updated 1/24/2007 11:59:33 AM ET 2007-01-24T16:59:33

Guests: Ed Schultz, Peter Fenn, Charlie Black, Al Sharpton, Ann Schroeder

TUCKER CARLSON, MSNBC HOST:  Welcome to a special Tuesday here on Capitol Hill.

Tonight at 9:00 local time President Bush will deliver his State of the Union address to a nation, a Congress that stand in staunch opposition to his foreign policy.

The president is expected to spend at least half of his time talking about Iraq.  It‘s a subject on which he has almost no credibility.  The war in Iraq has been a tragic mistake, conceived in error and prosecuted poorly.  Bush will be judged harshly by history for starting it but that does not mean that he is wrong now.

George W. Bush understands the one thing that most of the rest of us have long forgotten.  It could be worst.  A defeat in Iraq, a retreat, a strategy redeployment, pick your euphemism, would make the U.S. weaker, it would make our enemy stronger, and there is no way around that.  On this question for once, Bush is right.  The irony is that it may be too late.  The public, the Democratic Party, even his fellow Republicans are so angry and so frustrated by four years of arrogance and mismanagement, they have lost the willingness, maybe even the ability to hear the president when he talks about Iraq.  They oppose him out of reflex.

That‘s understandable but in this case, it‘s unfortunate, because Iraq is a mess but yet not the beginning of World War III, and with a few more missteps, it could well be the beginning of World War III.  And we should remember that.

Well, it‘s an uphill battle for the president and joining us from the Capitol to set the scene is MSNBC chief Washington correspondent Norah O‘Donnell.  Norah, does the president have a chance to convince members of his own party who seem to be deserting him that in fact the new way forward is the right way forward?

NORAH O‘DONNELL, MSNBC CORRESPONDENT:  That‘s the challenge for the president tonight.  This is his six State of the Union Address but it is his first state of the union address before a Democratically controlled Congress.  So the president will say tonight, quote, “We can work through our differences.”

But the two strikes against him are he comes before this congress as a lame duck with only two years had left, and he comes before this congress knowing he‘s lost a lot of his political capital.  Because it‘s Democrats who are now in charge up here.

He also, according to advisers, acknowledges that he faces a very skeptical audience.  Not only the American public at large because his approval ratings are now the same level as Richard Nixon‘s but also a Congress that is not inclined to work with this president.

On Iraq is he going to defend his policy for that troop surge, what the White House calls reinforcement sent to Iraq and he is going to say that failure would be grievous and far reaching.  But really, Tucker, the White House wants to spend most of this speech on domestic initiatives.  And that‘s why the president has a new plan on energy, cutting gasoline consumption, by 20 percent in the next 10 years.  New health care initiatives.  Those are the types of things—reviving Social Security, reviving immigration.

But already we‘ve heard from Democrats up here on Capitol Hill today, they do not have much of an inclination to work with the president on those specific initiatives and in response one senior White House advisor acknowledged it is a uphill battle for him to get anything done up here.

And of course, Tucker, we know tomorrow up here on Capitol Hill, there is going to be a vote, they are going to start this vote, especially in the Senate about whether to oppose or support the president‘s plan to send these 21,000 additional troops to Iraq.  The White House acknowledges they have lost a number of Republicans, including Senator John Warner, former chair of the Armed Services Committee.

The White House thought that maybe they would gain some ground today with

General Petraeus who is up here on Capitol Hill.  He is going to be the new

commander on the ground in Iraq.  General Petraeus delivered the White

House message, he said if you vote against, essentially opposing this troop

surge plan, that sends the wrong message to our troops

We‘ll see if that influences some of these Republicans but already Democrats telling me today they think they have at least twelve Republicans that will vote with them tomorrow when there is this key vote on Iraq.  Tucker?

CARLSON:  Norah O‘Donnell on Capitol Hill.  Thanks a lot, Norah.

O‘DONNELL:  My pleasure.

CARLSON:  Well, here with pre-speech analysis and discussion of the other major political news of this day, and there is a lot, Republican strategist Charlie Black, and Democratic strategist and contributor to the Hill‘s Pundit Blog Peter Fenn, and the host of the nationally syndicated “Ed Schultz Radio Show”, Ed Schultz himself.  Welcome to you all.

Ed, a lot has been said today about how low the president‘s approval rating is.  Just to put it in context, here is where he stood when he first began giving these speeches back in 2002.  He gave his first State of the Union address that year.  His approval was 82 percent, in 2003 was 54 percent, following year 54 percent, 2005 50 percent, last year, 39 percent, this year, and 35 percent.  Trend pretty clear, pretty ominous for the president.

The question is, at 35 percent, do people hear you when you talk?  Does he have any chance of winning over Democrats at all?

ED SCHULTZ, RADIO TALK SHOW HOST:  I don‘t think he has a chance of winning over democrats.  But I think the Democrats are going to pay close attention to what he has to say tonight even though the ratings might not be as good as the other years that you mention.

The point being here the president is short on political capital.  He has miscalculated issue after issue.  He has got to go to the domestic issues to rally some part of his base tonight, because Iraq is not going to do it.  He is a lone wolf on Iraq right now.  He has got the zealots with him, but you know, Tucker, I am still waiting to find out on this listening tour that the president was on, just who did he talk to that tipped him over that we have got to go with another 20,000 troops.  I hope he explains that tonight.

CARLSON:  I disagree with you on that.  I am the opposite of a zealot on Iraq, I am a skeptic, I am actually a bitter skeptic that did not vote for Bush in 2004 because I hate the war, and yet I think we need not to lose.  I mean, I actually—I cannot believe I am saying this.  I am with the president on this, as someone who has been opposed to him for four years.

PETER FENN, DEMOCRATIC STRATEGIST:  But not losing is what, Tucker?  We are not talking about a military situation here.  That‘s gone.  What we are talking about .

