone listening to him? 

DOWNING:  They are.  They‘re working through this.  And, of course, one of the big, long polls of this thing has been the creation of the Iraqi security forces. 

You know, John Abizaid is in charge of that theater.  George Casey is the commander out there on the ground.  They can call the shots and move those forces around and do what they have to do with them.  And that‘s what you‘re seeing. 

You‘re going to try to get the American forces, the coalition forces out of these daily patrols, these daily contacts as the Iraqi security forces come on board.  When they are not there Norah, you‘ve got no choice but the to put them there.

So, we‘re going to see a transition.  And I don‘t know what that number is going to be.  I think, without a doubt, we‘ll go down to 138,000 providing something doesn‘t happen.  I think by next summer, that number could, perhaps, be another 20,000 or 30,000 lower, but again it is going to depend on the security situation. 

O‘DONNELL:  We just have a little time left. 

I just want to get a quick...

DOWNING:  What do you mean a little time left?  You mean, on the ground? 

O‘DONNELL:  No, I mean actually time in the show.  No, no, no.  I mean the show.  So I just have a quick... 

DOWNING:  Sorry, Norah. 

O‘DONNELL:  No, no problem.

DOWNING:  Sorry, sure.

O‘DONNELL:  So I just have a quick prediction that I want from each of you.  How many troops will we have in Iraq by this summer?

First you, General McCaffrey.  Give me a number. 

MCCAFFREY:  Probably 100,000, but it will be driven by George Casey‘s call on how the Iraqis are doing. 

O‘DONNELL:  General Downing, by this summer how many? 

DOWNING:  That‘s as good a number.  I would say 100,000 plus or minus 20,000. 

O‘DONNELL:  Colonel Francona.

FRANCONA:  Yes, I have got no problems with those numbers assuming the security situation holds. 

O‘DONNELL:  All right, well thank you.  General Barry McCaffrey, General Wayne Downing playing HARDBALL with me tonight and Lieutenant Colonel Rick Francona. 

Up next, the president called the leak a shameful act.  Well, now the Department of Justice will investigate who leaked information about the NSA secret domestic spying program.  Will it be the dominant political story of 2006?  You‘re watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK) 

O‘DONNELL:  Welcome back to HARDBALL. 

The Justice Department announced today that it would launch a criminal investigation to determine who leaked information about the president‘s secret NSA spying program. 

For more on the White House reaction to the spying story we turn to NBC‘s Kelly O‘Donnell, who is with the president near his ranch in Crawford, Texas—Kelly. 

KELLY O‘DONNELL, NBC NEWS, CRAWFORD, TX:  Good afternoon, Norah.

The White House says that this decision was made by the Justice Department as it should be in the words of White House spokesman Trent Duffy. 

However, it would be very clear to know that the White House supports finding out who leaked the information about the NSA surveillance program to “The New York Times,” blowing this whole operation into public scrutiny and raising lots of questions about the extent of surveillance spying and different tactics this administration is using in the war on terror. 

The president made his feelings known at a recent news conference when he talked about this public disclosure. 

(BEGIN VIDEO CLIP)         

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  My personal opinion is it was a shameful act for someone to disclose this very important program in a time of war.  The fact that we‘re discussing this program is helping the enemy. 

(END VIDEO CLIP)             

K. O‘DONNELL:  And that has been a major argument for the White House, saying that it has essentially revealed important tools to the enemy by exposing some of the methods used by law enforcement in trying to track down potential al Qaeda links. 

Of course, the other side is that there are many who believe that perhaps laws were even broken or perhaps civil liberties were trampled on in ways in which this administration could have avoided if it had followed some of the set channels of seeking warrants and so forth.

There‘s a lot going on here.  But the White House is trying to fiercely defend its view, saying it has to do everything within the law, and it believes the president gets that authority in the constitution to fight these kinds of new threats. 

And those who are advocates of privacy rights say there is a lot of debate and discussion that should go on about where that limit should be set—Norah. 

O‘DONNELL:  All right.  Thank you to Kelly O‘Donnell.  Happy New Year to you, Kelly. 

