updated 12/22/2008 4:56:01 PM ET 2008-12-22T21:56:01

Guests: Peter Sprigg, Kathryn Kolbert, Daniel Gross, Chrystia Freeland, Kerry Kennedy, Mark Leibovich, Eamon Javers

DAVID SHUSTER, MSNBC NEWS ANCHOR:  Tonight, outrageous and insensitive Democrats lash out at Barack Obama‘s decision to have a pastor deliver the inaugural invocation who opposes gay rights and says non-Christians are going to hell.  Is it new politics or bad judgment?

As the president-elect transitions to “1600 PENNSYLVANIA AVENUE.”

Thirty-three days until the inauguration of President-elect Barack Obama.

Welcome to the show everyone.  I‘m David Shuster.

Tonight: It‘s the biggest political firestorm of the transition.  Pastor Rick Warren has been asked to give the invocation at Barack Obama‘s inauguration.  Warren has tackled poverty and environmental issues but believes gay marriage is equivalent to incest and pedophilia.

(BEGIN VIDEO CLIP)

PASTOR RICK WARREN, SADDLEBACK CHURCH:  I‘m opposed to having a brother and sister be together and call that marriage.  I‘m opposed to an older guy marrying a child and calling that a marriage.

(END VIDEO CLIP)

SHUSTER:  Just ahead the president-elect under fire from the left says he wants the inauguration to reflect an atmosphere of diversity and dialogue.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES:  That‘s part of the magic of this country, is that we are diverse and noisy and opinionated.

(END VIDEO CLIP)

SHUSTER:  Later, our country is also going broke, thanks to Mr. Madoff with your money and other Wall Street schemes coming up as the Ponzi perpetrator tangles with the press.

The U.S. automakers today got punched in the gut by the Bush the White House.  Any assistance will be for the funeral.

(BEGIN VIDEO CLIP)

DANA PERINO, WHITE HOUSE PRESS SECRETARY:  There‘s an orderly way to do bankruptcies that provides for more of a soft landing.  I think that‘s what we would be talking about.

(END VIDEO CLIP)

SHUSTER:  Also this hour: Caroline Kennedy, the daughter of President John F. Kennedy is ramping up her fledgling effort for the U.S. Senate.  Tonight, we will talk live with one of her cousins, Kerry Kennedy.

Plus, the donor list for President Clinton‘s library.  Why would the government of Jamaica kick in $100,000?

And remember New York governor Spitzer, who paid $4,000 for a hooker?

(BEGIN VIDEO CLIP)

ELIOT SPITZER, FORMER GOVERNOR OF NEW YORK:  I must now dedicate some time to regain the trust of my family.

(END VIDEO CLIP)

SHUSTER:  Now, he and his family has sent out a holiday card.  We will show it to you.

And who says politics is not a blood sport?  In South Korea‘s parliament, thank you.  Now, let me hit you with a chair.

We begin this hour with Barack Obama‘s inauguration invocation.  The headline is “Uproar on the Left.”

During his presidential campaign, Barack Obama repeatedly declared that gay and lesbian Americans are free to live lives, quote, “free of discrimination.”  He said it in his convention speech and he said it throughout the campaign.

This fall, California passed a proposition that pulled back the rights of the more than 20,000 gay and lesbian couples.  And one of the biggest supporters of that measure known as Prop 8 was Pastor Rick Warren.

(BEGIN VIDEO CLIP)

WARREN:  I‘m opposed to having a brother and sister be together and call that marriage.  I‘m opposed to an older guy marrying a child and calling that a marriage.  I‘m opposed to one guy having multiple wives and calling that a marriage.

UNIDENTIFIED MALE:  You think those are equivalent to gays getting married?

WARREN:  I do.

(END VIDEO CLIP)

SHUSTER:  Today, the news that Obama had selected Warren to deliver the inauguration invocation prompted outrage and anger on the Democratic left.

David Corn of Mother Jones wrote: “Warren‘s opposition to gay rights is more than a mere policy dispute.  It is an act of bigotry.  By handing Warren this prime slot at the inauguration, Obama is saying that he recognizes Warren as a spiritual leader and is reaffirming Warren‘s position as such.  This is an insult to gay Americans and those who support equal rights in this nation.”

This morning at a news conference, President-elect Obama argued for context.

(BEGIN VIDEO CLIP)

OBAMA:  I would note a couple of years ago, I was invited to Rick Warren‘s church to speak, despite his awareness that I held views that were entirely contrary to his when it came to gay and lesbian rights, when it came to issues like abortion.  Nevertheless, I had an opportunity to speak and that dialogue, I think, is part of what my campaign has been all about.  That we‘re not going to agree on every single issue but what we have to do is to be able to create an atmosphere where we can disagree without being disagreeable and then focus on those things that we hold in common as Americans.

(END VIDEO CLIP)

SHUSTER:  Joining us now from Washington, Peter Sprigg, vice president for policy at the Family Research Council and Kathryn Kolbert, president of the People for the American Way.

Kathryn, Obama says he wants diversity and diversity is to be part of his administration.  What‘s wrong with that?

