updated 11/24/2008 4:04:46 PM ET 2008-11-24T21:04:46


November 20, 2008

Guest: John Harwood, Erin Burnett, Jay Carney, Michelle Bernard, Tony Blankley, John Harwood, Jonathan Alter, Michael Beschloss

DAVID GREGORY, HOST: Tonight, the Obama team doesn't like the leaking about Hillary Clinton at the State Department. Has the distraction of the New York senator overtaken the reasons the president-elect wanted her there in the first place? And while this drama still plays out, Rome is burning. The Dow plunges again today. What will the new president do to fix the fear in this economy once he gets to 1600 PENNSYLVANIA AVENUE? Sixty-one days now until the inauguration of President-elect Barack Obama. Welcome to the program. I'm David Gregory, reporting from New York tonight, a pretty scary place to be if you are watching Wall Street. Headline tonight, "Rocky Road."It has been another tough day for the automotive industry as Democratic leaders in Congress hit the legislative brakes, sidetracking a proposed $25 billion bailout for Detroit's big three, arguing that the current plan did not go far enough to adequately prove how much money they need or how it would be spent if they were to get it. Congressional leaders demanded that the CEOs of Chrysler, Ford and GM go back to the drawing board to see what they can do if they want to see a dime.


REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: It is all about accountability and about viability. Until we can see a plan where the auto industry is held accountable and a plan for viability on how they go into the future, until we see the plan, until they show us the plan, we cannot show them the money. And that is really where we are with this.


GREGORY: At a standstill. The fate of the auto industry hangs in the balance, of course. Its weight rests squarely on the shoulders of its leadership.If they produce an acceptable new bailout plan, Congress has pledged that it will return to Washington sometime in early December for a vote. The White House saying and urging Congress to do something. While the drama unfolded through the day on Capitol Hill, Wall Street reacted, and not well. Automotive stock prices fluctuating as hopes that a deal would be struck. At one point, GM shares tumbled as much as 39 percent to a 70-year low, while shares of Ford hit their lowest level in more than 26 years. The closing bell rang in a somber tone with the Dow Jones Industrial Average down over 440 points, losing a little more than 10 percent over the last couple of days. All of this comes as jobless claims now total over four million, a 25-year high. With the number of workers filing new claims soaring to the highest level in 16 years, bad news that turned out to be even worse than analysts expected. Joining me now with the follow on all of this, Erin Burnett, anchor of CNBC's "Street Signs" and "Squawk on the Street." She's here in New York. And John Harwood, CNBC's Washington chief correspondent and a political writer for "The New York Times." Welcome to both of you. Erin, the economic pain and also the policy, what happened today?

ERIN BURNETT, ANCHOR, "SQUAWK ON THE STREET," CNBC: I wish I could just explain this-the answer to that simply. But look, you had a 600-point swing. We ended down, as you said, 444. At one point we were up more than 100 points, and the reason was hopes of this automotive bailout. Nobody really likes bailouts on Wall Street, but they were hoping for some resolution because there is real fear about what a failure of one of the big three might do to the overall jobs picture. And that obviously was the other headline of the day, real concern over that. So I would say it's broad concern over a spread of the economic malaise and how deep it will be. The markets simply can't shake that off right now.

GREGORY: And fear is what's overriding everything else. The consumer's afraid, the investors afraid, financial institutions afraid to lend to one another, and a treasury secretary who has got to be afraid about continued who's trying to do as much explaining as he can do. He was on CNBC talking about the path that the government has taken. Let's watch a portion of it.


HENRY PAULSON, TREASURY SECRETARY: As I assess our current situation, I believe we have taken the necessary steps to prevent a financial collapse. By proactively addressing the problems we saw coming and being pragmatic enough to change strategy in the face of changed facts, and despite the inevitable criticism, we prevented a far worse financial crisis that would have severely damaged our economy.


GREGORY: Adequate explanation?

BURNETT: You know what's amazing? He was speaking today at the Reagan Library. And he actually gave for the first time a timetable of exactly what had happened, which was very well done, I would say. But he just said in that sound bite that you picked there, in light of the changed facts, I changed my mind. And that is the mark of a strong individual, right, someone who says I'm going to listen to everybody and change my mind if I made the wrong choice? That is how he is positioning it. But, you know, I interviewed him last week. And when I said, "Well, what facts changed? You said you wanted to use the money for this, now you're using it for this. What changed?" And there is no clear answer to that. And obviously the lack of answer there is something that creates perhaps more uncertainty and more, can we really trust this administration, this government to help us?

GREGORY: We talked about, John, on this program, about the economy, about the economic pain, also about the policy. John Harwood, let me bring you in for that.

Washington getting to work on fixing the big three. Where are we on this? Is there actually new hope that there might be a bailout?

