updated 12/30/2008 4:52:01 PM ET 2008-12-30T21:52:01

Guests: Richard Engel, Shibley Telhami, Pat Buchanan, Mort Zuckerman, Chrystia Freeland, Erin Burnett, Bob Shrum, Pat Buchanan, Mike Barnicle, Lawrence O‘Donnell

MIKA BRZEZINSKI, HOST:  Tonight, if you wondered what the first test would be for Barack Obama and Hillary Clinton if confirmed, look no further than Israel.  Foreign policy takes center stage inside 1600 PENNSYLVANIA AVENUE.

Twenty-two days until the inauguration of President-elect Barack Obama. 

Welcome to the show.  I‘m Mika Brzezinski, in for David Shuster tonight. 

Day four of Israel pounding Gaza targets.  While it is one president at a time, the world is looking to the next team for answers. 

Coming up, what will we see before day one and on day one when it comes to the increasingly delicate situation in the Middle East? 

The Bush Legacy Project—an extraordinary look inside from the people who lived it as “Vanity Fair” presents the oral history of the last eight years, stories you may never have heard, quotes you simply won‘t believe.

As the year closes with trillions lost in stock market value, a look ahead to the money it‘s going to take the Obama administration to put the economy back on track.  And a hint here—it‘s a lot.  Get used to saying the word “trillion” with a “T.” 

Caroline Kennedy finally faces the press, giving interviews about why she is seeking Hillary Clinton‘s Senate seat.  But what‘s memorable about her interviews may not be what she meant to say so much as what “you know” she said. 

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, JOHN F. KENNEDY‘S DAUGHTER:  You know, in our family, and my family in particular, you know—you know, we have to work twice as hard because, you know, people have this perception that, you know but I think that‘s a question of, what do you do with that opportunity? 

(END VIDEO CLIP)

BRZEZINSKI:  And President-elect Barack Obama might like a full-court press on the basketball court, but not when it comes to the press corps.  Can he handle living in the bubble? 

But first the headline.  Israel‘s defense minister calls it “A war to the bitter end.”  At this hour, nearly 370 people are dead and hundreds more wounded.  The Israeli air assaults have been targeting Hamas compounds in response to the militant rocket attacks, but dozens of civilians are reported among the dead. 

NBC‘s Chief Foreign Correspondent Richard Engel joins us live now. 

And Richard, take us to the next level here in terms of what makes this escalation in Gaza different and what challenges the conflict presents globally. 

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT:  I think what you can say immediately is that this is something that we haven‘t seen on this scale in Gaza before.  Israeli officials are talking about going in an all-out war against Hamas.  And if you look at the map—and you can see I‘m standing in front of one now—it also very immediately has regional implications, particularly along the border with Egypt. 

Today there was as much criticism in the Arab world for Israel as there was for Egypt.  People are saying on the Arab street that the Egyptian government is not doing enough to stop Israel and may in fact have given Israel a green light. 

Another area to watch, just to Israel‘s north, all of south Lebanon.  There have been numerous speeches by the leader of Hezbollah, and he is calling for people to take action to support the Palestinians. 

What you‘re seeing is a tremendous contrast in the Arab world‘s reactions.  On the Arab street, on the popular level, many people support the Palestinians and will tolerate Hamas.  On a government level, however, countries like Egypt are blaming Hamas.  They do not want to see Hamas in power and have been very quiet about this entire offensive. 

So there is a growing resentment and growing tension. 

BRZEZINSKI:  And the tension, how are both sides responding to or listening to the U.S. response to this?  If any.  And especially the incoming administration, which has been rather quiet so far. 

ENGEL:  I think there was a window of opportunity for Israel to act.  This offensive, according to Israeli officials, had been a long time in the planning.  Right now, there is a question mark about how the next administration will act toward Israel.  Will it give Israel a green light to do this kind of operation? 

Again, muted reaction from the Arab states.  And that is something that I think gives Israel a lot of encouragement, when they see countries on their border like Egypt not doing anything. 

Today, the king of Jordan was donating blood to the Palestinians and making a very symbolic gesture, but you‘re not seeing any Jordanian troops being moved toward the border.  You‘re not seeing any Egyptian aircraft in the sky.  So far it has just been popular anger. 

BRZEZINSKI:  All right. 

Richard Engel, thank you very much. 

President-elect Barack Obama has largely declined to comment on the crisis in Gaza, speaking with Secretary of State Condoleezza Rice over the weekend, but saying through spokesmen only that we only have one president at a time.  But the Israel/Hamas conflict may prove an early test for his presidency.  And I want to bring in our panel now. 

Shibley Telhami, senior fellow at the Saban Center for Middle East Policy at the Brookings Institution, joins us.  And Pat Buchanan as well joins us, MSNBC political analyst and former Reagan White House communications director, and Nixon speechwriter.  Also, Mort Zuckerman, chairman, editor-in-chief and publisher of “US News & World Report,” as well as chairman and publisher of “The New York Daily News.”

Gentlemen, thanks very much. 

I want to play for you all David Axelrod on the Sunday shows dealing with this situation, maybe giving us a little bit of a hint as how the Obama administration may deal with Israel.  It will be probably one of the primary foreign policy tests for this new president. 