KATHRYN KOLBERT, PEOPLE FOR THE AMERICAN WAY:  Well, I think there‘s no problem with trying to reach across a partisan divide.  But here, he is rewarding and placing a great honor on a pastor who has preached hate.  We have no objection to him preaching the Gospel any way he wants within his own church.  But we don‘t think that the President of the United States should take the most historic moment, when he is being inaugurated, to reward him and to place him in a position of honor.

There are many, many ministers, there are many people of faith, of all different types of religion who could do that without being divisive.  And the reaction of the lesbian and gay community, the abortion rights community, the women‘s community, many of the people who supported Obama from day one has shown that this has been an extraordinarily divisive choice.

If he wants unity, pick someone who will give him unity.

SHUSTER:  Peter, to put this in context, Peter, would you support a gay atheist delivering some sort of a high-profile invocation if your candidate was being inaugurated as President of the United States?

PETER SPRIG, FAMILY RESEARCH COUNCIL:  Well, if over 50 percent of the American public were gay atheists then I think that would make a lot of sense.  Certainly the majority of the American public believes that marriage is the union of one man and one woman.

In fact, Barack Obama says he believes that marriage is the union of one man and one woman.  I don‘t see anything inconsistent in him inviting Rick Warren to speak.  Rick Warren perhaps is the most well-known, local church pastor in America today.

So, the choice—

SHUSTER:  So that‘s the qualification?  You‘re well known and you happen to have a majority view as opposed to having the sort of tolerance that some of the Democrats expected they would get by electing President-elect Barack Obama?

SPRIGG:  We‘re seeing what the tolerance looks like.  Miss Kolbert in her press release on this issue accused Warren of spreading the lie that pro-homosexual activists are out to silence pastors.  What is she doing?  She‘s out to silence the pastor who is Barack Obama‘s personal choice to pray at his own inauguration.

SHUSTER:  Is he being silenced, Kathryn by—

SPRIGG:  There‘s no tolerance on that side.

SHUSTER:  Kathryn, is he being silenced if he‘s not allowed to speak at the inauguration?

KOLBERT:  First of all, there is a difference between being silenced and being honored.  What‘s happening here is the president-elect has chosen to honor him, to place him in a position of great prominence in an historic event.

Now, I‘m not saying that Rick Warren can‘t espouse all his hateful views in any forum he wants.  That is the American way.  We believe in freedom of speech, we believe in freedom of religion.  We believe that they are important, constitutional values that underlie America.  But the reality is here that we don‘t think that the president should elevate a minister who is being, in his nature, decisive.

If, in fact, you‘re trying to bring people together, bring people together and pick people who respect all of our views, including lesbian and gay Americans, including people who believe in abortion rights, including people who include in stem cell research or a variety of other issues that Rick Warren just doesn‘t believe in.

SHUSTER:  Peter, do you think it is appropriate for somebody who is going to speak at an inauguration?  And again, it‘s not a church; it‘s the west side of the capital.  Do you believe it‘s appropriate for somebody who had said however, that people who you are non-Christians who don‘t believe that they are going to hell?  Do you think that‘s a great sort of symbol to have on the west side of the capital, even if that‘s something that you may happen to agree with?

SPRIGG:  Well, Rick Warren is a Christian pastor and that‘s been an essential part of Christian theology, the mainstream of Christian theology for 2,000 years.  That Jesus said, “I am the way, the truth and the life.”

SHUSTER:  Right, but there are a lot of Christians out there who believe that if you‘re a good person and you‘re a good human being, there is a place in heaven for you as well.  There are a number of Christian pastors who believe that.

SPRIGG:  I don‘t think Rick Warren is, in his inaugural prayer, is going to be talking about hell or talking about same-sex marriage.  He‘s probably going to give a message that is intended to draw us together, just as Barack Obama wants.

So, I think that all of this anguish on the left is showing that they‘re not really sincere.  I‘m impressed that Barack Obama seems to be showing that he was sincere in saying that he wanted to reach out across some of these lines of division.

I would point out that the people who espoused the views that Miss Kolbert espouses, they‘re the ones who are going to get the actual policy making positions in Obama‘s administration.  I would like to see somebody pro-life, pro-family, pro-marriage, perhaps be in a policy making position not just a ceremonial one.  But we‘ll take what we can get.

SHUSTER:  Miss Kolbert, you get the last word.

KOLBERT:  We saw what happened when people of that ilk were in policy making positions during the Bush administration.  We don‘t think it was good for the country.  We‘re thrilled that Barack Obama is going to change those policies.

But the important point here is, as much as we want to reach across partisan lines to include discussion around these difficult issues, let‘s not reward people who believe in hate.

SHUSTER:  Kathryn Kolbert, president of the People for the American Way and Peter Sprigg, president for policy at the Family Research Council.  Thank you both for coming on.  We appreciate it.

SPRIGG:  Thank you.

KOLBERT:  Thank you.

SHUSTER:  Up next, is the White House changing course on an auto bailout?  Press Secretary Dana Perino is now using phrases like an orderly bankruptcy.  Is that really possible for the big three?  Is the Bush approach very wise?

When “1600 PENNSYLVANIA AVENUE” returns right after this.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to “1600 PENNSYLVANIA AVENUE.”

