updated 1/7/2009 3:13:42 PM ET 2009-01-07T20:13:42

Guests: Mike Viqueira, Bruce Fein, Brad Blakeman, David Goodfriend, Michelle Bernard, Richard Wolffe, Bill Press, Ken Walsh, Chris Cillizza

DAVID SHUSTER, HOST:  Tonight, this was not the image Democratic leaders in Congress wanted today.  Chaos reigns as Roland Burris is denied entry to fill Barack Obama‘s Senate seat, and confusion mounts inside the Capitol building as the 111th Congress is sworn in and prepares to work with the next occupant of 1600 PENNSYLVANIA AVENUE.

Fourteen days until the inauguration of President-elect Barack Obama. 

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

As calm and capable as our next president may be, today brought a dramatic and sharp reminder that working with Congress may not be easy simply because it‘s Congress.  Inside the Capitol today, the confusing protocols produced the swearing in for Joe Biden and others whose Senate terms are about to end. 

(BEGIN VIDEO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES:  Do you solemnly swear that you will support and defend the Constitution of the United States without any mental reservation or purpose of evasion? 

(END VIDEO CLIP)

SHUSTER:  Outside the Capitol, a man who appears to have every legal right to be inside as Barack Obama‘s Senate successor and isn‘t evading anybody was denied entry. 

(BEGIN VIDEO CLIP)

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE:  I am not seeking to have any type of confrontation.  I will now consult with my attorneys and we will determine what our next step will be. 

(END VIDEO CLIP)

SHUSTER:  One of those attorneys worked for Scooter Libby.  What‘s that all about? 

Coming up, a complete roundup on the surreal day at the U.S. Capitol. 

Also this hour, Barack Obama, the president-elect, kept his distance from the chaos in Congress today and held a more orderly series of meetings with his transition team.  But the budget news was grim. 

(BEGIN VIDEO CLIP)

BARACK OBAMA (D-IL), PRESIDENT-ELECT:  We‘re already looking at $1 trillion budget deficit, or close to a $1 trillion budget deficit.  And potentially, we‘ve got trillion-deficits for years to come. 

(END VIDEO CLIP)

SHUSTER:  So where will the money come from?  That‘s the issue for our guests today in the segment we call “The Grill.”

Plus, an inside look at Air Force One.  The other night Mr. Obama had his first ride on the plane that is part of the presidential fleet.  We will show you what the Obama family and staff will find on the 747s waiting for them in two weeks. 

Meanwhile, Al Franken could soon be making his travel reservation soon.  Democrats urging Republican Norm Coleman to concede that Senate race in Minnesota now that Franken has been declared the recount winner. 

And our “Muckraker of the Day” has led the reporting on former Florida governor Jeb Bush and a big decision he‘s been mulling over.  Are we looking at the continuation of the Bush dynasty here in D.C. or the end? 

Finally, Sarah Palin is back in the news.  She‘s lashing out at the media because reporters have been accurately describing daughter Bristol and Bristol‘s boyfriend, Levi, as unwed parents and high school dropouts. 

But we begin this hour with the confusion on Capitol Hill, otherwise known as Mr. Burris goes to Washington.  Burris‘ odyssey to do the people‘s business began yesterday with two separate airport press conferences.  When he finally arrived at Pennsylvania Avenue, the other end, of course, he was barred from entry by the procedural trickery of Democratic leaders. 

This afternoon, in the warm and dry confines of the Senate floor, Majority Leader Harry Reid, at the center of the maelstrom, described the dramatic scene. 

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER:  I don‘t know Mr. Burris personally.  I hope to meet him in the next few days.  He has served the state of Illinois in elected office over many, many years.  Mr. Burris and his advisers were welcomed to the Capitol this morning. 

(END VIDEO CLIP)

SHUSTER:  Mr. Burris was welcomed?  Welcomed, as in to accept with pleasure, as Webster‘s defines it?  That doesn‘t sound exactly like how it went down. 

(BEGIN VIDEO CLIP)

REID:  Mr. Burris and his advisers were welcomed to the Capitol this morning by Sergeant at Arms Terry Gainer, who was chief of police in Chicago, so they‘ve known each other for a long time.  They then had a gracious meeting with the secretary of the Senate, Nancy Erickson, and Senate Allen Filman (ph), who informed them that Mr. Burris is not in possession of the necessary credentials in the state of Illinois. 

