updated 11/13/2008 11:39:25 AM ET 2008-11-13T16:39:25

1600 PENNSLYVANIA AVENUE

November 11, 2008

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

Guest: Dan Balz, Richard Wolffe, Jay Carney, Bobby Jindal, Debbie Wasserman Schultz, Rep. Peter King, Susan Molinari, Michelle Bernard, Joan Walsh

DAVID SHUSTER, HOST: Tonight, new details about President-elect Obama's first meeting with President Bush inside the White House. Plus, Governor Sarah Palin is back and talking about Senator John McCain, Alaska, and the future of the GOP, as the Democrats take over 1600 PENNSYLVANIA AVENUE. Seventy days until the inauguration of President-elect Obama. Welcome to the show. I'm David Shuster, in for David Gregory tonight. My headline, "Great Expectations." Today, at President-elect Obama observed Veterans Day in Chicago, a new Associated Press poll out revealed the positive and immediate impact his election is having on the country's mood. Before the election, 78 percent of people said the country was going in the wrong direction, while just 17 percent said it was on the right track. Now that number has jumped nearly 20 points to 36 percent. The Obama team says November 4th provided a mandate for change, and now we're learning more about what specific changes the president-elect is pushing for. Aides revealed that Obama asked President Bush to back the request from Democratic leaders in Congress to provide the troubled auto industry with a $25 billion cash injection, and that Obama reiterated his support for a second stimulus package. But on foreign policy, some Democrats may not get the change they were hoping for when Obama actually takes office with newspaper reports today that he may follow President Bush's lead on the Iraq war and counterterrorism. Joining us now, a panel of ace reporters. Playing for the first time tonight, Dan Balz, national political reporter for "The Washington Post," along with two of our regulars, Richard Wolffe, "Newsweek" senior White House correspondent and MSNBC analyst, and Jay Carney, Washington bureau chief for "TIME" magazine. TIME's commemorative issue on the election of Barack Obama is on newsstands now. Richard, let's start with you. What did we learn from this pen and pad with John Podesta, who's running the Obama transition? What did we learn from his meeting today with reporters?

RICHARD WOLFFE, MSNBC POLITCAL ANALYS: Well, a couple of things. First of all, this is a meticulously planned group of people, just like the campaign. They are going to be entering the federal agencies and departments shortly with their own teams to review things, prepare materials for the appointees that we don't know yet. But interestingly enough, just to come back to what you teased at the top there, about President Bush and President-elect Obama's meeting, these details that have emerged have caused some friction between the two camps. And what we heard today from John Podesta was that Podesta had talked to the current White House chief of staff, Josh Bolten, and they had agreed, pointedly, I think, to move forward in a more cooperative way, which is exactly how they have been progressing. But I think that cooperation may have just been frayed a little bit by the extent of the news reports this morning.

SHUSTER: Dan Balz, do those tensions really matter though?

DAN BALZ, NATIONAL POLITICAL REPORTER, "WASHINGTON POST": Well, they matter in the short term, I think, a little bit, David. I think over the long term, they don't. I mean, look, this election was a mandate to go in a different direction than President Bush has led the country for the last eight years. That's how President-elect Obama ran the campaign from the very beginning. And that's how he won the campaign. So the idea that he and President Bush are going to be on the same page, in the same wavelength through this transition, is a little too much to expect. I think they want to be civil. I think they want to be cooperative. I think both sides know it's important to have as smooth a handoff as possible, but in a policy sense, it's not going to be a seamless change.

SHUSTER: Jay Carney, we saw today that the stock of General Motors dropped to below $3 for the first time since 1943. We also learned, of course, that Obama pressed President Bush to provide some aid to the ailing auto industry. And here's what Barack Obama said about the auto industry last Friday. Watch.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENT-ELECT: The auto industry is the backbone of American manufacturing and a critical part of our attempt to reduce our dependence on foreign oil. I would like to see the administration do everything it can to accelerate the retooling assistance that Congress has already enacted. In addition, I've made it a high priority for my transition team to work on additional policy options to help the auto industry adjust. Weather the fiction crisis, and succeed in producing fuel-efficient cars here in the United States.

(END VIDEO CLIP)

SHUSTER: Jay, what are we picking up from Democrats as far as what they want the Bush administration to do? I mean, we saw Nancy Pelosi, the speaker of the House, embrace the idea of helping out the auto industry, and perhaps some acknowledgment from the Bush administration that maybe part of the money that's been allocated can again be spent. But what exactly-where is this going to work?

JAY CARNEY, WASHINGTON BUREAU CHIEF, "TIME": Well, look, Barack Obama is not only speaking as a Democrat-and the Democrats are very concerned that the audio industry. Michigan, a very important state for Obama is exceedingly and understandably concerned about the auto industry. What they're looking for is treatment of the automobile industry that is similar to the treatment that major American banks and AIG, the insurance company, got, which is access to bailout money, because the auto industry, the big companies, the big three, they believe, are simply too big to fail, symbolically and literally, in terms of the jobs failure would cost the American economy. So I think it is a strong argument, and I expect we'll see some kind of compromise on this, because imagine an America as Barack Obama takes office where one or two of the major American automobile companies were disappearing.

