updated 11/25/2008 12:13:50 PM ET 2008-11-25T17:13:50


Guests: Margaret Brennan, Mike Barnicle, Chris Cillizza, Jay Carney, Jim Cramer, Jim Moran, Dick Armey, Laura Tyson, Todd Harris, Steve McMahon

MIKE BARNICLE, GUEST HOST: Show me the money.

Let's play HARDBALL.

Good evening. I'm Mike Barnicle, in for Chris Matthews. Leading off tonight: It's the stupid economy. The economy and all of its problems isn't just a story today, it's the story. President-elect Obama announced key members of his economic team this morning in Chicago. The top choices, Tim Geithner as Treasury secretary and former Treasury secretary Larry Summers as director of the National Economic Council.

Obama talked about the need to get the economy moving again.


SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: We need a recovery plan for both Wall Street and Main Street, a plan that stabilizes our financial system and gets credit flowing again.


MATTHEWS: Well, Wall Street seemed to like what it heard this morning, the Dow gaining 396 points on the day.

Also: Who isn't asking for a bail-out these days? The government has already bailed out AIG, some $700 billion is ticketed for Wall Street and Detroit's big three have received $25 billion and have their hands out for more. Then today, we also learned that federal regulators have approved a plan to pump $20 billion more into struggling CitiGroup and to back more than $300 billion in toxic loans. So who's next, and where does it end?

Plus, if we're not broke after all those bail-outs, consider this. The Obama team is talking about an economic stimulus package that, as one Obama adviser put it, will have so many zeros that people will say, Oooh. The goal is to create 2.5 million new jobs. Exactly where is all this money supposed to come from? We'll discuss the pros and cons of the expected economic stimulus plan in a moment.

Also, if you were wondering why Wall Street gets bailed out but the big three auto makers don't-at least not yet-you're not alone. Is that fair? We'll look at that in tonight's "Politics Fix."

And President Bush has 57 days left in office. So tonight, we're beginning a new feature, "Final Days," a daily look at what the president of the United States is doing as the financial crisis consumes his presidency. This morning, he met with Treasury Secretary Hank Paulson. Normally, a president meeting with a Treasury secretary in the middle of an economic crisis would be big news, but this may be the first you've heard about it because it was completely overshadowed by Barack Obama's news conference. Could it be that President Bush is now irrelevant? We'll have that and much more in the HARDBALL "Sideshow."

But first, Laura Tyson is an Obama economic adviser and the former chair of President Clinton's Council of Economic Advisers. Ms. Tyson, thanks for joining us.


BARNICLE: And right off the top, Tim Geithner-tell me why Tim Geithner and not Larry Summers at Treasury.

TYSON: Well, Tim Geithner has been working on the scenes at the New York Fed for the last several years. He's been deeply involved in the ongoing crisis. He's experienced. He has the respect of Wall Street. He has the respect of the Congress. He worked with Larry Summers closely in the Treasury. They're a wonderful team. I would not say one instead of the other. This is a team of both, and it will be very powerful.

BARNICLE: Earlier this morning, I'm sure you watched President-elect Obama's news conference, and he had this to say about what will take place for the next 60 days, if you could please listen to this sound bite.

TYSON: Sure.


OBAMA: Our families can't afford to keep on waiting and hoping for a solution. They can't afford to watch another month of unpaid bills pile up, another semester of tuition slip out of reach, another month where instead of saving for retirement, they're dipping into their savings just to get by. I want to repeat, this will not be easy. There are no shortcuts or quick fixes to this crisis, which has be many years in the making, and the economy is likely to get worse before it gets better. Full recovery will not happen immediately.


BARNICLE: You know, to a lot of people, Ms. Tyson, January 20 seems as if it's a long way away, given the crisis that we're in the midst of now. And I think a lot of average people are fearful about what's happening with the economy because there's been so little certainty coming out of Washington, it would seem.

So my question is to you, what can the incoming Obama administration with this new economic team do now, in the interim, before January 20, if anything, to help restore confidence in this country?

TYSON: Well, I think that it's great news that the economic team has been appointed. There will be a couple of additional appointments tomorrow, but these are very outstanding individuals and very experienced individuals. And they will be able to work behind the scenes with the Congress, with the outgoing administration, with the Federal Reserve.

We know that there are conversations going on now, there have been going on between the Treasury and the transition team, so that there really will be the possibility of moving the right policy agenda forward before the president takes office on January 20.

Some of the work, of course, has to be done by the Congress, and there really is the issue of whether the lame duck Congress can get things done or whether some of-those that require legislative action, for example, massive stimulus, may indeed have to wait until we have both a new Congress and a new president. But certainly, the plans for what that stimulus package will be, how large it will be, what its composition will be, can be done now and can be done in communication and coordination between the president-elect's transition team and now his new economic team and the members of Congress who will be returning.