K. O‘DONNELL:  Happy New Year. 

And Norah, while we‘re on here.  Let‘s take two seconds.  Let‘s answer the question, we‘re TV sisters but not related in real life. 

O‘DONNELL:  That‘s right, but you‘re my pal any day of the week.  And thank you for being on HARDBALL so many times this week.  We‘ve loved having you. 

K. O‘DONNELL:  Great to be with you. 

O‘DONNELL:  All right.  And happy New Year and say hi to the folks in Crawford down there. 

K. O‘DONNELL:  Will do.  Will do.

O‘DONNELL:  Up next more reaction to the developments in the NSA spying story, and a look ahead who will be the hottest political stars in 2006?  It might surprise you. 

And still to come, historian Douglas Brinkley will talk to us live from his hometown of New Orleans.  We‘ll ask him how will Hurricane Katrina go down in the pages of history.  You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

(NEWSBREAK)

O‘DONNELL:  Welcome back to HARDBALL.  Now for the highlights and low lights of 2005 and what you can expect in 2006.  Let‘s take a look at the president in the past year. 

(BEGIN VIDEO CLIP)

BUSH:  This has been a year of strong progress toward a freer, more peaceful world and a prosperous America. 

(END VIDEO CLIP)

O‘DONNELL:  That was President Bush explaining what he thought about 2005.  And to explain what they thought about 2005 is Charlie Cook, he writes the Cook Political Report and deputy managing editor of the Chicago Tribune, Jim Warren.  Thank you to both of you. 

Charlie, the president says this was a great year, 2005, how would you rank 2005 in terms of all of the president‘s years in office? 

CHARLIE COOK, COOK POLITICAL REPORT:  Well, the president started off this year in the low 50‘s in terms of approval, dropped down to the mid to high 30‘s, ended the year in the low 40‘s.  So, a ten point net drop.  It‘s been a pretty bad year. 

I mean, you have to sort of step—put 9/11 aside.  Obviously that was horrible for the country, for the world, for President Bush.  Putting that aside, just as a year, this has been a lousy year for the president. 

O‘DONNELL:  Jim, was 2005 the worst year for the president? 

JIM WARREN, CHICAGO TRIBUNE:  First of all, thank you for having two people in not named O‘Donnell on here at the end of the week. 

O‘DONNELL:  All right, Jim, you are never invited back.

WARREN:  Although, I think she called us lowlifes.

(LAUGHTER) 

WARREN:  Oh, my gosh. 

No, it‘s been an absolutely awful year for the president: the war, the economy, Katrina, the totally botched Harriet Miers nominations, the ethical problems of Tom DeLay and Jack Abramoff and also don‘t forget his sort of swing for the fences post reelection domestic agenda of revamping Social Security and also getting big tax cuts has at minimum been stalled, if not wound up in the dumper. 

That said, looking ahead, if there are substantial troop withdrawals next year and the economy picks up, as I certainly hope it does, then that it could be a good year for him. 

O‘DONNELL:  Well, talking about swinging for the fences, I was particularly interested when Dan Bartlett, who is the president‘s counselor said recently in terms of what‘s ahead in 2006, and I‘ll read a quote from him.  He said, quote, “when the president puts out a legislative a executive agenda, we‘ll make sure we reflect the fact that it‘s difficult for congress to get anything done in an election year.”

Charlie, we‘re a month away from the president‘s State of the Union. 

Is he going to be able to lay out a big agenda in a mid-term election? 

COOK:  I don‘t think the president will lay out a big agenda.  I don‘t think he should.  Congress is - they‘re only going to be in something like 60 days this whole year of 2006.  There‘s just huge leadership vacuums up there on Capitol Hill.  I don‘t think they‘re going to be in a position where they can get a whole lot done. 

So, the president has got to sort of show motion, show movement, show effort, but not raise expectations unrealistically high because it‘s extremely unlikely that any kind of aggressive agenda by any president under these circumstances with the deficit, the war, can be successful.  So, he has got to figure out a way to tread water and make it look good at the same time. 