SHUSTER: Dan Balz, is it a tough political task for Congress in a lame duck session to give more money to the auto industry, and also to pass the second stimulus package?

BALZ: I think it's a lot to ask. It was interesting at President-elect Obama's press conference on Friday. It was clear that while he would like to see something done in the lame duck session, it's not clear that he's going to work that hard or put too much of his own political capital on the line to get it done. I think if he could get something out of this lame duck session that would be useful, that would be fine. I think on the other hand, he doesn't want to make a lot of compromises at this point with the Bush administration if he thinks he could do something more ambitious or more along the lines that he wants to do, once he takes office. So I think those are the calculations that the Obama transition team is making at this point. If there can be consensus to get it done, fine. If not, wait until January and then move it.

SHUSTER: And Dan, do you get a sense as to what they do want to spend their political capital on right off the bat?

BALZ: Well, that's a very interesting question. And I think it's the $1 trillion question in a funny way. President-elect Obama has a very ambitious set of proposals that he put on the table during the campaign. He also now has an economy that is far, far, far worse than anything he had envisioned when he put those out on the table. So I think the question is, what will the sequencing be? What will the first priority be beyond trying to get the economy back moving, beyond a stimulus package, and perhaps aid to the auto industry? Will he move on energy? Will he move on health care? Will he move on the tax cuts that he's talked about? Will he try to do all of them quickly? Which seems very, very ambitious. His new chief of staff, Rahm Emanuel, has said in essence that a crisis like this is perhaps a helpful stimulant to doing bold and ambitious things. In other words, as he's put it, this crisis should not go to waste. And I think that some people inside the administration, the new administration, will be pushing to be as ambitious and bold as possible. But there is another argument that's going to be made inside, and that is whether this country can afford to do all that and whether this country can count on other countries to underwrite the amount of debt that that would require.

SHUSTER: And Richard Wolffe, you've covered the Obama campaign for more than a year. Do you get the sense, as some of the newspapers are suggesting, that perhaps foreign policy may take a back seat and that perhaps decisions about whether to pull out troops, that may get pushed off for a period of time?

WOLFFE: Well, I think President-elect Obama was always more cautious about troop withdrawal than maybe his rhetoric suggested. But look, this is a president to be who sees himself as a foreign policy expert. Not just sat on the Foreign Relations Committee, but studied international relations at the university. And so I think he's going to make sure he has the time to deal with this. Iraq and Afghanistan to him are two sides of the same coin. He needs to withdraw troops from one place in order to ramp up the troops in the other. So I don't think he's going to hold back on either of those issues. Any idea of this being put on the back burner I think is not true.

SHUSTER: Jay Carney, the expectations, as you know and have noted, the expectations for Obama are so high. I mean, there was this Associated Press poll on the economy and whether the new president will improve the economy. Seventy-two percent said they are confident that Barack Obama would improve the economy, 26 percent said they are not confident. Is there a risk and also, perhaps, a reward for Barack Obama with these numbers?

CARNEY: Well, what the numbers give Barack Obama on the upside is more of a sense of mandate, to do the big things and to do as many big things as possible, as early as possible, like Dan was talking about. You know, financial wherewithal provided. But the downside is that if this is a prolonged recession, the kind that we saw when Ronald Reagan took office, you could have a scenario where to years from now, Barack Obama's popularity numbers are not what they are now. And at the mid-term elections in 2010, the Democrats could be punished for failing to pull us out of what at that point would be a pretty severe and prolonged recession. So there's an upside and downside here.

SHUSTER: And Richard Wolffe, you started off by talking about some of the tensions with this meeting between Barack Obama and President Bush yesterday. Maureen Dowd of "The New York Times" made a rare television appearance to talk about the conversation between President Bush and the president-elect. Watch.

(BEGIN VIDEO CLIP)

MAUREEN DOWD, "THE NEW YORK TIMES": I'm sure he was irritated when Barack Obama tried to actually talk issues and specifics, and talk about bailing out the auto industry. I'm sure he just thought it was a photo-op where they would have small talk about the gym.

(END VIDEO CLIP)

SHUSTER: Richard, who is responsible for the leaks that came out of that?

WOLFFE: Look, the Bush White House style, I can tell you from bitter experience, is that they do not leak out private conversations. And that's clearly where the displeasure was. I would hate to put a finger on it, but let's just say, someone close to the president-elect obviously shared information that the White House wasn't ready to. And I love Maureen and would never say anything bad about her. I think there probably was always going to be some substance beyond the tea and cakes.

SHUSTER: And Jay Carney, there is a report in Politico tonight that Mrs. Obama called Hillary Rodham Clinton for a long chat on November the 5th and also talked about how to get Sasha and Malia adjusted. There is also some plans for the Obamas to sit down with the Clintons soon to talk about policy. Can the Clintons and the Obamas get together without there being drama?