The Dow closed down almost 220 points today with shares of GM dropping more than 16 percent after a White House suggestion that it has not ruled out a, quote “orderly bankruptcy of the big three.”

(BEGIN VIDEO CLIP)

PERINO:  Disorderly collapse would be something very chaotic that it just shocks the system.  If there‘s an orderly way to do bankruptcy that provides for more of a soft landing, I think that‘s what we would be talking about.  That would be one of the options.

(END VIDEO CLIP)

SHUSTER:  Today President Bush said he was worried about a disorderly bankruptcy, but gave no suggestion of when he might take action.

(BEGIN VIDEO CLIP)

BUSH:  I haven‘t made up my mind yet.  So, you‘re assuming something.

(END VIDEO CLIP)

SHUSTER:  Chrysler announced last night it is shuttering its North American plants for a month.  And as both GM and Chrysler deny renewed talks of a merger, many people wonder how long the industry can survive.

Also today Barack Obama filled out his economic team with three regulators appointing Mary Schapiro to chair the Securities and Exchange Commission, Gary Gensler to head the Commodities Futures Trading Commission and Daniel Turullo to sit on the Federal Reserve Board.

(BEGIN VIDEO CLIP)

OBAMA:  Instead of allowing interest to put their thumbs on the economic scales and CEOs run off with excessive golden parachutes, we‘re going to ensure openness, accountability and transparency in our markets so that people can trust the value of the financial product they‘re buying.

(END VIDEO CLIP)

SHUSTER:  Joining us now to sort through the latest on the economy, is Chrystia Freeland, she‘s the U.S. managing editor of the “Financial Times” and Daniel Gross, “Newsweek” senior editor.

Chrystia, it sounds like they‘re going to let these automakers essentially dry up.

CHRYSTIA FREELAND, THE FINANCIAL TIMES:  You know David, I think we shouldn‘t discount the extent to which a game of chicken is being played and some bargaining is happening right now.

I think that lots of backroom negotiations are going on, that treasury is very, very closely involved now, looking very closely into the finances particularly GM and Chrysler.  And part of that process, part of the negotiation with them surely is going to be not giving the automakers a sense that they‘re going to get a free ride; that they‘re definitely going to get this money.  Because they‘re going to want to get them to make some concessions in order to get the bailout.

SHUSTER:  The White House is trying to make a distinction today between an orderly bankruptcy and a disorderly bankruptcy with the idea that, “we want to avoid a disorderly bankruptcy.”  But when you‘re talking about any kind of bankruptcy, can it be orderly for the big three?

DANIEL GROSS, NEWSWEEK:  Well, the phrase that Dana used was disorderly collapse.  And I guess we now have a lot of experience watching disorderly collapses of huge financial firms.  So I guess now we‘re learning what not to do.

A disorderly bankruptcy would be a kind of rushed Chapter 11 filing where all of a sudden they don‘t have any access to capital.  They‘re forced to file for chapter 11, then they scramble for new money.  Nobody is sure who‘s going to get paid what.

An orderly bankruptcy would be what they might call a pre-packaged bankruptcy where the parties, without perhaps even needing to file Chapter 11 say, “This is how much we owe.  This is how much we can pay.  Everybody accepts I‘m going to get ten cents on the dollar.  The union is going to lose these benefits and kind of go forward from there.”  That is possible.

These sorts of things happen, of course, on a much smaller scale.  The irony is that the complexity, the parties involved, the UAW, the dealers, all these bond holders almost requires somebody in Washington to bring them all together and to have something like a prepackaged bankruptcy.

SHUSTER:  Nobody is doing that.  And we just find out that Chrysler factories are going to be shut for a month.  Each day that this sort of backroom negotiating—if that‘s what‘s going on—continues, they‘re closer to just a complete collapse.

FREELAND:  I think that‘s right.  And the clock is ticking.  The power that the car companies have right now is essentially this loaded gun to George Bush and Hank Paulson‘s head, which is if you don‘t help us out, we may go the disorderly collapse route.  Do you really want that to be your legacy?

The negotiating power that the White House and the treasury have is to say, “You know what?  You might not get a bailout.  We might force you into prepackaged Chapter 11,” which would be much tougher for the management and the management might be forced out in that kind of a circumstance.

SHUSTER:  The other big story which just gets so much attention especially here in New York is this guy Bernard Madoff; he essentially built or conducted a Ponzi scheme that may cost as much as $30 or $40 billion?  We‘ve seen the video of him sort of pushing the press and them pushing back.  That video in itself is a pretty remarkable—nice shove there by the photographer.

In any case, we‘re learning more about the Securities and Exchange Commission and where their sort of oversight didn‘t happen.

The picks that Obama made today, does that fix any of that?

GROSS:  I think it may.  I think the new catch phrase is now going to be, “Heck of a job, Coxy.”  The SEC is now turning to be the new FEMA.  We always think of the SEC as it has got all these lawyers, highly educated people, people who go from there to go into industry.  It‘s one of the elite institutions in the government.

And what‘s been revealed is that all these red flags over these people

there was a guy who had a jihad against Madoff who was complaining for years and years about him.  Not only did they not do anything, they kind of met with him and said, “Okay, as you were.”