BARNICLE: You know, you've been there. You've been in the White House, certainly not in such a critical moment as we face now.


BARNICLE: But do you sense that there might be a feeling of relief within Ben Bernanke and Hank Paulson that, you know, help is on the way, that there is a new team with more energy, perhaps, on the horizon coming to help them out?

TYSON: Well, I don't know if it's-I think that, certainly, I would expect that Ben Bernanke and Hank Paulson and others in the Congress that's all (ph) been (ph) expressed (ph) would recognize the great talent of the team that the president-elect has put together and would say, This is a fabulous team, this is a team that we can work with.

I think it also basically allows for, as I said, communication and policy development to go on. And I think that the American people should rest assured that with the appointment of such outstanding leadership, there will be action to move things forward more expeditiously.

BARNICLE: Final question for you. I mean, all these brilliant people coming into office, all of these smart people currently presiding over the economy, how come nobody saw this thing coming?

TYSON: Well, there were those who did see it coming. On the other hand, I think that I would go to the perfect storm analogy, which I have heard the former Treasury secretary, Bob Rubin, use. We have had a lot of things that have gone wrong at once. We do have to look very hard at the process by which we got here, but you know what? The first order of business is actually economic recovery planning, moving us out as expeditiously, as quickly, as effectively as possible. We can learn the lessons of how we got into it, but let's get the job done for the future first. And I think that's really what the first order of priority is.

BARNICLE: Laura Tyson, thanks very much for joining us. We appreciate it.

TYSON: Thank you.

BARNICLE: We're also joined this evening by Jim Cramer, the host of CNBC's "Mad Money." Mr. Cramer, thanks for joining us. Let me ask you pretty much the same question. We have all of these geniuses on the stage in Chicago today, we have all these Mensa members in Washington presiding over the economy, Ben Bernanke and everybody, how did this thing sneak up on so many people?

JIM CRAMER, HOST, CNBC'S "MAD MONEY": Well, it didn't sneak up on Larry Summers. He'd been writing about this and how house price depreciation could be the end of the economy for multiple years. So he's a fresh voice.

I happen to agree with the skepticism you have about Tim Geithner. Although I'm in a "Honeymooner" kind of Ralph Kramden mode here, meaning that perhaps-it may be he was not as-maybe he was pressured somewhat because he was the regulator for Wall Street, so he was in charge of Bear Stearns, in charge of Lehman Brothers, in charge of the problems at Merrill. And you could argue that perhaps Paulson or Bernanke said, Hands off.

But I think you're right, Mike. I mean, I'd like to see exactly what he knew and what he did. Although Wall Street likes him, is that really a good thing?

BARNICLE: Well, you're Kramden. I'll be Norton, OK?

CRAMER: All right.

BARNICLE: So my question to you, Ralphie boy, is this-off of your answer. I mean, wasn't Tim Geithner sitting there, holding onto the wheel, along with a couple of other people on Wall Street as Bear Stearns went down, as Lehman was allowed to go bankrupt, as Citi was slowly bleeding to death? I mean, wasn't he there for all of this?

CRAMER: Well, Michael, my friends on Wall Street would say, To the moon, Michael, but I agree with you. This has been a major problem for me is to understand how everybody is so sanguine about this guy. I understand the need to pull together and to say, Listen, this team could be good. But I'd like to have those questions answered.

I know "The Wall Street Journal"-I haven't agreed with a "Wall Street Journal" editorial since perhaps, I don't know, we all united about Pearl Harbor. But I do believe that this is one of those situations where he was in the room. I'd like to know point-blank what he knew and what he didn't about letting Lehman go, which was the worst thing that has happened. Again, I think skepticism is warranted for anybody who was involved with what occurred.

BARNICLE: Tell me, Jim, about the management of Citi, this huge, sprawling financial empire that apparently had trouble digesting and integrating everything they purchased over the past five, six, seven years. I mean, it seems as if this, too, happened like that. A few weeks ago, they were on the verge of buying Wachovia. A year ago, they were the biggest bank in America by market cap. How did it happen, like, over a single weekend, all of a sudden, we have to help these guys out?

CRAMER: It's actually worse than that. There was a presentation just this week ago on Monday, where I listened and it looked like they had $30 billion in bad assets. Now we need $400 billion? I don't know. That doesn't seem like a rounding error to me. And I will tell you this. Bob Rubin was integrally involved with all this. Why didn't he red-flag it? Good article in "The New York Times" yesterday. CitiGroup has been a run amok situation. Why was management kept in place by this new bail-out? Why does the government not have someone on the board? Why isn't the board replaced?

