updated 1/5/2007 10:34:13 AM ET 2007-01-05T15:34:13

Guests: Bill Press, Terry Holt, Charlie Rangel, Rob Portman, Paul Bedard

TUCKER CARLSON, HOST:  Welcome.

Day one of the 110th Congress winds down, and we come to you from the Capitol as the clock ticks on the much celebrated first 100 hours. 

Nancy Pelosi has been elected speaker of the House, and her first act was a sweeping speech for the Congress on broad themes, including the war in Iraq.  But among the few concrete promises were pledges to end the deficit and create what she calls the most ethical Congress ever. 

Let‘s hope she achieves the first goal.

As for the second, already it doesn‘t look good.  If the new speaker genuinely cared about ethics reform, she wouldn‘t have given a committee assignment to Congressman Bill Jefferson of Louisiana.

Jefferson, you‘ll remember, was taped by the FBI, apparently soliciting a bribe.  His business partners has already pleaded guilty in that investigation.  One of his top aides has been indicted, as Jefferson himself is expected to be.  Last year, investigators discovered $90,000 in cash stored in the congressman‘s freezer. 

Well, this fall, a state representative called Karen Carter ran against Jefferson in the Democratic primary in Louisiana.  Not only did Nancy Pelosi refuse to support Carter, she didn‘t even return her phone calls.  So much for female solidarity. 

As a spokeswoman for the Democratic Congressional Committee told “The Washington Post” this morning in an amazingly blunt admission, “We‘re an incumbent protection organization,” which is not the same at all as an ethical organization.

Speaker Pelosi wants her ethics reform to be taken seriously.  And as a first step, should ought to strip Bill Jefferson of his committee assignment and the legitimacy it bestows.  Until then the most ethical Congress ever will continue to sound like the bad joke it already is.

Well, as we said, Nancy Pelosi was sworn in as the first female speaker of the House today, and in her speech, the San Francisco liberal struck several notably conservative notes.  Boasting about going to church, and quoting St. Francis of Assisi. 

And then she said this...

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), HOUSE SPEAKER:  After years of historic deficits, this 110th Congress will commit itself to a higher standard.  Pay as you go, no new deficit spending. 

(END VIDEO CLIP)

CARLSON:  Amazing.

Joining us now, Bill Press, the author of “How the Republicans Stole Religion,” and Terry Holt, Republican strategist and former senior adviser to the Republican National Committee. 

Welcome to you both. 

BILL PRESS, RADIO TALK SHOW HOST:  Tucker!

TERRY HOLT, REPUBLICAN STRATEGIST:  Thanks, Tucker.

PRESS:  Good to see you.

CARLSON:  First things first, Bill.

PRESS:  Yes, Tucker?

CARLSON:  Dollar-bill Jefferson, a courtly nice guy, but seems like he is about to be indicted for corruption.  He hasn‘t explained properly what $90,000 was doing in his freezer. 

Isn‘t it a little difficult to have the most ethical Congress in history when you‘ve got Bill Jefferson serving as a Democrat with a committee assignment?

PRESS:  First, Tucker, I want to say, I‘m a Democrat.  OK?

CARLSON:  Yes.

PRESS:  I‘m not going to let you rain on our parade.  And I just want to make this point.

I want to say, in reflecting what John Boehner said today, and what Nancy Pelosi said...

CARLSON:  Right?

PRESS:  ... this is day to celebrate, for all Americans to celebrate. 

History was made today, and I think you should at least recognize that at the beginning of this program. 

CARLSON:  History was made?  You know what, let me just recognize in the beginning...

PRESS:  It is a great day for America.

CARLSON:  ... I couldn‘t be lest interested in the fact of Nancy Pelosi‘s gender.  It literally doesn‘t interest me even a tiny, tiny bit.  It‘s 1975.  I don‘t hate Nancy Pelosi, I kind of like her.  But the fact she‘s a woman, irrelevant. 

PRESS:  But you‘ve always been....

(CROSSTALK)

CARLSON:  I love women, actually, and I live with a lot of them.

PRESS:  No, I just think it‘s a good day.  I think we ought to celebrate.

Now let‘s get to the ethics thing.  Look, here‘s the most important thing.  By the end of today, there will be in place the toughest, the most open ethics rules of any time in the history of the House of Representatives.

CARLSON:  OK.

PRESS:  No lobbyist gifts, no lobbyist travel, no lobbyist meals.  And if you put an earmark in, you have got to put your name on it so people know who‘s putting the funny money in the budget. 

CARLSON:  But why does any of that matter if Bill Jefferson, who‘s about to be indicted, is serving on a committee?

PRESS:  Because acts matter.  And that act is the first act taken by the new speaker, Nancy Pelosi, as she promised.

If you talk about wanting an ethical Congress, what counts is what the leader does—wait a minute—what the leader does, not that there happens to be one or maybe two unethical members of her party down there.

CARLSON:  Right.

PRESS:  She has done, I think, everything she can to strip Bill Jefferson of any power. 

CARLSON:  No she hasn‘t.

PRESS:  She took him off the Ways and Means Committee.  That‘s more than the Republicans did to Tom DeLay or to Bob Ney.

Yes.  It does hurt, though, if you are going to have the most ethical Congress in history, if some of your members are running around taking bribes.  I wonder why the Republicans—and I know the answer, and the answer is they‘re lame.  But why haven‘t they made more of this?  I mean, it‘s sort of—it‘s sort of an obvious irony, no?

HOLT:  Well, the Democrats do control the headlines today.  I want to say that maybe the Democrats ought to go back to just a couple of months ago with two words: Mark Foley.  You know, they should have learned the lesson then that the Republicans didn‘t, that when you have a bad apple, you probably better get it out of the bushel before it ruins the whole batch.

CARLSON:  Right.

HOLT:  I mean, today is really kind of an extreme makeover day.  They have done a great deal to put Nancy Pelosi up as something of a moderate, a Baltimore blue collar Democrat.  But this is clearly a dark mark on the record, and it‘s not a good way to get started. 

