updated 11/17/2008 2:28:55 PM ET 2008-11-17T19:28:55

Guest: Pat Buchanan, Eugene Robinson, Doris Kearns Goodwin, David

Ignatius, Paul Krugman, John Harwood

DAVID GREGORY, HOST:  Tonight, a team of rivals.  Is President-elect Obama moving toward naming his former political nemesis, Hillary Clinton, to a top post in his cabinet?  And what kind of working relationship will he forge with the political foe he most recently vanquished, John McCain?  The two meet for the first time since Election Day on Monday.  We have government in transition and a new president‘s leadership style just now coming into view at 1600 PENNSYLVANIA AVENUE. Sixty-seven days to the inauguration of President-elect Obama.  Welcome to the program.  I‘m David Gregory.  The headline tonight, “Brand New Guard, Same Old Problem.” The political world remains abuzz with anticipation tonight as President-elect Obama works to assemble his administration, a new guard that will soon move into formation at 1600 Pennsylvania Avenue.  But that will be plagued with the inheritance of the old guard, an economy in ruin. As we wait to learn who will assume the mantle at the Treasury Department, we‘re given a clue as to who may actually assume the critical role of secretary of state, Senator Hillary Clinton, who NBC News has learned in contention for the job there and even traveled to Obama‘s transition headquarters in Chicago for meetings Thursday.   All this comes as Wall Street wraps up a rocky week.  The Dow Jones closing 340 points in the red today as retail sales plunged to their lowest level since September 11th.   Meanwhile, at this hour, the economic crisis remains in the hands of the soon to be old guard, President Bush.  He stands tonight live at the White House North Portico greeting members of the G-20, leaders of the industrialized and emerging nations as they arrive for a two-day emergency economic summit where they will seek cooperation on solving the world‘s economic problems.  Joining me now to talk about this summit, preview it, and explain what could come out of it as a result, John Harwood, CNBC‘s chief Washington correspondent and political writer for “The New York Times.”John, here‘s what strikes me about this meeting.  You have got a lame duck president, all these leaders who probably want to do business with the president-elect, Barack Obama.  Obama‘s not going to be there.  All these leaders want to intervene in their countries‘ markets.  The president saying, no, no, no, we want to keep free market capitalism alive.  And yet, the United States is pumping $1 trillion into its economy to prop it up.  Can you make sense of any of this? 

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  Well, I think what you just said, David, is the reason why the most important event of this summit is going to be the time-roasted rack of lamb and the fruit wood-smoked quail, and the nice cabernet that they‘re going to have for dinner at the White House tonight, because they are looking toward Barack Obama.  These leaders want some sort of a new financial regulatory body internationally.  And President Bush yesterday signaled he wants no part of it. He talked about, as you said, drawing a line, saying, yes, we did intervene with that financial rescue plan, but now it‘s the time to stand up and assert the value of free market capitalism.  And you had even some of his international allies, Angela Merkel of Germany, Nicolas Sarkozy of France, saying, wait a minute, I thought this crisis was still ongoing.  We want more than that. 

GREGORY:  What do we realistically get out of a meeting like this? 

HARWOOD:  Well, there are some steps.  And I talked to someone at the White House today who said, I think some of these steps that we‘re going to take toward more coordination, more sort of early warning systems, financially may have some significance, but I don‘t think that‘s what members of the G-20 are looking for.  You‘re going to have some representation of Barack Obama at this meeting, but he‘s not going to be anywhere near it.  So I think what‘s likely to be the outcome, David, is 24 hours or so of discussion that is going to be a precursor to what all of these countries expect is going to happen once Barack Obama takes office. 

GREGORY:  And one thing is clear.  There is going to be some kind of international movement, consensus on the economy that happens once Barack Obama takes office. 

HARWOOD:  Yes.  And you‘re likely to see more stimulus.  You know, one of the discussions is whether or not we‘re going to see stimulus, cross-border stimulus, by various governments.  But we have the administration right now resisting attempts in the Congress next week to pass a substantial new stimulus program.  So again, that‘s a reason that—you know, Barack Obama has made the statement, we only have one president at a time.  Democrats are making an attempt to get what they can out of this lame duck session next week.  But the dimmer those prospects get, the more everybody is likely, including Barack Obama is, to hold back and say January is the time when we move. The question is, for Detroit, is whether the auto companies have that much time to wait.  And of course they‘re still at loggerheads over whether to help Detroit, and General Motors in particular. 

GREGORY:  All right, John.  Thanks very much.  Going to hear from you later in the program as part of our panel.  Thanks. What to turn now to the Pulitzer Prize-winning columnist for “The New York Times,” and more recently the Nobel Prize-winning economist.  That, of course, is Paul Krugman.  Paul, good to see you here.  Thanks for being here. 

PAUL KRUGMAN, “THE NEW YORK TIMES”:  Hi there. 