JOHN HARWOOD, CHIEF WASHINGTON CORRESPONDENT, CNBC: I think there is some hope that it's going to happen before the end of the year in an extended lame-duck session. What you had from the Democratic leadership is pressure from both sides, resistance from Hank Paulson, the Treasury Department, the Bush administration, to using some of that $700 billion in bailout money that was already passed. But also resistance from members who are loath to vote for additional bailouts. Voters were not too happy with what Congress did in September. So what they are trying to do now is, the administration wanted to use some previously passed money that was going to be used to help the automotive companies retool their factories to make more fuel-efficient cars. The leadership is not prepared to give in to the administration on that and give up on using some of that TARP money, the bailout money. But they want to have a firmer political foundation underneath. So what they've done is told the auto companies to come back with a written plan, come back after Thanksgiving, the first week in December. The committees of Congress, House and Senate, Chris Dodd and Barney Frank, will review that information and then they're going to try to get it to the membership to have a vote on using perhaps some of the TARP money, perhaps some of that additional money.


HARWOOD: They're still looking for a compromise. They hope it's not gone yet.

GREGORY: How much pressure-we know that the president-elect went to President Bush and said, look, I want this bailout. You've got to do this. That was now a couple of weeks ago, after the election, when they met. What role does he play, what role does he have to play, as he is trying to build his cabinet? All of this stuff is going on. That pressure keeps ratcheting up on the new administration.

HARWOOD: Well, I think they are counting on some more political pressure come-the more cash that GM and Ford burn, the more close we get to the potential for a bankruptcy to increase pressure on the administration.


HARWOOD: By that time, we also may see the Obama administration with a new treasury secretary who could help make some of the public argument.

GREGORY: Where is the confidence? We see the fear. And that is what the administration is trying to tamp down at this point. A new administration will have that same role. Why is the fear only spreading and not reducing?

BURNETT: Well, it does appear right now there is a vacuum. Obviously, you have the Bush administration sort of handing things off, or giving its grand finale.


BURNETT: And we don't know who the treasury secretary is under President-elect Barack Obama. That is what everybody wants to know.

GREGORY: Would that be reassuring, if he actually stepped forward and said -- and got that done sooner rather than later?

BURNETT: You know, I want to say yes and it would, because then people would have a chance to evaluate that person. Obviously, we all know who's on the short list-Tim Geithner, who runs the New York Fed, and also Larry Summers, who had had that job previously. But, yes, for the short term. But then the questions again will arise, which is, how is this money going to be used and when are we going to know? And maybe Barack Obama is trying to say, I want to wait until I'm in office and come in with a splash, a big stimulus plan, a big infrastructure plan, a big bailout for the autos. But I think John raised the point we might not be able to wait that long, particularly for the automakers.

GREGORY: Well, here's what I don't understand. You deal with this in people you talk to every day. What answer are they looking for before they feel more confident? Is it to know where the bottom is for the housing market? Is it, where is the bottom in the stock market? What are they looking for?

BURNETT: You mean "they," us, all of us selectively?

GREGORY: Well, those of us who cover it, but also those who are in it, who are actually institutional investors, those who are holding back their money?

BURNETT: I think the question is they are not sure what they are looking for either. And there is this sense it all comes down to housing. Sort of like an inverted pyramid. Housing is at the bottom of it-mortgage is at the bottom of it, and then all of these promises that have been made sort of stem off from that. So you're not going to seen an improvement in anything until housing prices start dropping. But if the job situation keeps getting worse, you're going to see more people defaulting and foreclosing, so that problem isn't going to get better. So you really have to get to the root.

HARWOOD: And David?

GREGORY: Yes. John, isn't there kind of the frightening prospect that you're wondering when the grownups will get home to fix all of this?

HARWOOD: Well, sure. And everybody's looking for the bottom, when does it stop getting worse. I think one of the striking things in this situation though is the way President Bush, on his way out the door, has drawn the line ideologically.


HARWOOD: You know, he gave a speech before that G-20 summit and said, yes, I intervened in September when we thought we were going to face a depression, but no more. And trying to put the brakes on more government action. He is not caving in. Democrats had counted on the idea that President Bush would be afraid to have the auto companies, any of them, go bankrupt on his watch. He doesn't look so afraid of that.

GREGORY: He doesn't.

BURNETT: Right. But every dollar that we spend here, I mean, a fair point, is money that is borrowed from the future or money that is printed now. I mean, it's not as if it's sitting there unused and we have it to use.

GREGORY: All right. Erin Burnett, John Harwood, thanks to both of you. A big day to have you both here to talk about it. I want to switch gears a little bit. The drama over the selection of President-elect Obama's cabinet continues. NBC's Chief Foreign Affairs Correspondent Andrea Mitchell joins me now with the very latest about the prospect of Senator Hillary Clinton being chosen as secretary of state.

Andrea, new reporting from you tonight. What is the very latest?

ANDREA MITCHELL, NBC NEWS CHIEF FOREIGN AFFAIRS CORRESPONDENT: Well, the latest is that there has been some cooling in Chicago by some Obama advisers about a lot of the reporting, the public reporting about Bill Clinton. This coming from people around Bill Clinton, about what he is willing to do about the disclosures of his contributors, that it's not helpful. They prefer less drama, less leaks. It's not the people immediately around Hillary Clinton. She has only talked to very few people, her staff and one or two other people. And so the people who say they are speaking for her are not really speaking for her. She needs to decide and of course the president-elect has to decide.