PRESS:  It is a great mark that she threw him off of the Ways and Means Committee.  He‘s got some dinky, nothing...

HOLT:  But he‘s part of the leadership.

PRESS:  No he‘s not leadership.  He was re-elected.  The problem is—do you know what the problem is that you guys don‘t understand? 

CARLSON:  The Congressional Black Caucus is pushing to keep him on a committee.  That‘s the reason.

PRESS:  No.  The problem is democracy.  And the people of Louisiana, who I think were idiots to do it, re-elected this guy to the Congress. 

There is no way Nancy Pelosi can throw William Jefferson out of the Congress, certainly not until he is indicted.  I wish she could.

CARLSON:  OK.  She doesn‘t have to throw him—she does not have to throw him out of the Congress, you‘re right.  But she does not have to give him a committee assignment, and she did because of pressure from the Congressional Black Caucus, and it‘s disgraceful.

PRESS:  This committee is nothing.

CARLSON:  Let me ask you about something she said today that I agree with.  And I actually admire Nancy Pelosi for saying this, and I wonder how you feel about it.  “Pay as you go, no new deficit spending.” 

Good for Nancy Pelosi.  That must send chills to the marrow of your liberal spine, though.

PRESS:  I love it.

CARLSON:  Really?

PRESS:  No, absolutely. 

CARLSON:  Good.

PRESS:  Let me tell you.  You know what?  Ronald Reagan convinced me way back when—OK. 

(SIRENS)

Is that Nancy?

CARLSON:  They‘re coming for you.

PRESS:  Ronald Reagan convinced me that a balanced budget is the way to go.  And the only one who has done it lately, recently, is Bill Clinton.  I think we ought to have pay as you go.  I think that‘s fiscal responsibility, and I would hope Republicans would support it. 

HOLT:  They are building their own box.  If they say no new deficit spending, then there‘s absolutely no room for all of the spending they want to do. 

And they are going to make room—and trust me on this.  They are going to try and raise our taxes. 

Today the Republican minority, one of the first things they‘re going to do is make sure that the Democrats can‘t overturn rules to make it easier to raise taxes.  And if you want to end deficit spending without cutting the spending that they‘ve promised their constituents, then they will raise taxes.

(CROSSTALK)

CARLSON:  Well, let me ask you—hold on.  Let me ask Terry one question, quickly, though.

If—and I agree with you, they will raise taxes.  However, no new deficit spending, pay as you go, it is a significant and, I would argue, very conservative principle, if they adhere to it, if they keep to this promise.

How humiliating is it that for the Republicans who were, after all, in charge of everything until about 15 minutes ago and didn‘t do this? 

HOLT:  Well, it is a strong challenge.  And it‘s one of the Republican tenets.

Deficit reduction has been one of the successes the Republicans were able to ride in the ‘90s.  They held Bill Clinton accountable and they put spending restraints in place that they abandoned over time.  They need to get back to the basics, they need to prove to their Republicans in the conservative base that the deficit does matter.  It does. 

PRESS:  Democrats will show the way on fiscal responsibility.  Mark my words. 

CARLSON:  All right.

Coming up—we‘ll see—President Bush maintains his lonely stance on Iraq and his latest (ph) cooperation with Congress.  Are his chances of actually getting what he wants better or worse than a snowball‘s chance in hell?  We‘ll tell you.

Plus, South Dakota senator Tim Johnson‘s condition remains grave.  He‘s reportedly many months from a return to active service.  What does that mean to the balance of power here on Capitol Hill?

We‘re there.  We‘ll be right back.

(COMMERCIAL BREAK)

CARLSON:  Not every member of the new Congress is new to Congress, of course.  There are members who are practically institutions within the institution.  One of them is the Democratic congressman from New York, the honorable Charlie Rangel, now chairman of the House Ways and Means Committee. 

He joins me.

Mr. Chairman, congratulations.

REP. CHARLIE RANGEL (D), NEW YORK:  Good to be here.  Thank you so much. 

CARLSON:  So you are now in a—you now have control of the conference room that until moments ago had Dick Cheney‘s name on the door.  Is that right?

RANGEL:  I don‘t know whether the Republicans really put his name on the door, but they sure gave him the office.  But his lease expired.

CARLSON:  How does it feel?  Did he leave anything behind?

RANGEL:  No.  As a matter of fact, a lot of the things in that room were taken away from the room.  It was bare.

But, you know, he shouldn‘t have been here constitutionally.  His duties and responsibilities on the Senate side—and I feel very strongly, not from a Rangel Democratic point of view, but from the history of the Ways and Means Committee, the first  and only committee, 1789.  To me, that tradition of having our own hearing room and not turning it over to the executive branch really meant a lot to me, whether it was a Democratic or whether it was a Republican vice president. 

CARLSON:  Speaking of the Senate, are you—as a longtime ardent opponent of the war in Iraq, are you shaken and dismayed by the news from the Senate side that Senate leaders, a couple of them, at least, are open to the idea of adding more troops? 

RANGEL:  I am disappointed.  But I tell you this, the American people are way ahead of the House and the Senate, and when the House starts holding its hearings, you don‘t expect that we‘ll be doing anything dramatic about cutting the funds and undercutting our brave men and women over there.  What we will be doing is having hearings, just some basic questions. 

Mr. President, what is a surge?  How many people can we lose in the surge?  Can we have a military victory?  What is this victory that you are talking about?  If it‘s not a civil war, what will you call it?

The American people are going to put a stop to this war.  And when they stop looking for the 40,000 soldiers, you won‘t be hearing Rangel screaming “draft.”  They‘re going to have to do it.

CARLSON:  But wait a second.  I mean, the American people voted, as you just said, for Democrats out of their dissatisfaction with the war in Iraq.  How betrayed are they when Carl Levin gets up or Harry Reid, the Democratic leader in the Senate, and says, before the president even calls for troops, they agree that they‘re for it?

I mean...

RANGEL:  That doesn‘t mean—one or two Democrats or Republicans can say what they want.  I say the people have spoken, and for the first time, there‘s going to be oversight.  I don‘t think the American people expected us to come back in.  We just got sworn in a couple of hours ago.