CARLSON:  Well, here‘s the choice.

FENN:  What‘s the choice?

CARLSON:  We know that a strategic redeployment, the phrase Democrats who are too cowardly to concede what it really is are using, in place of defeat, which is the reality, we know that equals an ignominious defeat for the United States.  There is no way around that.  That‘s all you need to know.

FENN:  You are defining it wrong.  The question is what is the best situation in the Middle East?  The best situation is for two generations of war to keep on going?  No.  The best situation is to have a government there, however they work it out, without our being in occupying power and creating more terrorists every day than we kill.

CHARLIE BLACK, REPUBLICAN STRATEGIST:  We are not the occupying power.  We are trying to help them establish enough security this year that they can work it out among themselves, and have a relatively stable, relatively peaceful government.  But Iraq is—as the president says, this is the central front and the war on terror.  The international war against Islamofascism which we will be fighting for a generation.

If we lose Iraq, we lost on the central battlefront.

SCHULTZ:  Americans don‘t believe that either.

CARLSON:  There is no doubt no matter what side you are on, that‘s the central question of this age, is what happens in the Middle East from here on out.  Why, then, is the president, as Norah just said, going to spend the bulk of this speech talking about domestic issues, that conservative Republicans don‘t like and the Democrats don‘t accept.  What is the .

BLACK:  He had a nationally televised address about his new way forward, his new policy two weeks ago, so tonight he is goring to spend about half of time talking about the international scene, the war on terror, and Iraq will be part of that, and my guess is he spends five or seven eight minutes on Iraq, but he will be put in context.

But what the American expect, war or no war, they want the president and Congress to work together on big issues, on big reforms.  That‘s what he is going to propose.  He is going to sincerely offer to work with the Democrats to solve big problems.  Immigration, education and health care.

SCHULTZ:  Redeployment is not a defeat.  Redeployment is a strategy.  Because if you take the Americans out of the equation, now you are going to give them an opportunity to have a political solution, because we are going to prove to them that we are not there to get their country, we‘re not there to get their oil, we tried everything but redeployment.  It‘s a strategy.  It‘s not defeat.

CARLSON:  Once we display good will, that will prevent Syria, Iran, Saudi Arabia, all the countries that border Iraq from becoming involved in the war in Iraq?  No, the second we leave, our vacuum will be filled with people who don‘t like us.

SCHULTZ:  That‘s a theory, Tucker.

CARLSON:  You really think that won‘t happen?

SCHULTZ:  Everything we have tried so far has not worked, that‘s the key.

FENN:  Let‘s put this into context, too.  It‘s draining lives, it‘s draining resources, it‘s draining away from the domestic agenda.  This president, if he came to us tonight and said look, we are going to work together to really solve the health care problem.  This president now is going to come with us with a tax increase, Charlie.

CARLSON:  Don‘t tell me you‘re against.

FENN:  Well, I am for taxing.

CARLSON:  Wait a second .

FENN:  He is going to destroy New York City‘s health care system, and he is going to tax the middle class, and here is a president that is that - it is not going to help the 47 .

BLACK:  Those of us who have a Cadillac high priced insurance policy might have to pay more .

FENN:  Charlie, he‘s going to tax .

CARLSON:  One at a time.

Hold on a second

If Barack Obama or Senator Clinton came out tomorrow and said—we ought to tax these—Charlie just said these Cadillac health care plans in order for the little guy to have insurance, you would say amen and because Bush is saying you‘re saying this is outrageous.

FENN:  I would say we ought to tax the Cadillacs - and I drive one, by the way, we ought to tax the folks that can afford to pay the taxes.

SCHULTZ:  Does the president have credibility on health care?

FENN:  You know who are going to get taxed?  Companies, small businesses are going to get taxed.

SCHULTZ:  Tucker, in six years, health care premiums have gone up 87 percent, and this president has stood on the side line telling Americans to go get a health care savings account.  That‘s a plan?  The man has no credibility when it comes to health care.

CARLSON:  Don‘t you think it is—I understand all the political calculations here, there is an election looming in a year and a half, however, if Bush says something reasonable, it doesn‘t help Democrats to pretend it‘s unreasonable merely because he said it?

SCHULTZ:  Democrats said today they are willing to work with the president

CARLSON:  But they‘re not.

SCHULTZ:  No, I think they are.  I think they are willing to do it.  I think they are wrong to do it because he has 18 months to get something done but the numbers are undeniable.  The other thing is half the bankruptcies in this country come from unpaid medical bills.  This guy has been a no show when it comes to health care, and now, State of the Union speech number six, he has got a plan.

BLACK:  Well, you have got two years to get something done on it, and you have Democrats in Congress, in control of the committees, and the process, so he is saying let‘s sit down and work together on it.  Are Democrats against reducing by 20 percent the use of gasoline?

CARLSON:  My prediction, they will scoff at him even as he parrots their own positions.  But we‘ll see.

We‘re going to take a quick break here.  Coming up the Scooter Libby prosecutor asserted in open court today that Vice President Dick Cheney was, quote, “deeply involved in the case.”  What else did the prosecutor say and what does that mean, if anything?

Plus the Hillary Clinton media blitz is on?  It‘s a wise strategy because it‘s free but how is she going to pay for the rest of her presidential campaign?  That‘s another matter.  Senator Clinton makes major money moves.  We will talk about them when we come back.

(COMMERCIAL BREAK)

CARLSON:  President Bush has a hit or miss track record speaking publicly, ranging from the brilliance of his post 9/11 oratory to something far less on other occasions, as you know.  He is on the spot tonight and to analyze what is to come, we welcome one of the truly great public speakers of our time, former and perhaps future president candidate, the Reverend Al Sharpton.