SHUSTER:  Heck of a job, Coxy.

FREELAND:  I think that‘s right.  But I think it‘s also important to remember it‘s not just about individuals.  It‘s also about what the prevailing ideology was of the government and also of the country.  We‘re just coming out of an era of light touch regulation.

It‘s not so long ago that Starbucks was blamed as the root of all of the country‘s economic problems and we were desperately concerned about New York losing it‘s competitive position to London because it was overly regulated.  I think that part of what we‘re going to see is a whole new mind-set on the part of officials, whoever they are, much more scrutiny, much more willingness to shut people down.

SHUSTER:  By the way, before we let you go, we‘re going to be talking about former New York governor Eliot Spitzer in our next segment.  You ran into him at a party.  You don‘t have to tell us where, but how does he look?

GROSS:  Well, he‘s one of my colleagues at Slate, which is the online magazine for which we are both columnists and we had our holiday party at a bar called—

SHUSTER:  Don‘t tell us.  Don‘t tell us.  We can talk in the next segment.  You‘ll ruin it.  Did he look fine?

GROSS:  Okay.  I‘ll let you save the joke for the next segment—but you have to give me credit for it.  Yes, he looks great.

SHUSTER:  Okay.  Daniel Gross, senior editor for “Newsweek.”  Chrystia Freeland from “Financial Times.”  Thank you both.  I owe you, Daniel Gross.  Nice line about “Heck of a job, Coxy.”

Up next, our gift to you.  The kind of video you only get this time of year courtesy of the “New York Daily News.”

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  There you go.  Good girl.  Okay.  Are you ready?

(END VIDEO CLIP)

SHUSTER:  Plus Eliot Spitzer explains the reason for the season, forgiveness and political resurrection.  I guess that falls somewhere between hope and a fruitcake?

“1600” returns after this.

(COMMERCIAL BREAK)

SHUSTER:  We are back with a look at what‘s going on inside the “Briefing Room” and today, we want to brief you on some holiday greetings.

Remember former New York governor Eliot Spitzer?  Who could forget?  After all, he was the politician who paid a prostitute $4,000 an hour and when the story came out, he resigned from office.  But that little episode nine months ago hasn‘t kept him from wishing family and friends happy holidays.

Here‘s the card with a lovely picture of his family but listen closely to the sweet message the Spitzers chose to include.

“Hope is not a thing heedless given to be crushed by the vicissitudes of experience.  Rather it is the unanticipated reward of struggle endured, a gift of grace.”  And they signed it, “Wishing you peace, hope and boundless love”—boundless love, we are not making that up.

One other thing of note, Spitzer attended Slate‘s holiday party this week.  And the party was held at a place that Daniel Gross knows it “Happy Ending.”  That‘s right, the bar is called “Happy Ending.”  When Spitzer was asked about his current gig as a Slate columnist, he said, quote, “It sucks.”

So for all of you who are friends with Eliot Spitzer, this is your warning.  Just enjoy the card.  Don‘t ask any questions.

Anyway, a brief departure now from politics to go with the song you‘ve been hearing about, roasting chestnuts.  Everyone, meet of fan of such holiday snacks who‘s also a water skiing enthusiast.  Yes it‘s Twiggy, the squirrel, and there she goes, showing off her many talents at the New York boat show.  Notice the cool Santa suit she‘s wearing and the reindeer driven motor boat.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Of course, we‘ve had the newspaper came out into our roller skating rink one day.  And they were taking pictures of our skaters for the newspaper.  And my husband happened to mention that we caught our squirrel on the water ski.

(END VIDEO CLIP)

SHUSTER:  Now, back to politics.

Vice President Dick Cheney never known to mince words had some advice for Rahm Emanuel, incoming White House Chief of Staff.  The two were together for a meeting of Chiefs of Staff past, present and future.  Cheney, once President Gerald Ford‘s right-hand man told Emanuel, quote, “the best thing you can do is keep your VP under control.”  Yes, believe it or not, the out-of-control Dick Cheney is occasionally capable of making a funny.

And speaking of funny, unless you were actually in the room at the time, South Korea is the latest addition to the lawmaker brawl hall of fame.

Lawmakers there debating in a free trade deal with us, the United States, went at it today.  Those in favor barricaded themselves in the room using furniture to jam the doors.  Opposition lawmakers tried to push their way into the room and eventually turned to sledge hammers and electric saws to help their cause.  But the opposition failed and the legislators succeeded in presenting the trade bill to the committee.

Such outbreaks are not foreign to South Korean politics, much less non-American politics in general.  Case in point, this legendary brawl in Bolivia; who knows what they were fighting about?  Quite frankly, who cares?  All that matters to us in the visual world is—well, the visual.  Enjoy.

Just to refresh your memory, here‘s yesterday‘s induction to the governmental brawl hall of fame.  A breakout in Mexico‘s parliament, all in an effort to delay the vote on a tunnel.

Up next, a candidate by any other name; Caroline Kennedy says she wants Hillary Clinton‘s senate seat, but she won‘t tell New York voters why she‘s qualified to have it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Mrs. Kennedy, you‘re avoiding questions.  Miss Kennedy, you‘re avoiding questions.