GREGORY:  Let me talk more broadly before we talk about the summit.  I want to talk about the economy in general, and I want to turn to something that the treasury secretary, Hank Paulson, said just today on CNBC.  Listen to this. 

(BEGIN VIDEO CLIP)

HENRY PAULSON, TREASURY SECRETARY:  I think the system has been stabilized.  I think it has clearly been stabilized.  I don‘t think people are going to bed at night wondering which major financial institution might have a problem.  You‘re never, ever going to get me to apologize for being so prudent as to change a strategy when the facts changed, and to do it in a way that protects the taxpayer. 

(END VIDEO CLIP)

GREGORY:  Paul, is the treasury secretary analyzing, witnessing, looking at the same economy that most consumers are looking at which when they pull back their spending, or other corporations on the brink of collapse, or investors who are not investing in this market, or lenders who are not lending money?  Can he really say with a straight face that the situation has been stabilized? 

KRUGMAN:  You know, he is talking about the narrow financial picture. He is talking about banks‘ lending rates, swap spreads, all those things.  And he‘s right, there has been some stabilization.  I‘ve been saying, you know, we had a 107-degree fever.  Now it‘s down to 103, if all you‘re looking at is these financial indicators.  So the interbank market is working a little bit better than it was.  LIBOR is down.  You know, I can go on with the jargon.  Which is all good.  It means that the high speeds—you know, the world is going to melt down tomorrow crisis—has receded a little bit.  The world probably won‘t end tomorrow, but the real economy is falling apart as we speak.  Jobs, manufacturing, the auto companies are at risk of going under.  So, yes, he is in a way talking about a different planet. That planet is important too, but it doesn‘t address the problem which is now.  You know, we‘ve shifted focus, and now jobs and production, rather than financial markets, are where the action is. 

GREGORY:  But do you think the administration, and for that matter, the incoming administration, is really leveling with the American people about what kind of sacrifice is going to be entailed in getting the economy to a normal temperature, to use your analogy? 

KRUGMAN:  I‘m not sure “sacrifice” is quite the right word.  I mean, this is a situation in which the main sacrifice is you‘re going to have to borrow a lot of money in the short run to prop the thing up.  And then there will be other things later on.  But, you know, the incoming administration is being cagey about exactly what it‘s going to do, partly because they‘re really figuring it out, and partly, I think, because as—I know that outside analysts are looking at the numbers and sort of saying, oh, my god, this is going to have to be a bigger program than anyone expected to ever see in their lifetimes.  And they must be doing the same thing inside the Obama team, and then saying, can we really sell the kinds of things that we think are going to be necessary to pull us back from the brink? 

GREGORY:  But let‘s talk about the wisdom of borrowing a lot of money to prop businesses up.  And that‘s really the question.  What evidence do we have thus far that the amount of money that the administration is pledging to pump into the financial system and the economy generally, which is a lot more than $750 billion—it‘s much closer to $1 trillion if you look at the money that was already pledged to the GSEs prior to some of the bank lending that went on.  Where is there evidence that that has actually stabilized, that it‘s contributed to more lending, and that, more to the point, it has attracted investors to provide capital to the economy, which is what is needed?  Investors remain totally scared. 

KRUGMAN:  That‘s right.  I mean, you have to contrast, you know, what you would like to see happening, which we are not seeing, with what we were afraid was going to happen, which luckily, it hasn‘t quite happened yet.  I mean, there was—if you go back to around September 20th, thereabouts, when—after Lehman had failed, the world financial system, just the ordinary business, the grease on the gears that keep even basics going, had ground to a halt.  There was just nothing flowing.  We were really looking at—it looked like financial Armageddon.  And that has not happened.  Some of the basic credit is flowing again, some of it—now, none of this is rescuing.  The economy is continuing to get worse.  So we‘re basically saying, gosh, we‘re very, very sick, but we‘ve stopped the patient from bleeding to death immediately.  It‘s a very, very qualified success.  Not nearly enough. 

GREGORY:  But the concern, it seems to me, as somebody who is not an economist, is to say, if the enormity of the problem was such that the government said we‘re going to take this big action so that we can persuade you, the consumer, not to get spooked, well, that‘s not working because the consumer is still spooked.  So the remedy is not there, and everybody‘s saying, well, it could get a lot bigger, but it‘s gotten bigger than everybody said it would get initially. 

KRUGMAN:  That‘s right.  And so that‘s why more financial stuff may be necessary because we may approach the brink again.  But it doesn‘t solve the problem.  And so...

GREGORY:  But in your column today, you talked about the need for really a huge, a super-sized, a hungry, super-sized stimulus package to the order of $600 billion.  Why is more necessarily better? 