Here he is. 

(BEGIN VIDEO CLIP)

DAVID AXELROD, SR. ADVISER TO OBAMA:  The president-elect recognizes the special relationship between the United States and Israel.  It‘s an important bond, an important relationship.  He‘s going to honor it. 

And he wants to be a constructive force in helping to bring about the peace and security that both the Israelis and the Palestinians want and deserve.  And obviously, this situation has become even more complicated in the last couple of days and weeks.  As Hamas began its shelling, Israel responded.  But it‘s something that he is committed to. 

(END VIDEO CLIP)

BRZEZINSKI:  Pat Buchanan, I want to start with you.

Dealing with Hamas was an issue in the campaign.  What do we know about the approach Barack Obama will be taking to this situation, which might differ from the Bush administration? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, Barack Obama has said during the campaign repeatedly he wants to talk to our enemies.  And certainly, I think they would put Hamas in that category.

But he has been left with a very difficult situation here.  The Israelis—I doubt if they cleared this with Barack Obama—they have engaged in a far disproportionate response to these rocket attacks from Hamas that killed no one by responding and killing more than 300 Palestinians and wounding well over 1,000, with all those pictures going across the Middle East using American smart bombs and American fighter jets.  And so I think Barack Obama has presented with a hellish problem on day one in office, Mika. 

BRZEZINSKI:  Absolutely.  And it started before he has taken office, for sure.

Shibley Telhami, I want to play for you Obama‘s statement toward AIPAC that he made I believe over the summer.  It was on the campaign trail, back in June.  Here‘s how he stated his position toward Israel.  Take a listen. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  As president, I will work to help Israel achieve the goal of two states: a Jewish state of Israel and a Palestinian state, living side by side in peace and security.  And I won‘t wait...

(APPLAUSE)

OBAMA:  I won‘t wait until the waning days of my presidency.  I will take an active role and make a personal commitment to do all I can to advance the cause of peace from the start of my administration. 

(END VIDEO CLIP)

BRZEZINSKI:  All right.  Shibley Telhami, clearly at this point, it‘s a very precarious balance, what he says before he takes office.  Clearly, there is one president at a time.  Yet, is his silence being perceived in any negative way around the world, and especially in the area? 

SHIBLEY TELHAMI, SR. FELLOW, SABAN CENTER, BROOKINGS INSTITUTION:  It might be.  But you know what?  He has to be silent, to be honest.  I mean, frankly, there is only one president at a time.  There‘s not much he can do at this moment, and I think that he should leave whatever policy he is going to announce until after he is in office. 

The question is, what is he going to do when he is in office?  That‘s the real question. 

I think what you heard here, what you heard him on the campaign, saying on the campaign, and what you even heard him when he introduced his national security cabinet, he said that this issue, namely the Israeli/Palestinian conflict, is an important issue to him.  He mentioned only one or—two to three issues when he introduced that cabinet, so he clearly believes this is an important issue.

And the question is, how is he going to deal with it?  And how is this crisis going to affect his approach?  I think there are two lessons to be learned. 

First, once you put a plan in place very quickly, you‘re going to be preempted by the local parties, whether it‘s going to be Hamas or Hezbollah or Israel or some other player.  They‘re going to dictate the options that you‘re going to have.  And you‘re not going to have something to rally people behind.  So he has to act very quickly in putting a plan together on the table. 

BRZEZINSKI:  And try to get out in front of this if it‘s possible. 

Mort Zuckerman, chime in if you like on that.  But also, you‘ve been on “MORNING JOE” with us may times when we talked about what the foreign policy challenges will be, what the priorities will be.  We talked about Iran, we talked about Pakistan, we talked about Afghanistan.  Now this is jumping to the top of the list. 

MORT ZUCKERMAN, CHAIRMAN, “US NEWS & WORLD REPORT”:  Well, bear in mind here, the Palestinian community is divided.  You have Fatah, which is one wing of it, and Hamas, which is another. 

Hamas is a terrorist organization and so recognized.  And when they took over in Gaza, which they did by throwing out Hamas in basically a modest revolution, they have in every day since they have been in power until the recent truce, been lobbing mortars and rockets into Israel.  And there was no way of stopping them.

There was a six-month truce which just ended.  And what happened is that they resumed firing rockets against Israel, which is what upset the Egyptians and what upset the Palestinian government in Ramallah.  This is the Abbas government, the Fatah people, which is what upset the Jordanians. 

In effect, all the Sunni countries really see this as another action by a wholly subsidiary of Iran, and there‘s some truth to it because Iran has been behind the funding and training an army of Hamas as they have been with Hezbollah.  So you have here a different kind of situation. 

It‘s not Israel versus the Palestinians.  It‘s Israel versus Hamas, which is a known terrorist organization and one which basically refuses to even recognize Israel.  That is going to continue. 

There is no way that we here in America can do anything about Hamas, which is a radical and extremist organization.  We can work with Fatah and make progress, but not with Hamas.

BRZEZINSKI:  Pat?