These again are questions that need to be answered. I do not want to be a guy who's pot-shotting. It's important for confidence you. And you and I talked this morning on "MORNING JOE." I don't want to be the guy who just says none of this matters because we've got to get a fresh start going here. But the questions you're raising need to be answered before the new team takes over.

BARNICLE: Well, here's another question for you. I mean, very few people know more about the inner workings of the economy and Wall Street than you do. So a couple of months ago, the Treasury secretary, Hank Paulson, has the nine biggest banks down to Washington and he basically tells them, We're going to throw all this money at you. You have to take it. In retrospect, do you think that was designed to cover up the fact then that Citi was the biggest bank and Citi was in big trouble?

CRAMER: Let's speak facts. We know that many of those banks did not want the money, which then leads me to conclude, Well, hold it, someone must have needed the money or they wouldn't have done it. The logical company that needed the money, we know from the way that there was going to be a shotgun marriage between Citi and Wachovia, where the government wanted to bail out Citi-the logical presumption is exactly what you addressed, particularly because Bank of America didn't need it. They just invested a very good investment in China. Wells Fargo has gone out of its way to say it didn't need it. So to me, until proven innocent, the guilty party was CitiGroup.

BARNICLE: So right now-the stock market went up today, took a big bump today-are you an optimist or a possess mist over the next six months in terms of how the economy is going to fluctuate or act?

CRAMER: I think that confidence matters. I think that you cannot be-it's reckless to be as pessimistic as you would have been ahead of the Citi reorganization, and the notion that Obama is going to hit the ground running. So I can't be as negative as I would be. It doesn't mean I trust the stock market. We just went up 800 points. I always tell people on my show, You got to start taking a little off the table and get those moves. And things are quite bad in the country.

But see, if I stay as negative as I've been-and I've been negative for 3,500 points-I am not going to be anything other than a perma (ph) bear, Mike, and I know you don't-you know that's not my style. I can't go there.

BARNICLE: So one quick question...


BARNICLE: ... looking for one quick answer. Is there anything that you would have liked to have seen the president-elect say today to take the fear out of Main Street?

CRAMER: I would have liked to hear paint-blank, Listen, we're not going to raise anybody's taxes. This is not the right time. That would have been good. And let's put a number on the infrastructure. Let's be sure that we actually know that it is not just zero zero zeros but it's at least $2 trillion. We need that.

BARNICLE: Ralph Kramden, AKA Jim Cramer, thanks very much.

CRAMER: Thank you, Mike.

BARNICLE: "Mad Money" airs weeknights at 6:00 and 11:00 Eastern on


Coming up: Another bank, another bailout. With the government stepping in with a multi-billion-dollar bail-out for CitiGroup, who's next, and where does it end?

And is President Bush doing enough to get President-elect Obama involved in these big economic decisions?

You're watching HARDBALL, only on MSNBC.


BARNICLE: Welcome back to HARDBALL. Once again, the United States government is coming to the rescue of CitiGroup, the country's second largest bank. Last month, the bank got an infusion of $25 billion from the Treasury, and now CitiGroup will be getting $20 billion more. Taxpayers will also be on the hook for almost all of the banks $306 billion in troubled assets. President Bush said today that he would consider other rescues he deems necessary to help stabilize the faltering economy. The president also said he discussed his decision with President-elect Obama before going public with it today.

For more on the political implications of the CitiGroup bail-out and others yet to come, we turn to our strategists, Republican Todd Harris and Democrat Steve McMahon.

Now, gentlemen, I don't want you, like, getting in a fistfight over this, but I'm going to start with you, Steve, first. And my question is, is there a tipping point here? At some point, does Congress, both Republican and Democrat, say, Enough is enough, we don't have this kind of money, Steve?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: I think there is a tipping point. We obviously haven't reached it yet, and Senator-elect-or President-elect Obama is now looking for a great, big package, which I think he's wisely trying to get done not in his first 100 days but his first 30 days because the more people pick at this thing, the more they're going to find fault with it. And think, you know, at some point, there is a tipping point, but we obviously haven't reached it yet.

BARNICLE: Steve? Todd? That was Steve.

TODD HARRIS, REPUBLICAN STRATEGIST: No, I agree with Steve, absolutely. I think that it's important, as we talk about CitiGroup and we talk about some of these other bail-outs, though, we have to put all of this into the larger, and frankly, far scarier context, which is-you know, there's a brand-new analysis out from Bloomberg News that shows that if you total up the amount in guarantees, direct bail-out money and loans that have been pumped into the financial services industry, $7.4 trillion, with a T. That's $24,000 for every single man, woman and child in this country.