CARNEY: Well, probably not, but I think that it makes eminent sense, because the Clintons did such a fine job raising Chelsea in the White House at a young age and keeping her life private, keeping her situation at school very closely held. She is a perfect example for Michelle Obama, I think, to follow. She has also consulted obviously others, including Caroline Kennedy, although that was such a long time ago that she was young in the White House. The Bush twins obviously were there, but only for a few years before they went off to college. So I think this is an area around which the Clintons and the Obamas can actually come together and without a great deal of drama.

SHUSTER: Jay Carney, Richard Wolffe and Dan Balz, thank you all very much. We appreciate it. And still ahead, as the Republican Party looks to find new life, some say there is a young southern governor who could take the party in a promising new direction. Louisiana Governor Bobby Jindal joins us. I'll ask him who is the best bet to help the Republicans find their way back to 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

SHUSTER: Welcome back. A week after Election Day, Governor Sarah Palin explained the GOP losses to NBC's Matt Lauer.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA: Perhaps the margin was going to be larger than we anticipated. And then just that anti-incumbency sentiment really that was spread across the land, and our ticket representing the incumbency, it's really no-not so much a surprise after all that the margin was as great as it was.

(END VIDEO CLIP)

SHUSTER: Was the Republican defeat inevitable? Does the party need to change? A group of Republican governors will take up these questions tomorrow when they meet in Miami, Florida. With us to look back on the presidential campaign and forward to the future of the party, and his own role in it, Louisiana Governor Bobby Jindal. And Governor, first of all, you're going to be participating in this conference tomorrow. What's your view as to why the Republicans lost? Was there a fundamental problem with the McCain/Palin ticket?

GOV. BOBBY JINDAL ®, LOUISIANA: Well, I don't think it was just about the campaign. When you look at the Republican Party, there are basically three things we've got to correct for to us start winning elections again. Number one, our actions have to match our rhetoric. The Republican Party has talked about spending discipline, cutting taxes, and yet we were defending out-of-control spending in Washington we would have rightfully criticized in the other party. Number two, we have to root out corruption within our own ranks. A week before the election, you've got our most senior United States senator convicted of federal charges. We can't defend behavior again that we would rightfully criticize on the other side. And then finally, third, and most importantly, we again have to be the party of solutions. We have to apply our conservative principles to the challenges that are confronting the American people, whether it's the rising cost of health care, whether it's the economy, whether it's international challenges. We have to show real solutions. It's not enough you can't win an election simply by criticizing the other side. Now, the good news is this-there is a map (ph) force back. And you go back to the '90s, Republican governors helped to lead the way with policies like welfare reform by supporting education, by supporting people's ability to go back to work. We were able to reduce welfare roles, reduce poverty rates. Those are the kinds of creative solutions it will take for the Republican Party to come back. Now, the good news is I continue to believe we live in a center, a moderate country, a center-right country. And I think that as long as the voters see us applying our principles to solving problems, we can start winning elections again.

SHUSTER: Governor Jindal, Governor Palin is scheduled to give very high-profile remarks at this conference that you are attending. She's also planning on having a very high-profile news conference. Will you do the same?

JINDAL: Well, I'm looking forward to going and meeting with other governors, learning from them, sharing what we've done in Louisiana. We've cut taxes, reformed the ethics code.

SHUSTER: Well, Governor, what do you make though of what Sarah Palin is going to be doing over the next couple of days in this very same conference that you're attending? What is she up to?

JINDAL: Well, look, I think it's a good-I think the Republican Party needs as many voices right now. But it's not just the messengers. It's the content, it's the substance of the message. We need our governors the to speak out. We need our leaders at the local and the state level. You know, not all wisdom is contained in Washington. And we need our congressional members to speak out as well. But I think you're going to see the states become laboratories of experimentation. I think it's a good thing that Sarah Palin is going to be speaking out. I hope all of our governors will talk about what they're doing in their states, learning from each other. The founding fathers intended the states to be laboratories of experimentation. That's a good thing. One other thing I want to add though. Senator McCain and Governor Palin, they were very gracious on election night. Senator McCain's remarks were very gracious on election night. I think it's so important. We need to support the president-elect, the new Congress. The election is over. Whether you voted for the president-elect or not, we all need to support him. We need him to be successful. We need to stand up and oppose him on principle when we disagree, but we should work together. The country is tired of partisan attacks. The campaign is over. Now's the time to work together.

SHUSTER: Well, on that point, then, wouldn't it be better for Republicans if Sarah Palin, who so many Republicans, of course, associate with John McCain's loss, if she took something of a breather, cooled down essentially, didn't have such a high profile engagement this week. Wouldn't that be better for the Republican Party in your estimation?