BUCHANAN:  I think we have to.  Look, the problem with the Bush administration is it gives a, if you will, a blank check, or it approves whatever policy Israel decides. 

Israel will say, well, we don‘t want to attack them.  They say fine.  We want to kill 1,000 or three hundred of them right now and wound 1,000, and Bush approves it. 

What Barack Obama has to do is tell the Israelis, we have—you have your own policy and we have our policy.  And we need to establish separate lines of communication to Hezbollah, to Hamas, to Syria, and we‘ll look out for our interests as the Israelis look out for theirs. 

BRZEZINSKI:  Shibley Telhami.

TELHAMI:  I just want to point out that the anger in the Arab world is very interesting, because public opinion in the Arab world is very sympathetic with Hamas.  I do public opinion polls every year.  And right now Arab public anger is huge, and you can see it in demonstrations, sizes that we haven‘t seen in Yemen, in Lebanon in particular.

Arab governments, it‘s true, particularly the Egyptians and the Jordanians, they‘re uncomfortable with Hamas and they don‘t want to see it win.  But that is only increasing the anger in the public arena.

And with Iran, I think Hamas is getting support from Iran.  But you know, they‘re not like Hezbollah.  With or without Iranian support, they would have the same power that they do.  And frankly, Iran is reaping the benefit right now of this attack because their main arena of contention is public opinion.  They become popular when the public is angry with their governments, and they see Iran as championing the Palestinian cause, and they win in public opinion. 

BRZEZINSKI:  Yes.  And to wrap up, it seems to me that this is one situation where we need clarity and where a team of rivals could prove a bit cumbersome.  But we shall see, because it‘s certainly complicated and not something that‘s going to end any time soon. 

Gentlemen, thank you very much. 

Up next, the situation in the Middle East is escalating.  Will it keep the Obama administration from focusing on its ambitious economic agenda?  

When 1600 PENNSYLVANIA AVENUE returns right after this.

(COMMERCIAL BREAK)

BRZEZINSKI:  Welcome back. 

The Obama administration is raising expectations on its ambitious economic agenda.  But is it really possible with a massive and growing budget deficit and a host of challenges abroad? 

Erin Burnett, anchor of CNBC‘s “Street Signs” and “Squawk on the Street,” joins us now, as well as Chrystia Freeland, U.S. managing editor of “The Financial Time.”  And still with us, Mort Zuckerman, chairman, editor-in-chief and publisher of “US. News  & World Report,” as well as chairman and publisher of “The New York Daily News.”

Mort, I want to read to you what Lawrence Summers put in Sunday‘s “Washington Post.” And we can all chime in on this, but here‘s part of what he writes.

“In this crisis, doing too little poses a greater threat than doing too much.  Any sound economic strategy in the current context must be directed at both creating the jobs that Americans need and doing the work that our economy requires.  Any plan geared toward only one of these objectives would be dangerously deficient.”

“Failure to create enough jobs in the short term would put the prospect of recovery at risk.  Failure to start undertaking necessary long-term investments would endanger the foundation of our recover and ultimately, our children‘s prosperity.”

I guess those are obviously a broad brush, broad strokes on what needs to be done.  Obviously, they‘re going to spend as more—as much as they can, rather, than too little.  But isn‘t it the specifics that are going to make these measures work? 

ZUCKERMAN:  Well, the question is whether any of these measures can work in the face of the problems that our economy is facing.  There‘s no way that the administration can stop the decline in housing prices, there‘s no way that any new administration can stop the de-leveraging of American finance, there‘s no way that an administration on its present course can stop the credit crunch.  And they are going to have—no matter what they do, it‘s going to take a log time to rebuild confidence.  So they have got huge problems. 

Now, I agree with everything Larry Summers has just written, particularly we‘ve got to do something about employment in the first year, because the unemployment rate is soaring.  And if that happens, it will affect everything. 

It will affect consumer spending.  It will affect the housing world.  It will put such downward pressure on the economy that nothing the administration does will be able to turn it around.  That seem to me is job one. 

The longer-term program that he‘s talking about are also very important.  But in the short run—you know, John Maynard Keynes once said in the log run we‘ll all be dead wrong.  In the long run, we‘ll all survive and flourish.  In the short run, we can be dead, and that‘s what this administration has got to avoid.  They have got to find a way to stop the downward spiral in the economy. 

BRZEZINSKI:  Yes, I think they‘re going to...

ERIN BURNETT, HOST, “STREET SIGNS”:  Mika, it‘s interesting...

BRZEZINSKI:  Go ahead, Erin. 

BURNETT:  Sorry.

BRZEZINSKI:  No.  Please, take it away. 

BURNETT:  I was just going to say it‘s interesting the link they do.  You know, we can talk about jobs and you were talking about the unemployment rate.  I mean, some would argue now the real unemployment rate already is double digits. 

When we talk about getting 2.5 million jobs this year and next year, where will they come from?  So far, the link seems to be that it‘s going to come from infrastructure spending.  But if we try to get all those people to work immediately on infrastructure projects, we may end up working on projects that are of dubious merit when you look over the longer term. 