(END VIDEO CLIP)

SHUSTER:  In fact, that was a zoo. 

Joining us now, MSNBC Congressional Correspondent Mike Viqueira to help take us through this Burris issue and the other sights and sounds today. 

Mike, first, with Burris, what do lawmakers think of the situation and Reid‘s approach? 

MIKE VIQUEIRA, MSNBC CONGRESSIONAL CORRESPONDENT:  Yes.  Inside the Capitol, outside the Capitol, Roland Burris was every place but inside the Senate chamber today raising his right hand and taking the oath of office, as he believe is his right and a lot of legal scholars and other members of Congress and other members of the public, for that matter, think that he has the right to do that, having been duly appointed by the sitting governor, after all, taint or no taint, of Illinois, and that would be Rod Blagojevich. 

But you‘re right, Harry Reid, other Democratic leaders, decided that because he did not have that signature of the Illinois secretary of state on his certification of his appointment by Blagojevich, that that would be the reason they would not seat him today.  We should point out that Reid has a meeting scheduled for tomorrow morning with Roland Burris, unclear whether any kind of deal can be worked out from here.  Everything pretty much in limbo at this point. 

Burris appeared before cameras many times, crossing Constitution Avenue, (INAUDIBLE) of Capitol Police, reporters, onlookers following up to the third floor of the secretary of the Senate‘s office, where he got the bad news.  And then the secretary of the Senate, very interesting, put out a statement late today saying that Roland Burris—letting it slip that Roland Burris posed for pictures in the secretary of Senate‘s office.  So a lot of time on camera for Mr. Burris today.  It was just not clear whether we can call him “Senator” just yet—David. 

SHUSTER:  Mike, we‘re going to keep you on camera for a little while.  And I want to keep you around as we go through some of the stuff that happened inside with these swearings-in.  And I know this is a scene that you love.

Joe Biden always a bridesmaid.  Today, Biden came face to face with his presidential counterpart, Senate President Dick Cheney.  He swore in soon-to-be Senate President Biden.  Senate president is the constitutional role of a vice president.  But today, the vice president-elect promised to do his duty as a senator from Delaware with no purpose of evasion. 

Of course, Cheney has already questioned his successor‘s knowledge of the Constitution.  Remember this? 

(BEGIN VIDEO CLIP)

CHENEY:  Joe‘s been chairman of the Judiciary Committee, a member of the Judiciary Committee in the Senate for 36 years, teaches constitutional law back in Delaware, and can‘t keep straight which article of the Constitution provides for the legislature and which provides for the executive. 

(END VIDEO CLIP)

SHUSTER:  Well, at least Biden‘s chief of staff didn‘t get convicted. 

Anyway, Mike, putting Cheney aside, Biden looks pretty happy for a guy who had to eat some crow today with incoming Intelligence Committee Chairwoman Dianne Feinstein.  He and President-elect Obama apologized profusely for not running their pick for CIA director, Leon Panetta, by her.  But why did Biden need to be sworn in as a senator anyway, given that he‘s leaving in two weeks? 

VIQUEIRA:  For a seventh term.  Remember, here‘s a guy that‘s been a senator since he turned 30.  Literally some 36 years ago.  This is the seventh time he‘s appeared in the Senate and raised his right hand. 

You might notice that enormous bible that Biden chose to bring with him down to the well (ph).  They call it “Biden‘s Big Brown Bible.” It‘s been in his family since 1893, the property of his paternal grandmother.  Perhaps he needed it as self-defense against Dick Cheney, because, after all, it was Cheney whom Biden called the most dangerous vice president in American history in his debate with Sarah Palin. 

And David, it seems as though every time Dick Cheney shows up in the Capitol for these ceremonial purposes, there‘s some harsh words between him and prominent Democratic senators.  You remember his suggestion a while back to Senator Patrick Leahy, of course. 

SHUSTER:  Yes.

And Mike, one of the most conspicuous absences on the Senate floor today, other than Roland Burris, involved the junior senator from New York.  Watch. 

So you heard the clerk say, “Senator Clinton?  Senator Clinton?”  And even the clerk apparently could not find her, she was keeping such a low profile.  But we found her, and apparently so did her senator colleague. 