JINDAL: Oh, not at all. Again, I think our governors need to speak out. And I think the voters are going to be looking at substance. I know there's going to be a lot of focus and a lot of speculation on who the messenger is going to be, who the new faces are going to be. But the reality is people are looking for substance. The message is so much more important than the messenger at this point. People want out of this conference, they want to hear what a Republican governor is going to do.

SHUSTER: But Governor, you would acknowledge that there are some people who are better at delivering that substance than others, right?

JINDAL: Well, I'm biased. I think our governors are great messengers. I think that our governors should speak out. I think that, again, I think the founding fathers got it right. You know, governors have to work across party lines, they've got to balance their budgets, they've got to solve problems. It's not about ideology. It's about getting thing done at the state level. So I tend to think that governors are great messengers. But I think voters will be looking for substance, not just messengers.

SHUSTER: But, of course, there is a big ideological divide in terms of which way the Republican Party should go in the future. Here's what David Brooks has written about the GOP divide. "In one camp, there are the Traditionalists, the people who believe that conservatives have lost elections because they have strayed from the true creed. The other camp, the reformers, argue that the old GOP priorities were fine for the 1970s but need to be modernized for new conditions. Only one thing is for sure: In the near term, the Traditionalists are going to win the fight for supremacy in the GOP." Your view?

JINDAL: Well, I think you can be a Traditionalist and a Reformer. I think that it's absolutely true. When you ask voters, they'll tell you, they trust the Democrats more to control spending, to cut taxes. That tells us something is very wrong. The Republicans are not living up to our rhetoric. So, in part, it is not abandoning our core conservative principles. But I also think just like President Reagan broadened the party by winning over Reagan Democrats, we have to show the American people that our conservative principles can work on problems they care about. It's not just going back to the '70s and the '80s. It's talking about medical inflation. It's talking about the number of uninsured folks out there, working families. It's talking about investing in our crumbling infrastructure and showing how we can solve problems that matter to the American families that are worried about their nest eggs, their retirement accounts, that are worried about this economy. They're worried about the high cost of energy. So it's not abandoning our core principles. It's being true to them, but it's also solving problems that matter to the American people. We've got to show people that we've got a solution for the high cost of energy, the dependence on other countries. We have got to show voters there is an alternative to government-run health care that provides high quality, affordable health care. For mom and dads out there, they don't care about-their first concern today is not about ideology. It's about, how do I pay for my son and daughter to go see the doctor? How do I make sure I can afford their prescriptions? We need to show-and I think governors are in a great position to do this-we need to show the American people we've got solutions to these problems. And I think that's what makes this conference so important. We did it in the '90s. Welfare reform is just one example. With a balanced budget amendment that we brought to Washington. We can do it again.

SHUSTER: And yet the conference is going to be dominated, of course, as probably it should be, by a lot of Republican wondering what went wrong over the past year. You gave an interview to the NBC affiliate WDSU in which you talked about the job of the vice president. Watch.

(BEGIN VIDEO CLIP)

JINDAL: With Senator McCain's campaign this year, even when I was putting-my name was put on all those lists, I was very clear, I don't want to be vice president. I have got the job that I want. Indeed, I declined to be vetted.

(END VIDEO CLIP)

SHUSTER: Now, a lot of other possible vice presidential nominees said the same thing. But were you surprised when they actually didn't even attempt to vet you, Governor?

JINDAL: Well, no. They asked me to be vetted. They actually contacted me and asked me to be vetted. And we politely declined. I said I was honored that they wanted me to do that, but the reality is that I do have the job that I want. I've been governor for about a year now. We've cut taxes six times, including the largest income tax cut in our state's history. We've revamped ethics. Louisiana is now on the top of the list, according to the Center for Public Integrity, Better Government Association's indices. And so we've made some reforms. We've revamped workforce training, we've created thousands of new jobs. But we've still got a lot more work to do. So I was flattered when they asked me to be vetted, but I told them what I said all along, which was that I've got the job that I want. I certainly support the ticket, but didn't want to be part of the ticket. But again, I was certainly flattered that they thought of me. I was even flattered to be mentioned in the same sentence with some of those other names.

SHUSTER: Well, Governor Jindal, we're flattered that you took the time tonight to join us. And we appreciate you joining us on this program.

JINDAL: Well, thank you. Have a great evening. Thank you for having me.

SHUSTER: You too. Governor Bobby Jindal of Louisiana. And coming up next, how the current and future commander in chief honored Veterans Day.

(COMMERCIAL BREAK)

SHUSTER: We're back with a look at what's going on inside The Briefing Room, Veterans Day edition. Let's start with President Bush. This is his final Veterans Day in office, and he spent in it New York. The president spoke at the rededication ceremony for the Air, Sea and Space Museum onboard the aircraft carrier Intrepid in Manhattan. President Bush praised all veterans who have defended the country.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES OF AMERICA: Today we send a clear message to all who have worn the uniform. Thank you for your courage, thank you for your sacrifice, and thank you for standing up when your nation needed you most.