KRUGMAN:  Because this is different.  What we‘ve been doing now is we‘ve been providing cash to financial institutions so they don‘t go under.  Now we‘re talking about actually going out there and building bridges and, you know, employing people.  We‘re talking about actually putting people to work, or if it‘s (INAUDIBLE), stopping people from being laid off.  So this is—we‘re now talking about shifting.  And we‘ve been talking about Wall Street basically.  Everything that has happened so far is about trying to patch up Wall Street. Now we‘re talking about actually providing a lot of aid to Main Street.  Now, maybe I‘m all wrong and this won‘t work, but it‘s not the same thing as what we‘ve been doing so far. 

GREGORY:  All right.  Paul Krugman, there‘s a lot to watch and witness and analyze. And appreciate you doing some of that here tonight. 

KRUGMAN:  Thanks. 

GREGORY:  Coming next, a possible cabinet position for Senator Hillary Clinton.  Barack Obama has always talked about a team of rivals, but there may be another reason for considering Clinton.  We‘ll get to that in a minute. Plus, call it a sign of bipartisan unity.  John McCain and Barack Obama have set up a meeting of the minds. 

It‘s all ahead on 1600 PENNSYLVANIA AVENUE after this. 

(COMMERCIAL BREAK)

GREGORY:  Welcome back to 1600 PENNSYLVANIA AVENUE. Several big developments tonight, including new names being considered for Obama cabinet positions and a show of some bipartisan unity.  For a wrap of them all, we‘re going to go inside The Briefing Room with NBC News Political Director Chuck Todd.  Hey, Chuck.

CHUCK TODD, NBC NEWS POLITCAL DIRECTOR:  David, how are you? 

GREGORY:  Great.  The big four to get to tonight. First topic, Barack Obama considering Senator Clinton as secretary of state.  NBC News has confirmed that Senator Clinton flew to Chicago yesterday, where she met with the president-elect at her transition headquarters.  This would be a big play.  I mean, a new foreign policy in the Obama administration is going to be a huge priority, and she would become the face of that overseas. 

TODD:  She would become the face.  It‘s a big—you know, it‘s a big decision for her.  It‘s one thing for Obama to offer it.  And I think when he is looking around at the potential candidates for secretary of state, he is realizing, you know what?  Not a lot of people jump out.  You know, one of his first ideas was Dick Lugar, the Republican Indiana senator.  Well, the overtures there didn‘t work out, and I think that he is looking and realizing, Hillary Clinton would be a big deal.  There is some political benefit to him.  And the question is, is there a benefit for her, that she sees, you know what, this is what I want to do next?  Maybe the Senate isn‘t where I want to go back.

GREGORY:  Right.

TODD:  And I think that that‘s going to be interesting.  Plus, you know, who gets to control the appointments?  Who‘s going to be at defense?  Who‘s going to be the national security adviser? 

GREGORY:  Yes.

TODD:  You know, there are a lot of moving parts here before a deal is done. 

GREGORY:  But if you were Obama, and you were concerned that the drama factor with Hillary Clinton being on your team, when you were considering her or not considering her for vice president, what happens if you bring her into the fold in such a big way and it doesn‘t work out now? 

TODD:  Well, I‘ll tell you, though, state is one of the places it‘s very hard to play political games.  And it is hard to imagine—I mean, look at the struggles, frankly, that Colin Powell had.  And he couldn‘t really have the political team to fight what he was trying to fight internally with Vice President Cheney, or with Rumsfeld at Defense.  So State is a difficult place to sit there and somehow fill it with a bunch of political appointees, political hacks.  So I don‘t think you have to necessarily assume that that‘s the—the full Clinton political machine will somehow move into Foggy Bottom. 

GREGORY:  OK.  Let‘s move on. Second topic in The Briefing Room tonight, Barack Obama, John McCain scheduled to meet Monday at Obama transition headquarters in Chicago.  It‘s going to be their first meeting since the election.  Obama/Biden transition spokeswoman Stephanie Cutter said this: “It‘s well known that they share an important belief that Americans want and deserve a more effective and efficient government, and will discuss ways to work together to make that a reality.” The two are going to be joined—this is interesting—by Republican Senator Lindsey Graham and Congressman Rahm Emanuel, Obama‘s White House chief of staff.  So we know this is part of the dance.  Is it anything more than that? 

TODD:  Right.  I think it‘s—you know, this is a fairly unprecedented thing to have happen this quickly, that the vanquished foe goes to Chicago, goes to the home turf, and meets with the president-elect.  I think just that image there, the fact that John McCain is doing that for Obama politically, I mean, that is going to play very well with the middle.  Lindsey Graham and Rahm Emanuel, they did the debate deal.  Right?  They negotiated the debates.  They really struck up a very good friendship.  Remember, when Rahm was appointed chief of staff, the first Republican to praise the appointment was Republican Senator Lindsey Graham.  So this is real.  And I think a real deal may happen here.  Maybe it‘s on climate change, maybe it‘s on immigration, but something real is going to come out of this. 

GREGORY:  Right.  And look at the emerging Republican power base in the Senate, in a Democrat-controlled Senate.  Nevertheless, it is back to McCain and then Lindsey Graham as well on some key issues. 