A lot of those bridges and tunnels we want to build may not create (ph) unemployment tomorrow.  It might take a year for that.  So that‘s your long-term prosperity.

But the infrastructure may not solve the short-term jobs problem.  And that link, we need to break that link or find out where the Obama administration stands on that. 

CHRYSTIA FREELAND, “FINANCIAL TIMES”:  Well, I think...

BRZEZINSKI:  And Chrystia Freeland, go ahead. 

FREELAND:  No, I was going to say I think Erin is right.  And what‘s interesting about the op-ed that Larry wrote, is that is shows a sort of development, a more subtle position than he took, say, a year and a half ago, before he was in government, before the crisis had really sort of metastasized into this global economic recession. 

And at that point, when Larry was talking about stimulus—this is before the first stimulus package—he was saying what you need is something very short term.  You need an immediate sort of shot of adrenaline to the economy. 

What he is talking about now is, yes, you still need the shot of adrenaline, and it has to be a much, much bigger shot than we were talking about before.  That‘s why he says the danger of doing too little rather than doing too much.  But he has also added a second element to it, which is we need to be doing longer-term infrastructure spending as well. 

So I think we should expect to see from the Obama team sort of a two-track strategy. 

BRZEZINSKI:  Yes.

FREELAND:  The first really aimed not so much at specific job creation, but really pumping money into the economy.  And that will probably go to the poorest people, be very targeted.  And then the second track will be more of these long-term projects which will be acting on Barack Obama‘s political agenda as well. 

BRZEZINSKI:  You know, Mort and then Erin, I mean, the thing that makes this different, clearly, is that this is a global crisis.  And whatever measures are taken are going to have to somehow connect with other countries that are in a similar situation, that are bailing out their big companies, that are struggling fictionally.  I think that‘s the challenge.

And potentially, Mort, the unknown here?

ZUCKERMAN:  Yes.  It is certainly one of the challenges.  And no other country, frankly, has the political system or the economic flexibility to respond the way we are. 

If you look at Europe, Europe doesn‘t have a single fiscal policy.  They have a whole set of countries, each of whom is going to have a separate fiscal policy and not all of whom are going to respond in the way that we‘re going to respond. 

What worries me the most is that we are in a situation now where there is no credit in the system.  And this is an economy that rests on credit, that works on credit. 

And none of the financial institutions feel that they have the wherewithal to do lending because their own loan book, as we call it, their own assets, are so problematic.  And they have just huge losses built into their existing loan assets.  And if housing go down, as most people expect, it would add another $500 billion to a trillion dollars to the capital costs of the financial world. 

And when you about what we‘re helping invest in the financial world, which is $250 billion, and that would be—this would be the second trillion.  The financial system is broke and we do not know yet how to cure that. 

The federal government is going to have to step in and be a lender or a backup lender to a degree that is unprecedented in our history.  Without that, we will have a major recession. 

BRZEZINSKI:  And amidst that, Erin and then Chrystia, talk about how to rebuild confidence, consumer confidence in a situation where confidence, I believe, and trust in the federal government has been lost. 

BURNETT:  Mika, I guess, you know, trying to think about what we can boil it down to, because as you say, it is so complex and so global, but when you talk about confidence, I think it comes down still to where we started.  And that is housing. 

For most Americans, 70 percent of Americans own their home; right?  Their home is their biggest asset.  And when their home is dropping in value, they don‘t feel wealthy.  And people who don‘t feel wealthy aren‘t going to be spending money on buying things.  And then companies aren‘t going to make more things, and it keeps feeding its way through. 

I look at it this way—you‘ve got housing prices last month down 13 percent.  They are dropping at a faster rate than they have been before.  So you could say that problem is getting worse. 

People who own their home feel poor.  People that are thinking about buying a home are going to wait because prices are going down.  And if you can‘t break that cycle, we aren‘t going to get out of this.

So we need something specific and targeted.  How are we going to deal with housing?  How will that change now?  If we can do that, then you‘ll start to change the entire confidence game. 

BRZEZINSKI:  Chrystia, Erin makes it sound so simple. 

FREELAND:  I think that‘s partly Erin‘s job, but I think Erin and Mort would probably agree with you, Mika, because it‘s very far from simple, and that‘s why no one has come up with an obvious solution. 

Maybe an interesting sort of study to bring up which we like so much, we put it on the front page of tomorrow‘s “Financial Times,” is a report on global fiscal stimulus plans that the IMF has published.  And it really has two important ideas in it. 

One is that the immediate fiscal stimulus, to be really effective, should be targeted at the poorest people.  The economists describe them as the people with the greatest marginal propensity to spend.  And that really means people who are so poor, that they‘re going to spend the money rather than saving it.  I think that that‘s really important. 

And the other point that the IMF makes, which goes back to your

reference, Mika, to bailouts, is that it warns that if governments devote

too much of this stimulus money to bailing out specific industries, they risk getting the whole world into a protectionist cycle, because as different countries see their neighbors bailing out specific industries, they may say, wait a minute, we have to raise trade barriers.  And I think that that is one of the big dangers going into 2009. 

BRZEZINSKI:  Yes, really.

BURNETT:  Well, Mika, you know what‘s amazing?

