updated 11/9/2006 1:12:43 PM ET 2006-11-09T18:12:43

Guests: Frank Gaffney, Ed Rogers, Jack Jacobs, Rich Masters, A.B. Stoddard, Frank Donatelli, Al Sharpton

TUCKER CARLSON, HOST:  Welcome to the show.  I‘m Tucker Carlson.

Americans voted for change yesterday, and less than 24 hours later, change is exactly what they got.  But it was a change few anticipated, the sudden resignation of Secretary of Defense Donald Rumsfeld.

Here‘s President Bush with Rumsfeld and the man nominated to replace him, Robert Gates, just a few minutes ago.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Your service has made America stronger and made America a safer nation.  You will be missed, and I wish you enjoy all the best in the years to come.

DONALD RUMSFELD, SECRETARY OF DEFENSE:  Mr. President, thank you for your kind words and the wholly unexpected opportunity you provided me to serve in the Department of Defense again.  These past years—six years—it‘s been quite a time.  It recalls to mind the statement by Winston Churchill, something to the effect that, “I have benefited greatly from criticism and at no time have I suffered a lack thereof.” 

(END VIDEO CLIP)

CARLSON:  Here with the latest from the White House, NBC News‘ Jeannie Ohm. 

JEANNIE OHM, NBC NEWS CORRESPONDENT:  Hi there, Tucker.

Well, the surprise announcement about Secretary Rumsfeld‘s resignation accomplished two things for the White House.  One, it got some of the focus off of the thumping the Republicans got at the polls yesterday.  That was a word that the president used during the news conference. 

It also shows that this president is still very much in charge going against the recommendation of Vice President Cheney to keep Rumsfeld.  Instead, showing his dissatisfaction with the pace of how things are going in Iraq.  The president saying, acknowledging things are not going fast enough and it‘s time for a fresh perspective. 

As for the timing of all of this, if you recall it was just last week that the president in an interview said, yes, he anticipated Vice President Cheney and Secretary Rumsfeld to stay in their positions until the end of his term.  Well, when asked today whether or not he knew in advance during that interview that there was going to be this change, the president responded this way, saying that at that point he didn‘t who the replacement would be. 

He had yet to have a conversation with Robert Gates to know if he would accept that job.  That conversation took place on Sunday.

The president also saying he didn‘t want to interject a major military decision before the elections, and saying his final conversation with Secretary Rumsfeld took place just yesterday, but that they agreed that there was a need for some new ideas, a fresh perspective. 

Now, Democrats have been quick to respond to this.  They have been for a while now calling for Secretary Rumsfeld‘s resignation.  And while they did say this was a welcome step and that—but they are also saying that a change of personnel—more than a change of personnel is needed, but that this was a good first step—Tucker. 

CARLSON:  Jeannie, on a political level, the president, as you said, acknowledges that his party got thumped yesterday, but how has the White House reacted?  What are they doing in response?

CARLSON:  Well, you know, it was a much different tone we heard from the president in this news conference than the last one before the elections.  That‘s when he had chided and mocked Democrats, saying they were already picking out the drapes. 

Well, at one point the president did say he gave Nancy Pelosi, the soon-to-be next speaker of the House, recommendations on some Republican interior decorators for her new offices.  But in all seriousness, he did try to reach across the aisle and say he was committed to working together.  And his tone was similar to what we heard from President Clinton back in 1994, the day after Republicans took control of Congress.

Here was the president this afternoon.

(BEGIN VIDEO CLIP)

BUSH:  I‘m obviously disappointed with the outcome of the election, and as the head of the Republican Party, I share a large part of the responsibility. 

(END VIDEO CLIP)

OHM:  Again, the president pledging this afternoon to work with Democrats for the common good of this country—Tucker. 

CARLSON:  Jeannie Ohm at the White House.

Thanks, Jeannie.

Well, the Rumsfeld bombshell has rocked Washington.  How will it affect the war in Iraq, though? 

Joining me to talk about that, Frank Gaffney, founder and president of the Center for Security Policy and the author of “War Footing: Ten Steps America Must Take to Prevail in the War for the Free World”.

Frank Gaffney joins us from Washington.

Frank, welcome.

FRANK GAFFNEY, CENTER FOR SECURITY POLICY:  Thank you, Tucker.

CARLSON:  Is this an actual change of policy?  Does the sacking of Rumsfeld represent a new direction in the war in Iraq, or no? 

GAFFNEY:  Obviously, it remains to be seen.  My guess is that it does. 

I believe that what Don Rumsfeld‘s replacement by Bob Gates reflects is a decision by the president and his team to embrace basically what I would describe as the Baker regency.  Jim Baker, having been, of course, the former secretary of state under this Bush‘s father, the man who led this Iraq Study Group which Bob Gates served on, the man that Andy Card, President Bush 43‘s first White House chief of staff, wanted twice to replace Don Rumsfeld in the Pentagon. 

This is a man who I think is promoting an agenda that is very different from that of Don Rumsfeld and Vice President Cheney, and, for that matter, the president himself have observed up to this point.  Namely, let‘s see if we just can‘t cut deals with enemies like Iran and Syria.

CARLSON:  Right.

GAFFNEY:  And I think that will represent a—not only a change of policy, but a fatal one perhaps. 

CARLSON:  Well, that‘s a repudiation of policy as it has existed until today, it seems to me.  I mean, this is—this is being described in the broadest, maybe vulgar terms, as the replacement of a neocon with a realist. 

Do you think that‘s fair?  Is that what you are saying? 