And we really as taxpayers-that's our money. We really don't know where a lot of that money is being spent. So when you talk about a tipping point, I think one of the things that will cause at least Republicans to reach that tipping point an awful lot faster than they otherwise would is if there's a real lack of transparency in terms of how this money is being spent and where it's going.

BARNICLE: Yes, Todd. I mean, never mind where it's being spent. I mean, do you ever stop to think, Where is it coming from?

HARRIS: Well, China.

MCMAHON: Yes. Well, it's-it's coming from China.

But, when you talk about tipping points, for Democrats, I think the tipping point is going to be, if they continue to bail out Wall Street, and they don't-they don't do what-what Barack Obama was talking about today, which is to try to make this economic aid package work a little bit harder for Main Street, there's going to be a tipping point in Congress among Democrats.

And if they don't ask these CEOs who are coming hat in hand asking for taxpayer money in the billions and billions of dollars to control their own salaries, then I think there's going to be a tipping point. You know, the president of Citigroup shouldn't be making any more money than the president of the United States of America.

And, if he is, taxpayers have every reason to be upset.

BARNICLE: All right. All right.

So, Todd, what does John Boehner and the Republicans in the House, specifically the House, what do they have to say when the yammering starts about just that sort of thing, like the givebacks, give back your bonus, give back a portion of your salary, unless the president-elect of the United States decides to let the-the Bush tax decrease on the wealthy-let it go until the end of the year? What happens?

HARRIS: Well-and I do think having president-elect Obama saying that-that he would likely either defer or-or not phase out the president's-President Bush's tax cuts sooner than he otherwise might have, I-I think that that's a positive step, as far as reaching out for Republicans.

The other thing that I think Republicans are going to want to hear-you know, Chuck Todd made a great point on "Meet the Press" the other day, when he talked about how they brought in the heads of the Big Three and raked them over the coals in front of Congress, rightly so, the other day, but missing from that table was the head of the United Auto Workers union.

Republicans are going to be looking-as we talk about concessions on the management side, we're going to be looking, when you talk about bailing out Detroit, looking at reopening some of those ridiculous union contracts that have been huge, massive giveaways.

BARNICLE: Well, all right, Todd, strategize this. You say huge, massive giveaways for Detroit.

Ron Gettelfinger was there at the table the other day, but he was not touched up as much as the three guys from the Big Three automakers were. But, OK, why should we bail out AIG? They're making much more per hour, the people there at that bust-out outfit, than the United Auto Workers are making on the line? I mean, isn't this class warfare we're talking about?

HARRIS: No, I don't-I don't think that this is class warfare. I mean, you talk about a company like AIG or a company like Citigroup, and there was bipartisan consensus that they were simply too big to allow to fail.

Now, you haven't heard-at least I'm not aware of any Republicans saying, no, you have got to protect the AIG management, or you have got to protect the Citigroup management. If they need to be hung out to dry, then let them hang them out to dry.

But, when you talk about some of these union contracts that are really crippling the Big Three, it's not just that they made bad cars or that they made cars that used a lot of gas. They certainly did, although their cars are a lot better now. But, if you're going to address fundamental reform in Detroit, you have got to have the union issue on the table.

BARNICLE: All right, let me ask you this, Todd. Who designed the cars? Did the UAW design these cars that nobody wants to buy?

HARRIS: No. The UAW designed the contracts that are crippling from legacy costs. And, you know, it costs between 30 percent and 40 percent more in labor costs for Detroit to make a car than it costs for Toyota to make a car right here in the United States. And that's all because of these crippling union contracts.

BARNICLE: And, Steve, that does lead to a potential problem for the incoming Obama administration, the need to step up to the unions and say, listen, we know you have given back a lot in your new contract, but you're going to have to give back even more right now for retirees who are on pay-less health benefits for their lives, and had the-all of that stuff.

I mean, doesn't it-doesn't it present a problem?

MCMAHON: Well, it presents a challenge, but I don't think it presents a problem.

I mean, basically, the wealthy in this country have-have feasted at the banquet table of lower taxes, and the middle class has paid the bill. And I think, to get back to Todd's point, or to get back to your point, Mike, this is a little bit of class warfare, because you have-you have these CEOs coming to town-and I'm not singling out the auto industry, because I don't think that they're any worse than anybody else-coming to town with their-in their private jets, with their huge salaries, and they're essentially saying, we need billions and billions of taxpayer dollars.

And you have got the guy who is making 25 bucks an hour on the line, and Todd's sitting there blaming him for the problem. He's not the problem.

And-and, frankly, in this country, one of the reasons we have a union movement is so that people can afford to buy the automobiles that they make. That was Henry Ford's vision. It wasn't the vision of labor. It was the vision of the owner of the company: The people who make my cars ought to be able to afford to buy them.