CARLSON:  But that‘s not much oversight, if the Democratic leader in the Senate preemptively agrees to the president‘s plan.  I mean, that‘s not oversight.

RANGEL:  What you‘re talking about is rhetoric.  That has not happened.  And believe men, I think the American people will send a signal. 

And I know that we in the House—because I don‘t like talking about the other body.  They‘ve got different rules, they think differently.  But in the House of Representatives, where the people govern, for the first time we are going to have oversight, we‘re going to have hearings. 

I hear that the president is going to ask for an additional $100 million to add to the $500 million.  Believe me, we‘re going to find out what he has done with the other money before we even think about this $100 million. 

CARLSON:  It will be interesting. 

RANGEL:  It sure will be.

CARLSON:  Chairman Charlie Rangel of New York.

Thank you.

RANGEL:  Good to be here.

CARLSON:  And we‘ll be right back. 

(COMMERCIAL BREAK)

CARLSON:  One seat was notably empty as the Senate opened its 2007 session today.  It was that of Tim Johnson, Democrat from South Dakota, who remains hospitalized following emergency brain surgery last month.  Doctors say his recovery will be slow and he is facing many months of physical therapy before he can go back to work. 

In the meantime, what does his absence mean for the Senate, where Democrats hold a very narrow 51-49 seat advantage?  Not much, according to Majority Leader Harry Reid, whose spokesman said, “The bottom line is his absence will have very little impact.  It has nothing to do with the reorganization.  In the end, you are still looking at 60 votes to pass anything of significance.  We‘ll be able to deal with this, no problem.”

Here with me again is our panel—Bill Press, author of the “How the Republicans Stole Religion,” and Terry Holt, Republican strategist and former senior adviser to the Republican National Committee.

Welcome to you both. 

PRESS:  Tucker, yes?

CARLSON:  What do you mean, no problem?  I mean, this is difficult, obviously, because everyone wishes Senator Johnson the best.  And everyone, I think, is upset by his illness.

However, the people of South Dakota deserve some representation.  And at some point, are Democrats going to have to be honest and say, if he can‘t serve, we need an actual voting senator?

PRESS:  I think what Harry Reid‘s spokesperson was talking about is, remember, I think it was Ben Franklin who said about the Senate—the difference between the Senate and the House.  That the House is the cup with the coffee in it, the hot coffee, and the Senate is the saucer where you kind of cool it down before you drink it. 

The Senate doesn‘t move as fast as the House.  They have very few votes.  They have very few votes that are decided by one vote.

So, I think what he means is, while we all wait for Senator Johnson to get back, that the business of the Senate will go forward, for the most part, and, you know, the seat will be ready for him when he‘s ready.

CARLSON:  It‘s pretty cynical though, isn‘t it?  I mean, here you have...

(CROSSTALK)

PRESS:  No, it‘s not cynical at all.

CARLSON:  You‘re talking about how important democracy is, and one man, one vote, and everybody gets representation.  And here, a man unable to serve, but his seat is of all importance to the Democrats, so they ignore it?

PRESS:  Tucker, I think what we all should be doing is wishing for Senator Johnson‘s recovery.  I know you do, but I don‘t think this is a real big issue.

I‘ll just point out, if you need to get partisan, that Senator Karl Mundt, a Republican from South Dakota...

CARLSON:  Not partisan?

PRESS:  ... was out—had a stroke, and was out for four years.

(CROSSTALK)

CARLSON:  I mean, that was long before I got on the scene.

PRESS:  No, no, no.  But Senator Johnson hasn‘t been absent for, you know, one day of this 110th Congress.  So I don‘t think we ought to be dumping on him. 

CARLSON:  I‘m not dumping on him.  And I‘m not the one who said “No big deal,” the most callous thing I‘ve heard today.  In fact, it was Harry Reid‘s spokesman.

Are Republicans, do you think, Terry, going to make a big deal out of this? 

HOLT:  No.  I think that this isn‘t really a partisan issue.  That any party with as many elders as there are in the United States Senate has to be sympathetic to this.  I think that Republicans are wishing Mr. Johnson the best with his family.

CARLSON:  Of course.

HOLT:  And at the end of the day, I mean, Johnson is a pragmatic and fairly conservative Democrat. 

CARLSON:  Yes, he is.

HOLT:  He‘ll be missed for his pragmatic, conservative approach, more so than the vote at this point.  And remember, the Senate, in anything you do, it takes 60 votes.  If the Democrats want to raise taxes, they‘re going to need 60 votes to do it in the United States Senate.  And we‘re a long way from that point in the process. 

PRESS:  Terry really wants Democrats to raise taxes.  And they‘re not going to do it.

CARLSON:  Well, let‘s go back to sort of the news of the day, which is the shattering, not simply of the glass ceiling, Mrs. Pelosi told us today, but the shattering of something called the marble ceiling, something I was heretofore unaware of.  I didn‘t know there was a marble ceiling, but she‘s broken it.

Why is it significant—and let‘s be very specific now, Bill—that a woman is speaker of the House?  I‘ve asked this question every day and not gotten a good answer.  How will she govern differently as a woman?

PRESS:  Well, first of all, I think it‘s significant because over half of Americans are women, over half of American voters are women.  This is the woman who has achieved the highest position of power in the history of the United States.  That, in and of itself, I think, says it all.

I have to tell you, Tucker... 

CARLSON:  I don‘t know.  What does that mean?  I mean, most people are right-handed.  I mean, they don‘t—how does a right-hander represent them better? 

PRESS:  No, no, no.  Let me tell you something, Tucker.  Maybe you have a hard time, and maybe I do because we‘re men.  OK?  But I‘ve talked to women today since Nancy gave her speech, and I‘m not saying this is partisan either, who were in tears, who were really moved, who were inspired. 

CARLSON:  Then I challenge you to explain what that... 

(CROSSTALK)

PRESS:  Little girls are going to look at Nancy Pelosi and say, this is a role model for us and it‘s very important. 