O‘DONNELL:  Jim, you know, it‘s interesting because the president is going to try just as other presidents use the State of the Union Address to start fresh, to try and lay out some bold, new proposals, to set the agenda again.  And yet, he‘s dragging along a lot of scandals from 2005 that are largely going to dominate the news for 2006, including the news today we learned that the Justice Department, in fact, has begun and launched this investigation into the NSA leak case.  How big of a story does that become along with the congressional hearings, too? 

WARREN:  I think by my math, at least the third leak investigation. 

Not a good year for the press either.  We have the Patrick Fitzgerald—

Chicago‘s own Patrick Fitzgerald, Valerie Plame investigation still going on.  We also have one, it hasn‘t gotten as much attention, remember the White House—the “Washington Post” story I should say—on the supposed alleged secret prisons in Eastern Europe, leak investigation number two.  And this is number three.

Well, having sat behind the speakers for the House, I don‘t know, seven or eight States of the Union speeches, often there was a distinct disjoint between the grocery list, particularly in the Bill Clinton area, and what the larger political reality was. 

I can remember even during Monica Lewinski, there were plans to get 3029 pieces of legislation passed when the big story clearly was Monica Lewinsky.  Hello, Mr. President.  I think here, too, what you are going to also find as Charlie well knows, is probably increasing lack of party discipline as folks realize the lame duck-dom of this president and prepare for their own reelection campaigns. 

Up on the Hill, you have a Dennis Hastert who has not proved as potent and as effective, I think, without (INAUDIBLE) Tom DeLay in action.  And on the senate side, an absolutely terrific, wonderful, accomplished human being, Senator Bill Frist, is also proving, I think, a woefully insufficient majority leader for the Republicans.

O‘DONNELL:  A better heart surgeon than leader? 

WARREN:  Perhaps, yeah. 

O‘DONNELL:  Charlie nodding his head.

COOK:  No question.

O‘DONNELL:  But this NSA story, and I want to dig down on this, because it is a big story.  And it has to deal with one of the biggest topics, of course, in this country, and that is freedom, our civil liberties, versus the need to protect American from another attack.  As the vice president has said, it‘s no coincidence that we haven‘t had another attack in the last four years.

How big—you know, how many people does this effect?  And you might think by looking at this—I mean, this is a super secret operation that was going on.  I mean, only a few people knew that the NSA was doing this.  Can‘t they just go through the list and check off who had this information?  We know it was eight leaders in Congress, the leadership, a handful of people at the White House, the Justice Department and the NSA. 

COOK:  But you have to assume that there was some people in the intelligence community that were uncomfortable with this.  And that it probably came from somebody within the intelligence community who just disagreed with it.

O‘DONNELL:  Well, it‘s interesting, because we went back and read the original story today by James Risen who will likely—could have his notes and other be subpoenaed.  And it said, “nearly a dozen current and former officials were granted anonymity, because of the classified nature of the programmed, discussed it with reporters from “The New York Times.”

So a dozen current and former officials.  That‘s a heavily sourced piece of reporting.

COOK:  But, you know, as much as this is an enormously important constitutional question and policy issue, I don‘t think politically it‘s going to make that much of a difference, because I think the people that have really high antenna, really high sensitivity on civil liberties kinds of issues that would be offended by this probably were already offended by the Patriot Act.  And the people who think that, look, you have got to do what you need to do to protect the country—the country is so polarized, that the lines are drawn.  I don‘t see much of an overlap.

(CROSSTALK)

O‘DONNELL:  Jim, Charlie makes an interesting point, because as we just learned recently, this Ohio truck driver who admitted that he was trying to blow up the Brooklyn Bridge now is planning to sue the president.  So at the end of the day, who do you think people root for?  The terrorist who tried to blow up the Brooklyn Bridge or the president of the United States? 

WARREN:  Right.  I catch your drift.  I mean, a couple of things.  First of all, one curiosity to me is that as we now know the White House knew what about a year ago about “The New York Times” story and clearly that some folks had leaked to “The New York Times,” presumably, or it was simply, it was just unbelievably great reporting by them. 

And then secondly, we have the possibility of at the same time of the leak investigation, you have got folks on the Hill, whatever their motives may be, are going to be holding their own investigations into the substance of what was going on in the eavesdropping and wiretapping. 