CAROLINE KENNEDY, DAUGHTER OF JOHN F. KENNEDY:  I‘m following the process laid out by the governor.

UNIDENTIFIED MALE:  The governor told you not to talk to us?

(END VIDEO CLIP)

SHUSTER:  If her name were Caroline Smith or Caroline Maloney, would she be leading the polls to get the seat?  I‘ll ask her cousin, Kerry Kennedy, when “1600” returns.

(COMMERCIAL BREAK)

SHUSTER:  Tonight, dynasty drama. 

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, DAUGHTER OF FMR. PRESIDENT JOHN F. KENNEDY:  I‘m a Kennedy Democrat, a Clinton Democrat.

(END VIDEO CLIP)

SHUSTER:  Caroline Kennedy campaigns for Hillary Clinton‘s Senate seat in Harlem.  And as the incoming secretary of state faces a world of conflict, her husband releases a list of his foundations international donors, a lot from the Saudis, a little from Jamaica.  Why any from Jamaica?  1600 PENNSYLVANIA AVENUE continues. 

Welcome back to 1600 PENNSYLVANIA AVENUE.  Today, Caroline Kennedy, the daughter of President John F. Kennedy, continued her tour around the empire state, lunching with the Reverend Al Sharpton at the famous Sylvia‘s Restaurant in Harlem.  She was asked by reporters why is she qualified to replace Hillary Clinton in the United States Senate?  Watch. 

(BEGIN VIDEO CLIP)

KENNEDY:  You know, I come at this as a mother, as a lawyer, as an author, as an education advocate, and, you know, from a family that really has spent generations in public service.  And I feel this commitment.  This is a time where nobody can afford to sit out.  And I hope that I have something to offer.  And I plan to work hard on the issues that affect New York, if I were to be chosen. 

There are many qualified candidates in this race for Senate.  It is up to the governor. 

(END VIDEO CLIP)

SHUSTER:  Joining us now, Kerry Kennedy, the cousin of Caroline Kennedy, and author of “Being Catholic Now, Prominent Americans Talk About Change in the Church and the Quest for Meaning.”  Good to see you.  We‘re going to talk about your book in just a moment.  Let‘s start by talking about your cousin.  The seat, of course, is the one your father, Robert, had.  I understand you have some memories of traveling around with him while he was campaigning and when was a senator.  Tell us about that. 

KERRY KENNEDY, “BEING CATHOLIC NOW”:  I do.  I think the thing about Caroline is we really need to judge her in her own right and not by her DNA.  Caroline has raised over 70 million dollars for public schools here in New York.  She‘s on the board of the NAACP Legal Defense and Education Fund.  She has worked hard for the American Ballet Theater and the Met.  She loves the culture of New York.  And she has spent her whole life in public service. 

She wrote two books on the Bill of Rights and on privacy issues, which have been decimated by the Bush Administration.  We really need her voice in the Senate. 

SHUSTER:  Where I was going is you learned at a very young age the sort of grit it takes in hard scrabble towns in upstate New York, as you were watching your dad press the flesh and campaign.  A lot of people have questioned whether your cousin, Caroline, has the same sort of fortitude to do that. 

KENNEDY:  You know, I think that Caroline—When she talks to people who are really suffering upstate, in Utica, in Buffalo, in Oneida and across the state—people are in such trouble.  House after house if for sale.  And the biggest export from upstate New York is children.  It‘s college graduates who can‘t find a job.  I think Caroline has started her listening tour there.  She‘s going to hear what people have to say, and their vision for the future.  And that will be incredibly moving to her. 

SHUSTER:  A lot of Republicans are licking their chops over here.  I want to play for you what Peter King, representative from New York, said.  Watch.

(BEGIN VIDEO CLIP)

C. KENNEDY:  There‘s a lot of good people in this, candidates that the governor is considering -- 

(END VIDEO CLIP)

SHUSTER:  Actually, that‘s her talking about her qualifications.  Peter King said she‘s led a life, I believe, which is separate from what most New Yorkers do.  Here he is.  Here‘s Peter King.  Watch.  All right, we‘re having a little problem with the tape.  Is there a sense, though, when people say that Caroline is different from most New Yorkers, that she hasn‘t been really out there for the last several years?  There have been a number of big policy issues, where she could have taken a policy stand, where she could have fought for a particular policy issue, and she stayed quiet.  A lot of people think maybe we should give it to people who put themselves on a limb for those many years. 

KENNEDY:  I think that‘s a misperception.  Caroline has been out there her entire life working on public service issues.  She‘s a lawyer.  She went to Columbia University Law School.  She‘s written books on—best-selling books on the Constitution.  She‘s on the board of the John F.  Kennedy Library, has met with heads of state once a month for the last ten years.  She started the Profiles in Courage Award there, which goes to politicians who stand up to popular beliefs for the right thing for the community. 

So I think she‘s somebody who really has her priorities straight and who has not sought out the press to help herself, but really only when it would help public service.  That‘s what‘s so important about Caroline. 

SHUSTER:  In your book, you talk about reconciling your Catholic faith with your views on social issues.  Your family is obviously an icon in the Democratic party.  How do you bridge the gap on issues like abortion and gay rights? 