REV. AL SHARPTON, FORMER PRESIDENTIAL CANDIDATE:  Thank you, Tucker.  How are you?  Happy New Year.

CARLSON:  Happy New Year to you.  I have not been a great Bush supporter the last couple years.  But tonight is one of those times where I feel sorry for him because it seems to me the animosity he faces is so profound that no matter what he says the Democrats will attack him as deceitful or unrealistic or deranged.  Is there anything that Bush could say to win you over?

SHARPTON:  Well, I think that first of all most State of the Union addresses are mostly state of the president.  And I think this president‘s state where you say he will face a lot of animosity, he is invested in that.  Let‘s remember that this is his sixth State of the Union address.  The first five, many of them we saw the republicans in a very mocking way, standing up applauding every line.

Now he has got to come back and reap what he has sewn.  Fifty million Americans with no health insurance, he is going to make a health proposal.  Yes, he has a credibility problem because he has not tried to work on a plan that would resolve that in the past as premiums have gone up.  Yes, there is going to be those that are going to want to definitive withdrawal from Iraq, and he cannot come in, and use the threat of Iran in a way that is reminiscent of the way he used the threat of Iraq.  So he has very hot water but he turned the temperatures um up on himself.

CARLSON:  There are many Democrats, I would say the vast majority of Democrats would like to see an immediate withdrawal from Iraq, I think that‘s fair to say, and the president will never concede on that point, ever, I think for the next two years he is going to be in office.  The Democrats could do something about it, though, since they control Congress, they could defund the war, if they believed the war was unwinnable and every day we spend in Iraq is just furthering the tragedy, they would act on it, but they‘re not going to.  Is it because they don‘t believe what they‘re saying, they‘re deceitful or they are just too cowardly to do something about it?

SHARPTON:  I think different Democrats have different reasons.  I have clearly have said from the beginning we should withdraw.  I said we should not go in.  There are others in the Democratic Party for different reasons that disagree.  But I think that everyone agrees now that it was a mistake, but the president.  And I think that some of the animosity he faces is this kind of inflexible stubbornness that is costing lives.

We are not talking about an academic debate here, Tucker.  We are talking about over 3,000 Americans killed, we‘re talking about many more thousands maimed and we‘re talking about Iraqi citizens dying.

CARLSON:  But Democrats now have the power to do something about it.  They are no longer impotent.  They control this co-equal body of government, they control the United States Congress and they could end the war immediately by cutting off the money, they could do it, you know perfectly well they could do it and they are choosing not to, and I am not sure why.

SHARPTON:  I don‘t know why.  I think that she should, I think whatever he says tonight in some way, shape or form could energize the public to continue to grow in that movement to ask the Democrats to do exactly that.  I think that the president‘s supporters have tried to frame it that we would be abandoning troops, when that is not the case at all.

I think we are abandoning troops to continue to put them in a situation of danger with no end in sight and no real strategy to resolve the matter.

CARLSON:  OK.  Well, Jane Harmon of California, who would have been the head of the House Intelligence Committee, should have been, probably, said the other day to a reporter from MSNBC, look, we would love to cut back on funding for this war, because we believe the war is wrong and counterproductive, but we are afraid if we do Karl Rove will accuse us of being unpatriotic or not supporting the troops.  In other words, we know what‘s right but we are afraid of being called names so we‘re not going to do it.

How can you support a party so Machiavellian?

SHARPTON:  Well, first of all, you named a person in the party, I think when you look at the party, there are differing views and I think that the majority of the party, and for that matter, the majority of Americans spoke in 2006, they spoke to a much more aggressive withdrawal strategy than indicated by one Democrat.

So that‘s not the party.  I think many of us are trying to say that there is new people in the party that have a much different position, and hopefully that position will prevail to save American lives.  There is nothing more patriotic than to make sure you are not wastin American lives and shedding unnecessarily American military blood.

CARLSON:  Has someone told Hillary Clinton that.  I noticed she is still one of the more hawkish members of the Democratic caucus.  She has support from lots of liberals, including you, does she know that she is supporting this unnecessary war that is killing Americans?

SHARPTON:  I think that, first of all, Senator Clinton and the rest of those that are going to run in 2008 will be debating these position.  Senator Clinton came back from her trip to Iraq and Afghanistan, and did lay out a withdrawal proposal, something that she has not done before.

I disagreed with her as I did the other contenders in their voting for the war.  They said they listened to George Bush and intelligence that was given.  So even there, I think that despite our disagreement, they are not the ones that were saying there was evidence of weapons of mass destruction and imminent danger, they were going by what this president that will be speaking tonight misled this country into believing.

CARLSON:  Yeah, they believed it.  I guess they are naive.

If you‘ll just wait right there, Mr. Sharpton, we will be right back.  Coming up, two years from now we will be gearing up for a speech from the new president.  And just who will that be?  Could it be someone sitting in the chambers tonight?  Likely will be.  Reverend Al Sharpton will be back to weigh in on that in just a minute.

(COMMERCIAL BREAK)

CARLSON:  We are preparing for President Bush‘s State of the Union address about two and a half hours from now.  Back for more analysis of the speech under the field of ‘08 presidential candidates is a man who knows a lot about giving speeches as well as running for president.  He is of course the Reverend Al Sharpton.  Reverend, thanks for sticking around.

SHARPTON:  Thank you.

CARLSON:  Here is my very simple question, why would anybody who is not related to her or working for her vote for Hillary Clinton over Barack Obama.

SHARPTON:  I think that first of all, before we get to who is going to run, we have got to deal with what is going to run?  What is going to be the program.  I later this week am going to be meeting privately with Senator Clinton, with Senator Obama, with Senator Dodd and others.  I think that I am concerned about getting past all the media sizzle and saying what are we really saying?  What are you really saying about the war and withdrawal?  What are you really saying about health insurance and public education, and the criminal justice system and the things that are near and dear to many of us.