CARLSON:  OK.  You can‘t dismiss it with role model and say, oh, it‘s important.  Like what does that mean?  Why is that important?  It‘s not enough to say it‘s important...

(CROSSTALK)

PRESS:  It mean that is a woman can go to the top, Tucker.

CARLSON:  Right?

PRESS:  It means a woman can go to the top of House—of the House of Representatives.  That is very significant.  And if you don‘t grasp it, I‘m sorry.

CARLSON:  I guess as a member of the younger generation, that never even occurred to me, a woman couldn‘t.  I never even thought for a second a woman was incapable of being speaker, or a president, or an astronaut.  I mean, it never even occurred to me.

HOLT:  And Nancy Pelosi is not the speaker of the House because she is a woman today.  It‘s because she is the most partisan person in the House of Representatives since Tom DeLay. 

She held her party together, she held them in lockstep.  She ruled their partisan conference with a—with a sharp knife at certain points.  And so she is there because she‘s tough and she knows how to do a political fight.  And she‘s a tough lady, and that‘s why she‘s in that job, not because she‘s a woman. 

PRESS:  I agree with that.  She‘s a very skillful leader and politician.  And she proved it.

But Tucker, you know, when a woman is president of the United States, that‘s going to be a big deal.  Short of that, having a woman as speaker of the House of Representatives is a big deal.  And if you don‘t think so, you ask the women who are out here watching this show.

CARLSON:  OK.  OK, it‘s enough to observe and recognize it‘s a “big deal,” that people are in tears about it.  It‘s not unfair, it‘s not mean to ask why specifically it‘s significant that she is a woman.  And every time I ask the question, they say, “You don‘t like women.”  I‘ve got three daughters, I‘ve got a wife.  I love women.

I want to know why it matters.

PRESS:  I gave you the answer.  You weren‘t listening.

It matters because for the first time a woman achieved that.  It means that women have more hope, more promise, more reality of achieving their best in the workplace... 

CARLSON:  I think that‘s absurd.  I think anybody under 35...

PRESS:  ... or in politics.

CARLSON:  Anybody under 35 assumes—it‘s not even a question—assumes that a woman can do anything.  I mean, it‘s not even a question.

HOLT:  I‘m sure that it means something because it‘s easy to make that analysis and to write that headline.  But ultimately, she‘s going to be measure don whether or not she can get legislation passed by this president. 

PRESS:  Of course.

HOLT:  Whether or not she can hold a very fractured conference together.  And whether or not she can raise taxes under...

PRESS:  Well, I want to come back, though, to what your friend, John Boehner, said today.  And I thought it was a very eloquent statement, and I thought it took a lot of—a very graceful statement for him to make. 

He said, coming back to what I said at the top of the show, this is day for all Americans to celebrate because for the first time a woman is taking that gavel.  John Boehner said it.  I say it.  I think he‘s right.

CARLSON:  I think it‘s one of the stupidest things I‘ve ever heard.  And notice the—the hostility one encounters when one presses beyond the bumper sticker, beyond the talking points to explain what it means.

Does it mean—I heard someone on our air today say this is significant because she will bring more color in her outfits to the body.  I mean, literally, I heard somebody say that.

PRESS:  Well, that‘s silly.

CARLSON:  I mean, I don‘t know.  Why don‘t we treat her—why don‘t we treat her—how‘s this—how‘s this idea?  Why don‘t we treat her as a human being rather than as a woman or an Italian-American or the daughter of the mayor of Baltimore?  I mean, that‘s all irrelevant.

PRESS:  Believe me, she‘s not going to get any breaks as a woman. 

CARLSON:  Oh, yes she—oh, come on. 

(CROSSTALK)

PRESS:  She‘s not going to get any breaks.  Republicans will be tough on her as they would with anybody else.  And they should be.  But the fact that she the first woman means something, Tucker. 

HOLT:  And I‘ll tell you, it is fundamentally different to run against a woman.  And even in this day and age, if you are a campaign manager, you have got to figure out a way to define that person without some of the tougher barbs that you would normally run against a guy.  And I think that‘s part of—part of the American...

CARLSON:  Maybe in the end I‘m more liberal than both of you, but I look at Hillary Clinton and I don‘t see a woman.  I see, you know, a United States senator who wants to be president.  I don‘t see her through the lens of her sex at all.

PRESS:  Let me ask you two quick questions.

CARLSON:  Please.

PRESS:  Has a woman ever been speaker of the House of Representatives, ever? 

CARLSON:  No. 

PRESS:  All right.  Is a woman speaker today?

CARLSON:  Yes.

PRESS:  All right.  There you go.  That‘s why it‘s significant.

CARLSON:  OK.  I mean...

PRESS:  It‘s a milestone.

CARLSON:  Every snowflake is different, but I don‘t celebrate the arrival of each one.  I mean, what does that mean?  That doesn‘t mean anything.

PRESS:  Yes it does.  Celebrate Nancy Pelosi.  Just relax, Tucker.  It will do you good. 

CARLSON:  Oh, relax.  I love this.

PRESS:  Celebrate Nancy Pelosi.

CARLSON:  Soon you‘ll start telling us, you can‘t handle a strong woman.  You‘re intimidating.  Give me a break.  I love strong women.

HOLT:  Yes, come to my house if you love strong women.

CARLSON:  Exactly.  God, come to my house.

Coming up, the immigration debate rages all over this country.  But in Washington, it merits barely a mention as the new Congress convenes.  What‘s going to get done?

Plus, 2006 was a tough year for the man known as Bush‘s brain, but the word is Karl Rove has his swagger back.  What else does he know that we don‘t know?

Answers coming up.

(COMMERCIAL BREAK)

(MARKET REPORT)

CARLSON:  Lots of smiles and back slaps on the Democratic side of the isle here on the Hill today.  Noticeably less jocularity among Republicans though.  The new minority stripped of the power they‘ve held since 1994.  Joining me now with the view from the Republican White House is the director of the White House‘s Office of Management and Budget, former Congressman Rob Portman.  Congressman, thanks for coming on.