TODD:  Potentially.  We‘ll see.  I mean, you know, maybe John McCain wants another job.  Maybe he wants to be special envoy to Afghanistan.  I mean, who knows what comes out of this meeting. 

GREGORY:  Yes.  All right. Now to topic number three, the suburban vote, looking at how Obama did it.  This is fascinating—clinching the nation‘s suburbs, a key to Republican victory back in ‘04, as we know.  As we know, all that has changed in ‘08.  Exit polls show that Obama made big strides in this election, outperforming Kerry in the suburbs of every battleground state except for Missouri.  He won every state in which he got more than 50 percent of the suburban vote.  Charlie Cook, editor of “The Cook Political Report,” wrote this: “In general, in the higher-growth segments of our country, Republicans lost ground, prevailing only in small towns and rural areas.  When Democrats win the suburbs, Republicans are in trouble.” 

Why? 

TODD:  Well, it‘s big trouble, because it‘s where the growth is.  And, you know, it used to be—the Republican suburbs are where Reagan made his victories.  It wasn‘t just winning small-town and blue-collar Democrats.  You know, this was when he was able to win places like New Jersey, which is a state entirely made up of suburbs.  And so we were—we‘ve been watching this move of the suburbs from being Republican turf to Democratic turf.  It started in the Northeast with New Jersey and Long Island, places that were Republican territory for 20 and 30 years.  They moved blue about 10 years ago.  And then slowly but surely now, it‘s happening everywhere, whether it‘s northern Virginia, the I-4 Corridor.  I mean, David, you went through it.  It was unbelievable.  And you look at a state that Obama flipped, and you can see—find the major urban center and then look at the suburbs.  And he even did well in many of these exurbs which are now voting like suburbs. 

GREGORY:  Right.  And I think Karl Rove pointed out that a lot of these voters, suburban voters, were in fact Republican voters back in 2004.  I mean, necessarily, you have a largely white professional class, not wealthy necessarily, but a professional class voting for Democrats. 

TODD:  Well, think about how the economy was affecting this suburban, in some cases, exurban vote.  In 2004, they weren‘t worried about the commute.  They weren‘t worried about their money because their houses were worth something. Well, where did the housing market hit the hardest in this country?  It wasn‘t a particular region as much as it was the suburbs.  That‘s where housing prices collapsed in many cases.  And so they were always the ones that were more susceptible to an economic message.  And that could account for why it was so universal, whether it was in Colorado, Nevada, Florida, or Virginia. 

GREGORY:  All right.  Item number four tonight, outstanding Senate races.  We‘re watching this so closely because this is what we do.  But also because the Democrats‘ dream for 60 Senate seats is still a possibility.  You‘ve got three races up in the air.  Where‘s the news? 

TODD:  Well, I think the news today is probably sitting in Minnesota, where they‘re getting their recount situation settled.  There will be one final spot check of some of the voting machines to see if there were any egregious errors.  And then the hand count begins the middle of next week, and it‘s going to take four weeks.  And I tell you, you look at it, and the Democrats feel cautiously optimistic that they have a reasonable shot of making up to 200.  Alaska, everything they feel like that‘s left to be counted out there favors the Democrat.  He is up 800 votes.  The only one that they really think is a long shot at this point, David, as far as the Democrats are concerned, and why they think they‘re probably going to come up at least one seat short, if not two, depending on what happens in the Minnesota recount, and that‘s Georgia.  Very difficult.  Are you really going to get that same intensity of the African-American turnout, to somehow come in and make up ground?  You know, a lot of Democrats had told me they expected Jim Martin to actually win on Election Day.  You know, be under 50 percent, win, but somehow top Saxby Chambliss.  When that didn‘t happen, that told them, you know what?  This run-off is going to be very difficult.

GREGORY:  All right.  Chuck T., we‘ve got to leave it there.  Thanks very much. 

TODD:  All right.  OK.

GREGORY:  Coming next, William Ayers, that ‘60s radical that became part of the campaign—rivals, of course, linked to Barack Obama—breaks his silence, going on the record with his side of the story.  We‘ll get to that.  Also, Doris Kearns Goodwin will be with us tonight to talk about what President-elect Obama wanted to speak to her about in terms of her reporting and research for her book, “Team of Rivals.” We‘ll have that coming up a little bit later. 

(COMMERCIAL BREAK)

GREGORY:  We‘re back on the program.  I‘m David Gregory.  Good to have you for the back half.  She said she was running to restore America‘s standing in the world and now she may well get her chance.  Senator Hillary Clinton declined to address reports that she is under consideration to be President Elect Obama‘s secretary of state after rumors first swirled about yesterday‘s closed door meeting between Clinton and the president-elect.  It all come as Obama‘s transition team will officially begin their work at the State Department come Monday.  Will Obama choose Clinton to be his chief diplomat?  If he does, will she accept offer?  Joining me now, Eugene Robinson, columnist and associated editor of the “Washington Post,” Pat Buchanan, former Reagan White House communications director and Nixon speech writer, and former presidential candidate himself.  Both Eugene and Pat, of course, MSNBC political analyst.  John Harwood is back, cNBC‘s chief Washington correspondent and political writer for the “New York Times.”  Welcome all.  Let‘s listen to Senator Clinton today, asked about these reports. 