I think that's the right vision. I think Senator Obama-president-elect Obama agrees with me. And I think the majority of Americans do as well. And, you know, it's-it's-before it's-before you go after the guy making 25 bucks an hour, you ought to squeeze a little out of the guy making $25 million for taking his company into the tank.

BARNICLE: Todd, are you going to take that big-time dis?

HARRIS: Well, I don't disagree. Well, first of all, they don't make 25 bucks an hour. They make a heck of a lot more than that in Detroit.


HARRIS: But I don't disagree. Hang the management out to dry, but we have got to have these union contracts on the table if we're going to talk about any realistic bailout for Detroit.

MCMAHON: This is the first time-I have got to tell you, I have been listening to the commentary for a long time. This is the first time I have really heard anybody blame the guy making $25 or $30 or even $35 an hour for the economic collapse on Wall Street.

HARRIS: Or $70, $75 an hour.


MCMAHON: It's the first time I have ever heard anybody seriously suggest that, by penalizing them, you are going to fix the problem.

I-normally-Todd is a smart guy, but he doesn't believe this.

BARNICLE: No, we have got class warfare going on right here.

HARRIS: I'm not talking about the problem-I'm not talking about the problem on Wall Street. I'm talking about the problem in Detroit here. We're talking about bailouts. And if we're going to bail out Detroit, then the union-those union contracts have got to be on the table.

BARNICLE: Well, thank God we separated you two guys tonight. You're going to come to blows.


BARNICLE: Todd Harris, Steve McMahon, thanks very much.

MCMAHON: Thank you.

HARRIS: Thank you.

BARNICLE: Up next: So, how is President Bush spending his last weeks in office? Stick around for our new feature, "Final Daze." to find out what Mr. Bush is up to, as the economic crisis swirls downward.

You're watching HARDBALL, only on MSNBC.


BARNICLE: Back to HARDBALL. And time now for the "Sideshow."

First up tonight: Hillary Clinton is probably going to be the next secretary of state. But what about Bill Clinton?

Here's Darrell Hammond with his interpretation on "Saturday Night Live" this weekend.


DARRELL HAMMOND, ACTOR: After the holiday, Barack Obama will officially appoint me husband to the secretary of state.


SETH MEYERS, ACTOR: You mean he will appoint Hillary to secretary of state?

HAMMOND: Say it however you want to say it, Seth.


HAMMOND: To all those world leaders out there who thought they would be dealing with a cool operator like Barack Obama, surprise. You got Hillary.


HAMMOND: There are only three words you're going to need for when Hillary shows up: "I am sorry."




BARNICLE: Next up: Governor Palin has taken a lot of heat lately, but here's a new video by one group that likes her.


UNIDENTIFIED MALE: As Americans sit down to their Thanksgiving dinners of turkey or moose, a grateful nation wishes to say:

UNIDENTIFIED FEMALE: Thank you, Governor Palin.



UNIDENTIFIED FEMALE: Thank you, Governor Palin.

UNIDENTIFIED MALE: We thank you for fighting for everyday working families.

UNIDENTIFIED MALE: You have given us hope. And we just wanted to say:


UNIDENTIFIED FEMALE: What were those ingredients again for the moose chili?



BARNICLE: OK. For those of you keeping tabs, a spokesman says, Palin has received over 800 requests for interviews lately. I wasn't one of them.


BARNICLE: Now, take a look at this college marching band in Florida this past Saturday. It's a profile of Barack Obama.

By the way, here's another Obama tribute that is a little more permanent. Students at an elementary school on Long Island wanted their school to be renamed Barack Obama Elementary School. Well, the adults voted, and the students got their wish. He hasn't even started on the job yet, and he has got the school named after him. Pretty good.

And that brings us to a new regular item we're starting tonight called "Final Daze."

President Bush has 57 days left in office, and many are asking, where's W.? With the economy tanking and the country looking for guidance from the guy who is still president, here's what we got today.


GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Secretary, thank you very much for inviting me in for a cup of coffee.

The secretary and I share the concerns of our citizens, concerns about jobs, concerns about their savings accounts. This is a tough situation for America, but we will recover from it. And the first step to recovery is to safeguard our financial system.


BARNICLE: There you go: cup of joe with Hank.

Things are tough, though. It's no surprise that, just a few hours after that, the president was completely overshadowed by Barack Obama and the incoming economic team.

Time now for the "Big Number."