BRZEZINSKI:  Real quick.

BURNETT:  We‘ve doubled our obligations of the government in a year.  We had $10 trillion a year ago.  And now, when you count all the things we‘ve done—AIG, Citigroup, all the loan guarantees—we‘re at nearly $20 trillion coming into the Obama stimulus package. 

So we really are, frankly, depending on the good will of the rest of the world to fund that.  That could be the ultimate protectionist move, when people say no more.  We‘re going to charge you a whole lot more for all of that borrowing.

BRZEZINSKI:  OK.  On that note, Happy New Year. 

Erin, Chrystia, Mort, thank you very much.

Up next, change is coming in 2009.  Or is it?  Why.  Americans are fired up and ready to stay the same? 

When 1600 returns.

(COMMERCIAL BREAK)

BRZEZINSKI:  We‘re back with a look at what‘s going on inside “The Briefing Room.”

First up, the truth is in the numbers.  The majority of Americans voted for change in November, but it sounds like they‘re planning on someone else doing the changing for them. 

According to a brand new Marist poll, 60 percent of those polled say it‘s not at all likely they‘ll make a New Year‘s resolution this year.  And of the 40 percent who say they probably will make one, 20 percent are making a vow to lose weight, 16 percent want to quit smoking, and 12 percent say they‘re going to spend less money next year, bumping the resolution to be a better person lower on the list. 

I guess we‘ll just have to check in with everyone next year to see how they did.  

And breaking news in the briefing room.  This just in, or out as the case may be, Governor Sarah Palin‘s daughter Bristol has given birth.  “People Magazine” broke the news on its website.  The baby is a healthy boy named Trip.  If you‘re keeping track, it‘s another T.R. name in the Palin family.  Mother and baby are doing well.  And the baby‘s father, Levi Johnson, is excited.  Congratulations to the Palin family. 

Up next, inside the Bush White House, as told by the people who lived it.  As the administration picks up, top advisers are speaking candidly about the real reason for invading Iraq: shoddy pre-war intelligence and incompetence in the West Wing. 

Plus, why one of the engineers of Bush‘s 2000 victory says he was doomed from the start.  1600 returns right after this.

(COMMERCIAL BREAK)

BRZEZINSKI:  Tonight, as the sun sets on the Bush administration, the rose colored glasses are coming off, with the closest insiders talking candidly about controversies and incompetence.  Plus, a provocative question: will the legacies of President Bush and President Obama be intertwined?  Could the Democrat who campaigned as the antidote to Bush be the one to vindicate him in the history books?  As 1600 PENNSYLVANIA AVENUE continues. 

Welcome back to 1600 PENNSYLVANIA AVENUE.  I‘m Mika Brzezinski, in for David Shuster tonight.  Two wars abroad, an economic meltdown and now, all out war in Gaza.  Just some of what President Bush is dealing with in his final days, as Pat says, three weeks.  Also on that list of seemingly impossible challenges, painting a rosy picture of his time in office, even as his job approval ratings continue to sit at rock bottom.  The problem is, even as President Bush and Vice President Cheney are telling their version of the past eight years, the aides and advisers who were there are telling very different stories. 

The new issue of “Vanity Fair” has an oral history of the Bush Era, what administration insiders saw and experienced in their own words.  It‘s out smart take for today. 

Joining us now to talk about it are Pat Buchanan, MSNBC political analyst and former Reagan White House communications director, Nixon Speech writer.  Mike Barnicle, “Boston Globe” columnist, and Bob Shrum joins, us as well, Democratic strategist.  Thank you, gentlemen, for joining me.

Wow.  I want to start with Richard Clarke, with what he says about the reason they wet into Iraq.  And this is what he writes.  He‘s been critical for quite some time now.  Listen to what he says about Rumsfeld: “That night, on 9/11, Rumsfeld came over and the others and the president finally got back and we had a meeting.  Rumsfeld said, you know, we‘ve got to do Iraq.  Everyone looked at him—at least I looked at him and Powell looked at him like what the hell are you talking about.  He said—I‘ll never forget this—there just aren‘t enough targets in Afghanistan.  We need to bomb something else to prove that we‘re, you know, big and strong and not going to be pushed around by these kind of attacks.”

Pat Buchanan, first of all, we know Richard Clarke, where he has stood on this for quite some time now.  But this, if true, stunning. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  It is stunning.  I think that‘s a September 12th quote, the day after September 11th.  The point made is valid.  I think there is no doubt that Wolfowitz and others came into the Bush administration determined to take down Saddam Hussein, feeling that Bush I had failed to go all the way to Baghdad, and they were going to do it.  And 9/11 game they have the reason or the pretext, whichever you want to call it.  This is what the Bush administration is going to be judged on, Mika, I think, how Iraq comes out.  There is no doubt about it, this was not a war of necessity.  It was a war of choice. 

BRZEZINSKI:  Mike Barnicle, we‘ve heard over time about the politicization, if I may, of the pre-war intelligence, and whether some of it was ginned up, whether they had other reasons going to war.  But what do you make of Richard Clarke‘s statement on what Rumsfeld‘s attitude was toward this?  I guess I should point out, for the record, my brother was working for Rumsfeld at the time. 