KENNEDY:  You know, I think that Catholicism—the base of Catholicism is that we have a loving god and a god who looks for justice, and that we‘re all supposed to be speaking the truth and that we should treat each other with love.  And if you come at it from that perspective, then you see that there are different ways of viewing our faith and then these issues become a little easier to grapple with. 

SHUSTER:  A lot of Democrats today are infuriated that Barack Obama picked the Pastor Rick Warren to speak at his inauguration.  Rick Warren, you probably know some of the things he has said.  He opposes gay marriage and fought against it in Prop 8.  What‘s your view of that?

KENNEDY:  I don‘t think it‘s appropriate to have somebody who has advocated this sort of hateful stance against people who are gay to be in that position.  So, I think it was a regrettable decision. 

SHUSTER:  Even though your family has supported Barack Obama through thick and thin, his decision was a mistake? 

KENNEDY:  Well, you know, I think that there‘s always going to be disagreements with our leaders.  And I think that that‘s the great strength of our democracy. 

SHUSTER:  Kerry Kennedy, your cousin, Caroline, is very lucky to have you as an advocate.  We thank you for coming in.  Good to see you. 

KENNEDY:  Thank you. 

SHUSTER:  There is a new pullout today from Sienna College that finds New York voters are torn over who should fill Hillary Clinton‘s Senate seat; 26 percent say State Attorney General Andrew Cuomo, while 23 percent say Caroline Kennedy. 

Let me bring in NBC News Washington Bureau chief Mark Whitaker.  Mark, you heard Kerry there.  They have their talking points down, very well put in terms of the argument that they‘re making.  What do you make of it? 

MARK WHITAKER, NBC NEWS WASHINGTON BUREAU CHIEF:  Well, I think there are essentially two arguments that are being made against Caroline Kennedy‘s candidacy, whatever you want to call it.  One is a class argument.  Does she really understand the issues of ordinary people?  And the other is a personality argument. 

On the class argument, I think when you look at the number of patricians in the Senate, who have been in the Senate in the past, the Kennedy family, J. Rockefeller from West Virginia, the spouses of former senators like Libby Dole and so forth, I think she‘s going to be in a lot of company there.  So I don‘t think that‘s really a disqualifier. 

I think the personality argument is, is she too shy and reserved to be an effective politician?  The fact is, you know, she is shy.  But I think that already, from one day to the next, you‘ve seen a little bit of improvement on that front today.  I think that‘s something that can be learned. 

When you look at three essential components that you have to have in modern politics.  One is the ability to raise money.  She clearly can do that.  She did that for the New York public schools.  The second is, can you get media attention?  They say, will she milk cows in upstate New York?  I think cows in upstate New York will line up to meet a Kennedy.  The third and most important is, can she bring home the bacon for New York state?  I think when you look not only at her profile, but her close relationship with Barack Obama and this incoming administration, I think she would be very effective that way.  So, yes, the personality issue is out there, but I think she has a lot going in her favor. 

SHUSTER:  Mark, Speaking of bringing home the bacon, I want to transition to this other story we‘ve been watching today.  That is the Clinton library donations.  They are now out, part of the effort to sort of clear the decks for Hillary Clinton.  Here is where the money came from for Bill Clinton‘s library in Little Rock: 46 million dollars total from foreign governments, including 10 to 25 million from Saudi Arabia; five to 10 million from Norway, the Dutch National Lottery; one to five million from Kuwait, Qatar, Brunei and Oman; 500,000 to a million dollars from the Swedish Post Code Lottery, 50,000 dollars to 100,000 dollars from Jamaica and Italy. 

I‘m a little confused about why Jamaica is giving money to the library in Little Rock?  In any case, what do you make of this?  Are there any problems for Hillary Clinton, particularly Saudi Arabia? 

WHITAKER:  I think the Clintons were in a damned if you do, damned if you don‘t position here.  Obviously, revealing the sources of funding for the foundation was a condition of Hillary Clinton being nominated for secretary of state.  If they hadn‘t come forward with this information, we would all be wondering if there were conflicts.  Now that they have come forward with these names, we as reporters have to go through the list and find out if there are any glaring potential conflicts. 

The fact is, this was all in the past.  This was before Bill Clinton had any idea that his wife was going to be secretary of state.  The real issue is going forward, what are the rules and terms of donations and disclosure going to be?  There‘s a whole memorandum of understanding that was drafted between the Hillary people and the Obama transition on all of this.  It‘s now being circulated by John Kerry and Dick Lugar of the Senate Foreign Relations Committee up on the Hill right now.  I think that‘s what we‘ve got to watch.  And I think they‘re going to have to be very clear guidelines about any kind of relations and dealings she has with these countries, and what happens with donations to the foundation once she becomes secretary of state. 

SHUSTER:  NBC News Washington bureau chief Mark Whitaker.  Mark, thanks for coming on today.  We appreciate it. 

WHITAKER:  Good to see you. 

SHUSTER:  Coming up, the inside scoop on President-Elect Obama‘s incoming president secretary.  Why Obama really doesn‘t want to surrender his Blackberry.  Of course, Mr. Obama probably prefers e-mailing to watching television, where he‘s likely to hear more of this. 