GAFFNEY:  Well, again, I‘m concerned that—and I used this term advisedly -- a Baker regency, namely basically substituting the sort of George Bush 41, Brent Scowcroft, Jim Baker, Bob Gates...

CARLSON:  Right.

GAFFNEY:  ... school, whether you call it realist or not, I debate because I don‘t think it‘s all that realistic to think that you can actually negotiate productively with people like the Islamofascists of Iran who are trying to kill us, and who are determined to do that, by the way, in an apocalyptic way if they can.  That‘s not realism, and I‘m afraid that this will be the end of the Bush presidency, not simply neoconism and so on, but the Bush presidency as we have known it. 

Some will applaud that.  I personally fear that it will cost us dearly down the road. 

CARLSON:  Well, I‘m losing you here.  How exactly is the policy going to change?  Give me one—a concrete example and why would that mean the destruction of the Bush presidency.

GAFFNEY:  Well, Jim Baker and Bob Gates have both embraced the idea that we need to engage the Iranians.  Mahmoud Ahmadinejad has said he wants a world without America.  And he thinks it‘s not only desirable, but achievable.

He is working on nuclear weapons and ballistic missiles which I think he believes he can use to bring that about. He is pursuing this in a way that is antithetcal to the idea that we can negotiate successfully with these guys about Iraq, about their nuclear weapons, or, for that matter, about anything else.  And that‘s what would represent, as I think you said yourself, a repudiation of the past policy, an adoption of a policy that is very different from what this Bush has believed up to this point.  And, frankly, that I think is unrealistic and dangerous.

CARLSON:  Well, gee, I mean, to uninformed observers like me, you look on and you say, well, the current policy has resulted in the disaster in Iraq, North Korea getting a nuclear weapon, Iran coming a lot closer to doing that. 

How is that a success? 

GAFFNEY:  Well, it‘s a question of, is it worse than what is to come?  And I think what is to come if this course of action follows suit, negotiations with the North Koreans that will buy them time for more nuclear capabilities, prop up the regime, legitimate it.  And same with Iran.

Perhaps similarly empowering other people and buying them time.  Whether it‘s Hugo Chavez in Venezuela, or whether it‘s others in China and Russia. 

These are the sorts of threats I think Don Rumsfeld properly understood, took a long view about, and worked, as the president said in his “thank you” address just now to address not just in the near term, Tucker, but also for the farther term.  And I‘m afraid that‘s not what you‘re going to get under a Baker regency.  It will leave us in a situation that is more dangerous to this country and its interests by far.

CARLSON:  Boy, that would be pretty bad if it‘s more dangerous than the situation we‘re in now.

GAFFNEY:  That would be worse.

CARLSON:  That would be bad.

Frank Gaffney, thanks a lot.

GAFFNEY:  Stay tuned.

Thank you.

CARLSON:  The timing of today‘s announcement has many people in Washington wondering, what happened?  Why did Donald Rumsfeld resign just hours after the midterm election defeats for the Republicans?  What went on behind closed doors at the White House?

Joining me to shed some light on those questions, Republican strategist Ed Rogers.  He served in the Reagan and first Bush White Houses.

Ed, thanks a lot for coming on.

ED ROGERS, REPUBLICAN STRATEGIST:  Hey, Tucker.

CARLSON:  So here you have—this is odd actually.  You had the president just the other day saying he hoped Donald Rumsfeld would stay on until the end of his term, and then you had him today at his press conference, and one can see (ph) that he knew that that was a lie.  When he said it, he was just trying to keep the question of Rumsfeld‘s tenure from becoming a political issue.

I‘m not sure what to believe.  What‘s the truth? 

Well, you have the president‘s confidence right up until the minute that you no longer have the confidence.  Also...

CARLSON:  That‘s like a Zen principle there. 

It is kind of Zen, as a matter of fact.  But the fact of the matter is, the Republican Party and the Republican cause was in the worst of all situations. 

ROGERS:  The president couldn‘t make changing leading up to Election Day because they would look like they were politically motivated, yet the Republicans were clamoring for change and saying more of the same is undesirable.  So the president held his—he kept his powder dry, he held his fire, and now that elections are over with he can‘t be accused of doing things to try to manipulate the elections, and he‘s making some big chages. 

Good for him.

CARLSON:  But he did—but he did—yes, and maybe good for him.  I think -- I think you‘re probably right.  But just to back up to his statement last week...

ROGERS:  Yes.

CARLSON:  ... he did more than keep his powder dry.  He could have been cagey and said, you know, I think Donald Rumsfeld‘s a great guy and he‘s done a great job for the last six years.  He didn‘t say that.  He said this guy is going to be here until the bitter end.

ROGERS:  Well, you‘re wanting to suggest that he was deceitful.

CARLSON:  No, no.  I‘m actually not.  Wait.

ROGERS:  I don‘t think that was the case at all.

CARLSON:  I‘m not wanting to suggest that.  Maybe he was deceitful, maybe not.  Maybe he didn‘t know when he said that that he was going to sack Donald Rumsfeld.

ROGERS:  Well, even so, OK, but the point is moot.  Rumsfeld‘s gone, Gates is coming in.

There is—there is going to be some refreshing thinking.  There‘s going to be undoubtedly some new policy directions.  And, you know, that‘s a good thing.  The fact that the timing is what is it, so be it. 

CARLSON:  Well, here‘s actually why I think it‘s more than just (INAUDIBLE) and that the motive—the motive behind Rumsfeld‘s resignation makes a difference.