MIKE BARNICLE, “BOSTON GLOBE”:  You know, Mika, in the “Vanity Fair” piece, it is not just what Dick Clarke had to say about Donald Rumsfeld.  It is what Larry Wilkerson, former aide to Colon Powell at State, had to say about the president of the United States himself, that there was an experience vacuum, a character vacuum, devastating stuff. 

To Pat‘s point, the war in Iraq, and how history will judge the Bush administration on Iraq, that‘s decades down the road, I would think.  We don‘t know now.  We‘re to close to it.  It‘s too near.  It‘s still with us.  But we don‘t need a long view of history to look at what the Bush administration and the president of the United States failed to do from September 11th through Christmas, I would say, of 2001.  That‘s to summon this country to make a sacrifice in this extended war on terrorism.  They never asked any of us to make a sacrifice, to fight this war on terror. 

Instead, they gave us tax cuts and expenditures of 10 billion dollars a month to fight the war in Iraq.  That is not only unheard of in history.  It is fiscal and cultural insanity. 

BRZEZINSKI:  Oh, OK.  Strong words and possibly a very fair argument there, Barnicle.  Bob Shrum, looking ahead to the Obama administration and the team that he‘s put together to deal with this, you could argue that President Bush brought some of the cronies from his father‘s administration together.  But if you look at what Barack Obama is putting together, it‘s many Clinton folks who are coming together now.  Could he be overwhelmed by the folks around him that perhaps had a lot to do with the previous administration as well? 

BOB SHRUM, DEMOCRATIC STRATEGIST:  I don‘t think Barack Obama gets overwhelmed by anybody, number one.  Number two, I think we would have been a lot better off, if you read this “Vanity Fair” piece, if President Bush had listened more, say, to Colin Powell and less to some of the other folks he was listening to. 

The fact is his legacy is going to be ashes.  You know, they keep running around saying, Harry Truman, look at Harry Truman.  He went out with a low popularity rating and history redeemed him.  Where is Bush‘s NATO?  Where is his Marshall Plan?  Where is his containment strategy? 

Pat is right.  This was a war of choice.  The best possible outcome now—it is a terrible outcome, actually—is a Shiite dominated regime that‘s in tacit league with Iran.  It wasn‘t worth it.  It was a mistake.  I think Obama is going to change direction. 

BRZEZINSKI:  But Pat, a war of choice?  How can history ever vindicate a war of choice that is politicized, as opposed to a war of necessity? 

BUCHANAN:  Well, rather, when we took over the Philippines from Spain and ran a three-year guerrilla war and then basically annexed, it was successful.  And nobody knocked them for it, even though it was a colonial imperial war. 

SHRUM:  I wouldn‘t say that.  That doesn‘t defend him. 

BUCHANAN:  It doesn‘t.  But America has fought a lot of war of choices.  The Bosnian thing, the over Kosovo, those were wars of choice.  Let me say this, I‘ll have to say, when I heard Bush had picked Rumsfeld, Cheney and Powell, all three of whom I know and worked with to some degree, I was elated, because I said these are long-headed, tough-minded, experienced guys.  What happened to Bush is on 9/11, Mika, that thing happened and that was a Road to Damascus experience for him.  I think he converted basically to the neo-conservative ideology, the Freedom Agenda.  We‘re going to make—

Wilson on steroids.  We‘re not only going to make the world safe for democracy, we‘re going to make the whole thing Democratic with American military powerful.  That‘s what led him into Iraq. 

BRZEZINSKI:  It‘s such as an us and them.  I agree Barnicle.  There was no request or command for sacrifice, if I could.  Mike Barnicle and then Shrum, I would love to hear what you think about John Heilemann‘s piece.  He has a really interesting piece in “New York Magazine” called “Why Bush is Rooting for Obama.”  It basically asserts that a successful Obama administration could actually help vindicate the Bush years.  Here‘s what he writes: “the president has long seemed to realize that history‘s verdict on his tenure will hinge mainly on Iraq, on what transpires there over the coming years, on whether the country emerges, as Bush hoped, as a relatively peaceful, fee, Democratic place.  Not long ago, that outcome seemed ridiculously far-fetched.  But now there are plenty of serious people of both parties daring to think it possible.  And one of them must be Obama, who soon will have no small amount of political skin in that game.” 

If Iraq can bring itself toward progress, does that help vindicate President Bush?  Mike Barnicle? 

BARNICLE:  First of all, Pat‘s fondness for the Philippines has to do with the fact that he was a personal friend of Admiral Dewey‘s and he was there with Admiral Dewey. 

My feeling on the Bush presidency and Iraq is such that, as I said before, it is going to be decades before we can view this venture, in terms of whether it is the disaster that we all think it is now or whether there is some form, some mild form of democracy in Iraq ten, 15 years from now.  We don‘t know that.  I don‘t think the odds are very good that there is going to be a League of Women Voters chapter in Baghdad in five or ten years. 