People seem to indicate that it is in her court.


MITCHELL: That if she does decide she wants it-and certain other things in the Senate have clearly been shut down for her, it was very obvious. Senate aides and others are telling me that when Teddy Kennedy had his big meeting on health care, David, yesterday, the people in that room were not Hillary Clinton. They were key Republicans, key Democratic senators. She was not there. She knows she does not have anything but a taskforce in name. No budget, no staff. She is not being given a big role in any way in the Senate.

GREGORY: It's interesting, because when you first reported the news about Hillary Clinton being this top prospect which became this huge, huge story, what you were also interested in is what you have been reporting tonight, which is, who else is part of this national security team? Who is the president-elect turning to for advice on all of that?

MITCHELL: Well, in the last two days he, in fact, did reach out to Brent Scowcroft. Brent Scowcroft, former Gerald Ford national security adviser, former national security adviser to Bush 41. And General Scowcroft was an early and vocal critic of the Iraq war, before the war, and, in fact, for that, lost his position as head of the Foreign Intelligence Advisory Board. Democratic sources confirm that they have had conversations. General Scowcroft, a key adviser and friend and former colleague of Bob Gates. Bob Gates, as a transitional Pentagon chief, very much still in play. One of the people talking to both Barack Obama and Gates, I'm told, is Senator Jack Reed, a key member of the Armed Services Committee, and a close adviser to Barack Obama. Other players, former Marine Commandant Jim Jones, former NATO supreme commander, could have a role at the State Department, at the National Security Council. Richard Danzig, a former secretary of the Navy in the Clinton administration, could be a deputy secretary of defense under Bob Gates. So these are all key players as this team is assembling. You can see also that there is always the possibility of Bill Richardson because of a lot of pressure from the Hispanic community.

GREGORY: Right. Interesting. And Brent Scowcroft opposed to the war in Iraq, but also deeply reticent about the idea of a precipitous withdrawal of U.S. troops. Wants that withdrawal process to be done very carefully. So he'll be an interesting voice for the president-elect to consult now.

MITCHELL: Exactly. David, and just one word. Nothing imminent, but as we look, you were just discussing with Erin and John the treasury situation.


MITCHELL: What I'm told is that the two surviving possibilities there, Tim Geithner at the New York Fed, Larry Summers. That there seems to be a trend towards Geithner because he represents change. Not so much because of the women's groups criticizing Summers, but that Summers could have a very major role in this administration down the road.

GREGORY: All right. Andrea Mitchell, thanks very much for coming on. Really appreciate it tonight.

MITCHELL: Sure thing.

GREGORY: Coming next, Clinton and Obama, more of this. A picture of unity on the campaign trail this fall, but leaks about the secretary of state post have sparked suspicion in both cams. Will trust get in the way of successful foreign policy?

We're going to talk about that when 1600 returns after this.


GREGORY: We're back now on 1600 PENNSYLVANIA AVENUE. Tonight, the Obama team has roughly 200,000 names of donors to Bill Clinton's foundation to pore through. The former president making good on his promise to do "whatever they want" to help vet Hillary Clinton for secretary of state. The speculation over the position has reached a fever pitch thanks to a daily stream of leaks about the vetting process and the stat of the offer, something the no-drama Obama team is said to be rather unhappy about. Let me bring in Jay Carney, Washington bureau chief for "TIME" magazine. The new issue with the latest on the transition is out today. That's actually not it. That's not the new cover. But we just want to remind people of the fine cover that was on the last edition. This is the new reporting from Karen Tumulty and Mr. Calabrazy (ph). "Bringing Hillary into the tent," the article reports, "could co-opt a potential adversary in 2012 and put a leash on her globetrotting husband, who has a propensity for foreign policy freelancing. Which raises the question, would this move, if it happens, be just the first manifestation of that new kind of politics that Obama was promising in his presidential campaign, or proof that he understands the oldest kind all too well?"Do we have an initial answer to that question?

JAY CARNEY, WASHINGTON BUREAU CHIEF, "TIME": Well, I think the answer is both, David, because, look, ,I don't think that Barack Obama-you have to assume, given how incredibly successfully they ran the campaign, given how smart the decisions he made during the campaign were, and given how smooth the transition has gone so far, that they are being very thoughtful about this process. The leaks they don't like, but the process is smart and they know what they are doing. You have to assume that given his record. They are looking for a two-fer here. They're looking for if, in fact, Hillary Clinton is the person he wants to be secretary of state, they see tremendous upside in terms of her worldwide renown, her strength, her forcefulness, her appeal, especially to women around the world, and her skill as a-I mean, her brand name as a Clinton. All of those are value-added aspects of...


GREGORY: Yes, go ahead.

CARNEY: I was just going to say, then the other side is, yes, I think they are also savvy, old-style political operatives who are surrounding Barack Obama, people like Rahm Emanuel and David Axelrod, who also understand that the Clinton/Obama dynamic could be better managed if she is inside the tent, in the cabinet, rather than in the Senate.