ROB PORTMAN, DIRECTOR OMB:  Well thanks for having me on.

CARLSON:  Do Republicans—or does the White House specifically think, in real life, this is a Congress it can work with?

PORTMAN:  I hope so.  The president said yesterday, he is eager to reach out and work with the Congress.  He talked about some specific issues like balancing the budget, getting rid of wasteful earmarks, but also working with the Congress on immigration, health care, education, there are lots of issues where we need to work together. 

CARLSON:  What did you think of Nancy Pelosi‘s line, pay as you go, no new deficit spending?  That warmed my conservative heart.  I‘m sure you felt the same way.  Can they keep to that promise?

PORTMAN:  Pay as you go would be great if it focuses on spending.  Our concern is that too often when the Democrats talk about pay as you go, they mean pay as you go on the tax cut side.  We need to keep the tax cuts in place.  We should not be putting road blocks up on tax cuts because tax cuts, in fact, are what is helping to keep the economy moving strongly ahead. 

But absolutely, pay as you go on the spending side, in fact, we would go further than what Mrs. Pelosi is talking about and actually apply it to the day-to-day and annually appropriated government spending, not just the mandatory spending. 

CARLSON:  But Republicans didn‘t go further during the 12 years they had Congress, or at least—you now, during the last six years, they‘ve got a reputation, earned I think, as big spenders.  Do you regret that?  

PORTMAN:  Well, the last couple of years we did a little better job.  As you know, that sort of spending, which is the non-security, again, annually appropriated domestic spending, we actually did pretty well.  This last year we had it—the president‘s budget was at a freeze, in other words, no increase.  We ended up just below inflation.  And this year, it looks like with the Democrats there saying they‘re going to live with the Republican budget, it will be just below inflation. 

So we‘ve done a little better job the last couple of years.  We now need to build on that.  If we do that, keep spending under constraint and continue to have the economy grow, and therefore have receipts continue to come in strongly, as they have the last couple of years, we can get to a balanced budget. 

CARLSON:  But can you actually keep to that pledge, pay as you go when it comes to entitlement spending?  I mean, don‘t you have to deficit spend in order to fund entitlements? 

PORTMAN:  The way is Mrs. Pelosi is talking about is that it‘s new entitlement spending that would be subject to the pay as you go rule.  What the president has said is the unsustainable growth in entitlement spending, the important programs of Medicare, Medicaid and Social Security, will not be there in the future unless we begin to make changes now to address them.  That‘s why he has proposed a bipartisan commission right away to look at it.  That‘s why, as you know, he‘s been way out front of Social Security reforms. 

So the president is saying short term, we are in better shape thanks to a growing economy, which is part is thanks to the tax cuts, by the way.  And let‘s take advantage of that.  Let‘s balance this budget while we can.  That positions us better for the longer term challenge, which is taking on these entitlements.  The president thinks we ought to get busy right now, working on a bipartisan basis to make small changes in the entitlements now that will have major changes in the out years, to be able to sustain these programs over time. 

CARLSON:  What‘s the most profound lesson the White House learned from last November‘s Democratic sweep? 

PORTMAN:  Well, as the president said yesterday, he heard what the voters were saying.  Among other things they were saying, we want Republicans and Democrats to work together to find common ground, but also cut out some of the wasteful and unnecessary spending.  That‘s why the president took on earmarks in a very direct way yesterday.  And that‘s why the president is talking about let‘s get together and let‘s balance this budget, because he did hear that message loud and clear from the voters. 

CARLSON:  All right, OMB Director Rob Portman from the White House, thanks a lot. 

PORTMAN:  Thank you Tucker. 

CARLSON:  I appreciate it.  Well, of all the many, many problems facing this country in the wake of the Democratic victory, none are more profound than immigration and particularly the war in Iraq, and yet neither one is explicitly addressed in the 100 hour agenda unveiled today here on Capital Hill.  Why is that?  Here to tell us Bill Press, Terry Holt.  Why is that, Bill?  Democrats win on the war in Iraq.  I‘ve been saying this for a week, but I would love to know the answer.

PRESS:  Let‘s be honest.  You cannot solve the war in Iraq, you can‘t not solve the immigration problem of this country within a hundred hours.  There are things you can do within a hundred hours, the lobbying reform, raising the minimum wage.  Those two issues are going to take a lot of time and a lot of work.  And so don‘t expect it within 100 hours, but they are definitely on the agenda.  Iraq is high on the agenda, and immigration will be as well. 

CARLSON:  Why not though, Terry—Bill makes, I think, a fair point that you can‘t, and you wouldn‘t want to attempt to solve, even address profound issues that huge in 100 hours, obviously, but couldn‘t you at least have like a symbolic resolution at the very beginning, if you‘re the Democrats, saying, we disapprove of the course of this war and we want to pull out as soon as possible, or something like that. 

HOLT:  I think there‘s tremendous pressure from the liberal wing of the Democratic party to go after the war in some way, even if it‘s just a symbolic way.  but the Democrats are in a terrible situation here.  There is no agreement in their caucus about what to do about the war and I think that that‘s one of the reasons why they won‘t address it.  They need to get the low hanging fruit, the things that they can pick off easily in the first 100 hours, to demonstrate that they‘re in control. 

They‘re also in another dangerous place.  And that is that the American people, at this point, believe that the Democrats are in charge.  They believe that the Democrats can change Washington.  So I think that there‘s a huge risk for the Democrats by ignoring the elephant in the room.  They are demonstrating to the American people that there‘s very little that they can really do to lead on this issue. 

CARLSON:  Well the Democratic left is right, though.  I mean, I have almost no sympathy for them most of the time, but they are telling the truth when they say, all that matters, from the world historic view anyway, is Iraq.  That‘s the issue.  They are right, aren‘t they? 

PRESS:  It is the biggest issue, but I have to take—disagree with Terry here.  This is not a Democratic problem.  Under the constitution, the president is the commander in chief.  It is George Bush‘s war.  He started it.  He‘s got to find a way to end it.  What Democrats will do—it is a difficult position.  They will put as much pressure as they can on the administration to change direction. 