But Barack Obama, he is going to have a different set of issues to deal with when he comes into office, a lot of them born of the activity of the last four or five days in the Middle East.  No matter what we say or think about geo-politics and what we say here tonight, the fact is that on the ground, in the Middle East right now, it might as well be our planes in the air, our missiles being fired into Gaza, and our troops at the border getting ready to invade, because on al Jazeera, seen by the people of the Middle East—not the leaders in the Middle East—they view that activity there as being us, not Israel, just Israel. 

BRZEZINSKI:  Bob Shrum, final thought? 

SHRUM:  Well, Obama inherits a mess in the Middle East, a much stronger Shiite presence, an Israeli-Palestinian conflict that‘s going to be much more difficult to deal with.  I think if he manages to make progress on these fronts, and in Afghanistan, which could become a quagmire, by the way, then I don‘t think it is going to redeem Bush.  It is going to rebound to the benefit of Barack Obama, who after all did run against a third Bush term.

I love John Heilemann.  The one thing I would say I disagree with him on is Obama is not going to be another Bush.  He is going to resist that tremendously. 

BRZEZINSKI:  All right.  We shall see.  He has got a lot on his plate for sure.  Bob Shrum, Pat Buchanan, Mike Barnicle, gentlemen, thank you very much. 

Coming up, President-Elect Obama running from reporters in Hawaii.  Is his characteristic cool demeanor starting to show cracks under the scrutiny?  When 1600 returns. 

(COMMERCIAL BREAK)

BRZEZINSKI:  Welcome back.  President-Elect Obama set off a bit a brouhaha in Hawaii when hit the water park, but skipped the pool, the pool reporters that is.  The president elect took daughters Sasha and Malia to a water park on on Friday, but he didn‘t tell the press corps, which “Politico” says is a breach of long-standing protocol between presidents or president-elects and the media.  However, when the Corp finally caught up with the incoming first family at a snack stand, the president-elect offered the reporters some shaved ice.  That‘s nice, a little rapprochement there.

Joining me now, Lawrence O‘Donnell MSNBC political analyst, and former chief of staff to the Senate Finance Committee.  Still with us, Pat Buchanan, Mike Barnicle and Bob Shrum.  Lawrence, come on.  It was water slides with his kids.  He didn‘t want a bunch of reporters tagging along.  This is the final moments together before he is president.  I can empathize. 

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  Yes.  And he has younger kids than we‘ve seen in the White House in a very, very long time.  So I think the press should get used to some new protocols, in terms—especially anything involving the kids.  The Obamas are going to look for private moments like that in whatever way they can shape a so-called private moment. 

So the Obamas will pay no price for that particular violation of protocol. 

BRZEZINSKI:  No, I can‘t imagine, Pat, when you look back at presidential—children of presidents, that is tough.  I was a peer of Amy Carter‘s and my father was in the Carter administration.  I felt bad for her. 

BUCHANAN:  I think they should leave the kids really alone.  Even the president, frankly.  Nixon, I can recall; he is out at San Clemente.  He gets a couple days off.  He wants to go in the surf.  He looks up on the hill and there are reporters with cameras all looking down.  Why do they need to know immediately if he‘s been grabbed by a shark, if he‘s hauled away and he‘s gone, we have to call Mrs. Nixon first.  They‘ll find out soon enough will.  Why do they have to see it? 

BRZEZINSKI:  There is an obsession there.  I think when it come to the children, Mike Barnicle, as a mother of children that—the age of the Obama children, I just—I feel bad for them.  They‘re going to be going through a lot of changes.  And it is a terrible time to be followed 100 percent of the time. 

BARNICLE:  Look, I think all of us understand the need for a pool reporter to be present in case anything happens to the president of the United States.  God knows, our history is such that we all appreciate that reality.  But the fact is, for the last 16 years, the growth of the media in Washington—look, I have a press card.  OK?  I‘ll probably get in huge trouble for saying this.  The growth of the arrogance of the media in Washington leads me to want to have term limits for Washington reporters.  

There is stuff about the president of the United States I don‘t want to know.  I don‘t care what kind of ice cream he buys for his daughters.  I don‘t care what size swimsuit he wears.  I want the president of the United States to have a little sense of privacy, a little sense of being the person that he is.  Whether it is George W. Bush or whether it is Barack Obama, leave the president alone.  Leave them alone for a while.  Let them live a life at least for a bit. 

BRZEZINSKI:  But, Bob Shrum, how do you balance what Barnicle is saying with the fact that he is the president of the United States, the president-elect.  And the one moment that he is not covered by the president something could happen and the press would miss it. 

SHRUM:  Do you know what the tragedy would be?  The tragedy would be that something happened, not that the press missed it.  The press‘s fascination with itself and its prerogatives is not shared by the public.  Barack Obama is going to be judged on how he deals with the economy, on whether he delivers health care reform, on how he deals with crisis in the Middle East, not on whether he takes the press to the water park. 

I have to tell pat, Nixon would have been a lot better off at that photo opportunity if he hadn‘t worn Oxfords into the surf. 

BUCHANAN:  If the shark had gotten him we call Agnew.  You don‘t need to call the Associate Press. 