(BEGIN VIDEO CLIP)

CONAN O‘BRIEN, “THE LATE LATE SHOW”:  The Illinois Supreme Court refused to hear a motion to throw Governor Blagojevich out of office.  Yes.  Afterwards, Blagojevich thanked the Supreme Court and said your check is in the mail.

(COMMERCIAL BREAK)

UNIDENTIFIED MALE:  Would you say that the president‘s situation makes it harder for him to focus on the situation in Haiti?

UNIDENTIFIED FEMALE:  To be honest with you, Paul, I think the president is relieved to be focusing on something that matters. 

Obviously, what I meant to say was—

UNIDENTIFIED MALE:  Excuse me.  Did you just say he was relieved? 

UNIDENTIFIED FEMALE:  Obviously, what I—

(END VIDEO CLIP)

SHUSTER:  Welcome back.  Like the “West Wing‘s” storied C.J. Craig, the next press secretary will face a tough task.  The daily job of defending the president from the White House podium can get really combative, as it did so many times for Scott McClellan.  And sometimes, as in Dana Perino‘s case, it can lead to the occasional black eye.  Robert Gibbs, known as a crabby populist from Auburn, Alabama, rose with Obama from communications director in the Senate office to shadow on the campaign trail.  Now, he prepares to take the podium job in Obama‘s White House. 

Joining us now is Mark Leibovich.  Mark wrote a must-read profile about the incoming spokesman in this Sunday‘s issue of the “New York Times Magazine.”  Mark, let‘s start with what did you learn?  What surprised you about Robert Gibbs? 

MARK LEIBOVICH, “NEW YORK TIMES MAGAZINE”:  Well, I think what‘s unique about Robert—Robert is a fairly tenacious, very loyal guy.  He is very affable in some ways.  He can also get very pit bullish in defense of his patron.  What‘s unique about Robert, unlike any press secretary we‘ve had in recent history in the White House, he is exceedingly close to the president.  He knows his rhythms.  He knows his history.  They spent, you know, hours, days, weeks together over the last four years, in particular over the last two years of the presidential campaign. 

So you‘ll get a knowledge and intimacy between the two of them that really hasn‘t been seen in a long, long time, and that creates its own complications, too. 

SHUSTER:  As far as the aggressiveness, you write—I‘ll read it. 

This is where you‘re talking about Gibbs being aggressive with the press

corps: “Gibbs acknowledged that there were times in the campaign when he

became overly aggressive with reporters, which he regrets.  When he speaks

of press relations, Gibbs tends to do so in metaphor.  ‘I might have tended

in the campaign to have more of a sledge hammer in lieu of a fly swatter,“

he told me.  Overlooking that Gibbs was equating reporters with flies, I

quibbled with the premise that a fly swatter is, in fact, a softer way to

engage.  The fly usually days, after all.  ‘True,‘ Gibbs said, and I tried

another metaphor.  ‘It‘s more like if you see every problem as a nail, then

every time you use a hammer, so to speak.‘ 

A lot of us have been on the receiving end of that hammer from Robert Gibbs at one time or another.  Does that work though, necessarily, when you‘re standing there at the White House podium?

LEIBOVICH:  Not as well.  These are—there‘s a real art to this.  Robert has been pretty good about balancing the short-term conflict that is inherent to his job with the kind of long-term relationships that are also very defining about what he does.  Robert, I think, has learned and grown a lot.  I think he seemed very committed to actually working very closely with the White House press corps and not burning bridges.  There‘s another metaphor for you. 

He actually—I think he used the metaphor of building a draw bridge instead of a moat.  Anyway, I think—

SHUSTER:  Again, the idea being that sometimes he‘s just going to draw it up and not provide information, which has been another criticism at him, that sometimes he‘ll say, I‘ll get back to you.  And he never does. 

LEIBOVICH:  Robert is not the best organization guy there is.  He‘s not a good manager, by his own admission.  That‘s true.  He does have a somewhat frustrating habit of going dark for periods of time and not responding to increasingly urgent e-mails from reporters and even co-workers.  So yes, that is—people in the White House, David Axelrod and others said that they‘re going to strip as much managerial responsibility away from Robert as they can.  Robert, basically, his role is largely going to be the podium, and making sure that, as President-Elect Obama says, that is all buttoned up.  But also advising the president, spending a fair amount of time in the Oval Office, I would gather. 

SHUSTER:  Before we let you go, I have to ask you about this incredible anecdote about a night of a debate when Barack Obama and Robert Gibbs are furiously text messaging, sending e-mails.  Tell us about that.  Apparently, Anita Dunn thought there was something wrong? 

LEIBOVICH:  Yes, this was actually a debate prep session before the third debate.  Obama was sitting down, and he and Gibbs were going back and forth on their email.  They kept looking at each other.  And Anita thought there was a world crisis or something.  So she e-mailed back to headquarters and said, what‘s going on?  They said nothing.  Immediately after the session ended, obviously a pretty pressure-filled environment, Gibbs and Obama ran to each other and they just immediately started talking.  And it turns out that they had been charting the fortunes of Obama‘s fantasy football team in the course of that hour, because it was a Sunday afternoon.  And they had to immediately get to each other to debrief on this. 