(CROSS TALK)

PRESS:  Let me finish my point.  Nancy Pelosi said today that what Democrats are for, and they said that, is a new direction, to start bringing the troops home within the first four to six months.  That‘s their position.  They can‘t do it though until we find out what the president is going to propose. 

CARLSON:  Is that the Democratic position?  I mean, I‘m not sure.  That is Nancy Pelosi‘s position.  She represents the left, activist wing of the party.  I‘m not criticizing her, but on Iraq, she is to the left of many, many, many in our caucus. 

HOLT:  And on the other side is Hillary Clinton, who remains a hawkish conservative when it comes to winning the war in Iraq.  Again, this goes to a fundamental problem, a weakness the Democrats have had since 2001.  They have never had a coherent approach to how to fight and win the war on terror and now that they are in charge in the Democratic Congress, they are going to be at odds with themselves on this issue. 

PRESS:  It is just not true.  Harry Reid, Nancy Pelosi, Steny Hoyer, Dick Durbin, they are the leaders.  They have all said one position, change direction, bring the troops home starting within four to six months and turn it back to the Iraqis.  That is a unified position.  Now ...

CARLSON:  Wait, but that is a position that is broad as to be meaningless. 

PRESS:  It is not -- 

CARLSON:  -- Bush on down is for winning and bringing the troops home.  Let‘s get to specifics.  Let‘s get to the surge, because this is what matters.  The actual concrete policy changes, which we‘re about to see, one is the president‘s proposal we send, indeed, more troops to Iraq, 20,000 or more.  Apparently, as I said a minute ago to Mr. Rangel, who was here, Harry Reid, the leader in the Senate, is going to be for that.  Now, that‘s not a position that people who voted Democrat, by and large, have.  They just don‘t agree with that. 

PRESS:  No, you‘re right about that and let me tell you something.  I think either Harry Reid misspoke or he is dead wrong.  I‘ll tell you one thing, Harry Reid could not get the support in the caucus of the Senate, United States Senate, the Democratic caucus, for that position.  The Democrats in the Senate are against any more troops in Iraq, right across the board. 

HOLT:  But the chairman of the House Intelligence Committee, Mr. Reyes of Texas, said, the moment he was elected chairman of the Intelligence Committee, that he wanted more troops in Iraq.  So this is going to be a food fight in the Democratic Congress. 

CARLSON:  He also doesn‘t know the difference between Sunni and Shiite, so right, there were some problems.  But let me ask you about immigration.  The nightmare position—the nightmare confluence of events for those of us who are really worried about illegal immigration is a Democratic takeover.  Because you have the Democratic party, almost as left wing on the subject as President Bush is.  They are in agreement on this subject.  They want amnesty for 12 million illegal aliens in this country, and they are going to get it, aren‘t they? 

HOLT:  Well, it‘s going to be a really hard fight.  Because I‘m not sure that the battle lines have been drawn yet on this.  Their were terrible problems with the McCain/Kennedy bill in the last Congress, the one that most Democrats embraced.  They are going to have to decide whether or not they are for giving illegal immigrants Social Security dollars, I mean, our rare and diminishing Social Security fund could go there. 

(CROSS TALK)

HOLT:  And I think that he is going to have to continue to work with Republicans to find common ground on that.  Because he is going to need his Republican friends on this to make sure that this isn‘t a horribly bad bill, or the Republican party is going to be in trouble. 

PRESS:  I‘ll just say, Republicans lost their chance to fix this problem.  Now it‘s up to the Democrats, and I think what they‘re going to do—I believe what they‘re going to do, they‘ll adopt President Bush‘s program.  Because it is the right way to go, which is strengthen the border, yes.  Enforce the immigration laws, yes.  And then you have got to have some ladder to citizenship for the five or 15 million, however many are here, and have been here five years, supporting their families. 

HOLT:  Ultimately the president makes a critical point, and that is that this economy, this strong, growing American economy, has always relied on immigrants, and we need to find a way to accommodate people that want to come in and move up the economic ladder, and continue to strengthen our country.  So the president‘s overall goals on immigration are very Republican goals, and I think there‘s a way to get that across. 

CARLSON:  They are very corporate goals.  The goal is to create or maintain a serf class, that does work at lower wages than Americans are willing to do. 

HOLT:  My Irish ancestors came over here to build railroads and work at coal mines.

CARLSON:  Yes, but did they send their money back to Ireland?  I don‘t think they did.  They didn‘t wire their money, with the help of the U.S.  government, we help immigrants wire their money back to Latina America. 

PRESS:  Some of them do, but most of them are here.  They have families.  Their kids are in school.  They have jobs.  They are paying taxes.  Let me tell you, Democrats will pass an immigration bill and George Bush will sign it. 

(CROSS TALK)

CARLSON:  After petroleum sales, what is the single largest source of foreign currency in Mexico?  I‘ll tell you, it is your house keeper sending money home.  I‘m not attacking your house keeper.  I‘m being serious though.  It is immigrants here, most of them illegal, sending money back.  Now, I‘m just telling you, that‘s not the behavior of someone who wants to be a part of this country in the long term.  It‘s not. 

PRESS:  Yes it is.  Once they get married, once they have a family, then they are here and they want to stay here.  Ronald Reagan recognized this problem back, I think it was in 1986, whatever, and George Bush recognizes it today. 

CARLSON:  Well rich people love it.  Because It‘s cheap labor for rich people.  Big business loves it.  It‘s cheap labor for them.  It‘s working class Americans who get screwed in this.  How do they not?  Why aren‘t your labor allies up in arms over this, I wonder? 

PRESS:  I‘ll tell you what the labor allies are doing, the smart labor allies are doing, they are organizing the immigrant labor force.  They are going to the meat packing plants, they‘re going to Wal-Mart, they‘re going to the janitorial services and they‘re organizing them and bringing them into the labor movement.  That‘s what the SEIU was doing, and that‘s what they ought to be doing, Tucker.  It‘s not just people who are cleaning your house. 