(CROSS TALK)

BUCHANAN:  Let him do it.  Let him tell the story.  For heaven‘s sakes, leave him be.  I agree Mike Barnicle.  Leave the guy alone.  Let the pool take the weekend off. 

BRZEZINSKI:  Barnicle, quick.

BARNICLE:  Lawrence, Pat and Bob, having been in that business for a lock time, you appreciate this.  That it is one thing to have an adversarial press corps.  God knows, we need that in this country.  We do need that.  But it is quite a thin line between being an adversary and becoming an enemy.  That‘s what has happened to politicians and the media.  They now view us as the enemy. 

BRZEZINSKI:  Yes.  I agree completely.  Mike Barnicle, stand by.  Gentlemen, all of you, stand by, if you could.  The wheel have fallen off the bus here.  We‘ll get them back on track next.  Up next, Caroline Kennedy‘s charm offensive imploding.  She is insulting reporter and giving her critics a lot of material.  These clips will probably help her chances of showing up on “S&L.”  Could they hurt her chances of becoming the next senator of New York when 1600 returns?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CAROLINE KENNEDY, DAUGHTER OF FMR. PRESIDENT JOHN F. KENNEDY:  In our family, my family in particular, I think there was a sense that we have to work twice as hard.  People have this perception that—and we are fortunate.  But I think it‘s a question of what do you do with that opportunity? 

(END VIDEO CLIP)

BRZEZINSKI:  Yes, you know, welcome back to 1600.  That was Caroline Kennedy on New York One.  After weeks of criticism that she has campaigned for Hillary Clinton‘s New York Senate seat largely behind closed doors, as you just saw, Caroline Kennedy finally met the press this weekend to not so favorable reviews.  Still with us, Lawrence O‘Donnell, Pat Buchanan, Mike Barnicle, Bob Shrum.  Lawrence, are we being unfair? 

O‘DONNELL:  Yes, you are, Mika.  I think she did very well in most of these interviews.  I don‘t think the press asked a single interesting question.  I don‘t think there has been a reporter who has been exposed to her who demonstrated an understanding of what working in the Senate is.  So they didn‘t even ask any questions that are relevant to a senator‘s performance. 

Look, we have to remember where she was a couple weeks ago.  She was not out here talking about this stuff, and she was being attacked every day by some member of the Congressional delegation, by people backing other candidates who they want to be the next senator.  She was getting attacked and back stabbed every day.  They were saying, she‘s afraid to come out.  She‘s afraid of the rough and tumble.  She is afraid of the exchange. 

She is not afraid of the exchange.  She went out there this weekend, talked to the “New York Post,” television.  She covered them all.  And there was nothing problematic in that coverage. 

BRZEZINSKI:  Well, a lot of folks are looking at the language.  Pat, how is she doing?

BUCHANAN:  If you take that sound bite, compared to Caroline Kennedy, Sarah Palin comes off as a cross between Disraeli and Bismarck.  She‘s had a very, very tough time here.  Everybody is pounding on her.  They are going to do it for three and a half more weeks.  I don‘t know who is going to come to her defense.  She looks like she is less excited about this.  If I had to guess, I would bet you that like Harriet Myers, she will find a graceful way out of this before the 20th of January. 

BRZEZINSKI:  Bob Shrum, I have to say, I‘ve been on the front lines of saying I don‘t feel she wants this.  At the same time, it is not like she is campaigning.  This is a private appointment.  And she has probably been told to hold back a little bit.  Do you think we‘re being fair as the media? 

SHRUM:  No.  I think it is totally unfair.  Absolutely inappropriate to compare her to Sarah Palin, who didn‘t know what she was talking about about almost anything.  As Lawrence O‘Donnell said, the press complained that she wouldn‘t answer questions.  She came out and answered all the questions.  Then they said, well, you know, she said, “you know,” you know, sometimes in the middle of sentences.  You know what?  Robert Kennedy said, ah, ah, ah, quite often in the middle of sentences.  He was a very effective senator and a very effective leader for this country. 

She is not going to get out of this.  The governor is going to make the ultimate decision.  If she gets appointed, she‘s going to be terrific and she‘s going to get reelected by a big margin. 

BRZEZINSKI:  OK, Mike Barnicle, you know, I do feel that we‘re being a little unfair.  But she is get no different treatment than anyone who emerges on the scene like Sarah Palin. 

(CROSS TALK)  

BARNICLE:  You betcha. 

(CROSS TALK)

BRZEZINSKI:  Quick, Mike. 

BARNICLE:  The last segment is bleeding into this segment.  Some dean of some journalism school is going to call me tomorrow and ask me for my computer.  I am going to tell you right now, I know Caroline Kennedy.  I like Caroline Kennedy.  This is a one man, one vote deal.  The governor of New York, David Paterson, goats cast a ballot.  If it is her, we‘re going to find out what kind of a senator she is, and then the people will get to vote on it in two years. 

BRZEZINSKI:  OK, Mike.  That‘s the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m Mika Brezinzski.  I will see you on “MORNING JOE” tomorrow morning at 6:00 a.m. Eastern and then back here tomorrow night at 6:00 p.m.  “The Decider,” a “HARDBALL” documentary, is next.

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

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