Forget Barack Obama's inauguration. The hottest ticket in town is a job in the incoming administration. How many people have applied for jobs so far? More than 200,000. Here's the catch. There's only about 7,000 jobs. So, good luck, everybody -- 200,000 resumes, 200,000 people looking to change jobs to be part of the big change, that's tonight's HARDBALL "Big Number."

Up next: What will it take to jump-start the economy? Five hundred billion dollars, $700 billion, or more? We're talking about huge amounts of money, with no guarantee that any of it will work. The debate over the economic stimulus plan and what Obama and his team need to do.

You're watching HARDBALL, only on MSNBC.


MARGARET BRENNAN, CNBC CORRESPONDENT: I'm Margaret Brennan with your CNBC "Market Wrap."

Stock rallying for a second straight session, following the government's bailout of troubled bank Citigroup and after president-elect Obama announced his economic team. The Dow Jones industrial average soared 397 points, after gaining 494 points back on Friday, its best two-day point gain ever. The S&P 500 closed up nearly 52 points, and the Nasdaq higher by 87.

Citigroup shares surged 58 percent after the government agree to guarantee $306 billion in risky assets and inject $20 billion in new capital. Other financial stocks also posted big gains on the back of that news.

Meantime, oil prices spiked. Crude gained $4.57, closing at $54.50 a barrel.

And sales of existing homes fell more than 3 percent in the month of October. Prices also fell more than 11 percent from a year ago.

That's it from CNBC, first in business worldwide-now back to


BARNICLE: Welcome back to HARDBALL.

President-elect Barack Obama wants a stimulus package that could cost as much as $700 billion. Good idea or bad idea?

With us now, Democratic Congressman and prominent Holy Cross graduate Jim Moran or Virginia, and Charlie Armey, former assistant Patriots coach, his favorite brother, Dick Armey, the former Republican House leader from Texas.


BARNICLE: Gentlemen, thanks for joining us.

Jim, I'm a taxpayer. I'm scared. I can't stand looking at the headlines each and every of day. Tell me why this expenditure of all of these billions in bailouts is a good thing. And tell me that my money, given to you, the federal government, will work the way you think it will work.

REP. JIM MORAN (D), VIRGINIA: Mike, I think it's very hard to justify it until the economy comes back.

But, if you do have faith in America's future, then you have to believe that the government is buying up these equities at bargain-basement prices, the liabilities as well, and that, when they mature, that the federal taxpayer will be better off.

Now, that may not happen, but, if it doesn't happen, we're all going to be much worse off. Now, in terms of the-of the stimulus package, which is different than the Bush-Cheney bailout, I think the taxpayer may welcome that, because it's going to go into infrastructure. It's going to build roads and bridges and public transit. It's going to get people back to work in this country.

And I think that's what they want done with their money. The-some of it will go into extending unemployment compensation, food stamps and the like, but that has an immediate stimulative effect greater than putting money into Wall Street.

But I think we have to justify this. And what troubles me the most is that we're never going to pay this money back if we-if-if these equities and liabilities don't improve in value. We're doing this all on our kids' credit card.

And, of course, the holder, the servicer of that credit card is China, Inc., and other foreign nations. You know, we're at a precarious position here. And-and I-I just hope that it works out.

But this is an awful lot of money we have been putting into Wall Street, at the expense of the taxpayer, i.e. Main Street...


MORAN: ... without really investing much in our domestic...


MORAN: ... in the jobs that...

BARNICLE: I gotcha.

MORAN: ... are going to put people back to work.

BARNICLE: OK, so, Dick Armey, I'm still scared. Tell me why I should not be scared.

DICK ARMEY, FORMER REPUBLICAN HOUSE MAJORITY LEADER: Well, I don't know. It's all very confusing to me. Let me had remind you, I have a PHD in economics. I have to tell you, we used to say that inflation is caused by too many dollars chasing too few goods. Right now, we've got this unbelievable flood of bad money chasing worthless product and nothing new - - nothing is being produced out of it. It's like we're putting a whole family in hock to pay the bail and pay the fines and pay off the bad debts of our irresponsible relatives. But it's creating nothing of value in the economy and preserving a lot of trash off on the corner.

Now, the fact of the matter is at some point the people who perpetrate this horribly irresponsible business practice have to come to terms with it and accept the punishments that cause them to be better, more responsible business people.

BARNICLE: But one of the people that Jim Moran said that I do buy, that resonates with me, petrified as I am about the state of the economy, is that we are investing, aren't we, in America, in a sense. We're investing in these banks that are such staple parts of this country. We're investing in these corporations that-fine, some of them are mismanaged. A lot of them are mismanaged. But they are American companies. Don't we have to get them back on their feet and don't we have to do this?