There was a very long and seemingly awkward hug.  Senator Clinton has said she won‘t resign her Senate seat until after she‘s confirmed as secretary of state, but given how long and awkward this was, one wonders if Clinton may now want to speed things up. 

And Mike, I‘ll give you a pass on that one. 

VIQUEIRA:  Thank you.

SHUSTER:  However, I do want to get your reaction to how trying this day did seem to be for some Republicans, including House Minority John Boehner, who faced the double ignominy of calling the president to inform him of the Democrats‘ victory and being given an awkward, good job, sport, by the woman who beat him.  Watch.

(BEGIN VIDEO CLIP)

REP. STENY HOYER (D), MARYLAND:  Well, I have the honor of informing you as well that the honorable Nancy Pelosi of California has been elected speaker of the House. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Was it a landslide? 

REP. JOHN BOEHNER ®, MINORITY LEADER:  Well, Mr. President, this is Boehner.  I lost. 

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  Mr. Boehner, would you have some words? 

BOEHNER:  No.  I told the big news—I lost.  I knew you‘re rooting for me, boss. 

BUSH:  That‘s right.

PELOSI:  He‘s a winner, Mr. President. 

(END VIDEO CLIP)

SHUSTER:  Mike, is Boehner always going to be that sullen? 

VIQUEIRA:  You know, that was one of those awkward ceremonial photo-ops.  They allow cameras in for this phone call that they make every two years.

And Nancy Pelosi went on—it was very interesting—invited the president, come on down for lunch.  And I think it took the president by surprise. 

Within the next two weeks, come on down, we‘re going to set this thing up.  And President Bush was like, I‘ll get back to you on that, Madame Speaker. 

(LAUGHTER)

VIQUEIRA:  But, you know, John Boehner has got a tough road ahead of him. 

SHUSTER:  Absolutely.

VIQUEIRA:  He‘s facing a significant smaller minority here in Congress and he‘s got a Democrat in the White House and hegemony on the part of Democrats in both the House and the Senate—David. 

SHUSTER:  MSNBC‘s Mike Viqueira. 

Mike, thanks, ,as always. 

VIQUEIRA:  All right.  You‘re welcome.

SHUSTER:  The (INAUDIBLE) and even bizarre rituals that accompany the start of a new Congress aside, there is a real constitutional fight brewing around the Senate seat Obama vacated.  Roland Burris is expected to meet, as Mike said, with Majority Leader Harry Reid and Illinois Senator Dick Durbin tomorrow. 

Reid has said he would not seat anyone appointed by embattled Illinois Governor Rod Blagojevich, but today he seemed to leave the door open. 

(BEGIN VIDEO CLIP)

REID:  A court case in Illinois is pending to determine that secretary of state, Jesse White, is obligated to sign the certification.  We‘re waiting that court decision.  If Mr. Burris takes possession of valid credentials, the Senate will proceed in a manner that is respectful to Mr.  Burris while ensuring there is no cloud of doubt over the appointment to fill this seat. 

(END VIDEO CLIP)

SHUSTER:  Let‘s bring in constitutional lawyer Bruce Fine, who wrote forcefully in favor of seating Burris in today‘s “Washington Times.”

And Bruce, is this a close call? 

BRUCE FEIN, CONSTITUTIONAL LAWYER:  I don‘t think so.  The Constitution itself sets forth only three criteria for eligibility to the United States Senate, all of which Mr. Burris has satisfied: age, citizenship, and residency in the state of Illinois.  And he was appointed pursuant to a constitutional provision that enables the state legislature to lodge in the executive of the state, the appointing authority. 

Now, the executive is not the secretary of state.  And if you‘re applying the Constitution, the secretary of state is irrelevant to the governor‘s decision whether or not to appoint, which was done in this case. 

Here, we have a secretary of state who has not countersigned the credentials that the governor gave Mr. Burris, but under the Constitution that is irrelevant.  Mr. Burris should be seated immediately.  And it was quite ironic that these senators pledge to uphold and defend the Constitution when they were sworn in, and their first act by rebuking his credentials was to violate their oath. 

SHUSTER:  Explain why it is irrelevant that the secretary of state has not signed these credentials the way Reid apparently wants them to be signed. 