And I think once we understand the what we can deal with the who.  The media deals with a lot of personalities.  I think that whoever wins these primaries and becomes the candidate and ultimately becomes president is going to have to do it based on some concrete, real messages that touches where people live.  And I think that all of this personality tabloid politics is fun and games now but it‘s not going to .

CARLSON:  Wait.  I actually, I believe it or not am interested in the policies these candidates are espousing, and of the three frontrunners, I think you have to say at this point the front runners on the Democratic side, Hillary Clinton, Barack Obama and John Edwards, and it‘s John Edwards that has by far the most detailed plan for Iraq, and yet he is not getting support of the mockers (ph) in your party, the money people in your party, the people who kind of run the Democrat Party.  They are throwing their weight behind Hillary Clinton.  And I guess I don‘t understand that.

SHARPTON:  I think that John Edwards has come out with some very concrete on the war and poverty.  I respected the fact he went to the Ninth Ward in New Orleans and announced his candidacy.  I want to hear what everybody has got to say.  I think that the mockers as you call them and the finances are not always the ones that will decide the nomination.

I must also say, I was one that was skeptical of Senator Clinton when she came to New York.  She has proven to be a very competent senator.  She has proven that she could work with all sides of the state.  I have not always agreed with her.  I don‘t know if I want to support her for president.  But I don‘t think that she earns the dismissiveness that you give.

CARLSON:  I am not dismissing her for a moment.  I just know that her campaign is built more on calculation than it is on conviction.  I refer you a piece this morning in the “Politico,” a brand new and very excellent political paper out of Washington written by reputable people, that explains her attempts to win over black leaders preemptively.

They are afraid, the Clinton campaign is afraid when they get to South Carolina in the primary, it‘s a pretty heavily black electorate there, and Barack Obama could do pretty well.  They fear.  So they are trying to tie up people like you.

And my question is, what exactly are they offering black leaders or any leaders in return for their support?

SHARPTON:  First of all, the presumption is that they are offering something that is unethical .

CARLSON:  I am not suggesting that for a second.  I am not suggesting that.

SHARPTON:  The only thing that I have heard anybody say is that they want discussions—open discussions around the issues that are near and dear to us.  I think that that is black leaders, white leaders, polka dot leaders and undecided leaders, and I don‘t think anybody should take any community for granted and write them on or off when there is nothing to offer.

What they should be offering is how do we deal with double digit unemployment in black America, and how we deal with not having access to capital.  How we deal with the war, how we deal with inferior education in many parts of the country.

I mean, while personal (ph), you go into South Carolina, a state I am very familiar with, my radio show is on every day, I talk to people there, and they are not concerned about all of these allegations against people, they are saying who is going to stand up with the policies that matter to me, and who has the track record to make me believe that they can deliver.  The rest of is that for talk show hosts.

CARLSON:  I don‘t know.  I don‘t think that‘s entirely true.  But we will see.  Barack Obama, in 2008, that‘s the answer and you know it.  I am sorry, I am being told we have to go, and I think I could win you over if given another two minutes but we don‘t have it.  Reverend Al Sharpton, thanks a lot, reverend.

SHARPTON:  Thank you, Tucker.

CARLSON:  Coming up, the man who will sit over President Bush‘s shoulder tonight has been described in open court has having been, quote, “deeply involved” in the Valerie Plame leak case.  What are the implications of that assertion, proven or not?

Plus no one has ever gone directly from City Hall to the White House but Rudy Giuliani just made a move that indicates that he may try.  Can America‘s mayor make the big step?  Stick around.

(COMMERCIAL BREAK)

CARLSON:  Still to come, many of the president‘s audience tonight are hoping they‘ll get to deliver their own State of the Union Addresses in a few years.  We‘ll discuss the state of the 2008 presidential contest.  That‘s all coming up in just a minute.  Right now, though, here‘s a look at look at your headlines.

CONTESSA BREWER, MSNBC NEWS ANCHOR:  I‘m Contessa Brewer.  Here‘s what‘s happening.  In excerpts of tonight‘s State of the Union Address released by the White House.

President Bush seeks to deflate strong opposition to sending more troops to Iraq. The president is also expected to announce proposals to expand health coverage and slash gasoline consumption.

U.S. military officials say a helicopter owned by the private security firm, Blackwater USA, crashed today in Baghdad killing five American civilians onboard. An Iraqi official says that helicopter was shot down.

State Farm Insurance has reportedly agreed to settle hundreds of lawsuits by policy holders whose homes were devastated by Hurricane Katrina. And person with knowledge of the settlement says it‘s expected the agreement will end a criminal investigation of allegations that State Farm fraudulently denied claims after the storm.

And a man helped who organize the Watergate break in that lead the greatest scandal in American political history, has died, Howard Hunt‘s says he died of pneumonia; he was 88 years old. Back to Tucker. 

CARLSON:  Today‘s opening arguments in trial of Vice President‘s Cheney former chief of staff Scooter Libby and prosecutor Patrick Fitzgerald stunned observers by stating unequivocally that Mr. Cheney was, quote, “deeply involved in the outing of Valerie Plame as a CIA operative.”  Furthermore, Mr. Fitzgerald said the vice president was the first to reveal Mrs. Plame‘s line of work to Scooter Libby.  And that, before he met with the FBI about the case, Libby wiped out instructions from Cheney.

Joining me now for analysis of these accusations, Republican strategist Charlie Black, Democratic strategist Peter Fenn, and nationally syndicated radio show host, Ed Schultz. 

Welcome to you all.

Why should I care, Ed, whether Dick Cheney was involved in the outing of a woman that was perfectly legal, that has no direct baring on this ludicrous criminal case? What does that have to do with anything?