And I think, although Charlie is probably correct, the possibility there might be some vivid instances of people who were caught up in too broad an investigation, perhaps, the possibility that there will be some vivid examples of that could turn public opinion a little bit.  Because I think there is tremendous sensitivity, increased sensitivity, particularly in this high tech age to privacy rights. 

O‘DONNELL: All right.  In a moment, much more with Charlie Cook and Jim Warren, including the rising stars of the coming year, who‘s really going places.

And still to come, a year end look at Hurricane Katrina and how history will remember 2005.  Historian and New Orleans resident Douglas Brinkley will be here.

You are watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O‘DONNELL:  Welcome back to HARDBALL.

We‘re talking to NBC rMDNM_News‘ political analyst Charlie Cook, who writes the “Cook Political Report” and Jim Warren, deputy managing editor of “The Chicago Tribune.”

Let‘s start with Jack Abramoff, the Washington super lobbyist, who now may be at the center of the biggest congressional scandal in decades.  We have learned that he may strike a deal with prosecutors as early as Tuesday of next week.  There have been last-minute negotiations going on all this week, as well. 

Charlie, if this turns into a big deal and Abramoff cops a plea, turns in some lawmakers, will Republicans lose the House of Representatives? 

COOK:  I don‘t think so.  First of all, I think it makes a big difference, are we talking about one, two, three members of Congress going down?  Or are we talking about six or eight or 10 or 12?  I mean, I think that makes a difference. 

But the thing about it is I just think it‘s very unlikely that Republicans lose control of the House.  There‘s just not enough Republican seats, vulnerable seats, in the really competitive districts.  There are not enough Republican retirements in competitive districts right now. 

I could see their margins getting cut in half.   I can see that easily, but losing control, that‘s really hard.  It would take a tidal wave of the magnitude of 1994 given the smaller playing field that we have today. 

O‘DONNELL:  Well, 1994 when Newt Gingrich and the Republicans took power. 

It‘s interesting because Democrats are trying to paint Republicans with this culture of corruption.  And yet, in our last NBC News “Wall Street Journal” poll, we showed that the vast majority of the public thinks that corruption among elected officials is equally spread among Democrats and Republicans.  Look at that, 79 percent. 

So, Jim, it doesn‘t look like the Republican Party has been tainted by Jack Abramoff or the problems that House Majority Leader, former House Majority Leader Tom DeLay has been facing either. 

WARREN:  Well, I didn‘t know those figures, but anecdotally my sense out here was exactly the same sort of a plague on both their houses, but on Charlie‘s sense of the coming year though.  Charlie, covers congressional elections sort of like the British historian, Edward Gibbon, chronicled the fall of the holy Roman empire. 

O‘DONNELL:  Right, he‘s a superstar.  We know. 

WARREN:  He knows his stuff.  And he knows, as Tip O‘Neill said, all politics are local.  Generally speaking, a lot of local issues will dictate what will happen.  And probably what Charlie, the 15 or maybe max 20 Congressional races that might be contested.

But at the same time as ‘94 suggested, occasionally there can be odd political tsunamis and maybe just maybe the drip, drip, drip of some political ethical scandals in conjunction with continuing dissatisfaction with the war, say the economy doesn‘t do too well. 

You know, maybe something happens with Karl Rove that is very high profile and Mr. Fitzgerald‘s investigation, put that all together and maybe you do have a seat change next November. 

O‘DONNELL:  Now, Jim, we‘re going to talk about the hottest political stars of 2006.  And I know you have some predictions, which I was very interested in.  Who do you think is the biggest Democratic star of 2006? 

WARREN:  OK. 

Norah, number one, the political fave of the press corps and pundits at least for the next year, year and a half, I think, could be outgoing Virginia Governor Mark Warner, a very wealthy, Democratic centrist who has proven he can win in a Republican area and also could be positioning himself as sort of the anti-Hillary.  So I think, number one, people will slobber all over him. 