(BEGIN VIDEO CLIP

SEN. HILLARY CLINTON (D), NEW YORK:  In the off chance that you‘re not here for this important issue and are here for some other reason, let me just say that I am not going to speculate or address anything about the president-elect‘s incoming administration.  I am going to respect his process.  And any inquiries should be directed to his transition team. 

(END VIDEO CLIP)

GREGORY:  Pat, this is still a relationship that gets a lot of people very emotional.  They think about the friction.  They think about the possibilities.  Is this the right play for the new president? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  I think it is a big play by Barack Obama.  And I think it may very well be the right play by him.  I think it speaks well of him if he is making this offer to her.  What she has to consider is she will be putting her career and her fate in Obama‘s hands, and the risk would be great of a possible, you know, separate center of power in Washington.  I think if she looks at it, she will see Iran, Iraq, Afghanistan, Russia, the Middle East, a chance for a Nobel Peace Prize, working as Barack Obama‘s secretary of state, if she can bring herself to work with him and I think she probably can.  I think—frankly, I‘ve thought it over all day long, and I think it might be a terrific thing for her to do.  And it certainly speaks well, I think, of Barack Obama, that he is willing to take this risk and make a big play like this, if this thing is as serious as Andrea is reporting. 

GREGORY:  Gene, you‘re talking about Andrea Mitchell, who has led the way in the reporting these meetings and the possibility of this.  Gene Robinson, you cover Washington, but you‘ve also covered the world from foreign posts.  Let‘s look at the list of possibles that have been reported on and speculated on.  It‘s Senator Clinton, Senator John Kerry, Governor Bill Richardson of New Mexico, who also has some real bona fides when it come to foreign affairs, and Tom Daschle, the former senator, as well.  One of the things that I hear from the Obama and Clinton camps is that the bar is very high.  There are some very tough standards being applied on these folk who are going to get these high jobs.  What makes Clinton the right choice at this time? 

EUGENE ROBINSON, “THE WASHINGTON POST”:  The bar should be very high.  And look, Hillary Clinton almost beat Barack Obama for the nomination.  She certainly demonstrated a steadiness, command of the issues, the ability to be presidential, really, and to have the sort of authority the secretary of state should have in these times.  The differences between her and Obama on foreign policy were not so great that they couldn‘t be overcome.  They basically had most of the same policies on every region, troubled region in the world.  So it seems to be a match that could work.  And it might work spectacularly well.  She could be an excellent secretary of state. 

GREGORY:  John, I know one person in this administration who has probably got some serious questions about all this.  That‘s Joe Biden, who thought he would be running foreign policy from the vice president‘s office, right? 

HARWOOD:  I think Joe Biden knew that when he stepped into the vice president‘s office, as opposed to the secretary of state‘s office—if he weren‘t vice president, we would be talking about Joe Biden for that job.  That‘s control that he would probably give up.  I think it‘s a fascinating move by Obama.  I get the feeling it is serious.  One of Hillary Clinton‘s people told me today, thinks it will happen.  I think it reflects self-confidence on the part on Barack Obama.  It would put somebody who developed a reputation for strength in the primaries.  In fact, her critique of Barack Obama was that he wasn‘t tough enough on some of those issues, negotiations with, as Pat mentioned, countries like Iran and Ahmadinejad.  I think would it provide some real star power and heft to his cabinet, if he has Bob Gates stay on at the Pentagon.  You have a Republican in a very senior national security position.  This would provide some balance there.  Now on the downside, I‘m still not sure why if you can‘t control Bill and Hillary Clinton, particularly Bill Clinton as vice president, and that was a big negative, why that would be such a reduced risk at the State Department?  The other thing is that when we talk about the high bar, there is a high bar clearly for competence, but there‘s also a high bar for disclosure and vetting.  And how would Bill Clinton and business deals in Kazakhstan and thing like that, how would that clear the vetting process? 

GREGORY:  It‘s very interesting.  I want to switch gears a little bit.  We have a smart take that I want to get to tonight that has to do with the future of the Republican party, and important for the panel.  I‘m going to single out Pat here.  In smart takes, at yesterday‘s Republican Governor‘s Association Meeting in Miami—we‘ve talked a lot about that this week—event host and Florida Governor Charlie Crist, a potential 2012 aspirant, outlined his vision for how the Republican party should rebound, saying this, quote, “we must work, and I mean work our way, back to gain the confidence of the people.  It is time to govern with a focus not on the next election, but instead on the next generation.  It is time to end the usual politics and begin forging relationships across the political divide.  This party can no longer hope to reach Hispanics, African Americans and other minority groups.  We need to just do it.  Embracing cultures and lifestyles will make us a better party and better leaders.” Pat, what are the issues?  What is the message that helps that appeal happen? 