SCHULTZ:  Well, I think it plays into a particular pattern that we have seen from the White House, of manipulating stories, manipulating the message, and running over anybody that gets in their way. Why should we be surprised if Dick Cheney is in the middle of this?

CARLSON:  But that‘s not what happened. Because we know that, none of it—in fact, Valerie Plame‘s identity was not outed by the White House, in retaliation.  We know it was given away by a guy who is actually opposed to our Iraq strategy, Dick Armitage, chief aide to then Secretary of State Colin Powell.

SCHULTZ:  It‘s early.  It‘s early.  There will be more testimony, and Fitzpatrick does not want to look stupid on this thing.  I‘m sure he has done his detailed homework. 

(CROSS TALK) 

SCHULTZ:  And we have a long way to go here.

(CROSS TALK) 

BLACK:  If he was involved in it.

SCHULTZ:  This story is going to take a long time. 

BLACK:  Wait a minute, if he was involved in it—involved in what?  Joe Wilson was a documented liar, he was lying about the nature of the assignment and what he found in Niger.  And who sent him there in the first place. 

UNIDENTIFIED MALE:  Did he lie more than the 16 words in the State of the Union?

BLACK:  If everybody in the White House had simultaneously said, the guy‘s wife works at the CIA, that‘s their prerogative. They were trying to send the press away from—

SCHULTZ:  Charlie, this is—

BLACK:  A phony store.

(CROSS TALK) 

FENN:  This was the administration that was against leaks.  That goes nuts about leaks, right up here on Capitol Hill.  This is a president of the United States who said anybody—anybody in this White House, in this administration, whose caught leaking the name of an agent will be fired. He said that.

BLACK:  They didn‘t leak the name of an agent.

FENN:  Hey, come on, they all leaked. It was all—

BLACK:  They were waving reporters off a phony story. That was a service to the press.

FENN:  It was not a phony story when they took an undercover agent—

BLACK:  She wasn‘t undercover!

(CROSS TALK) 

CARLSON:  Wait, wait, wait, can I ask a simple question though?  Here is what makes this different, OK?  I am not defending the Iraq war, I‘m not defending the hypocrisy, real or perceived of the White House.  I am merely saying this is not a criminal matter.  And for Democrats who sat by through the 1990s and watched their president hung out to dry, and all his acolytes, subpoenaed, day after day.  To look upon this and say, oh, good, I‘m against the Iraq war—

(CROSS TALK) 

FENN:  Fitzgerald proved that.  Let the prosecutor do his job.

CARLSON:  You want to give prosecutors the power to destroy people‘s lives because they might find some.

(CROSS TALK) 

FENN:  Tucker is right about one thing. 

CARLSON:  One?

FENN:  The fact is—well more than one.

CARLSON:  Thank you.

FENN:  But I‘ll just point out one thing.  Look, the whole debate about the legality of President Clinton not telling the truth about sex is about as important as this.

I will agree with you but—

CARLSON:  This is the vice president former chief of staff lying about his schedule!

(CROSS TALK) 

FENN:  No, no, no.  My point on this is not about that, it‘s about the promise that this president made that anybody who is caught leaking within this administration—

CARLSON:  So Scooter Libby should go to prison?

BLACK:  It‘s not leaking to wave reporters off bad information. Joe Wilson is a documented liar.

(CROSS TALK) 

FENN:  Charlie, I don‘t agree with that.

SCHULTZ:  Was the president doing that when the NSA story broke?  And how they were doing this in the NSA thing so they could protect American lives, and all of a sudden he wants to cooperate because there has been a shift in Congress. I mean, it‘s either going to protect the American people or it‘s not.

(CROSS TALK) 

CARLSON:  Hold on, gentlemen. 

I want to get to the bottom of Mrs. Clinton‘s recent behavior. And for that matter, John McCain‘s.  Here are two people, John McCain and Hillary Clinton—I‘ll make it bipartisan—who are adamantly in favor of campaign finance reform.  McCain has basically made his reputation as a champion of campaign finance reform. 

And now it looks likely, in both cases, certainly in her‘s, they‘re going to ignore spending limits in the upcoming presidential election.  Basically blow off the whole campaign finance reform system—just so they can win.

Are you going to stand by and allow this, or are you going to add your voice to the chorus of people saying—enough!

SCHULTZ:  Well, based on McCain‘s performance with your friend Tim Russert last Sunday, he‘s dazed and confused.  I don‘t know where John McCain is on anything right now. As far as Hilary is concerned. It‘s about winning. They are going to bend the rules, they‘re going to do whatever they can. 

CARLSON:  You cannot mean that as a compliment?

SCHULTZ:  Well, the fact is, the Clintons know how to win elections.

And if they think they can raise enough money and get away from the public trough, they‘ll do just that.

CARLSON:  Well, why not just kill people?  You don‘t—

(CROSS TALK) 

SCHULTZ:  If you can out fund them!

CARLSON:  If you do what it takes to win? 

(CROSS TALK) 

UNIDENTIFIED MALE:  Bush has never done that?  Come on, Carlson.

CARLSON:  I‘m not for it, though.  I‘m not defending the Bush—

FENN:  It‘s an option, you can go either way on the thing.  The problem that they have now is that the limits are so low that no one can run a general election campaign any more.

BLACK:  You‘re right, Peter.

FENN:  And win this race.   No, I‘m serious, unfortunately.

BLACK:  Serious contenders will all forgo the option of public finance.

CARLSON:  Charlie, you have been a around a lot of campaigns. Can we just all concede that federal attempts to limit our free speech and our campaign money contributions are all just ridiculous. They are never going to work.  Can we just give up on campaign finance reform, please? 

BLACK:  Well, I wouldn‘t give up entirely.  I think reasonable contribution limits are acceptable. And I think full public disclosure of what you receive and how you spend it.  That‘s all you need really is the disclosure, these days. But Congress did not change the law to keep up with the changing times and the cost of campaigns, the cost of advertising. 