If this was a decision made last week, then it might reflect kind of broader thinking about where we take the war on Iraq and the war on terror.  If it was a decision made, you know, yesterday in response to the exit polls, then it really is kind of the White House caving to pressure from its critics. 

ROGERS:  Well, it certainly doesn‘t appear that way.  I mean, this was in the pipeline for some time.

I‘m sure that Bob Gates had to do some things.  He‘s a responsible person. 

He‘s the president of a huge university.

He had to talk to some people.  He had to talk with his family. 

CARLSON:  Right.

ROGERS:  And it‘s not like they did all this this morning.  That didn‘t happen. 

CARLSON:  You‘ve heard a bunch of people sitting in chairs on cable television this morning, on all three cable nets...

ROGERS:  I have.

CARLSON:  ... talking about how this represents the end of Dick Cheney‘s influence.  They don‘t know if that‘s true.  I don‘t know if it‘s true.

Do you know if it‘s true? 

ROGERS:  It doesn‘t ring true to me.  I mean, Cheney is certainly there to the end. 

I think at times Cheney‘s influence has been overstated.  At times it‘s been dismissed.  I mean, Cheney is a constant in this administration, and he should be, and he‘s going to be.  So...

CARLSON:  People hate Dick Cheney.  People hate Dick Cheney with an intensity that I don‘t really understand.  He‘s not the president, but he is about the most unpopular person in the world since Pol Pot and Idi Amin have died.  And I wonder...

ROGERS:  Well, you know...

CARLSON:  ... is—I mean, is...

ROGERS:  Go ahead.

CARLSON:  I mean, does that matter?  And does the White House think it matters?  That‘s my question.

ROGERS:  No.  I don‘t know if it‘s true.  Having said that, I don‘t think it matters. 

The vice president doesn‘t drive votes during the presidential election.  I don‘t think it drove votes during midterm congressional elections either.  The vice president is doing precisely what this president wants him to do, and that‘s what really matters.  And let‘s not overstate the significance in terms of a midterm election the vice president‘s role or the vice president‘s image or what his approval rating may or may not be. 

Give him a break.

CARLSON:  Yes, I‘ve never gotten that.  I mean, look, the president is responsible for his administration and what it does. 

ROGERS:  Yes.

CARLSON:  I don‘t know.  The obsession with Cheney has always kind of confused me. 

ROGERS:  Yes.  And the president...

CARLSON:  Why not blame Bush for Bush‘s errors?

ROGERS:  And the president stood up today and he took the blame.  Good for him. 

CARLSON:  You said a second ago, very quickly, that Republicans were clamoring for this change, for Donald Rumsfeld‘s resignation.  Are they pleased, to the extent you know, with what happened today? 

ROGERS:  Undoubtedly, absolutely.  A breath of fresh air, a new break.

And the Democrats are going to be in a box now.  I mean, they are under pressure from their voters to, well, you said there would be change in Iraq, let‘s see a change.  But the fact of the matter is, there‘s not much options to do many things different. 

CARLSON:  No.

ROGERS:  So now this weekend you‘re going to see the Democrat leadership begin to say things like, well, let‘s let Mr. Gates some time.

CARLSON:  Right.

ROGERS:  Let‘s let him get in office and give him a chance to change things, because their pledge for a rapid change in Iraq was not connected to any real authority or option... 

CARLSON:  No, that‘s actually a very smart point.  This is a godsend for Democrats.  And I—I must say...

ROGERS:  No question.

CARLSON:  ... I feel for them.  How would you like to come up with a new Iraq policy?  I don‘t know what it would be. 

ROGERS:  There‘s not one. 

CARLSON:  No, there isn‘t.

(CROSSTALK)

ROGERS:  And so they‘re going to hide behind some of the new personnel changes and policy changes by saying, let‘s give these people and plans some time and a chance. 

CARLSON:  Well, good point.

Ed Rogers, smart point.  Thanks very much.

ROGERS:  Thanks a lot, Tucker.

CARLSON:  Still to come, the latest on Donald Rumsfeld‘s surprise resignation.  How will troops in Iraq take this news? 

And yesterday‘s election puts Nancy Pelosi of California third in line for the Oval Office.  Will her elevation to speaker spark a battle, though, between liberal and moderate Democrats?

That story when we come back.

(COMMERCIAL BREAK)

CARLSON:  Welcome back. 

The White House tried to put a positive spin on Donald Rumsfeld‘s resignation earlier today, but does that resignation signal a new policy in the war on Iraq?  And if so, what does that mean for our troops fighting there?

Here with a military perspective, MSNBC military analyst Colonel Jack Jacobs.  He joins us from outside somewhere in St. Louse, Missouri. 

Jack, welcome.

COL. JACK JACOBS (RET.), MSNBC MILITARY ANALYST:  I‘m in front of—I‘m in front of Boeing, appropriately enough, where they make F-18s and F-15s and all that jazz. 

CARLSON:  Perfect.  So the guys who are going to fly those planes, are they going to be happy about the resignation of Donald Rumsfeld?

JACOBS:  I think the highest ranking guys are going to be happy.  There‘s been a great deal of friction between the secretary of defense and the highest echelons of the military establishment for a long, long time.  He doesn‘t take advice and so on and so forth. 

I think at the lowest possible levels, down in the trenches where the war is won or lost, there‘s not going to be much change for them.  Their perception of what takes place in Washington is slim and it‘s irrelevant in any case for them. 

Whatever changes that are going to take place in terms of strategy—and it‘s difficult to tell what kind of changes they can make that will—that Gates will make that will really make a difference—those changes won‘t be felt for some time down in the trenches. 