ARMEY: Not necessarily. I think the misconception is that if a prominent, existing American bank or insurance company is forced into bankruptcy or forced to close out that that aspect of the market will disappear. Look, if there's a demand for good banking practices, for good, responsible insurance practices, for good under-writing of mortgages, if that demand is there, the institutions will recreate themselves to serve that market responsibly.

But what good do we do by taking people who have proven track records of irresponsible business practices and propping them back up in the same old jobs to perpetrate the same old irresponsibilities in the market? I think the market needs to discipline some people.

BARNICLE: Jim Moran, part of what Dick Armey just said resonates with me too. The people running these outfits, mismanaging these outfits, we have to address that, don't we, the mismanagement? On the other hand, for instance, if Citi Group ever failed, I can tell you the people I know, ordinary people that would become instant history majors looking at 1932, 1933.

MORAN: You're absolutely right, Mike. I am sympathetic to what Dick is saying, but there-that there ought to be consequences. If people take risk and they fail, if they get too greedy, if they over-reach, if they extend their leverage to 40 to one when it should be closer to eight to one, just out of greed, then there should be consequences if they make the wrong judgment.

But the problem is a company like Citi Group has its tentacles so extended into our economy. If they freeze, our credit markets freeze, then no jobs are created. Everybody suffers. What Dick is saying is true. Over the last eight years, we have had the highest corporate profit ever. We've had the highest productivity ever. But the median family income has actually gone down by 792 dollars when adjusted for inflation. A third of all that profit went into the financial services companies because they didn't create anything. They didn't manufacture, produce anything. They created a lot of additional wealth for themselves by borrowing with other people's money.

So there ought to be consequences. I just don't want the average American worker to pay even more than they already have for those consequences.

BARNICLE: Are either of you guys afraid that the ultimate weapon of mass destruction might be discovered 20 years from now, and it might be a bank note in Beijing that they hold on us? Does that scare either of you guys?

ARMEY: You know, first of all, the Chinese didn't come by all these American dollars just by accident. They came by those dollars because Americans keep buying things from China. And China buys very little from us. So the fact of the matter is, we have a great deposit of dollars in China. We have a growing economy over there. It's becoming a greater influence. But the dollars do them no good until they find some way ultimately to get them back to the United States. China has just as much of a stake in a strong American economy as we do, or just about.

BARNICLE: Jim Moran, last word.

MORAN: Actually, they're the largest creditor right now of our debt. You know, I was talking with a real estate agent on Friday. They said they , on behalf of China, are finding factories that are about to go under. China buys the factory. They send over Chinese workers on work visas. They learn how to operate it. Then completely dismantle it. They ship it back to China. They make the very same products and they sell them back to the United States, but at a much cheaper cost because they don't have the health care costs and the labor costs and so on and so forth.

They're going to make what we're making, sell it to us for a profit, and that's the situation we've got ourselves into. We've got to get this economy back on track. We've got to become more competitive. And we've got to stop have to borrow from China. They've got a financial guillotine over our heads. We don't need to be investing in more fighter jets. They have the ultimate weapon, as you suggest, Mike. If they wanted to dump American debt on the market, we would go into a Depression and it would be a long time before we got out. That's the situation the Bush-Cheney administration has gotten us into, frankly.

BARNICLE: I'm looking at you guys, a combined, what, I don't know, 40, 45 years in Congress, maybe. What have you guys been doing while this has been happening?

ARMEY: I have to tell you one thing, I was working with Richard Baker as early as 1995 trying to get some discipline and regulation into Freddie and Fannie Mae. The fact of the matter is Congress stopped us from moving forward with the kind of regulations that would have avoided a great deal of this. The fact of the matter is there have been times when responsible regulation of government-sponsored enterprises was demanded and that would have killed the snake before it got out of the hole.

BARNICLE: I appreciate both of you coming on.

MORAN: A great thing for more people to buy more homes. But gosh sakes, you shouldn't require no documentation, no down payment. That's where greed took over. Now we're paying the consequences of that kind of greed. That wasn't Fannie and Freddie's fault.

BARNICLE: Congressman Jim Moran, former Majority Leader Dick Armey, I'm still scared.

Up next, the politics fix. And the big question on a lot of people's minds, why all the bail outs for Wall Street firms and not for the big three Detroit automakers, at least not yet? We'll try to get some answers next. This is HARDBALL, only on MSNBC.


BARNICLE: Welcome back to HARDBALL and the politics fix. Tonight, joining us are Chris Cillizza of the "Washington Post," and Jay Carney of "Time Magazine." Gentlemen, this afternoon, or earlier today, Barack Obama in Chicago held his press conference. Here he is at his press conference today saying we cannot wait to find solutions to this economic crisis.