(CROSS TALK)

BLACK:  So, all the serious candidates will forego public finance.

SCHULTZ:  If you want real reform, you have to get into the media and you have to mandate the media give equal time to candidates that don‘t have the money.

(CROSS TALK) 

I really believe that.

CARLSON:  You want to—you say this as someone is, of course, part of the media, as a radio talk show host.  You want the federal government come in and tell you what to put you on your air?

SCHULTZ:  What is wrong with that?  That means I could run for office. 

You could run for office.

CARLSON:  What‘s wrong with that?!

SCHULTZ:  Have you to be a millionaire to run for office.

(CROSS TALK) 

BLACK:  Air time is NBC‘s private property. You can‘t force them to give it up.

(CROSS TALK)  

UNIDENTIFIED MALE:  It is the licensing of the broadcast property.

BLACK:  They pay for the license.

FENN:  I know, but not on political campaigns.

SCHULTZ:  And they sell advertising on it, too.

FENN:  The point now is that we should have learned something the last 25 years with campaign finance reform, it does not work.

CARLSON:  Of course it doesn‘t. 

FENN:  The water will just spread out—

CARLSON:  So in the few minutes we have left—very quickly, let me start with you, Charlie, it looks like former New York Mayor Rudy Giuliani, apparently selling off part of his company to reduce conflicts, should he in fact run for president, he is going to run?  And is he an actual contender?

BLACK:  He‘s running.  And he‘s a very serious candidate. I think, Mayor Giuliani, along with Senator McCain and Governor Mit Romney are the top tier on the Republican side. 

UNIDENTIFIED MALE:  Yes.

BLACK:  And all are going to be—

CARLSON:  So, you don‘t buy the idea that he‘s too liberal on social issue to compete?

BLACK:  I do not think it‘s impossible for him to be nominated. He is very popular in this country, and viewed as a strong leader in a time of war.

CARLSON:  Peter, what do you think?

FENN:  I think that he is about as much chance as being president as I do winning the New York City Marathon. That‘s what I think.  His company is a big problem, big problem.  Wait until they go there. His personal life, he is going to have wives coming after him. And the most important thing—

(CROSS TALK) 

FENN:  I know, but it‘s crazy, but it happens.

SCHULTZ:  Well, forget—

(CROSS TALK) 

FENN:  Pro gun control, pro gay rights, pro-choice—Republican, no way.

SCHULTZ:  The first time he sells off business interests will be the first time Rudy Giuliani ever hits the moral high ground.  He‘ll never make it with strong conservatives in this country, and I think that Mit Romney or Brownback—

CARLSON:  He‘s so liberal, do you like him?

(LAUGHTER)

SCHULTZ:  No, I don‘t. I don‘t like him.

CARLSON:  Why?  I‘m having trouble pegging you down here!

SCHULTZ:  He does not have to be a liberal for me to—I just think,

the guy is not credible. I think that he good on the rubber chicken circuit

CARLSON:  His personal life is to unsavory for you?

(LAUGHTER)

SCHULTZ:  I am just saying the standards of the Democratic Party change so often it‘s hard to know.

SCHULTZ:  If he is going to run as a conservative, how‘s he going to get the vote?  He doesn‘t have the base. 

BLACK:  Stay tuned, he‘s a serious candidate.

CARLSON:  Coming up!  For the first time in his experience, President Bush will face the Congress with his opposition sitting directly over his shoulder. What to watch for from Speaker Nancy Pelosi and the rest of the famous faces, when we come back.

(COMMERCIAL BREAK) 

CARLSON:  No matter the substance or the response to tonight‘s State of Union,  the event will offer riveting theater.  The president under political siege, the Congress controlled by the opposition party and the country mired malaise about the war in Iraq.

Here with the people to watch tonight, columnist Ann Schroeder of Politico.com.

Anne, welcome.

ANN SCHROEDER, THE POLITICO:  Well, thanks, Tucker.

CARLSON:  What should we be watching for tonight?

SCHROEDER:  I definitely think the big gossip of the State of the Union tonight is the newly inaugurated D.C. Mayor Adrian Fenti is not sitting with the first lady—which he is definitely breaking precedent in doing so.

My colleagues who covers Fenti, who is Amy Dolittle, was telling me today that Fenti has made—well, first of all, Anthony Williams, who was the mayor, always sat with the first lady, whether it was Hillary Clinton or Laura Bush.

But Fenti, when he was campaigning he made the big stink about how D.C. does not have voter representation rights in Congress, and that he would never sit in the box with the first lady, if he gets elected.  So now he to eat his words.  But, luckily, Nancy Pelosi kind of swooped in and said, why don‘t sit at my box, which was totally brilliant.  And so he will still be there representing an office, while sticking with his campaign platform.

CARLSON:  So, are you saying—I mean, will his constituents be upset?  Is the president popular in the District of Columbia?

SCHROEDER:  I think, you know as well as I know that -- 8 percent, right?  He got 8 percent voter, right, Tucker?    

CARLSON:  I think it‘s about 8 percent, it‘s the single-most Democratic piece of real estate in the Continental United States.

SCHROEDER:  I mean, no wonder they don‘t have voting rights in Congress.

CARLSON:  That‘s exactly right.  We hope they never get them.

So, what is happening after the speech?

SCHROEDER:  Actually, what‘s gong on right now, the Atlantic Media always has a party at the Library of Congress.  You know, it‘s palatial, it‘s five feet from every congressman‘s door.  And there is a cocktail party from 6 to 8.  It is very elegant and fabulous.  And a lot of congressman stop by, just to kind of—A, for the free food.  And talk about what Bush is going to say and what he‘s not going to say.  And what is going on. 