FEIN:  Because the constitutional language is the appointing power lodges in the executive of a state.  The executive, by any common understanding, refers to the governor of the state.  The secretary of the state clearly is not that status. 

SHUSTER:  So what do you think that Reid is doing here?  I mean, do you think that—he must have somebody advising him that he‘s on very thin ice here, constitutionally, right? 

FEIN:  Well, I think both parties here, both Republicans and Democrats who are supporting the exclusion of Mr. Burris, are partisan in their thinking.  The Republicans seem to want a special election to supercede any gubernatorial appointment that a Republican might win.  And the Democrats don‘t want probably a senator whose loyalties would be to Governor Blagojevich, as opposed to a possible successor if he is impeached and reviewed from office, Mr. Quinn, who would be more sympathetic to Mr.  Reid‘s agenda. 

So that‘s what is going on politically.  And it may well be that Mr.  Reid believes that by delaying any acceptance of Mr. Burris into the Senate, that gives time for the state legislature in Illinois to impeach and remove Blagojevich, have the seceding governor try to revoke his credentials, and then get somebody else in who would be more along the lines of the Obama/Reid agenda. 

SHUSTER:  Constitutional law expert Bruce Fein.

Bruce, thanks, as always.  We appreciate you coming in.

FEIN:  Thank you.

SHUSTER:  And a quick reporter‘s notebook.

The scene today on Capitol Hill was surreal on so many levels, when Roland Burris was outside on the Capitol grounds, he was greeted by his old friend, the former Illinois police director, Terry Gainer, who is now the Senate sergeant at arms.  Gainer escorted Burris into the visitor‘s center, and then, when the Burris paperwork was rejected, it was Gainer who officially denied Burris access to the Senate floor. 

Making things even stranger, take a closer look at one of the Burris lawyers near the microphones.  That‘s William Jeffress.  He‘s a top trial lawyer for Vice President Cheney‘s convicted former chief of staff, Scooter Libby. 

Jeffress does all kinds of work in D.C.  And Burris is a smart man to hire him.  But some of us today were having CIA leak trial flashbacks. 

Coming up, tough times ahead. 

(BEGIN VIDEO CLIP)

OBAMA:  We‘re going to have to stop talking about budget reform. 

We‘re going to have to fully embrace it. 

(END VIDEO CLIP)

SHUSTER:  President-elect Obama says the U.S. is almost $1 trillion in the red and difficult decisions must be made.  But what exactly does that mean? 

And later, Air Force One.  In a few weeks, the Obama family and staff will experience one of the greatest perks of the presidency.  Tonight, we will give you a visual preview and talk with someone who has flown on the presidential 747 more than 200 times. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  ... that we‘ve already looked—we‘re already looking at a trillion-dollar budget deficit, and we‘re close to a trillion-dollar budget deficit.  And potentially we‘ve got trillion-dollar deficits for years to come. 

(END VIDEO CLIP)

SHUSTER:  Welcome back. 

How would you like to be the one to tell your boss that he‘s $1 trillion in the hole?  Today, President-elect Obama‘s budget manager had exactly that task, informing him that the U.S. will face trillion-dollar budget deficits “for years to come.”

That‘s not necessarily a surprise.  After all, the U.S. government has racked up some big-ticket items recently like the $700 billion bailout to Wall Street. 

What is unusual is that the Obama administration is doubling down on the deficit by pushing a trillion-dollar stimulus plan, including, we learned yesterday, $300 billion in tax cuts.  Can we really spend our way out of the red, or is this just as Orwellian as when President Bush said war is really about peace? 

We‘re putting it on “The Grill” tonight.  And joining us now, Democratic strategist David Goodfriend, former deputy staff secretary to President Clinton, and Republican strategist Brad Blakeman, former deputy assistant to President Bush. 

Brad, you start.  Can we spend our way out of this? 

BRAD BLAKEMAN, REPUBLICAN STRATEGIST:  Well, we‘re not only going to spend our way out of it, we‘re also going to hopefully cut taxes and grow our way out of it.  You can‘t spend your way out of a recession or deficits.  You must grow your way out, the same as Ronald Reagan did in the ‘80s. 

He was vilified for having run up the deficits.  But if you‘re spending for capital improvements that will benefit future generations, and not spending to keep the lights on at home for current liabilities, it makes good sense to do it.  And I think Barack Obama‘s going to get support from the Republicans, provided that his plan is comprehensive and makes sense. 