CARLSON:  No, I‘m aware of that.  And I‘m not in any way—look, I admire illegal aliens for coming here.  People working hard, I admire them.  They work harder than I do.  I think they are great people, by and large.  I am not attacking them as people, at all.  I am merely saying, this is all for the convenience of the wealthy.  It is.  And they are the ones who benefit.  And I want to know why organized labor isn‘t standing ...

HOLT:  What about the millions of people who want to come to America and make a better life for themselves just like our ancestors did.  That‘s what America is. 

CARLSON:  I don‘t think they have a right to do it. 

HOLT:  The Statute of Liberty means something to these people to this day and it should mean something to us.  And yes, we should secure the boarders first.  No illegal immigrants, obviously, but our country was founded on immigrants.  It is going to grow because of immigrants.  And we need to be cognizant of that. 

CARLSON:  Well, I like immigrants.  I‘m not arguing against immigrants at all.  Again, I think they are really decent people.  I just think we should be able to control when they come. 

PRESS:  Here‘s what you don‘t like.  You don‘t like the Democrats are going to get credit for this, Tucker. 

HOLT:  That‘s what I‘m upset about.

CARLSON:  OK, coming up, the winning party goes to the parties and the Democrats are gearing up for a school night humdinger, the sordid details, which we have just around the corner, from a man who knows them. 

(COMMERCIAL BREAK)

CARLSON:  The man behind all of Washington‘s whispers.  He is Paul Bedard of US News & World Report, Washington Report, in your case Washington Report.  So, Nancy Pelosi, the rest of us look at the new speaker giving her speech and we listen to the words.  There are things that we don‘t know.  Tell us what they might be. 

PAUL BEDARD, “US NEWS & WORLD REPORT:  She wore purple today. 

CARLSON:  Yes she did.   

BEDARD:  Not because she like‘s Barney, but why?  It‘s the color of the suffragette movement. 

CARLSON:  Seriously?

BEDARD:  Seriously.  It was scripted that way.  It is supposed to have meaning and it does have meaning.  Other things about Nancy Pelosi. 

CARLSON:  So she wants women to have the vote, she is saying?  Just a little joke, they have the vote, yes, they do. 

BEDARD:  Other things about Nancy Pelosi that we‘re learning today.  She gave House speaker, former House Speaker Denny Hastert a little hide away, which is a very special thing to get.  They are in the House and the Senate and there are all these little offices where you can kind of step away, take a breather, do your business, take a phone call, and it‘s not normally given to the other party.  It‘s just kind of a thank you for all you‘ve done. 

CARLSON:  Well that is nice.  That‘s a genuine show of bipartisan kindness. 

BEDARD:  One piece of symbolism, another piece of symbolism, because she‘s a big environmentalist—She‘s from San Francisco—she wanted her limousine to be a hybrid.  They don‘t make hybrid Suburbans, so she has asked them to get one of these new Ethanol 20, which none of us really have.  They have them out in California.  So it‘s, you know, just another little thing where she is trying to push through personal example.   

CARLSON:  Why have a limousine at all?  Why not a Honda Prius? 

BEDARD:  Way too small for the speaker of the House. 

CARLSON:  Well, I don‘t know, if you care about the environment ...

BEDARD:  It‘s security.  We have to keep these people safe from the terrorists. 

CARLSON:  You had said a minute ago that John McCain fearing Newt Gingrich?  Can this be real? 

BEDARD:  McCain is the front runner by a mile, right, and he‘s the probable winner.  He owns that conservative lane.  Yes, he‘s a little bit of a maverick, but he owns that.  Romney‘s trying to get.  Even Giuliani is trying to change his positions to get in.  The McCain people say he owns it.  He will be fine with it, but what if Newt Gingrich got in.  You know, Gingrich has been talking about coming in later in the race, if he doesn‘t believe there‘s someone essentially good enough to run.  So he could really draw in those conservatives. 

CARLSON:  Meaning someone as good as Newt Gingrich, that‘s a high bar.  I‘ll tell you where I fall.  To be at good as Newt Gingrich believes he is, I mean, you have to be good. 

BEDARD:  Well, I think so.

CARLSON:  So do they—Do the McCain people really think that Gingrich is going to get in?

BEDARD:  That‘s the one person that they are a little bit worried about.  Not so much Romney because they are seeing him doing contortions over abortion and gay rights, and Giuliani having his own problems right now.  So it‘s Gingrich is the one that could take those conservatives. 

CARLSON:  Do you take Romney, as a Democrat Bill, do you take Romney seriously? 

PRESS:  I take him a lot more seriously than I take Newt Gingrich.  I mean, I find Newt Gingrich‘s platform the strangest I‘ve ever heard in presidential politics, which is a year from now, if there‘s nobody else out there, yes, I‘ll do it.  You know, if everybody else stumbles and falls, yes, then I‘ll jump in. 

CARLSON:  You don‘t give him honesty points for that?

PRESS:  No, I think it‘s stupid to tell the truth. 

BEDARD:  Well maybe Al Gore could say the same thing and they could both run against each other. 

PRESS:  I think whoever does it is a bad policy, but you really have got to want it.  You really have got to go out there and fight for it and beg for it to get it.  But I think Romney, look, he has had a great career.  He‘s movie star handsome.  He wasn‘t hated as governor of Massachusetts, even by the Democrats.  He‘s a serious contender, very serious.   

CARLSON:  Paul, is it your impression that he has convinced conservatives he is one of them, Mitt Romney? 

BEDARD:  I think so, you know, he‘s spent the last several months reaching out to conservatives, giving speeches to them.  They like what they hear.  Yes, they have difficulty with his former position on abortion and gay rights, but hey, we can all change.  And he speaks well.  They like him.  They are still a little bit worried about John McCain.  You know, they still feel squirrelly about him.

CARLSON:  Amazing.  As a McCain fan, Bill, do you think McCain is a liberal? 