I mean, we should be there right now, Tucker.  I don‘t know why we are not. But you always sort of see the congressman who actually aren‘t clambering to get on TV, because those congressman are probably already on the floor waiting, staking out their claim.

CARLSON:  How early do they get there? You notice when the president walks through there, they are estimating that it will take him eight minutes from the door to the podium where he speaks, to shake hands and get kissed and all that stuff.  How early do people camp out? It‘s like a Grateful Dead show, like—

SCHROEDER:  Oh, yeah, President Bush, as Grateful Dead.  That‘s great.

No, I have actually heard many stories from, two hours, to an hour, to two and a half hours. Or that they go—they obviously have people go and kind of stake their claim for them and then they rush in at the last minute. 

At the Library of Congress party, I have actually heard congressmen say, I have to go, I am going to miss the address.  I‘m going to miss my seat.  I have to go.  So it really depends on you lackeys, if you will.

CARLSON:  Boy, it really is high school. Ann Schroeder, Politico.com. 

Thank, Ann.

SCHROEDER:  Thank you, Tucker.

CARLSON:  Now for their final thoughts on the president‘s State of the Union, just two hours from now, can you stand the suspense?  Our panel, Republican Strategist Charlie Black, Democratic Strategist Peter Fenn, host, finally of the nationally syndicated radio show, “The Ed Schultz Show”, Ed Schultz himself. 

Charlie, what do you think the president going to say different about Iraq? We began the show by noting he has to win over these Republicans who are starting to abandon him. Can he say anything new?

BLACK:  I don‘t think he will say anything different about Iraq.  He‘ll summarize the speech from two weekends ago and put it into context of the overall, global war on terror.

The message tonight, is the president sincerely reaching out to the Democrats and saying let‘s work together, and make reforms on some huge issues, immigration, education, and health care, and energy and environment. He is making the offer, and the message tonight will be, Democrats, the ball is in your court, let‘s sit down and work together and do big things. That‘s what the American people want.

CARLSON:  Peter, in their response, do you think Democrats will focus on his roster of domestic initiatives, health insurance, immigration, or will they zero in on Iraq?

FENN:  I think they‘re going to focus domestic stuff, too. Obviously you have a State of the Union response by a Vietnam veteran whose son is in Iraq right now.

CARLSON:  Right, who is part of the surge, actually.

FENN:  Yeah, he will speak for five minutes about that. I think the biggest problem the president has, Tucker, is he will hang the Republicans with the speech, on immigration, they‘re not going to have any part of it.  They don‘t like it.  They don‘t like the tax increase on this health care plan much.  They don‘t like the spending on education, so, you know, he will have more of a problem with some of the Republicans than he is going to have with some of the Democrats.

CARLSON:  Did you hear that, Ed? He is raising taxes, he‘s spending more on education, and taking away your SUV.  I mean, this guy—he is the Nancy Pelosi guy all of a sudden.

SCHULTZ:  The fact is, the president tonight will have to do a real tap dance when it comes to No Child Left Behind. He is going to talk about No Child Left Behind. I will tell you, Tucker, I have traveled this countryside, and I have seen a lot of rural communities saying where is the money. 

A lot of local taxes have gone up, No Child Left Behind has been the biggest fraud committed on the American taxpayer in the history of this country. When Ted Kennedy went along with it, he was never told that Bush was not going to fund it. The have short-falled every state budget. And they have to do something about that.

CARLSON:  That‘s the pattern.  I see a pattern.  These Democrats, who I give credit for being pretty intelligent.  Time and again, are outwitted by that wily George W. Bush. 

(LAUGHTER)

He convinces them to vote for things they don‘t really understand.

SCHULTZ:  Well, he didn‘t outwit them, because the House and the Senate now belong to the Democrats.

CARLSON:  They do!

SCHULTZ:  Did he outwit them there, too?  He convinced—

(CROSS TALK) 

He convinced them to vote for it, they had no idea!

SCHULTZ:  Well, those days—turn it around, are coming up.  And I‘ll tell you what, the No Child Left Behind is going to get the funding under the Democratic Congress.  And this president has no credibility when it comes to health care.  I think they‘ll take a pass on his proposal.

FENN:  Do you think Lucy pulling the football out from underneath that we got the message now. 

(CROSS TALK) 

BLACK:  You‘re going to hear about spending restraints, balancing the budget without tax increases, and no earmarks tonight.  And you are going hear about conservative judges.  Plenty of things for the good conservatives.

(CROSS TALK) 

CARLSON:  I don‘t want to be mean, I don‘t want to pile on, but here the Republican Congress did have six years of one of their fellow Republicans in the White House, and the budget is less balanced than ever, and do they mean this?  Or is this just an effort to win back conservatives?

BLACK:  Well, 9/11 wrecked the budget. It hurt the economy and caused us to have to spend money on homeland security and the military. And the president said, OK,  let‘s try to cut the deficit in half in five years.  He did it in three.  Now he believes you can you balance the budget by 2012, and he‘s going to talk about how to do that tonight.

CARLSON:  If he is so for balancing the budget, why did he sign the prescription drug benefit?

FENN:  Charlie, did this president—

(CROSS TALK) 

BLACK:  Because the American people demand it. You could have a Democratic version of that, that was a lot more expensive.

CARLSON:  They‘re demanding to get out of Iraq, and he‘s ignoring them. I think he should have ignored him then, too.

(CROSS TALK) 

FENN:  Not only has he spend $500 billion in Iraq, and made our military weaker. But he has not spent the money, as Ed says, on education.  This president‘s policy—he‘s like now --   

(CROSS TALK) 

FENN:  Fish out of water, flip flopping on the deck right now.

SCHULTZ:  What about record debts?  What about record deficits? 

(CROSS TALK)

SCHULTZ:  What about owing the Chinese? Are we paying attention to this?