GREGORY: Right. All right. But we have covered a foreign policy team in the Bush White House early on, and actually throughout it was kind of a fractious bunch, especially when it came to periods of war after 9/11.

So what does Hillary Clinton potentially represent about the core of the Obama foreign policy?

CARNEY: Well, what does he represent? This is the-the thing about the Clinton/Obama fight in the primaries was that it was not particularly over issues, it was more about experience and lack of experience.


CARNEY: And one of the reasons why Clinton people, Clinton veterans are so smoothly moving into Obama's world in, both in the administration and in the transition, is because this is not an ideological divide. It's not the kind of Carter/Kennedy fight that we saw, or even Clinton versus the liberals in his party in the '92 election.


CARNEY: This is-they really agree on most things, even Iraq. I mean, they fought over the fact that Hillary Clinton voted to authorize the Iraq War, then-candidate Obama argued against it. But on the issues they are really close. I think that what you'll see is a diplomacy, a strong diplomacy-focused foreign policy, where you go with diplomacy first, you try to repair America's image abroad, you try to extend the olive branch where necessary, you try to negotiate with places like Iran, where it's appropriate. But there is a toughness to Hillary Clinton. One of the things she did so well during her campaign, David, as you know, is establish that she had the strength even as a woman to be commander in chief.

GREGORY: Well, and I just want to pick up on one final point, which is that what she represents even in defeat is something of a political movement, of a political base. And people around her talk about that, that there was a movement of people, mainly of women supporters, who are part of that 18 million group who want to still give money and create a following for her. If you are Barack Obama, it seems to me it's good politics, it's also good policy to create an age of Obama that encompasses every Democrat in the land, and certainly in the establishment, so that you sort of wipe away Clintonism and replace it with the new age of Obama. Better to have her as part of all that.

CARNEY: I think that's true. And she does represent this constituency. I mean, we all have our personal sounding boards, and some of them are in our family. My mother, a lifelong Republican, never voted for a Democrat before, pulled the lever for Barack Obama in South Carolina. When she talked about who would be secretary of state, she was very pro-Hillary. Now, this is somebody who didn't vote for Bill Clinton, but felt that Hillary Clinton would be very strong as secretary of state. So I think-you know, she is obviously a woman, and I think that there is something that Hillary represents that is very powerful and part of this sort of new politics that Barack Obama is trying to present.

GREGORY: All right. Jay Carney, bureau chief in Washington for "TIME" magazine.

Thanks, Jay. Appreciate it.

CARNEY: You bet.

CARNEY: A break here. When we come back, will January 20th bring the start of a third Clinton term? It's coming up next in "Smart Takes," why one editorial board is congratulating Senator Clinton on actually winning the presidential election.

We'll explain after this.


GREGORY: Back now at 1600. Time for "Smart Takes." "The New York Post" editorial caught our attention today with this quote, "Congratulations to Hillary and Bill Clinton, who seem to have won the presidential election despite the official results on November 4. Who knew when Obama talked about the need for the nation to turn a page he meant turning it backward?" "True, a new administration needs solid veterans on board, and Obama's picks surely all have pluses, as well as minuses. But much of the president-elect's appeal was his promise to bring change, not to return to the hyper-partisan and ethically mired days of the Clinton era." Joining me now is Michelle Bernard, president of the Independent Women's Forum, an MSNBC political analyst. Well, Michelle, this is the line that they have been threading all week, and last week, too, as they have named these Clinton veterans to positions of prominence. And, of course, if Hillary Clinton becomes secretary of state, it doesn't get anymore prominent than that. The Clinton era is back.

MICHELLE BERNARD, MSNBC POLITICAL ANALYST: Absolutely. This is, I believe, could be a potentially very significant problem for the brand new Obama administration. I mean, think about it, we just had the election on November 4th. Most of us are talking not so much about the president-elect, but about former President Bill Clinton and about Hillary Clinton. The same thing happened after Barack Obama won the Democratic nomination. All of the media was talking about Hillary Clinton. Now, you know, you look at the people that he has named to the cabinet, or at least that we believe have been named, you know, Rahm Emanuel and others, and I think that the American public seems to have an appetite for that. But, you know, there is so much drama surrounding the possibility of Hillary Clinton becoming the next secretary of state, that it-for anyone who ever suffered Clinton fatigue, they now have it in a very major way.

GREGORY: It's not like there is a parallel universe that exists of Democratic talent with the experience to actually run the government.

BERNARD: Absolutely.

GREGORY: If they were talented, if they were ambitious, if they wanted to serve the government, they did it during two terms of the Clinton years.

BERNARD: They did. If they were Democrats, they did it, and they did it during the Clinton years.


BERNARD: But there is a difference between actually working for former President Clinton and the former first lady and actually having Mrs. Clinton in a cabinet position, particularly as the secretary of state, because her husband brings so much baggage. It is the Clinton era of drama all over again. And really, you know, we should be sort of basking in the election results of November 4th, and already we're back in the middle of Clinton drama.


BERNARD: Who leaked the information? Is she going to be secretary of state?