CARLSON:  Rumsfeld has alienated people at the Pentagon from the day he showed up for work six years ago, talking about reorganizing the military and all that.  People hated him, it seemed to me, from the beginning. 

Does he have allies in the upper echelons, uniformed services? 

JACOBS:  In a word, no.  I mean, he gets along better with some people than with others, but by and large, he‘s been an extremely crusty person to deal with. 

He won‘t take advice.  Or he doesn‘t take it very gladly.

He had the job before, you know.  He‘s been secretary of defense before.  And as a result, he has some predetermined ideas about how things are going to be done.

I have it on fairly good authority that in actual fact, he wasn‘t very much involved and has actually been sort of disconnected with respect to running the war.  His focus all this time has been the transformation of the military into a leaner, meaner fighting force, able to spin on a dime and so on. 

And you could posit a circumstance in which neocons came into his office with this idea of toppling Saddam Hussein, saying we needed to knock the guy off and then a miracle would happen and there would be democracy in southwest Asia, and his response was, yes, OK, whatever, because he‘s not paying very much attention to that.  Spending more time thinking about structure, and the way things have gone indicates that that may be true. 

CARLSON:  The irony in that, since, of course, his public perception has been completely consumed by, certainly defined by the war in Iraq. 

What do you think Gates is going to do?  Will he make changes in our policy in Iraq? 

JACOBS:  It is—he‘s going to want to, and he‘s a good guy.  And by the way, he‘s likely to get confirmed relatively easily, although more Democrats in the Senate, they‘re going to give him a harder time, period. 

But it is difficult to envision how you change the strategy and make it significantly different and more successful than what‘s being done right now.  We need more mobile training teams, that‘s for sure.  We need more troops in Iraq, in any case.  We‘ve got to get the Iraqi army and police force on line. 

But unless we are committed to sending another 150,000 to maybe 175,000 more troops to Iraq to really go root out the bad guys, lock, stock, and barrel, which, by the way, we‘re not going to do, I can‘t see that the tactical or strategic situation is going to change drastically. 

CARLSON:  Yes.  I think the rest of America is about to learn that.

Jack Jacobs, thanks a lot.

Coming up, the votes are in, and now control of the Senate is riding on one razor-close race.  That in Virginia, George Allen versus Jim Webb.  We‘ll have the latest on that all-important contest when we come back. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK:  There are two options here.  One is to go through a long, elaborate process, after which Jim Webb will be declared the winner, and the other is to do the right and gentlemanly thing to do and just declare Jim Webb the winner now. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

ED GILLESPIE, ALLEN CAMPAIGN ADVISOR:  Senator Schumer of New York is free to declare whatever he wants, but only the Commonwealth of Virginia has the right to declare the winner of this race.  And I think it‘s very important that we respect the voters of Virginia and count their votes.

(END VIDEO CLIP)

CARLSON:  Not only would their votes be counted, they may well be recounted.

Virginia‘s Democratic Senate candidate Jim Webb claimed the title of senator-elect today, but don‘t tell that to Republican incumbent George Allen.  He has refused to concede.  He is losing, though, by about 8,000 votes, a few less.

Allen‘s camp could demand a recount after election results are certified on November 22nd.

At stake in this razor-close race, Virginia‘s Senate seat and ultimately control of the U.S. Senate.

Here now with the latest on all of that, NBC News‘ Kevin Corke.  He‘s in Alexandria, Virginia.

Kevin, what is the latest? 

KEVIN CORKE, NBC NEWS CORRESPONDENT:  Tucker, good day to you. 

You‘re right about that.  The certification will come in weeks from now, but the question is, are there enough votes out there for George Allen to overcome that 8,000, perhaps even larger, deficit to Jim Webb?  That‘s exactly what they‘re going to have to try and figure out. 

And the truth of the matter is, it would be incredibly unusual, to say the least, for that to happen.  Still, the Allen campaign right now is refusing to give in and give up the fight in this particular case.  As you have been pointing out throughout the day, down by at least 8,000 votes.

The Webb team has already decided to name a transition team.  They are moving ahead as planned. 

However, there are operatives on both sides of the fence, both Republicans and Democrats, that are canvassing the state beginning today, looking for any voter irregularities.  Also trying to make sure that there were no numerical errors.

For example, Ed Gillespie said earlier on MSNBC that there was one case in Stafford County, which isn‘t very far from Washington, D.C., and northern Virginia, where there was at least a 1,000-vote swing from Webb to Allen today. 

Are there more examples out there like that?  And still, while that may seem unlikely, keep in mind 8,000 is a very, very big number in this state.  And it could just be a matter of time, frankly, Tucker, before George Allen has to concede that Jim Webb is the new senator from the state of Virginia. 

CARLSON:  What has—what is the Allen camp saying?  And has Senator Allen made any kind of public statement about this since last night? 

CORKE:  Yes, has not . And we‘ve been working that phone all day long, just wondering, look, is he going to get to a point where, as Chuck Schumer pointed out, will he do the gentlemanly thing and simply say, look, I know that I may pick up 3,000, maybe even 5,000 votes, but can I really pick up 8,000 or 10,000 to overcome Jim Webb?  Is it not time to simply step aside and do the gentlemanly thing, as Chuck Schumer put it?

But I got no indication of that happening.

CARLSON:  Kevin Corke in Virginia.  This drama may end sooner than we know, and you‘ll be there.

CORKE:  Yes.

CARLSON:  Thanks.. 

President Bush ushers Don Rumsfeld out the door.  Is it an admission of failure in Iraq?  And why should we expect a new secretary of defense has a better plan?  Maybe he does.