PRESS:  You know look, you and I were McCainiacs, right, in 2000.  But now, I think this McCain surge, I think the McCain surge is going to help - - is going to hurt, really hurt John McCain.  He is going in the exact opposite direction of the rest of the country right now, and most members of his own country, and I think that‘s suicidal. 

CARLSON:  I disagree with John McCain‘s position on the war.  Look, I‘m with you in that his position does not make sense to me.  However, doesn‘t he get points that people like, I don‘t know, Harry Reid don‘t get, because he is standing up and speaking what he really thinks, taking a genuinely unpopular position, not a kind of weasely, on the hand, on the other hand, position? 

PRESS:  Well, I‘ve heard that argument, but it seems to me when 85 percent of the American people are saying we want to go that way and McCain is saying, no we ought to go that way, they‘re not going to give him credit for going the wrong way.  I don‘t buy it. 

CARLSON:  All right, thank you gentlemen. 

BEDARD:  Thanks.

PRESS:  Tucker.

CARLSON:  Paul Bedard, “US News & World Report.”

PRESS:  Happy new year.

CARLSON:  Bill Press, thanks guys.

With more on the days events on Capital Hill, we turn now to our old friend Willie Geist. 

WILLIE GEIST, MSNBC CORRESPONDENT:  Hello Tucker, you look good out there in Washington.  Let me say, first of all, we want to give a little bit of special recognition to Democratic Senator Robert Byrd, sworn in today for a ninth consecutive term.  He was first sworn in January 3rd, 1959.  There he is.  He turns 90 years old today.  That was 48 years ago he was first sworn in as United States senator.  And let me just say Tucker, the closest margin of his victory since 1959 was this year, when he won by a mere 30 percent.  So, they are closing in on him Tucker. 

CARLSON:  Maybe next time they‘ll come closer. 

GEIST:  Just stop running against the guy already, enough, right.  Well, you know Tucker, with all the attention focused on Nancy Pelosi and the House of Representatives, you may have forgotten they were swearing people into the Senate today as well.  Bill Clinton stood at the side of his wife, Senator Hillary Clinton as she was sworn in there by President Dick Cheney. 

President Clinton spent part of his time in the Senate deflecting reporters questions about Hillary‘s intentions to run for president, and later led a standing ovation when she took her oath of office.  And there are all the Clintons there.  Tucker, how do you think Bill looks there as the doting husband, as the wingman, the second banana?  What do you think? 

CARLSON:  I think wingman is the right term.  It was interesting, though, to watch him charming Dick Cheney.  Whatever you think of Bill Clinton, and I don‘t think much, he is honestly one of the most charming people in the world, and you could even see Cheney, man with the heart of stone, looking kind of amused and happy to be with him. 

GEIST:  He looked kind of like a mediator in between Hillary and Cheney there, didn‘t he.  He plays that role pretty well.  We‘ll see him, maybe he‘ll be the first husband. 

Well, yesterday we told you that Minnesota Congressman Keith Ellison planned to be sworn into the House today on a copy of the Koran that once belonged to Thomas Jefferson.  Well he did it, as you see there, today.  Ellison and Nancy Pelosi each put a hand on the centuries old book for Ellison‘s unofficial swearing in, which is really nothing more than a photo op.  Ellison is the first Muslim member of the United States Congress. 

Tucker, as we mentioned yesterday, you have to admit this is a very clever move.  It‘s like. all right, the Koran is not good enough, maybe Thomas Jefferson is good enough.  You know, like how do you argue with that? 

CARLSON:  It‘s pretty hard to attack Thomas Jefferson.  That‘s a good point.  It was very clever.

GEIST:  A smart move and he did it today.  Congratulations to him.  Well there was also some news from the executive branch today.  Harriet Myers, best known as President Bush‘s failed Supreme Court nominee, announced she will resign from her position as White House counsel.  That will be effective later this month.  Myers was nominated by Bush in October of 2005 to replace Sandra Day O‘Connor on the court, but she dropped out when her qualifications were questions. 

Myers has been a friend and adviser to the president since her days as his personal lawyer in Texas.  Now, Tucker, they said, you know, she had been there for six years.  She got worn out.  It was her time to go and they congratulate her, but doesn‘t it strike you as a little odd that they are expecting subpoenas, they are expecting indictments, things coming down the pike, and this is the point at which they say, you know what, it‘s time for you to go.  I mean, I don‘t know is that an indictment of her in some way?

CARLSON:  I don‘t know.  I will take issue with your characterization of her Supreme Court bid, that her credentials were questioned. 

GEIST:  Yes.

CARLSON:  She was revealed as not having any qualifications, whatsoever. 

GEIST:  Questioned by you, I guess.

CARLSON:  I was in the position where I had to actually read a bunch of columns that she had written for, I believe, the Texas Bar Association.  Your average youth group minister in deepest, darkest Oklahoma, writing in crayon, is a better master of prose than Harriet Myers.  I‘m not trying to be mean.  I‘m sure she‘s a very nice person.  But her Supreme Court decisions would have been just comedy.  I think, it‘s probably best she was not put on the bench. 

GEIST:  Yes, probably not the most impressive.  They haven‘t announced a replacement yet, but Harriet Myers has been sent on her way.   

Tucker, any other final thoughts as you walked around Washington today?

CARLSON:  Yes Willie, a final though did occur to me actually, as I was looking at the new speaker of the House, Nancy Pelosi, whom, I don‘t mean to give a hard time to.  I like Nancy Pelosi, perfectly nice person, but she said, and I wrote it down here somewhere, because I was so struck by it—she said, I want to welcome the children, because in the end, it‘s all about the children, and I just want to agree. 

GEIST:  I actually saw that and thought of you when she said that.  I thought you might have an opinion.  She waved and winked at Tony Bennett.  That was my favorite part.

CARLSON:  Thanks Willie.

GEIST:  All right Tucker.

CARLSON:  I appreciate it.  That does it for us.  Thank you for watching.  Up next, “HARDBALL” with Chris Matthews.  See you tomorrow. 

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

END   

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