Number two, you don‘t know this name yet, at least not yet, her name is Tammy Duckworth.  She‘s a 30 something African-American Iraqi war vet, who lost both legs in Iraq.  And she has surfaced here as a Democratic candidate in about the only Congressional district in Illinois that will be open, not about the only, the only one. 

That‘s the seat of the retiring Republican powerhouse, Henry Hyde.  There will be several Democrats in this race, and Rahm Emanuel, Bill Clinton‘s big cheese aide, who is now the of the Democratic Congressional Campaign Committee, convinced her to run.  Although some Democrats here are not too happy.  She doesn‘t even live in the district, but Tammy Duckworth will get a lot of attention.   

My third one, will be a comedian.  Yes, a Harvard-trained comedian, Al Franken, yes, who is moving back to his native Minnesota, Minneapolis and is moving his syndicated radio show there, and is seriously considering a run in 2008 against Republican U.S. Senator Norm Coleman.  That could be real interesting. 

I would have thought once upon a time something like this was ludicrous.  I didn‘t think Arnold was going to run.  So what do I know? 

And finally I would say number, speaking of Katrina, as we did earlier, number four, Haley Barbour, Republican governor of Mississippi.  I think some folks are going to twist his arm to maybe run for president.

O‘DONNELL:  Those are all good predictions.

Charlie, what do you think about particularly these Iraq war veterans who are now running for Congress in ‘06?

COOK:  We have got at least a dozen or so out there running.  You know, the thing is if you have got a good, experienced candidate or if you have got a very experienced, very talented traditional candidate, go with that.  But if you don‘t, then why not give if it a shot with a war veteran? 

And so, you know, it certainly was a huge factor in 1946 when you had all the World War II veterans coming back.  It didn‘t really happen after Vietnam.  After the first Persian Gulf War we saw some of that.  But I think we saw some of that.

I liked a couple of Jim‘s predictions.  The one that I thought was interesting is I think Haley Barbour came out of Katrina looking great.  The catch he has got is that if he runs for re-election in November of 2007, that‘s like less than two months before the Iowa Caucus. 

How does he run for president unless he doesn‘t run for reelection.  And given Katrina how does he not run for re-election.  So, we‘ll have to see.

O‘DONNELL:  All right.  Yes. 

Well thank you to our superstars, Charlie Cook and Jim Warren predicting who will be the hottest political stars of 2006.

And coming up next, historian Douglas Brinkley on how 2005 will go down in history.  This is the last HARDBALL of 2005 only on MSNBC.

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O‘DONNELL:  Welcome back to HARDBALL.  While man-made disasters like political scandals, leaks and problems with the war in Iraq plagued President Bush in 2005, it was Hurricanes Katrina and Rita, a one-two punch of natural disasters, that sent the administration reeling and showed just how ill-equipped the government was to deal with a major catastrophic event.  One of the most notable moments of 2005 came when the president touring the damaged region for the first time praised the response efforts of FEMA‘s Director Michael Brown, while just a short distance away, thousands of victims were suffering.

(BEGIN VIDEO CLIP)

BUSH:  And Brownie, you‘re doing a heck of a job.  The FEMA director is working 24 hours. 

(END VIDEO CLIP)

O‘DONNELL:  Well, Brown was out as FEMA‘s director less than a week later. 

Douglas Brinkley is a professor of history at Tulane University, who lives in New Orleans.  Good evening.

DOUGLAS BRINKLEY, HISTORIAN: Good evening.

O‘DONNELL:  Let me ask you, the president was widely criticized for the government‘s very slow response to Hurricane Katrina.  His last visit to the Gulf was in October.  It‘s been several months.  How will Katrina affect this president‘s legacy? 

BRINKLEY:  Well, right now it‘s hurting President Bush‘s legacy tremendously.  It was a time when we needed great presidential leadership.  You look at somebody like Theodore Roosevelt, who built the Panama Canal and put aside over 200 million acres for conservation, or somebody like Franklin Roosevelt, who had New Deal program after New Deal program to get us out of the Depression.  Somebody like Harry Truman, who bailed all the European capitals out with the Marshall plan.