GREGORY: And nothing fills a vacuum like the Clintons. You know, when you don't have an lot of other information, that's what's happened. All right. Michelle, stick around. We're going to come back in just a moment. Coming next, a look at the next administration. So who's on the list? Who's not? Is Hillary Clinton being visited for secretary of state? But is that the role that her supporters want to see her play? We'll get into that as well when 1600 returns.


GREGORY: Tonight: Another new deal. President-elect Barack Obama is facing the greatest economic challenge since the Great Depression, and that's exactly where he is looking for inspiration. Plus, a look at the new Obama Team tasked with pulling the country out of the gloom. Who's on the list? And will Hillary Clinton make the final cut? As 1600 PENNSYLVANIA AVENUE rolls on. Welcome back to the program: 1600 PENNSYLVANIA AVENUE. I'm David Gregory. Incoming White House Chief of Staff Rahm Emanuel visited Republican congressional leaders on the Hill today. He told them he is ready for their ideas and demonstrated his commitment by passing out his personal cellphone number. Meanwhile, a lot more buzz tonight about whether Hillary Clinton will be tapped to be head of the State Department, secretary of state. NBC News chief foreign affairs correspondent Andrea Mitchell reports tonight that some Obama advisers have, quote, "cold to the idea" but other top Democrats say the prospect of Clinton at State is still very much alive. Joining me now: Tony Blankley, syndicated columnist; and still with us, Michelle Bernard, president of the Independent Women's Forum and an MSNBC political analyst; also, back with us, John Harwood, CNBC's chief Washington correspondent and a political writer for the "New York Times." First up, Tony Blankley, let me hear you on this issue of Hillary Clinton, the leaks, the prospects, the vetting.

TONY BLANKLEY, SYNDICATED COLUMNIST: Yes. I mean, I don't understand if Obama wants her he hasn't come to closure. It's been out for over a week now. I understand why he might want to. We heard all the arguments. I don't think she was his best choice but a good one. And to let linger like this, I think he should come to closure. The idea that the disciplined Obama campaign is going to be a disciplined government begins to-I don't want to say fray, it's too early for that-but this is not the kind of disciplined stuff we saw coming out of the campaign.

GREGORY: All right. But to be fair, John Harwood, this could very well be a disciplined process that's just a lot more transparent than the Obama team would like. And there are reports about them being none too pleased with some of the leaking that's going on here, that they suspect is coming out of the Clinton world. There are difficulties. There do have to be negotiations. You've got a very activist former president who is young and engaged in a lot of philanthropy around the world, who has a huge international profile. So, if you're going to consider his spouse for secretary of state, it is necessarily a complicated process.

JOHN HARWOOD, CNBC: I think you're right about that, David. This is a situation we haven't experienced before. I do think Tony has a point, in the sense that-yes, you have vetting and it's complicated and you have discussions back and forth. But this thing has hung out for a long time. My instincts are, based on the people that I talked to is that it remains on track, that she is his choice and that she wants to do it. But the crossing the T's and dotting all the I's is taking somewhat longer than people expected.

GREGORY: You know, the issue, Michelle, that we're just talking about a moment ago of restoration of the Clinton years in the Obama administration with, you're talking about Rahm Emanuel, you talked about, I think, Tom Daschle's experience, but not so necessarily in the Clinton camp, Greg Craig, Larry Summers potential for Treasury secretary. Obviously, a lot of-Eric Holder back as attorney general. Word today that Janet Napolitano, the governor for Arizona, who would definitely be an outsider of Washington (ph) governing, coming to run Homeland Security, elicited a rather odd congratulatory note from John McCain, the senator of Arizona, when none of this has become official. This is from Senator McCain, "Governor Napolitano's experience as the former U.S. attorney for Arizona," Arizona's attorney general, and his governor, "warrants a rapid confirmation by the Senate and I hope she is quickly confirmed." The only problem is she wasn't officially announced. That seems a little weird today.

MICHELLE BERNARD, MSNBC POLITICAL ANALYST: Yes, it seems a little bit bizarre. I think he's trying to show a little, you know, statehood camaraderie-in congratulating here. But it was a little bit strange, kind of jumping the gun. It'd be very interesting to see what happens and whether or not that we get an official announcement that she is actually been named., you know.


BERNARD: . the new secretary of the Department of Homeland Security.

GREGORY: You know, especially with that, Tony, do you come to the defense of Team Obama here on the notion of wanting to get something done and drawing from the best Democratic talent that's out there, many of whom are veterans? You know, not surprisingly of the Clinton administration when you do have outsiders like a Napolitano who looks like she's coming in as well?

BLANKLEY: I'm going to oddly defend the Obama Team for a moment, because my White House, the Reagan White House, we came in in '81, and we populated most of the administration with Nixon and Ford people-we didn't have enough Reaganites-but we populated the White House with Reaganites and key spots in the sub-cabinet with Reaganites. And, I think, Reagan was able to carry out a strong conservative agenda even though he used a lot of Nixon and Ford retreads, is what we called them at the time. So, I don't think that the fact that he is going with experienced Clinton people necessarily means that he's not going to be the master of his own agenda. We'll have to see. Now, as far as the governor of Arizona, I find her a very disappointing selection of that seat because while she is qualified, nominally, she has no anti-terrorism experience. And I know that my-research on anti-terrorism bill (ph), a lot of very qualified senior Democrats who could take that spot. That's why the agency was created for anti-terrorism.