We‘ll discuss it when we come right back.

(COMMERCIAL BREAK)

CARLSON:  Still to come, the 2008 presidential election begins right now.  We‘ll ask the Reverend Al Sharpton to handicap it for us.  Plus, Nancy Pelosi makes history but is that a good thing.  All that in just a minute, right now here‘s a look at your headlines.

MARGARET BRENNAN, CNBC ANCHOR:  I‘m Margaret Brennan with your CNBC market wrap.  Stocks rallying as Wall Street digests midterm election results, the Dow picking up 19 points for another record close, this time hitting 12,176.  The S&P 500 closing up 3 points, the NASDAQ up 9, thanks in part to Microsoft shares.  Both are up on word that Vista Operating system is good to go for late January.  Stocks made a comeback on news of Defense Secretary‘s Donald Rumsfeld‘s resignation.  He‘ll be replaced by former CIA director Robert Gates.  Meantime, shares of healthcare related firms like Pfizer, Merck and Johnson & Johnson declining as House Democrats signal they‘ll use their new power to pursue limits on pricing and Medicare reimbursements.  And investors now apparently shrugging off uncertainty over that still undecided Virginia Senate race and the so-called gridlocked theory.  The contest between Republican George Allen and Democrat Jim Webb will decide which party controls the Senate.  The Democrat‘s ahead  but it could still go either way.  That‘s it from CNBC, first in business worldwide.  Now back to MSNBC‘s nonstop post election day coverage with Tucker Carlson.  

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, (D) HOUSE SPEAKER-ELECT:  Nowhere was the call for a new direction more clear from the American people than in the war in Iraq. 

(END OF VIDEO CLIP)

CARLSON:  That was your new speaker of the House, Nancy Pelosi earlier today.  Thanks to Democrats taking control of at least the House of Representatives, she will become the first female speaker of the House.  If voted in next week, she‘ll be second in line of presidential succession right behind Vice President Dick Cheney.  Joining me now with more on what Pelosi‘s takeover means for the rest of us, Democratic Strategist Rich Masters.  Rich, first congratulations.

RICH MASTERS, DEMOCRATIC STRATEGIST:  Thanks Tucker.

CARLSON:  What does this mean? You‘re a Democrat. You run campaigns, you‘re looking on at what happened last night.  What is America telling us? 

MASTERS:  Well I mean I think there are several things.  One, I think people are fed up with the situation in Iraq.  I mean you know when you have people from the conservative right like yourself to those on the far left that agree on thing that the policy in Iraq is flawed and needs a fundamental change.  I think the president got that loud and clear.  Donald Rumsfeld‘s out today.  But aside from that, I think it also means that the American people are a little bit tired of incompetence, whether it was Katrina or whether it‘s failed to deliver on any kind of promises.  And of course, the other thing that actually surprised me Tucker is we have been talking about the culture of corruption and a lot of prognosticators said that that wasn‘t really taking place.  But when you looked at the exit polls, many, many people voted on corruption.  Surprised us, we were effectively as Democrats able to nationalize the election. 

CARLSON:  It was stunning the number of people who said they voted on corruption, I was definitely surprised by it to.

MASTERS:  It really was.

CARLSON:  We know what your take is, the Republicans screwed it up so bad that people had to vote for Democrats?

MASTERS:  Well unfortunately I think that‘s the case.  I mean I think now that we have the gavel, we have the microphone, we have the megaphone.  Now Democrats are going to have to move beyond just being against Bush, they have to move forward on an aggressive agenda that deals with Iraq, it deals with minimum wage, deals with a panoply of issues that we are facing and that voters really want to see some action. 

CARLSON:  Do they really want to see, the minimum wage, with all due respect, if you take a look at the numbers of people who actually work for minimum wage full time, very, very low, it‘s not an issue that actually affects a lot of working Americans in this country contrary to the propaganda.  So minimum wage, that‘s great, fine, whatever.  But what is the plan?  Can you sum it up for me in language I can understand, would you?

MASTERS:  Sure, I mean let me try.  There‘s going to be several things.  I mean first of all, I think stem cell research, undoing the president‘s edict from a couple of years ago on stem cell research.  It definitely, especially if we go on to take the Senate, one of the Senate seats in Missouri was literally decided on this issue.  The American people have said that they want to side on the side of science, so that will be one thing.  Another thing that I think this will mean aside to again from the minimum wage is I think the 9/11 commission report, a bipartisan commission report came back and suggested many things need to happen to make our homeland more secure.  The Republican Congress and George Bush did nothing, Democrats will.  

On lobbying reform, I think we saw all of the scandals and since Americans say they voted on corruption, they want to see a strong lobbying reform bill so I think you‘re going to see that right out the gate.  What exactly are Democrats going to do to make America safer as you‘ve said?  I‘ve heard that for the last six months and certainly more in the closing days of this campaign.  We‘re going to act on the recommendations of the 9/11 commission but you‘re replacing Republicans who whatever their many faults are sort of fixated on questions of security—what are Democrats going to do that they didn‘t do? 

MASTERS:  Well I mean I think there are several things, first of all, we need to figure out a way to make communications for first responders significantly better.  We need to do a much better job at port security, energy security, and infrastructure security.  No one has done it, we haven‘t really touched it. We‘ve talked an awful lot about it.

CARLSON:  So cops get new radios, the police get new radios, firemen get new radios and then you put security guards along the Alaska pipelines, is that what that means?