(END VIDEO CLIP)

SHUSTER: President-elect Barack Obama also paid tribute to America's veterans in Chicago. The president-elect and the Illinois director of Veterans Affairs, Tammy Duckworth, laid a wreath at the soldiers memorial near Soldier Field. Tammy Duckworth, who lost her legs in a grenade attack in Iraq, is on Obama's short list of possibilities for secretary of Veterans Affairs. Vice President Dick Cheney spent his final Veterans Day in office placing a wreath at the Tomb of the Unknown at Arlington National Cemetery. And Vice President-elect Joe Biden celebrated America's veterans in Delaware. He took part in an event at the War Memorial Plaza at the Delaware Memorial Bridge. Coming up next, 2008 was a mandate for change, but how aggressive should President-elect Obama be with his agenda? And how far should he go on issues like taxes and troop withdrawals? Lawmakers Debbie Wasserman Schultz and Peter King face off when 1600 PENNSYLVANIA AVENUE returns.

(COMMERCIAL BREAK)

SHUSTER: Tonight, defining change. Will President Obama's reflect his campaign promises? How fast and how far reaching will it be? And are his supporters in for a surprise when it come to foreign policy? Plus, Governor Sarah Palin has her say about postmortem attacks and 2012, as 1600 PENNSYLVANIA AVENUE continues. Welcome back to 1600 PENNSYLVANIA AVENUE. I'm David Shuster, in tonight for David Gregory. We start the back half with a face-off. President-Elect Obama says the economy is his number one priority. In his meeting with President Bush yesterday, he emphasized his support for governor aid to the auto industry and for a second stimulus package. For many of his supporters, a top priority must also be ending the war in Iraq, which Obama aggressively campaigned on and which the Democratic Congress failed to do after being swept into power in 2006. Our question tonight, how far and how fast should President Elect Obama go with his domestic an foreign policy agenda? Facing off, Congresswoman Debbie Wasserman Schultz, Democrat from Florida, and Congressman Peter King, Republican from New York. All right, Debbie, how aggressive should Obama be with everything that he has talked about in the campaign?

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: Well, we're going to definitely to have take this one step at a time, with the economy being our number on priority. It is absolutely essential that we get this economy turned around and focus on passing a second economic stimulus package. We have an opportunity to invest in our nation's infrastructure, David. We have crumbling bridges and roads and dams. It is a real opportunity to really address the now record unemployment that we have. We've reached 6.5 percent unemployment. It really has been it is the worst unemployment that we have had in decades, and we are going to have to focus on that as the number one priority. As far as our other priorities, in terms of expanding access to universal health care, making sure we can invest in alternative energy, those will be high on the list as well, but obviously those are going to have to come after we take care of getting the economy turned around.

SHUSTER: Congressman King, you've got no objection to that, do you?

REP. PETER KING ®, NEW YORK: I'm glad to see that Debbie didn't mention much about Iraq. I think it would be a serious mistake to have a precipitous withdrawal of troops from Iraq. And I know that Senator Obama has been elected. He is the commander in chief. He can obviously effectuate what policies he wants in Iraq. I would urge that before he does take any action, he sit down with General Odierno and General Petraeus and get their input. As far as the economy, I agree with Debbie, we have a serious issue with the economy. I could certainly myself consider a second stimulus bill. I think it is a question of what it includes. Also, I would hope and I would urge Senator Obama-I think he would have more chance of getting Republican support if he would agree to defer, at least defer any tax increases at all when we are right now either in a recession or on the verge of recession. Probably in one. I think it would be really counter productive to do. That that would go against what he said in the campaign. He can justify it by saying that conditions have changed. Maybe they're worse than they thought they were. As far as the stimulus, I think we can sit down and come to-I think we could to a compromise on that. It may not be all that Debbie wants, maybe more than I want. I think there is a general consensus that we should be taking serious action as far as the economy and a stimulus, as far infrastructure, as far as Medicaid relief, as far as some assistance to the states. All of that is vital.

SHUSTER: Congressman, one of the reasons that Barack Obama talked about doing both tax cuts for people making less than 250,000 dollars and raising them on people who make more is so that you show some fiscal discipline. In other words, you pay for some of this as you go along. Isn't it true that the markets do want to start seeing some U.S. economic discipline out of Washington?

KING: Again-maybe it becomes an ideological and economic debate. I believe that by raising taxes at this stage-we can have an argument over whether or not taxes should ever be raised or when they should be raised. I think raising them when you are in a recession or about to enter a recession would be very counter productive. It would not bring in more revenue. It would slow down job production. It would put a tax on those who are in a better position to create the jobs and move the economy forward. I think we should put that off for a year, have the debate next year about whether there should be a tax increase. Right now, I think it would not help the markets. It would hurt job production. And to me, it has in the past proven not to work to raise taxes at a time like this. Even Senator Obama, when he was campaigning, said that he would reconsider if there were a change in economic conditions.

SHUSTER: Congresswoman Wasserman Schultz, what's wrong with putting it off?