GREGORY: Yes. Well, that's true. Although, let's not forget that DHS' perhaps worst moment in this Bush moment had to do with Hurricane Katrina. So, having a chief executive there might be an important call as well. I want to ask you about Chuck Hagel, somebody who's been part of this speculation process for a while, John Harwood. He gave a speech today on foreign policy in which he sounded a lot like Barack Obama in the area of diplomacy. Listen to this.


SEN. CHUCK HAGEL, ® NEBRASKA: Somehow we have gotten in some minds in the United States that engagement is appeasement, that diplomacy is retreat. We've got to change that mindset.


GREGORY: Audio wasn't great, John. But do you think this is a Republican who is auditioning for the Obama administration?

HARWOOD: I do. Remember, Chuck Hagel's wife endorsed Barack Obama during the campaign. Chuck Hagel didn't take that step himself. But, it was very significant that that happened even though Hagel, in the past, had been very close to John McCain. So, yes, I think we've been seeing signals from Chuck Hagel throughout the year that he wants to play a different role in American politics. He has been on the outs with the Bush White House for some time, and I think he's going to find President Obama a lot more congenial, and Barack Obama may find him a Republican that he wants to put in a significant role.

GREGORY: Quickly, Michelle, is all of this, do you think, providing some legitimate concern for liberals who supported Barack Obama, who felt, you know, he was their champion even against the Clintons, and now he is in power, and he's talking about a "team of rivals" and reaching out, and changing the tone in a significant way? Is this a letdown for a big part of his base?

BERNARD: It could be. Particularly, you know, I still believe that there are some very hard feelings going on still between, you know, rabid Clinton supporters and rabid Obama supporters. And I think that some of those people who supported President-elect Obama could be very disappointed with some of the picks that he makes. I think that if he is reaching over the aisle to certain Republicans, it's going to be fine, the same thing with certain Democrats. There were people who worked for former President Clinton who supported Barack Obama and worked for Barack Obama.


BERNARD: Many, many people but it's the people who left the Clinton camp and found a home with the Obamas where I believe that there could be some tension and I think that-that when you look at the myriad of op-eds that have been written and columnists that have come out, and I think that they are speaking for people who read their newspaper, who are very vent-very angered.


BERNARD: . by the possibility of us seeing another Clinton era over the next four years.

GREGORY: OK. We'll leave it there. Thanks to the panel tonight.

Coming up: Hillary Clinton, do her supporters want to see her in the State Department? Is this the fulfillment of the movement that she unleashed in course of this campaign? I'm going to talk to a long-time confidant of the senator when 1600 returns after this.


GREGORY: We're back now. The primary is over, the general election-over. But the Clinton/Obama drama seems to go on, this time surrounding the secretary of state job. The "New York Times" reporting today this, "Aides in each camp have grown increasingly sour toward the other in recent days as the matter played out publicly. Some in the Obama camp are bristling at what they see as strategic leaks by the Clintons aimed at boxing the president-elect and forcing him to offer the post." Joining me now is Capricia Marshall, director of Senator Clinton's political action committee, HillPAC, and former social secretary in the Clinton White House.

Capricia, good to see you. Thanks for being here.


GREGORY: I'm doing well.

I don't-I don't want to draw you in to whatever the negative feelings are back and forth between these two camps. I want to ask a more general question which is: As somebody who has been associated and known Senator Clinton for a long time, and has followed the campaign supported her closely during the campaign-does Secretary of State Clinton, if that's the job she gets, does that represent the fulfillment of the movement that she really unleashed in the course of her candidacy? And if so, why?

MARSHALL: Well, I have to say, David, that I'm really excited to be here this evening with you but, you know, I'm going to allow the statements and the comments of Senator Clinton and that those she has made in the last couple of weeks stand, and all of the speculation that she has addressed stand as is. I really don't have anything to add about all of that.

GREGORY: Well, but as a supporter of hers, what I'm asking is-is this what her supporters want for her?


GREGORY: When there was talk of 18 million supporters continuing to raise money, when HillPAC was moving forward, is this is best way to channel that energy and that organization?

MARSHALL: Well, I would be speculating myself. I really just don't know. I am.

GREGORY: Well, I'm asking you-I'm asking you to speak for yourself.

MARSHALL: Sure. I understand that. But what I'm excited about is the inauguration that's coming up and the transition that's coming up. And that's what taking place right now on Pennsylvania Avenue.


MARSHALL: . and here in Washington, D.C. It's very exciting time. And I'm so excited about being a part of those activities moving forward.

GREGORY: OK. I understand that. But I'm not trying to put you in an uncomfortable position but I am asking a direct question which is.

MARSHALL: Oh, sure.

GREGORY: Where is the Hillary Clinton movement that her supporters talk about best served? If you don't want to say specifically about secretary of state, what does the people like yourself who have been involved in the organization of it feel that it should move? What's the potential for it-of a group of supporters that want to still be active, that want to support her-how can she still champion that cause?