We didn‘t have any of that.  We had inaction at the start of Katrina and then kind of a drip-drip philosophy of make the Gulf south suffer.  And people are angry.  And the Mississippi coast not as much, they don‘t blame the federal government as much, they‘re picking themselves up and slowly rebuilding.  But in the city like New Orleans and around Louisiana, the anger towards President Bush is palatable, and people can‘t understand why we can‘t save this city by building a levee system that would take a Category 5 hurricane.  That would take presidential leadership, an unprecedented public policy program, and it‘s just not happening. 

So he‘s not going to be remembered for outstanding leadership during Katrina. 

O‘DONNELL:  It hurt his credibility in many ways too, and at the time of the Katrina disaster, there were many who suggested that race may have played a role in the slow response by the government.  It‘s interesting, because recently Brian Williams asked the president about this for the first time, and here‘s what the president had to say. 

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC NEWS:  Was there any social or class or race aspect to the response? 

BUSH:  Somebody I heard—you know, a couple of people, you know, said Bush didn‘t respond because of race, because he‘s a racist, or alleged that.  That is absolutely wrong, and I reject that.  Frankly, that‘s the kind of thing—you can call me anything you want, but do not call me a racist. 

(END VIDEO CLIP)

O‘DONNELL:  Of course, the president referring to Kanye West, who said that the president does not like black people, and at one point his approval rating had fallen among African-Americans less than 10 percent.  It was interesting, because history and the facts ultimately tell the story, and I was stunned to read this data analysis that shows that the victims of Hurricane Katrina were not disproportionately poor.  They also were not disproportionately black.  That, in fact, the people most affected from Hurricane Katrina that died there were old.  More than 74 percent were 60 or older.  And yet, this problem lingers for the president. 

BRINKLEY:  Well, look, New Orleans is a predominantly African-American city, 67 percent black.  The images that NBC and others brought were of the Superdome and Convention Center—again, majority of black people suffering.  The looting, at least the images on television, were majority African-American, although there were white looters.  So it started—race came into the forefront. 

It‘s still a very hot topic here in New Orleans, because some neighborhoods—it‘s a question of where do you rebuild?  The Lower 9th Ward was a historic black neighborhood.  Can it be saved versus a newer white neighborhood like on Lake Pontchartrain, Lakeview?  And so—the politics of race is still there.

But President Bush is absolutely correct.  Nobody should charge him with racism.  It was bureaucratic ineptness and a lack of compassion and a FEMA that didn‘t know what they were doing.  I‘m still asking the question, where were these mythical 500 FEMA buses that were about to come in?  And some day, where I‘m standing in New Orleans, everywhere around, including the camp NBC next door here, is almost a historic spot.  I mean, there are going to be markers on the London Bridge Canal or on the 17th Street breach, or where people were turned back at Gretna.  It was a large misery drama that we experienced.  And the blame can go to city hall here, the governor‘s mansion, and the White House. 

O‘DONNELL:  Hurricane Katrina a huge story in this country and certainly in 2005, but where does that, you know, lay in terms of Iraq, for the president‘s legacy? 

BRINKLEY:  Well, I think it‘s secondary to Iraq.  This president has kind of put all the chips on the table in Iraq when we went to war.  He lost his sort of 9/11 Afghanistan president credentials and kind of put all the chips on winning the war over there.  It‘s been very traumatic, it‘s been very up-and-down, it‘s been a horrible year in Iraq. 

However, the president got a bounce on December 15th with the elections over there, and kind of stabilized, but I think in the long run, Katrina, there‘s not going to be too much he can do unless he totally changed tactics away from private sector rebuild and combined private sector with federal funding in a very mass way, which doesn‘t look like he‘s going to do. 

So he needs a victory in Iraq.  He needs to be able to send home the troops saying it‘s a victory, not send them home in a sense of defeat.  And it‘s a tall order, because building democracy in Baghdad is not easy. 

O‘DONNELL:  All right.  Well, thank you to Douglas Brinkley, there in New Orleans. 

And Join us again Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Chris Matthews will be back.  And from all of us here at HARDBALL and MSNBC, we wish you all a happy and healthy new year.  Right now, it is time for “THE ABRAMS REPORT” with Dan Abrams.

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