MASTERS:  I think a lot of that, absolutely.  I mean we‘ve not done any of those things Tucker.  I mean it‘s clear from a national—

CARLSON:  What about immigration, is that part of it?

MASTERS:  I think immigration is definitely going to be part of it. 

And I mean and frankly I think you‘ll see, if the president wants to reach out early and get a nice bipartisan victory to kind of go along with the love fest early on, I think he goes straight to immigration.  Democrats agree with him more often than they do the Republicans on this.  And so I think you‘re absolutely right on target Tucker.  I think that will be—if the president wants to do it right, he‘ll come out with that and try to get a deal on that in the next couple of months. 

CARLSON:  He‘s got a very reckless and left-wing position on immigration so it‘ll fit right in and Nancy Pelosi will love it, it‘s great.  Rich Masters, thank you very much.

MASTERS:  Absolutely Tucker.

CARLSON:  Well less than 24 hours, Washington, D.C.‘s landscape underwent a major change, part of it was expected.  Nancy Pelosi is just a House vote away from becoming speaker of the House.  But another part, Donald Rumsfeld‘s resignation could not have been more surprising.  Joining me now to dissect all of what has happened, our heads are still spinning, A.B. Stoddard, associate editor of “The Hill” and Republican Strategist and George Allen campaign advisor Frank Donatelli.  Welcome to you both.  

A.B., I actually left the list of your predictions in my hotel room but I think you did pretty well.  Yesterday I asked you what was going to happen and I think you called it pretty well.

A.B. STODDARD, “THE HILL” ASSOCIATE EDITOR:  No, Lynne Chaffee went down.  

CARLSON:  Oh, Lynne Chafee went down, ok. But otherwise you‘re a genius.  

STODDARD:  I‘m out of the prediction business by the way. 

CARLSON:  You have two more years until you have to.  So you just heard Rich Masters predict what he thinks House Democrats are going to make their early agenda.  Does that square with what you‘re hearing?

STODDARD:  Oh yeah, the agenda items have been out for months.  I think that people need to realize that Nancy Pelosi who has been raising millions of dollars for the Democratic Party since the dinosaur days and has had her sights on this job for many, many years, is a very shrewd manager, she‘s very ambitious, she has her eyes on the prize at the White House and to that end, she‘s not going to be a reckless liberal.  She‘s going to put her nose down and I don‘t think she‘s going to give the Republicans what they‘re really hoping for in the next two years.  So in order to get the White House, they‘re going to have to hold those seats they picked up with conservative and moderate Democrats, they‘re going to have to stick to a sort of middle of the road agenda, they‘re going to have to work with the president, and they‘re going to have to be shrewd and to appeal to the general population which is sort of center right, I mean right of center slightly.  I just don‘t think that we have a revolution on our hands here. 

CARLSON:  But Frank, how do Republicans respond? I mean Nancy Pelosi has been the embodiment of liberalism in the Republican storyline, you know, San Francisco liberalism, but now she actually is in a position of authority and power and they have to deal with her.  Are they going to continue to caricature her, not that she doesn‘t deserve it, but are they going to keep doing it? 

FRANK DONATELLI, GOP STRATEGIST:  Tucker I think the real line is San Francisco values. 

CARLSON:  That‘s right, sorry, you‘re exactly right.

DONATELLI:  But we should offer congratulations to the Democrats.  I thought they ran a good race and it was a good victory for them so I think all of us who are involved should take our hats off to them.  Look, I think this is a time to say that hopefully there could be opportunities to find bipartisan common ground on a variety of issues. We‘ve just had a tough election, it‘s not surprising Republicans and Democrats see things differently, the administration sees a lot of things differently from the new speaker but I think it‘s the obligation of all of us to make common cause and see if there are at least some issues that we can move forward together on.  I do believe that the speaker‘s powers are going to be tested early.  I do agree with A.B. that I don‘t think that there is a mandate in this country for foolishness but if I may say, I believe that the Democratic base is going to be demanding action. 

CARLSON:  Of course.

DONATELLI:  You know the daily chaos in the Huffington Post and all these bloggers and so forth, did not do everything they did to elect a Democratic Congress to just say oh, we can‘t rock the boat, we can‘t do anything.

CARLSON:  There‘s no doubt.

DONATELLI:  So her powers of persuasion are going to be tested very early.  

CARLSON:  And these are not realistic people any way.  I mean Nancy Pelosi whatever her many faults has been around politics her entire life and she understands what‘s possible and what isn‘t.  Bloggers sitting in their basement, mom‘s basement in their under shorts, banging this stuff out on laptops, so that may be the big difference.  A.B. I want to ask you about Rumsfeld but very quickly, I just want to get your take on a gender related question.  We keep hearing that Nancy Pelosi‘s eminent election as speaker is this momentous event not just for one Bay Area Democrat but for all women everywhere.  Do you feel transformed by it? 

STODDARD:  I don‘t know if I got enough sleep last night to feel

transformed by anything today.  I think it‘s, any time barriers are broken

in this country in terms of opportunities for any minority.  I think that -

CARLSON:  Women are the majority A.B. 

STODDARD:  You know, but women, I‘m not going to get into a debate with you right now about the economic disparity and fairness and everything between women and men in the workforce.  But I think that any time you have an historic first, it‘s a big deal.  

CARLSON:  All right, well, good.  I‘m glad to know.  Quickly, sum up Rumsfeld A.B. from the Democratic—did Democrats do this?