MARSHALL: Well, I don't want-I certainly don't want to frustrate you, David, because you are being so kind to me right now, but I just really don't feel like speculating about where a movement should go or how the movement should go about Senator Clinton. She is an extraordinary person. And so, whatever decision she makes, we will all support fully.

GREGORY: Is there an issue that you've been involved with in terms of how important is the issue of the retirement of her campaign debt? Is that something that a supporter of her, somebody who's been running the PAC, that you'd like to see the Obama administration or President-elect Obama specifically get involved with?

MARSHALL: Well, I certainly do want the debt retired-absolutely. She worked very hard throughout the entire campaign, and in the end, we owe a few more vendors and we are looking forward to retiring that very, very soon.

GREGORY: Right. Well, what can he do to help?

MARSHALL: Well, I think, everyone can participate. We reach out to everyone through our e-mails, through letter solicitations, through a variety of ways of having people participate in the process with us.

GREGORY: But I'm asking you a direct question. What he, the president-elect, do-what would you like to see him do?

MARSHALL: Well, I think it's up to him and his team, and how he wants to participate.

GREGORY: All right. Capricia Marshall, thank you very much for being on the program tonight.

Coming next: What can Obama learn from the former president and his New Deal? "Newsweek's" Jonathan Alter and presidential historian Michael Beschloss join me right after this break.



PRESIDENT-ELECT BARACK OBAMA, UNITED STATES OF AMERICA: The most famous words ever spoken by an American came from a president who took office in a time of turmoil. He said, "The only thing we have to fear is fear itself." So now is not the time for fear. Now is not the time for panic. Now is not the time to turn Americans against each other. Now is the time for resolve and steady leadership.


GREGORY: That, of course, President-elect Obama a month ago on the campaign trail in Ohio, drawing inspiration from the 32nd president, Franklin Delano Roosevelt. Like Roosevelt, Obama will take office at a time of great economic challenge. What lesson can he learn from FDR's presidency? Joining me now: Jonathan Alter, senior editor and columnist at "Newsweek," and an NBC News analyst. Jonathan is also the author of "The Defining Moment: FDR's Hundred Days and the Triumph of Hope" something the president-elect referenced in his recent interview, and something that he's been spending some time reading. Also, Michael Beschloss, NBC News presidential historian and the author of "Presidential Courage: Brave Leaders and How They Changed America, 1789 to 1989." Welcome to both of you. (INAUDIBLE) we started to talk about this even before we came back from the commercial because it's so interesting-this idea, Jonathan, of Obama potentially disappointing his base by reaching out to Senator Clinton, to the "team of rivals" idea, but also looking ideologically broadly. Does he perhaps approach his first 100 days in a much grander fashion because of how much peril he faces in the country?

JONATHAN ALTER, NEWSWEEK: I think so. I think, as Rahm Emanuel said, you know, crisis offers opportunity for big, big things.


ALTER: Now, if you look at what Roosevelt did when he came in, he actually had a couple of Republicans in his cabinet and some very conservative Democrats. But he moved very, very boldly. The key lines from that famous first inaugural were not "the only thing we have to fear is fear itself," you know, "if you are worried about putting food on the table that's not fear itself, that's something real to fear." So, that line, in some ways, was a bit of inspired nonsense. But the really important line, David, word was "action and action now."


ALTER: And he used that word six times in his inaugural address, that he was going to move past and he got through 15 major pieces of legislation in 100 days.

GREGORY: And you're talking about, Michael, of presidential courage. There is so much fear right now in the economy. And I feel like-the more people really sort of understand what kind of shape the economy is, is in, it's really going to make them a lot more afraid. And we are seeing fear all over the place. But really getting our arms around it is difficult, and you meet fear with courage and you can do it with bold leadership.

MICHAEL BESCHLOSS, NBC NEWS PRESIDENTIAL HISTORIAN: You can. And, you know, take a look. Sometimes people say it doesn't really make a difference who is president, you know.


BESCHLOSS: Maybe historical forces are more important. Go back to 1933. Let's say Franklin Roosevelt was not president. Let's say it was Al Smith the runner-up, or John Nance Garner, someone without that oratorical ability to actually get people to feel that the only thing to fear was fear itself when actually, as Jon and I were talking about earlier and we were, David, there was a lot more to fear.


BESCHLOSS: But Roosevelt was so good in framing the issues and telling people the system will survive, this country also has, that they were able to set aside those doubts.

GREGORY: And it's that activism, right? Obama talked in his interview with Steve Croft at CBS about trying some things, that the American people want to see some experimentation.


GREGORY: And to a lot of people, they'll say, wait, no, we don't go to a doctor for experimentation, we want to see action that's going to work. But the truth is, there is a lot of room for experimentation now as long as you are bold and activist about it.