(CROSS TALK) 

CARLSON:  What exactly, I wonder, Ed, since you brought it up, is the solution to the foreign debt held by, say, China.  Like what would a Democrat—let‘s say Hillary Clinton becomes—

SCHULTZ:  We are borrowing them—

CARLSON:  Becomes president, what is she going to do in say the first quarter?

SCHULTZ:  I cannot speak for Hillary or any candidate, but I can tell you what the solution is, and it is not good for conservative ears, but the fact is they‘re going to have to roll back the Bush tax cuts.  We do not have enough taxes.

CARLSON:  That‘s going to make us less indebted to the Chinese?

SCHULTZ:  Absolutely. Because we have to make our—

CARLSON:  How‘s that?  Are they going to be so impressed that they‘ll forgive the debt?

SCHULTZ:  No, because we‘ll stop borrowing money from them, Tucker.

We owe money to Mexico. We owe money to South Korea. What is going on here?  We‘re servicing out the next generation and putting it on their backs.  We‘re not fiscally responsible.  And foreign debt is a new thing, a new equation for this country that we never had to deal with before.

CARLSON:  Well, since entitlements can obviously constitute the bulk of the money the U.S. government spends on everything, right.

SCHULTZ:  Now, don‘t throw it on Social Security and Medicare.

CARLSON:  No, no, no!  But it‘s actually true!  It‘s actually true!

(CROSS TALK) 

BLACK:  Reforming entitlements is easier than increasing taxes, and still solve the problem you‘re describing, Ed.

CARLSON:  Do you expect, any of you, the president to say something unusual about energy use? A couple years ago, perhaps it was last year when he got up, and said we are addicted to foreign oil, and did that whole Sierra Club routine.

SCHULTZ:  Well, tonight he‘s going to talk about CAFE standards, which is long over due.

CARLSON:  Right.

SCHULTZ:  And it‘s a good thing, if he is really sincere about that.  The Democrats will work with him on that, and push forward for it.  He will talk about ethanol, he‘s going to talk about clean coal technology. The Democrats are all onboard with that stuff. But the fact is he talks about a lot of stuff in the State of the Union and never does anything about it.

(CROSS TALK)

CARLSON:  Can we just stand back and acknowledge how liberal this is, just for a second.

FENN:  Hold on a second—exactly.

SCHULTZ:  Ethanol is not liberal.

(LAUGHTER)

(CROSS TALK) 

UNIDENTIFIED MALE:  That‘s corn.

FENN:  Here is the idea, let‘s see if he agrees we will take away the $14 billion we give to the oil industry. That will be a first step. 

If he does what—if he does what Arnold Schwarzenegger did in California, he will have Democrats with him, no question about it.

(CROSS TALK) 

(CROSS TALK)  What you‘re saying—what Arnold Schwarzenegger did in California, is basically just move really to the hard left. We are not going to give health care to illegal aliens, that‘s not liberal, it‘s something more.

SCHULTZ:  It‘s not moving to the left if he‘s going to save money.

CARLSON:  If Bush got up there and said I‘m going to nationalize the railroads and pass the transgender amendment, OK?  

(LAUGHTER)

In other words, I am a Green Party member now. I swear to you, Nancy Pelosi would still despise him.

UNIDENTIFIED MALE:  No, that‘s not true.

BLACK:  The issues he‘s addressing tonight are issues that are on the Democrats‘  priority list. They will have to sit down and work hard and compromise to come up with solutions. He is expending the hand tonight, of cooperation, and we will see what they will do.

CARLSON:  Is immigration going to pass, Peter?  Do you think we‘ll see an immigration conference reform bill pass?

FENN:  I think there very well might be an immigration piece of legislation passed before he goes out of office.  But I think—look, we have been kidding around with a lot of stuff here.

CARLSON:  Yes.

FENN:  But the thing that the Democrats and the Republicans have to hit, they have to do something about retirement security.  That involves Social security. Nobody is ready to step up to the plate, talk about that.  Maybe some folks will do that.

We also have to do deal with health care in this country, seriously.  And if the president puts up out table, I say let‘s talk about it. Because it is a mess; 47 million Americans are too many Americans without health care coverage.

CARLSON:  Ed, what—sum up.

SCHULTZ:  I would like to see the president acknowledge the fact that a lot of Republicans in the House have come over and voted on the six bills that have been up there when it comes to stem cell research, when it comes to minimum wage, and all of the bills that they passed so far. It‘s been an event full two weeks.

Where was the leadership of the Republican Party in the House and Senate, if all of these Republicans are turning over and voting on the proposals?  I would hope the president would acknowledge that there has been some coordination of bipartisanship in the House without his leadership for that matter.

CARLSON:  So, he should just say my party is in disarray. I just want to note that?

SCHULTZ:  I am OK with that.

(LAUGHTER)

FENN:  It is interesting.  When you have two thirds of the people that say they trust Congress to run the war in Iraq, more than the president, that‘s incredible to me.

(CROSS TALK) 

CARLSON:  That‘s when you have an American public out of control.

(CROSS TALK) 

UNIDENTIFIED MALE:  Every war is unpopular.

FENN:  My point is, you had better work with Congress.

(CROSS TALK) 

CARLSON:  We have ten seconds left.

BLACK:  What we‘re going to offer to do tonight—the president is extending the offer to work with Democrats in Congress. The ball is in their court.

CARLSON:  All right, that will do it.  That does it for us.

SCHULTZ:  Year seven, it‘s about time.

(CROSS TALK) 

CARLSON:  Charlie Black, Peter Fenn, Ed Schultz.  Thank you for joining us.

Stay with MSNBC all night. We have coverage of the state of the president‘s State of the Union. Up next, “Hardball”.  We‘re back tomorrow.  Have a great night.

(COMMERCIAL BREAK)

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

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