STODDARD:  I think that Bush did it.  I think it was just a great move, it gives him some breathing room, it actually sort of gives him breathing room to make a policy change after the Iraq study group comes in with their recommendations he so eagerly awaits.  It tells the American people that he heard the results of the elections, it gives the Democrats reason to think that I guess they did, it really was a really smart move.  And it‘s interesting because we‘ve been thinking all along that Rumsfeld was never going to get to leave.  I actually thought he was sort of wearing an ankle bracelet and was getting a shock every time he—

CARLSON:  That‘s what I thought.  

STODDARD:  They couldn‘t endure the proceedings for a new secretary of defense.  And it‘s so interesting, because Bush is trying to have us believe today that he was going to do this with or without a Democratic takeover in Congress, that he was covering up with reporters last week.  I don‘t know, am I gullible, I thought that was kind of refreshing. 

CARLSON:  What do you think, Frank? Is that true?  Was the president planning this all along or not? 

DONATELLI:  I think this represents the president‘s last best alternative to try to fashion a bipartisan, some sort of bipartisan consensus on what we need to do in Iraq to move forward.  You‘ve just had the elections, a lot of the bitterness has gone out of the system at least for a period of time.  You have the Baker-Hamilton report coming out that hopefully will contain some new ideas.  Hopefully there are some Democrats out there led by Joe Lieberman, that want to work with the administration to fashion a bipartisan consensus.  And so Tucker I just think all these things coming together.  It would have been hard for Secretary Rumsfeld, all the battles he‘s been through to sort of be part of this bipartisan consensus. 

CARLSON:  He‘d be at hearing after hearing after hearing. Not that he still won‘t be.  But if you could both stick around, we‘ll be right back, we‘re going to take a quick commercial break.  The 2008 race for the White House begins of course today.  It began this morning at sunrise.  How long until Hillary Clinton announces?  Can she win?  We‘ll ask the Reverend Al Sharpton, a close friend, when we come right back.

(COMMERCIAL BREAK)

CARLSON:  It all comes down to Virginia, they need overtime to decide whether George Allen or Jim Webb will be the one to swing the balance of power in the U.S. Senate.  We‘ll ask our experts whose got the edge in that contest when we come back in just 60 seconds.

(COMMERCIAL BREAK)

CARLSON:  Democrats entered yesterday‘s elections hoping to sweep both the House and the Senate.  They took the House early in the night, but this hour we still don‘t know whether they have the Senate.  Everyone‘s waiting for the results of the race in Virginia.  Democrat Jim Webb leads Republican incumbent Senator George Allen by a razor thin margin of about 8,000 votes.  Webb is declaring victory, Allen is not ready to concede, a recount is looming. Back with me A.B. Stoddard, associate editor of “The Hill” and Republican Strategist and George Allen campaign advisor, Frank Donatelli.  Frank, the choice, Democrats are describing this as a choice between doing the gentlemanly thing and being stubborn.  George Allen can either be a man, be a decent human being, a patriotic American and bow out or he can be a little creep and continue fighting the inevitable.  Is that the choice? 

DONATELLI:  That‘s hardly the choice.  The choice is to afford yourself of all the remedies available to you under Virginia law.  And there are at least two other steps that have to happen before we can declare a winner.  The one which is taking place now Tucker is that the  results that you saw on your television screens last night have to be canvassed, which simply means you go back to all the polling places and make sure that the numbers that were reported are accurate, numbers aren‘t transposed or whatever.  This happened just last year, the Republican candidate for attorney general Bob McDonald at the end of election night was ahead by I believe 3,000 votes.  After they finished the canvass, he was ahead by 300 votes and he ultimately won.  So it is possible that thousands of votes could --  

CARLSON:  But, 8,000 votes, that‘s a lot of votes.  

DONATELLI:  It‘s a lot of votes, but it is less than one-half of one percent, because the vote was bigger this time.  And then at that point, you know the candidate, Senator Allen can make a decision as to whether he wants to seek a recount or not.  If it‘s under one half of one percent I believe he has that right.  Though I think he‘s wise to afford himself of all these opportunities. 

CARLSON:  A.B., have you heard what‘s actually going to happen?  There are a lot of rumors floating around today, are any of them true? 

STODDARD:  I don‘t think we know what‘s going to happen.  I think what‘s happening is that once again, Senator Allen is making the flavor last, it‘s too many news cycles going on, which has happened in all these sort of unfortunate incidents throughout his campaign, they don‘t end quickly.  That said, I want votes to be counted too and if I were George Allen, I would want to count every vote and I would not want to be in this position as we‘ve said over and over again.  In these weeks this was supposed to be a breeze for him, just a set up, a quick easy breezy reelection for his potential presidential campaign, and now he‘s standing here about to give the Senate to the Democrats and I wouldn‘t want to be in his shoes. 

CARLSON:  Yeah, because I mean, Frank, as you know, there is very likely to be another Supreme Court vacancy, and who controls the senate will have a lot to do with who gets confirmed to fill it.  So there‘s so much at stake here.  Are Republicans putting a lot of money, are the lawyers on the way, what‘s happening? 

DONATELLI:  Well again, I think that he‘s going to afford himself of all the rights under the law and that‘s exactly why to take a few extra days or a week for that matter to make sure that all the ballots were counted, they were counted properly and accounted for, pails into comparison to a rush to judgment like the gentlemen from New York would like this race to end up. 

CARLSON:  Be a gentleman, I love that, cracks me up.  Frank Donatelli, A.B. Stoddard, thank you both very much.

STODDARD:  Thanks.

CARLSON:  With Donald Rumsfeld out of a job today, will the new Democratic leadership change the direction of the Iraq war?  The answer when we come right back.