ALTER: Yes. Well, Roosevelt defined it. And this was the watch word for the New Deal --- bold, persistent experimentation. Take a method and try it. If it fails, admit failure frankly, which is kind of a novel concept in this era, right? And try something else. But above all, try something. And that's what Roosevelt said. And that's what the American people responded to. They didn't care all that much about the specifics. They wanted somebody trying to at least dent the problem. And he didn't end the depression until World War II, but he got tremendous credit for getting up every day and throwing different possible solutions at the crisis. And I think that Obama really understands it. He used that word "action" in that "60 Minutes" interview over and over again, too.

BESCHLOSS: And another reassuring thing for Obama is that, although Roosevelt didn't get out of the depression until the end of the '30s, in '34, Americans felt that he cared so much and was trying to help, they gave the Democrats even more members of Congress, gave Roosevelt a big reelection in 1936. You know, people when Roosevelt was going through streets, campaigning in -'36, people had literally screamed, "He saved my house. He kept my children from starving." If a president gives that sense, even if it isn't working perfectly, the American people tend to respond.

ALTER: It's interesting you mention "save my house." I mean, right now, the Bush administration is working on bailing out the financial sector, right? And the Hoover administration had the Reconstruction Finance Corporation also bailing out big corporations. In neither case, neither Hoover nor Bush wanted to deal with homeowners.


ALTER: And so, you see, first, Roosevelt, and now you'll see Obama coming in and saying, "Wait a minute. How about the little guy trying to keep a hold of his house? If it's good enough for greedy bankers, why isn't it good enough to help out needy Americans?"

GREGORY: What FDR accomplished was that sense of shared sacrifice and a sense that we are in it together. Obama seems to have some potential to achieve that as well. What does he do, though, to take the image and the feeling of Grant Park and even the campaign, and make that real? Because whatever cult of personality or leadership qualities that one has had in the past, it's a different media era today, information travels differently, and frankly, it seems like the expectation of people is different.

BESCHLOSS: I couldn't say it better. Roosevelt had the benefit of the fact that even though people were suffering in the '30s, they tended to be patient. They didn't expect it to be fixed in 30 days. You know, just as you're saying, we are in this cycle now that people expect it fixed in about 24 hours. And you have to hope that people will realize that these are not problems that are not likely to be solved in the first 100 days or, maybe even as Obama said at Grant Park, the first term.

GREGORY: You know, what's interesting to me, though, is I think about George W. Bush, President Bush. And after 9/11, he, I always said that he captured the tone of the country, he captured the sense of resolve and anger and he articulated that. Somebody who's not known as a great speaker was a great speaker in those moments.

ALTER: Yes. He was.

GREGORY: Now, a lot of people felt he sort of lost that along the way. But what he was saying is still true-that this is a long-term problem, that long after people tire of it, a leader has to remain focused on. And perhaps if he had made some different choices and rallied people in a different way, they would have still been tuned in to him.


GREGORY: But the potential for that was there even with him.

ALTER: Absolutely. Any president can seize the moment. But the moment doesn't last that long.


ALTER: That's why 2009 is so critical, if not the first 100 days, then the whole year. And he has a great opportunity to move very aggressively.


ALTER: His danger, David, is not in moving too quickly, it's moving too slowly.

GREGORY: Right. But what excites you about-you just said you are excited about this transition period and the early part of the administration. What excites you about this transition period that you find so instructive?

ALTER: Well, first of all, we have much less of a sense of how this is going to go.


ALTER: In 2008, we were pretty confident a Democrat was going to get elected. You know, this is much more of a suspense story. And the other thing is, in the same way Roosevelt dominated the new medium of his day-radio, Obama and the Internet.


ALTER: Watching how he uses this-he's got 10 million e-mail addresses in his database. When there were-these wildfires in California, he got some of his people out there to go and work and help victims of those fires. There is a potential here for a whole birth of civic action that goes way beyond politics.


ALTER: But there's the potential to blow it. There's about 100 different ways he can blow it. So, there is great suspense in seeing how he negotiates his way through all these possible traps.

BESCHLOSS: And also say that this is a moment of crisis. In history, that's what we, Americans, have done. We come together under the leadership of the president.


BESCHLOSS: That was Bush's big lost opportunity. He basically said, "I'm going to campaign in 2004. I'm going to please my base. I don't care about anyone else." Obama shows signs of doing the opposite.

GREGORY: Is the potential for failure failure itself, when you've got a problem like the economy that's not going to right itself for a long time, or is it ideological failure?

BESCHLOSS: Oh, I think, there are a lot of members of Barack Obama's base who are going to be very displeased. We are seeing it already.


BESCHLOSS: But I think, more than that, his problem is that people want to see results. 1982, Ronald Reagan's Republicans lost big in Congress because the recession was still on. I'm not sure that Americans are going to be very patient if two years from now, things don't seem to be monumentally better.

GREGORY: All right. We'll leave it there. A lot to think about and keep watching.

Michael Beschloss and Jonathan Alter, thanks very much to both of you.


ALTER: Thanks, David.

GREGORY: That is the view from 1600 PENNSYLVANIA AVENUE tonight. I'm David Gregory. Thank you for watching. I'll be back in Washington tomorrow night, 6:00 p.m. Eastern, on MSNBC.

"HARDBALL" with Chris Matthews is coming your way next. Have a good night.



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


Discussion comments