BUCHANAN:  Well, Charlie Crist sounds like he believes that the Republican right and the conservative movement are too heavy a weight to carry.  They have to broaden the base and move basically to the left or the center.  And the party is deeply divided in its soul, and on a lot of issues.  And it has been ever since the end of the Cold War.  But the answer to Governor Crist is simply this: if you feel you have a better idea of how to broaden the base and win the nomination and lead this party, go in and win the nomination.  Go into Iowa.  Go into New Hampshire.  There are others who are very conservative, say Sarah Palin, who might have a different view and they bring theirs in.  As we say in my father‘s house, there are many mansions.  And let these folks, let 100 flowers bloom. 

GREGORY:  All right, Pat.  We‘re going to take a break here.  Thanks, panel, very much.  Taking a cue from Abraham Lincoln, President-Elect Barack Obama is meeting with his former chief White House rivals.  Hillary Clinton, we talk about her.  And John McCain, we‘ll talk more about them.  Coming next, presidential historian Doris Kearns Goodwin on the theory behind building a team of rivals and another example, potentially, of history being a useful guide to what could happen in a new administration, after the break. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  One of my heroes is Abraham Lincoln.  A while back, there was a wonderful book written by Doris Kearns Goodwin called “Team of Rivals,” in which it talked about how Lincoln basically pulled in all the people who had been running against him into his cabinet, because whatever personal feelings there were, the issue was how can we get this country through this time of crisis?  And I think that has to be the approach that one takes, whether it is vice president or cabinet. 

(END VIDEO CLIP)

GREGORY:  The president-elect mentions her and we have her on the program, the historian and author of “Team of Rivals,” Doris Kearns Goodwin.  Doris, you can‘t get a better build-up than that, can you? 

DORIS KEARNS GOODWIN, AUTHOR, “TEAM OF RIVALS”:  No.  It has been really terrific. 

GREGORY:  It is good to have you.  This is such an interesting topic.  It is a book, besides the Bible, that President-Elect Obama has said that he would consult as a kind of guide for him in his leadership and in his presidency.  Now, we are seeing the potential of Senator Clinton being in his cabinet.  A very important meeting with his most recent vanquished political foe Senator McCain.  It adds up to something that could be a hallmark of his leadership style.  What does it say to you? 

GOODWIN:  What it says, number one, is that he has a sense of history, which is so great for a president to look back into the past and learn from previous presidents.  It also says that he has a great deal of internal self-confidence to be willing to surround himself with people who are more experienced than he, that he is willing to brook dissent in his cabinet.  When you bring these fiery people inside, there will be lots of arguments.  That was what was true for Lincoln.  So I think it is a window on to his character.  It may make for some difficult times ahead, but as he himself said, and as Lincoln said, the country is in peril.  You need to reach out to the strongest and most able people in the country.  And I bet you he will have the confidence to do that, without a question. 

GREGORY:  What can you tell us about conversations you‘ve had with then Senator Obama about this very topic? 

GOODWIN:  Well, the interesting thing is he called me on the phone.  I just answered my cell one day, very early in the primary process.  He said hello, this is Barack Obama.  And he told me he had read the book and that he really had absorbed not only the idea of the “Team of Rivals,” but the temperamental qualities that Lincoln had in his leadership, were ones that he was going to try to emulate.  I think it is just a terrific thing when you can have a gold standard person like Lincoln as your mentor.  All along, it seemed to me, that this is not surprising.  I think he understands, he has this capacity to look at people and see things from their point of view as well as his open.  If you have people in your cabinet who argue with you, even though at a certain point you have to make a decision, and it may go against what they wanted, you‘ve absorbed their point of view.  When you explain it to your countrymen, then it means that you are really giving them validation for their point of view.  And I think that‘s his modis operandi.  We hear that within his campaign, that‘s what he does.  He loves to have big discussions, and then he restates other people‘s point of view even more eloquently than they themselves stated it.  It means you have more options.  You‘re not simply an echo chamber.  It could be a big deal for your presidential leadership.  It was huge for Lincoln.  It was so unusual to have that kind of a cabinet.  Interestingly, he brings Seward in, the parallel with Hillary is uncanny.  Secretary of State Seward becomes, he was the senator from New York.  He was his chief rival.  It meant that there were rocky beginnings to their relationship.  Seward was rather arrogant at the beginning. But he gave Seward access.  He understood that Seward had hurt feelings.  He went over to Seward‘s mansion at Lafayette Park and they would talk for hours.  That will be important for Hillary, I think, to have special access to him.  In the end, Seward became his closest friend.  And it changed the course of history. 