(COMMERCIAL BREAK)

CARLSON:  What a difference a day makes.  In the blink of an eye, Donald Rumsfeld is out the door, Democrats are flaunting their new power.  Hillary Clinton who won her New York Senate race overwhelmingly, has been a vocal critic of the Iraq war and had called for Rumsfeld‘s resignation, all this despite the fact she voted to authorize the war in the first place.  So what will it mean to have people like Hillary Clinton calling the shots from now on.  For answers to that, we welcome former Democratic Presidential Candidate Al Sharpton.  Rev, thanks for coming on. 

REV. AL SHARPTON, FMR. PRESIDENTIAL CANDIDATE:  How are you doing Tucker?

CARLSON:  Well congratulations on the one hand and on the other hand, as you well know, it‘s a lot more fun to barn storm around the country criticizing the other guy than it is to be stuck in Washington actually doing stuff, like running the Congress.  Is this really kind of bad news for Democrats, they‘re going to be responsible for running the legislative branch? 

SHARPTON:  Well, no because I think first of all for eight years the Democrats ran the White House very well and there were much more prosperous and peaceful times.  So I don‘t think that for some people that were involved in the Clinton administration that this is anything short of what they desired and have a capacity to do.  

CARLSON:  But hold on.  We‘re at war now and we can‘t go back to peace and prosperity because, maybe prosperity but not peace.  I mean Democrats are going to have to come up with an alternative in Iraq.  And I don‘t envy them.  I don‘t know what I would do.

SHARPTON:  I think that they will have to build and the president is going to have to cooperate with this.  We will all have to build a way to come out of Iraq that has peace and to try and coalesce with other forces in the world to try and repair what is happening in Iraq. We went in Iraq in a unilateral strategy.  We‘re going to have to come out in a multilateral strategy and I think the Democrats are probably the only ones that will have the moral ability to reach out to others in the world to help put that together. 

CARLSON:  The 2008 presidential race has been underway for about 11 hours now, since dawn this morning.  Who do you think the first person to announce is going to be? 

SHARPTON:  I don‘t know.  I think that at this point anyone that is going to run in 2008 would be wise to first see what happens in the next few weeks in terms of the chairmanships in the House, where the Senate goes after we see what happens with Virginia.  And who is going to have what positions.  A lot of people that are running are in the Senate or in the House. And a lot of people are going to see where the power setup falls before they decide their race.  So anyone, whether you‘re in office or not, should wait to see what the landscape looks like before they start talking about announcing a race. 

CARLSON:  Hillary Clinton is not waiting, I mean she‘s not announced yet but she spent $29.5 million on a race against a guy whose name nobody knows.  I mean basically she was for all practical purposes unopposed for reelection in the Senate and she spent more than anybody else in the United States of America. That‘s another word for presidential candidacy.  Do other Democrats resent that? 

SHARPTON:  I don‘t think so. I think that first of all I live in New York state, I have agreed and disagreed with Senator Clinton but she‘s proven to be a very effective and a very I would say diligent senator.  She‘s handled state issues well, she‘s done what a lot of the Republicans and critics frankly of the Democratic Party said she couldn‘t do, and that is become a hard-working, serious person on the Hill.  I don‘t think that the matter is how much she spent.  I think the matter is the job she‘s done.  Obviously New Yorkers feel she‘s done a good job. Whether we agree with her or not on every issue, no one could say she‘s been an inept senator. 

CARLSON:  No, not inept, she‘s been fine, I mean she‘s been above average, you know, not exciting, hasn‘t done a lot, but a lot of people like her.  I mean that‘s great.

SHARPTON:  I‘ll tell her next time I see her you endorse her. 

CARLSON:  Is that the profile of a presidential candidate?  No, it‘s not?  Do these election results help or hurt her? 

SHARPTON:  Again, I don‘t know.  I think that it helps any Democrat.  First of all, I think that if the Democrats build on the victory of yesterday—let‘s remember this was a people-driven victory.  Many in the Democratic leadership were slow coming against the war themselves. And I think the anti-war sentiment was what drove the vote yesterday.  And this was from the bottom up.  Many of the leaders of the party had to be brought over there.  I had Howard Dean on my syndicated radio show yesterday and we were talking about how we looked like left-wingers in 04 and it was almost a centrist message yesterday.  A lot of the things we were saying about the war just a year before last during the presidential primaries.  

CARLSON:  You‘re like Jerry Falwell compared to most bloggers. 

SHARPTON:  I wouldn‘t offend you like that Tucker.  I thought me and you had a better rapport than that. 

CARLSON:  Barack Obama, is money lining up behind him? I mean you‘re involved in—

SHARPTON:  I have no idea.  I see the senator sometimes, we talk briefly, we‘ll probably talk more at length in the next couple of weeks.  I have no idea what‘s happening with that. 

CARLSON:  Do you think that the behind the scenes people, the strategists who put these campaigns together before the rest of us hear about it, do they take him seriously? 

SHARPTON:  I don‘t know, I mean I don‘t know who they take seriously.  I think that again, if anything taught us something yesterday, and that is that people better start being concerned  with what the public is thinking about.  You had a lot of people that the people on K Street, the spin masters and consultants had picked that went down in flames last night.  So I wouldn‘t be listening to consultants if I was in -- 

CARLSON:  I think that‘s a good point.  The Reverend Al Sharpton, thanks a lot Rev.

SHARPTON:  Thank you.

CARLSON:  Thank you for watching.  I‘ll see you back here at 6:00 p.m. eastern.  Up next, “HARDBALL” with Chris Matthews. 

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

END   

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