SHUSTER:  Great stuff.  Proves that Anita Dunn is somebody you can pull pranks on, if you‘re Robert Gibbs. 

LEIBOVICH:  I don‘t think it was a prank.  I think this was dead serious.  Nothing pranky about it. 

SHUSTER:  It‘s a great piece in this Sunday‘s “New York Times Magazine.”  Mark Leibovich from the “New York Times.”  Marks, thanks as always. 

LEIBOVICH:  Thanks David.   

SHUSTER:  Up next, this isn‘t a bad holiday blockbuster.  How the current financial crisis could totally screw up the country and the world when 1600 returns right after this. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  You know the old saying, what‘s the worst that could happen?  At a time of economic crisis, when much of the news is bad news, political reporter Eamon Javers went digging for answers on just how bad it could get.  The answers he found came from James Rickers (ph), a regular adviser to the director of national intelligence on financial issues.  James took him through some really, really bad worst case scenarios, such as, number one, the bait effect, where an economic meltdown provides the opportunity or even as bait for a terrorist attack.  Number two, the China syndrome; China gets tired of carrying billions of US debt and dumps it into the US market, destroying both economies. 

Number three, the existential crash, recession becomes depression, inciting crippling deflation and 15 percent unemployment.  Number four, what he calls the alternate dollar nightmare, the dollar collapses in a global sell-off.  With us now to examine these nightmare scenarios and tell us if we‘re in for economic doom is Eamon Javers, financial correspondent for “Politico.”  A very happy story, Eamon. 

(CROSS TALK)

SHUSTER:  Go ahead. 

EAMON JAVERS, “POLITICO”:  Yes.  I was going to say, I feel like the official doom correspondent here.  You have to think about these things.  I think a lot of people really aren‘t focused on the degree to which the financial meltdown actually hurts US national security and puts us in a much weaker position around the world than we‘re used to being in.  I think, to answer your question, the most likely scenario that we might see out of this is this bait effect.  That‘s the first one we talked about.  That means that terrorists around the world are fascinated with the idea of destroying the U.S. economy.  They may see the weakness now and the unsettled stock market as an opportunity to sort of serve as a force multiplier with a terrorist hit right now against the United States.  That‘s why intelligence folks really worry about the economic meltdown, because they feel like it also attracts want to be terrorists. 

SHUSTER:  I have heard about number two, the idea that China gets tired of carrying billions of U.S. debt.  That seems to be a more longer-term concern.  Again, explain how that scenario might actually work. 

JAVERS:  Well, the Chinese own more than 500 billion dollars worth of American debt.  We‘re doing nothing more right now than running up the U.S.  debt, as we embark on all of this spending to try to bring back the economy that we‘ve all been seeing over the past couple of months.  The problem is that it gives the Chinese tremendous leverage over the United States.  One of the things that the Chinese don‘t want to see happen and might not allow us to do is to allow the dollar to settle down to a lower level in international exchange rate, which would increase the opportunity for U.S.  exports. 

The Chinese now have leverage over the U.S. and leverage over our decision making, just by the threat of dumping U.S. debt on to the market.  They really can strain what American policy makers can do.  When you‘re looking at the geo-political implications of that, you have to take that into account. 

SHUSTER:  Again, some people suggest we may be two economic cycles away from China even to tempted to that, because they want their own economy to be strong enough before they essentially try to kill ours.  This idea, for example, the existential crash, number three; the recession becomes depression, inciting massive unemployment.  There is a view that the real unemployment, when you consider people who have already stopped looking, who aren‘t part of the statistics, that it might already be as high as 12 or 12 percent, right? 

JAVERS:  Yes, it depends on how you slice and dice the statistics.  Basically when they count, they‘re counting people who are actively looking for work and feel like they can still get a job, as opposed to people who have just thrown up their hands and really given up looking for work.  A lot of people say you should count those folks, too.  They‘re still unemployed.  They don‘t have a job.  They‘ve just given up. 

Bear this in mind, even if the unemployment number gets to 15 percent, which is an astonishingly high number, and a number that economists really aren‘t predicting right now, that‘s still lower than what we saw in the Great Depression, where, in 1933, unemployment got up to 25 percent.  Enormous numbers of people were out of work during the Depression.  So we‘re not talking about something that‘s comparable to that.  But it would be a disaster.  The question is, how would that impact U.S. foreign policy, U.S. relations with other countries around the world?  How many more failed states would we see around the world, like Somalia, where there‘s opportunity for all kinds of terrorism and international mischief? 

SHUSTER:  The good thing is that the government, of course, is looking at these scenarios and willing to talk about them and show people like you, Eamon, here is what they‘re planning to do or at least preparing for. 

In any case, Eamon Javers from “Politico.”  Eamon, great work.  Terrific work in the Madoff story this week.  Some excellent reporting.  We appreciate you coming on tonight. 

JAVERS:  Oh, thanks.  A lot of disasters to cover this week in finance. 

SHUSTER:  I‘m David Shuster.  That is the view from 1600 PENNSYLVANIA AVENUE.  Thanks for watching.  We‘ll see you back here tomorrow night same time, 6:00 pm.  “HARDBALL” starts right now.

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