SCHULTZ: I think we'll be able to provide Peter with some relief and I hope to hear his sigh of relief in a minute, when I say that clearly the most likely form of dealing with tax cuts and tax reform in general is going to be to allow the tax cuts, the Bush tax cuts to expire. They expire in 2010, as Peter knows. Most likely, that is what we're going to allow to happen. I don't really necessarily envision us specifically going in next year and quote/unquote raising tax. We have tax cuts that Peter well knows are about to expire in 2010. We'll allow that to happen. That was something the Republicans scheduled to occur in the first place and have subsequently been pushing to make them permanent. It would be irresponsible to make those permanent. We have some significant domestic needs, and we have to get back to a pay as you go economic approach. Americans are struggling. And in order to turn this economy around, we have to run the government just like people are trying to run their households, not spend more than we take in. That is going to be an incredibly important priority of ours in the Democratic Congress, as well as in President-Elect Obama's administration.

SHUSTER: Congresswoman, as you know, one of the issues that they're trying to resolve on the Senate side is the status of Joe Lieberman. Here's what transition spokeswoman Stephanie Cutter said about Joe Lieberman, "President Elect Obama looks forward to working within anyone to move the country forward. We would be happy to have Senator Lieberman caucus with the Democrats. We don't hold any grudge." Even as recently as Thursday, Lieberman still seemed to say that electing Barack Obama was not best for the country. Watch? .

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: We have just finished an historic election. As you know, I decided in that election that partisanship should take a back seat to doing what in this case I believed was best for our country.

(END VIDEO CLIP)

SHUSTER: Congresswoman Wasserman Schultz, does Joe Lieberman still deserve to be the chairman of the committee that he currently chairs?

SCHULTZ: Honestly, as a House member, I'm not even sure it makes sense for me to weigh in on that. That's an internal Senate Democratic caucus matter. Leader Reid will make decision that decision with his colleagues. I do think now is the time for us to come back together and make sure that we can work together on the priorities for the country, particularly, getting the economy turned around. I think Senator Lieberman needs to reach some solace with the idea that we have President-Elect Obama now, and that's the reality. We need lock arms and work together. I think we really have an opportunity to do that. Hopefully we are going to be able to put-hopefully all of us are going to be able to put this election behind us and move forward together. It is clear that President-Elect Obama is ready to do that.

SHUSTER: Congressman King, if this were the Republican side, justice would be meted out pretty strongly and swiftly, wouldn't it?

KING: I don't know. I don't want to hurt Joe Lieberman's cause. I think Joe Lieberman is a great regard for his integrity. This is an internal Democratic matter. I just have a great regard for Joe Lieberman. He did vote his conscience. People in the Republican party-again, if the Republican party, I would face it on the individual himself or herself. And each case, it has to be evaluated on its own. I would just say that I think Joe Lieberman is an outstanding American. He was a Democratic candidate for vice president. He was a strong supporter of John McCain. When I was chairman and ranking member of the Homeland Security Committee in the House, I worked very closely with him in the Senate, and found him to be extraordinarily bipartisan and genuinely interested in doing what's right. That really is a matter for the Senate Democrats. I don't want to be grand-standing other than to say I think Joe Lieberman is a great guy. That's for the Democrats.

SHUSTER: Representatives Peter King and Debbie Wasserman Schultz, thank you both for coming on tonight. We appreciate it.

SCHULTZ: Thank you.

KING: Thank you, David.

SHUSTER: Up next, Governor Palin speaks out. What she is saying about Obama's election victory and whether she will take her chances in four or eight years to win 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MAUREEN DOWD, "THE NEW YORK TIMES": Sarah Palin told Greta Van Susteran last night that she has been praying about 2012. And I have been praying that Sarah Palin gets back here as quickly as possible.

(END VIDEO CLIP)

SHUSTER: That was Maureen Dowd on MSNBC this afternoon. Sarah Palin, who barely made herself available for interviews during the start of the campaign, is certainly making up for it now. She's making the rounds with newspapers, cable networks and sitting down with NBC's own Matt Lauer. Joining us now to dissect some of her answers in those interviews and look forward to the future of the GOP are Michelle Bernard, president of the Independent Women's Forum and an MSNBC political analyst, Susan Molinari, Republican strategist and former New York Congresswoman, and Joan Walsh, editor-in-chief of Salon.com. To get this started, here's Sarah Palin talking to Matt Lauer on the victory margin.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA: I thought that it would be closer. But then, taking a step back and being able to consider why it was that the margin was as great as it was, it makes sense. We didn't get the Hispanic vote. That was very significant. And when you consider that we were out-spent so tremendously, it makes sense there also that perhaps the margin was going to be larger than we anticipated. And then just that anti-incumbency sentiment really that was spread across the land, and our ticket representing the incumbency, it is really no-not so much a surprise after all that the margin was as great as it was.