GREGORY:  And it does inspire, potentially, a level of confidence in the American people to say, look, this is somebody who took him on in a big way, in a personal way, in a substantive way as well.  Yet he was able to provide her then with not just any old job but to be the face of foreign policy in an administration where foreign policy will play a huge role. 

GREGORY:  To surround himself with a super star like Hillary, and have her able to try to reconfigure American feelings abroad and how people feel about us, it really is a large statement.  It is giving her a big space.  I have a feeling whatever temperamental qualities they need to work together can be worked out, in terms of it will give her an even larger stage than she would have had in the Senate.  I know she is comfortable in the Senate, but this could be history making for her as well.  What‘s good for her is good for him, and, most importantly, I think good for the country. 

GREGORY:  What about a contrarian question though.  We showed pictures just a moment ago of the president elect with the current president, George W. Bush, and one of the things we know from more recent historical accounts of the Bush administration in the run-up to the Iraq war, here was a president who had less experience than some of these very big figures in foreign policy in Washington experience who were around that table.  I‘m talking about the vice president and Secretary of Defense Rumsfeld, even the National Security Adviser Rice, Secretary of State Powell.  And yet there was disagreement at a level that created paralysis in the government and the policy in the Iraq war.  And as president, whatever his temperament, he didn‘t have the wherewithal, the experience, the clout—whatever the reason, he didn‘t have the ability to break through some of the paralysis that resulted in policy.  What makes Barack Obama different?  And what can he draw upon from Lincoln in that regard? 

GOODWIN:  Well, I don‘t think it is just a question of experience.  What Lincoln understood is that the search for consensus could be paralyzing.  At a certain point, you have to make a decision and then bring the people abroad.  He allowed everybody to argue for months about what to do about slavery.  Nothing could be more controversial than that.  There were people who wanted to end it instantly, others who wanted to not touch it all, radical, conservatives, moderates.  Finally, he makes his decision to emancipate the slaves.  He comes to the cabinet; I‘ve made up my mind now.  I don‘t want to hear your views anymore on this, but I‘ll listen to your suggestions on its implementation and its timing.  So it‘s that kind of leadership that you have to exert, even if these other people have more experience.  You‘re the one with the judgment to make the final decision, and then you bring them aboard, hopefully. 

GREGORY:  All right, we‘ll leave it there.  A lot yet to witness and talk about.  Doris Kearns Goodwin, always a pleasure. 

GOODWIN:  You, too, David. 

GREGORY:  Have a good weekend.  As the Obama administration prepares its transition to power at 1600 PENNSYLVANIA AVENUE, we want to see what his moves will be in the critical sphere of foreign policy.  What Obama needs to consider with David Ignatius from the “Washington Post” up next. 

(COMMERCIAL BREAK)

GREGORY:  David Ignatius is here, but we have a little breaking news to tell you about.  NBC News has confirmed that Valerie Jarrett, a frequent guest on this program, very close friend of Michelle Obama and the president elect, been an adviser throughout the campaign, has been named, according to Andrea Mitchell, senior adviser and counselor in the White House to President Elect Obama.  It‘s a big position, one that will be defined as the new president comes into office.  But it will confer upon Miss Jarrett very close proximity to the Oval Office and the new president.  So we‘ll be hearing a lot more from Valerie Jarrett, as we have throughout the campaign on “RACE FOR THE WHITE HOUSE,” and 1600.  Welcome back.  As world leaders gather in Washington this weekend for a summit on the global financial crisis, President Elect Obama prepares for the first war-time transition in four decades.  How will an Obama administration handle the unprecedented foreign policy challenges ahead?  Joining me now, “Washington Post” columnist, associate editor David Ignatius, also the author of “Body of Lies,” a fabulous novel, which is now a fabulous motion picture.  What I said off camera, I‘m going to say again; I just saw it a couple of weeks ago and loved it.  David, I told you, I stayed after the film just to see the credit to you, which I got as much of a kick—not quite as much of a kick as I‘m sure you got, but it was a great movie.

DAVID IGNATIUS, AUTHOR, “BODY OF LIES”:  I promise you, my wife and children even got more of a kick out of it.  It‘s been really—

GREGORY:  Well, congratulations on the book and now the movie.  A lot of fun.  Well, there‘s a lot to talk about here, the prospect of Hillary Clinton as secretary of state.  I wanted to begin with the notion that‘s been talked about—we‘ve been talking about this team of rivals concept throughout the program.  Does Robert Gates stay on as Secretary of Defense and how does that play out?  Why would that be important for President Elect Obama?