OBAMA: Because at this moment, we need to restore both confidence in the markets and restore confidence of middle class families who find themselves working harder, earning less, and falling further and further behind. With our economy under stress, we cannot hesitate and we cannot delay. Our families can't afford to keep on waiting and hoping for a solution.


BARNICLE: You know, he also went on to say-I believe it was in response to a question-that he had spoken earlier today with both President Bush and Hank Paulson, the treasury secretary. My question to you, starting with you, Jay, what do you think the dynamics? A lot of people talk to both you guys during the course of a business day, news day. What do you think the dynamic is between the out-going administration, the people in charge at Treasury, and the people in charge at the White House, and the incoming people? Is there a continuing dialogue that might make the average citizen feel more comfortable over the next two months?

JAY CARNEY, "TIME MAGAZINE": Well, I think that there is in the sense of President Bush has made it very clear both publicly and to his staff, and I think he acts this himself personally, that he wants this transition to work. He recognizes the stakes. He recognize the importance of a smooth transition and for national security reasons and now for economic security reasons. I think my guess is that Americans would be reassured by the tone and the content of those conversations.

At the Treasury side-the other side of this is that at the staff level and also at the presidential level, what is happening here is something like a hospital pass in rugby, a support I'm not all that familiar with, but somebody described this to me. It's when you're about to be tackled and you throw the ball to the next guy who is about to be creamed. Right? This is what is happening to the in-coming Obama administration. They're being handed a mess and it is their turn to try to deal with it.

So I'm sure those conversations are sober and some of the people in the Treasury department can't wait to get the heck out of town.

BARNICLE: Chris, does it surprise that you Jay would use rugby as a metaphor?

CHRIS CILLIZZA, "THE WASHINGTON POST": It does. It stuns and shocks me more than anything. I would have gone with more of an American sport.

CARNEY: A well traveled man.

CILLIZZA: I was going to use my own metaphor, which is you asked, are they getting along? What is the transition like? And I agree-first of all, Jay is 100 percent right. I do think both sides are talking. President-Elect Obama said he had spoken to Benjamin Bernanke as well as President Bush. I think they talk regularly. I would compare it to buying a house. When you buy a house, even if you buy it from your best friend, there are things that you would change. Whether it's the color of the walls or the way it is decorated, you always want to have it your way.

There are clearly going to be very clear differences between the way that George W. Bush handled the economy and the way that President Barack Obama handles the economy. But Obama is not going to say that. He has said over and over again this transition period, we only have one president at a time. He is not going to directly criticize the president. But when he gets in office on January 20th, there are going to be a lot of windows looking different, paint looking different. This is going to be a very different house.

BARNICLE: We're going to be back. Jay will probably talk about Heili (ph) or Lacrosse when we come back. We'll be back with Chris Cillizza and Jay Carney for more on the politics fix in a second. You're watching HARDBALL, only on MSNBC.


BARNICLE: We're back with Chris Cillizza and Jay Carney for more of the politics fix. Gentlemen, the president earlier today in that press conference had a little sound bite talking about the big three guys who were in Washington last week throwing up their hands like Larry, Mo and Curly. He had this to say about the big three automakers. Take a listen.


OBAMA: I was surprised that they did not have a better thought out proposal when they arrived in Congress. I think Congress did the right thing, which is to say you guys need to come up with a plan and come back before you're getting any tax payer money.


BARNICLE: So surprise. That's pretty harsh coming from the incoming president of the United States. My question to you, isn't he already in a box with regard to bailing out the automobile industry? How do you bail out AIG? How do you spend billions in the bailout programs that are already on the book? How do you propose to bail out Citi, a big bank, and not take care of the automobile industry? Jay?

CARNEY: I think he is in a box, because he said, remember, initially, right after the election, that he wanted to see something done to help the automobile industry. And, of course, he'll be under a lot of pressure from an important constituency for the Democratic party, organized labor, to help because of the jobs at stake.

However, if he chooses to do so, because the automobile industry is not that popular with the general public right now-if he chooses to take a hard line against them, he can say that AIG and Citibank and all those things happened not on his watch, but on the previous president's watch. My guess is he won't go that route and he'll try to see something through that at least bridges the big three over into next year.

BARNICLE: Chris, 15 seconds for a snappy response from you.

CILLIZZA: Here's a witty rejoinder. I think what you're going to see Barack Obama do is do his best to brook that divide. He is going to try-post-partisan, this is a solution. We need the big three to stay alive, but we're not going to do it with a blank check. He said as much today. The question is can he get Democrats and Republicans in Congress on board?

BARNICLE: Chris Cillizza, Jay Carney, thanks very much. Right now, it is time for "1600 PENNSYLVANIA AVENUE" with David Gregory-or Mika Brzezinski.



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