(END VIDEO CLIP)

SHUSTER: Michelle Bernard, I was surprised that she didn't talk about the fact the Democrats simply ran a strong campaign and that maybe Barack Obama had something to do with that.

MICHELLE BERNARD, MSNBC POLITICAL ANALYST: Yes. It is a very interesting response. She really sort of just brought on all the blame onto the Republican party. Many people would argue that is where the blame lies. But obviously, the Obama camp ran a fantastic campaign. But really, what is even more interesting, David, is that we're hearing so much from Sarah Palin and absolutely nothing from John McCain. Since his concession speech, which was very modest and a great speech in the way he handled things, and turned things over to President-Elect Obama, Sarah Palin has been everywhere. When asked what's going on with John McCain and also why are we not hearing from John McCain, in terms of standing up for Sarah Palin as she seems to be being attack so ruthlessly from people within the campaign.

SHUSTER: Susan Molinari, what is Sarah Palin now up to with this trip she's making to the Republican Governor's Conference. Unlike just about every other participant, she is delivering high profile remarks. She's having a very big news conference, a very different image that she's trying to carve out than others. What is she up to?

SUSAN MOLINARI, REPUBLICAN STRATEGIST: Well, you know, I think she's trying to keep her options open. Look, here's a woman who excited the Republican party, captured the interest and attention of the American public and certainly the American media. She has now, since the end of the election, has been the target of some vicious, vicious back biting and rumor mongering among those who do not want to disclose their names. She is standing up for herself and she's testing the water. And I think before the curtain sort of settles on this election, in terms of the next administration coming in and moving forward, she is trying to make sure she ends this year as positively as possible. And I give her credit for it. It she is a steely, tough woman and she is not going to back down.

SHUSTER: But it may not necessarily help the Republican party, right?

MOLINARI: I don't see how it hurts it. I don't see how it hurts it. I think she is a tremendously articulate spokesperson. I think she appeals to a very important segment of our party. I think moving forward, we have room for people.Here's what I think, David Gregory-sorry, David Shuster. I think that we had-sorry. Right show, wrong guy. I think we had one of the best nights of the Republican party when Rudy Giuliani and Sarah Palin gave a speech at the national convention. I think we can duplicate that and be a successful majority party moving forward. I think getting her out there is a smart thing for all of us. I know Joan will disagree.

SHUSTER: Joan, it is all yours.

JOAN WALSH, SALON.COM: David, I don't think it is a smart thing for the Republican party. I think she is a very divisive figure. I think that if you like Sarah Palin, you're going to like what you're hearing in these interviews. But if you have doubts about whether she's ready for the White House or the vice presidency, you're not reassured at all. She is really showing no self-awareness of her deficits in the knowledge department. I thought, actually, the clip of Matt talking to her about the Katie Couric interview was the most disturbing. Because she talks about her failure in that interview as simply a matter of not memorizing her lines, like a Washington insider. When, in fact, she showed some serious deficits in the realm of foreign policy. So a lot of Democrats are really hoping that Susan is right and that she is going to emerge as the front-runner and a serious leader of the Republican party, because they think it is exactly what the Republican party does not need.

SHUSTER: It does sound-it's exactly what Sarah Palin seems to want. Here she is in an interview on Fox News with Greta Van Susteran. Watch.

(BEGIN VIDEO CLIP)

PALIN: God, if there is an open door for me somewhere-this is what I pray. Don't let me miss the open door. Show me where the open door is. Even if it is cracked up a little bit, maybe I'll plow right on through that and maybe prematurely plow through it. But don't let me miss an open door. If there is an open door in 12 or four years later, and if it is something that is going to be good for my family, for my state, for my nation, an opportunity for me, then I'll plow through that door.

(END VIDEO CLIP)

SHUSTER: Now, Susan Molinari, there is nothing wrong with her jumping at an opportunity. But usually when somebody has been associated with a losing campaign, and when 59 percent of the voters say that the person was not qualified for the office that they were seeking, they usually try to take some down time, let some time pass, maybe study up on some issues that she got criticized for not knowing so well. And then they come back. Right?

MOLINARI: You know what, I think-sometimes that is appropriate. But the fact that there has been all this buzz about who she was and how she reacted, I think it forced her to have to come out and say, you know what, this is not true. You know how this town is and how this work. If there is a rumor out there and you don't stand up and deny it a million times, it becomes truth. Maybe by the time she did take that down time, that impression of her would have been set in stone. So yes, I think you're right. That is normally the way it goes. But I think the way this campaign ended and sort of the buzz of undisclosed people going on here within the Republican party didn't allow her to do that.