IGNATIUS:  I think the signs are that they will ask him and that if they ask him, he‘ll say yes.  I think the advantage for Obama is, first, he‘s been a very strong and effective secretary of defense.  I‘ve heard Obama people say, as we listen to Bob Gates, he sounds like he‘s closer to our viewpoint than that of the Bush administration.  If you‘re Obama, you have to worry about the big, deadly, dangerous issues ahead, getting the troops out of Iraq on the schedule he‘s announced.  That‘s going to take a lot of expertise.  And thinking about what to do in Afghanistan—in each of those issues, although Gates has been associated with Bush administration policy, he‘s been a very interesting, sometimes dissenting voice.  On Afghanistan, he‘s entertained a range of possibilities.  More troops is one of them, but he‘s really been one of the people saying we need to think about negotiations.  He‘s a useful person for them.  Finally, he‘s a symbol of this idea of bipartisanship.  Obama is going to—

GREGORY:  And there‘s some political cover to be had there too.  If you begin the withdrawal of troops, as well, to have a Republican as secretary of defense implementing that.

IGNATIUS:  There‘s some cover.  Barack Obama has been elected to get our troops out of Iraq.  We have to be honest about that.  That‘s really—he comes to office having made that promise.  He wants to do that effectively.  The problem for Obama is suppose things go badly as that process begins.  He is going to want a steady hand to help him, to help him think.  You know, do we keep moving troops out?  I would think Gates would be close to ideal in that counselor role. 

GREGORY:  What about this relationship we‘ve heard a lot about, between Obama and General Petraeus, now the head of Central Command.  It is a relationship where Obama made it very clear, I‘m the commander-in-chief.  I‘m going to call the shots here.  How do you see that relationship emerging? 

IGNATIUS:  General Petraeus—and I don‘t mean this in a nasty way—is a very political officer.  He understands that he is serving at the pleasure of the president.  This president, President Bush, tried to use him really as the face of the war and McCain almost made him a Republican general.  Petraeus didn‘t like that.  He wasn‘t comfortable with it.  Petraeus himself and many of the people around Petraeus have been in a real dialogue with Obama‘s people over the last month or two about what is ahead.  And I think that there has evolved a shared vision, particularly about Afghanistan.  General Petraeus says what we need to do is surge first, send some additional brigades to Afghanistan to try to stabilize the cities, and then negotiate.  Surge first and then negotiate.  I put the emphasis really on negotiate.  Petraeus, although he is seen as this very hawkish, hard line general, his great successes in Iraq were in finding ways to co-opt, to draw insurgents into a dialogue, to get them off the battlefield without going out and killing them.  That‘s what he wants to do in Afghanistan.  I think that‘s what Obama wants to do.

GREGORY:  He certainly privately has not been critical of Obama talking about engagement with Iran, in that regard, after what he done in Iraq. 

IGNATIUS:  Quite the opposite.  Petraeus has learned the way in which diplomacy and military operations fit together and really are seamless.  Again, I think that‘s something that he and Obama and the Obama team share. 

GREGORY:  Two aspects in the Mideast.  First Iran.  Where is this on the priority list and how do they go about it?

IGNATIUS:  When I talk to Obama‘s people, they tell me they‘re convinced that we need to make the effort to engage Iran, to draw Iran into a dialogue about the future of that part of the word, about their interests, our interests, the nuclear program, above all.  Understanding that that dialogue may fail.  In other words, the fact that it may not work, they may not be ready, all these obstacles, isn‘t a reason not to try it.  I think that‘s the direction they‘re headed. 

GREGORY:  On the Middle East more generally, on the Israeli/Palestinian issue, I talked to a Jordanian official recently who said that when Obama asked King Hussein of Jordan, what do I do?  Hussein said, just wait for now, just wait.  Is he willing to take some of the political heat to not jump right in right away? 

IGNATIUS:  King Abdullah, I‘m sure is as wary as everyone is.  My sense of the Obama team is that they actually do want to move fairly quickly on the Arab/Israeli peace process.  I think they want—they look at Bush and Clinton before Bush and they realize that the longer you wait, in a sense, the less leverage you have in the process.  I would expect actually that they would move fairly quickly.  Just to say one thing about this issue we‘re all talking about today, Hillary Clinton as the secretary of state.  In my conversations with the foreign leaders, with people abroad who are watching this amazing election, the sense of excitement they have about this new president, about his ability through his personality, his amazing history, to turn a page, to show the world a different face for America, is crucial.  And the one thing I think Obama wants or should be careful about is not dissipating that opportunity by having a super star as secretary of state.  The game changer in the world right now is Barack Obama.  It is Barack Obama who has the ability to meet with people, make things happen, go through doors that wouldn‘t exist but for him.  And if he subcontracts that to Hillary Clinton, I worry that the impact he could have might be lost. 

GREGORY:  All right.  David Ignatius, great to have you here.  Great to have your views.  Continued success with the film and the book.  That does it for 1600 PENNSYLVANIA AVENUE for tonight.  I‘m David Gregory.  Thank you for watching.  We‘ll see you back here Monday night, same time, 6:00 p.m. Eastern on MSNBC.  “HARDBALL” with Chris Matthews coming up next.  Have a peaceful Friday night and a good weekend.  Good night.

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

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