BERNARD: David, if could I just add to that. If you really think about it, if you go back, starting with the Republican convention, Sarah Palin really energized the base. The Republican party is disunited right now. There are many, many factions. But I think what Sarah Palin is saying is that she is not going to take blame for John McCain losing the election. She electrified the base, the base being what it is. All those people that we saw coming out in droves to see John McCain were really coming out to see Sarah Palin. I think that she realizes that she has a very short window of opportunity to decide whether or not she is going to remain the governor of Alaska, whether or not she might end up in a Senate seat, that opening that she's been praying to God for might appear in 2008 or early 2009, depending on what happens with Ted Stevens in Alaska. She might think about higher office in 2012, but I think she realizes the time is right now. She has to rehabilitate her image if she wants any future in national politics. Four years is a long time to study up on the issues. People might be stunned by what she shows up with four years from now.

SHUSTER: Clearly, the Republican party has to be thinking about their future and whether the future is found by appealing again to the base or by trying to move to the center. But, there will be plenty more discussions on that. In any case, Michelle Bernard, Susan Molinari and Joan Walsh, thank you all very much for coming in. We appreciate. it.

(CROSS TALK)

SHUSTER: You're welcome. You can see more of Sarah Palin's interview on "The Today Show" tomorrow. You can also see Senator John McCain's first interview since the election on "The Tonight Show." That's tonight only on your NBC station. Still to come, in addition to a struggling economy, President-Elect Barack Obama will be faced with the question, what to do about Guantanamo Bay. Some insight next on 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

SHUSTER: Welcome back. Catching Osama bin Laden will be at the top of the new president's agenda. And problems like terrorism, Iran and the war in Iraq will require complex solutions. Joining us now, Roger Cressey, NBC News terrorism analyst and former counter terrorism official in the Clinton and Bush White Houses. Roger, I want to start-there was this letter that Ahmadinejad from Iran delivered-sent to Barack Obama congratulating him on his victory last week. Here's how Obama handled it at his news conference. Watch.

(BEGIN VIDEO CLIP)

OBAMA: I am aware that the letter was sent. Let me state-repeat what I stated during the course of the campaign. Iran' development of a nuclear weapon, I believe, is unacceptable. Iran's support of terrorists organizations, I think, is something that has to cease. I will be reviewing the letter from Mahmoud Ahmadinejad, and we will respond appropriately.

(END VIDEO CLIP)

SHUSTER: Roger, what was President Ahmadinejad up to?

ROGER CRESSEY, NBC NEWS TERRORISM ANALYST: Well, you also have to view that letter, David, through the context of Iranian domestic politics. There's a presidential election in Iran next June. And Ahmadinejad is going to be running. There are other contenders, such as the former President Khatami. So one possibility here is that letter is as much for domestic support as it is for the U.S. audience. Also, President-Elect Obama is trying to fulfill the rule number one of the transition, which is don't make any policy news until you become president. So he will have a very basic, straight-forward response to this type of letter. Once he gets into office, then he can do a broad assessment of U.S. policy towards Iran, and then make the right type of overture, once he's in the Oval Office.

SHUSTER: On Afghanistan, the "Washington Post" is reporting that Barack Obama plans to pursue a new approach, possibly reaching out to some Taliban members. Is that a wise idea?

CRESSEY: Well, look what we've seen over the past seven years. We've not been able to decisively defeat the Taliban. The Taliban is going to be an element of any future Afghanistan. The policy challenges-this is a real tough one, David-how do you identify those elements in the Taliban that are willing to exist and live within the context of an Afghan government, where they are not running it, and are willing to lay down arms and be integrated back into Afghan society. Are there elements in the Taliban that are willing to do that? We don't know. But I think the president-elect, when he does his policy review of Afghanistan, he is going to say, defeat and destroy al Qaeda is going to continue regardless of what else happens. How do I come up with the proper political settlement? And key to this, though, David, is the role of Pakistan. How do you suck away, if you will, the inceptive that Pakistan has for supporting some elements of the Taliban? Within the Pakistani government, there is a bit of a bipolar disorder. Some people are fully behind the U.S. approach. Then there are others who look at the Taliban and say, we supported them for a decade in Afghanistan. We're not going to stop now. Trying to fix that problem is going to be a huge challenge.

SHUSTER: And then, Roger, as far as politics for Obama, if he keeps somebody on like Secretary Gates over at the Defense Department, liberal allies of Obama might be infuriated. He could possibly solve that by closing down Guantanamo. If he chooses to close down Guantanamo, is that a problem?

CRESSEY: Well, you have two issues with Guantanamo. The first is a symbolic issue. You have to close it down just to signal to the world you're turning the page on this issue. The second one is the question of what do you do with people who are now in custody? Do you put them through a legal process? That will be a more difficult challenge.

SHUSTER: Roger Cressey, thank you very much. That does it for 1600 PENNSYLVANIA AVENUE. I'm David Shuster. David Gregory will be back here tomorrow night. "HARDBALL" with Chris Matthews is up next.

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

END

Copy: Content and programming copyright 2008 NBC. ALL RIGHTS RESERVED.

Transcription Copyright 2008 ASC LLC ALL RIGHTS RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon NBC and ASC LLC's copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.>

Watch Race for the White House each weeknight at 6 p.m. ET

Discuss:

Discussion comments

,