SHUSTER:  David? 

DAVID GOODFRIEND, DEMOCRATIC STRATEGIST:  Well, I have to say, you look at the composition of what the Obama administration is proposing.  Ten percent of it is unemployment insurance and health insurance.  Forty percent of it are the kinds of tax cuts that Brad just mentioned, that are uniformly supported across the political spectrum. 

Fifty percent are targeted investments.  And that‘s kind of what Brad was just mentioning, that if you can justify deficit spending in the short term because you‘re helping productivity in the long term, that makes sense. 

Where I think a lot of us get off the deficit bus, if you will, is where we feel that spending has run amuck, that it doesn‘t lead to any kind of growth.  I would argue, for example, that the $700 billion spent on the Iraq war, complete waste.  But if we‘re spending money, billions of dollars of money on bridges and roads and broadband, that‘s actually an investment I think we can support then. 

SHUSTER:  How do you separate out, though, when you‘re looking at these projects, what is something that is a capital improvement that we should spend it on and something that is going to be wasted? 

GOODFRIEND:  Well, I look at it this way—take a bridge or road, something to that effect.  You know that there‘s traffic that‘s going to go across it for years.  That there‘s going to be goods shipped across it.  If you look at broadband, you know that it‘s going to be something that supports commerce, supports education. 

These are the things that you can actually look at numbers that say job growth, economic activity.  There‘s a multiplier effect.  An economist would say that‘s a multiplier effect. 

By contrast, if you look at something that‘s ephemeral—I would say, like, the rebate, the tax rebate early in the Bush administration, I didn‘t like it because I thought it was gone the minute it was spent. 

SHUSTER:  Well, isn‘t that the problem with any sort of tax cut that happens now?  People start getting more money in their pocket, they may just save it or pay off the credit cards.  That‘s not going do go back into the economy. 

BLAKEMAN:  Well, that‘s why it would be helpful if Barack Obama cut capital gains and cut the death tax, to get people spending more money and investing more money instead of being taxed for moving their property around.  That would be a big help.

But to go back to what David said, what‘s a capital improvement, what makes sense to spend?  Barack Obama‘s got to get that scalpel out.  And so does Republicans.  They have to go through it line by line, and hopefully we‘ll have enough time to do it and understand what we‘re voting for, and not have it shoved down our throats.  The American people also have to understand it to accept it.

SHUSTER:  Shouldn‘t we still be concerned though over the overall size, the budget deficit, $12 trillion?  We‘re going to add $1 trillion every year.  At a certain point, the Chinese, the Saudi Arabians, the non-democracies that own this debt, they gain an influence with every dollar that we add to this pile. 

GOODFRIEND:  There‘s no question about it.  There‘s no question about it.

In fact, during the presidential race, I heard an interesting speech by Hillary Clinton, who at the time was a candidate for president, saying, just imagine if China said, “We‘re calling in our debt.”  You know, “We‘re going to actually require you to pay these loans back right now.”

I mean, that is a national security threat.  There is no two ways about it.  And it is unsustainable. 

And I think we‘ve heard very smart people say now it is unsustainable.  Kent Conrad, chairman of the Senate Budget Committee, was someone who said that today. 

I agree with that.  And I think Barack Obama agrees with that too. 

But let‘s look at the short term that‘s right in front of us. 

Right now we are in an economic crisis.  And, you know, economists talk about cyclical deficits versus structural deficits.  A cyclical deficit is where the economy is down and you‘ve got to spend in order to get it back.  That‘s OK. 

I would be much more worried if we were at full employment and running these kinds of deficits.  That would be a real problem. 

We‘re not.  We have high unemployment.  We need a stimulus.  This it going to get the job done, and I think Barack Obama‘s got it right. 

SHUSTER:  I am always worried when you two guys get along. 

(LAUGHTER)

David Goodfriend, Democratic strategist; Brad Blakeman, Republican strategist.  Usually they fight, but I guess we‘re in a new era. 

Thank you both.

Coming up, her dad is the president-elect, but that isn‘t why the kids think Sasha Obama is the cool new girl at school.  Coming up, we will show you what she brought to class and why parents across the country who are looking for the perfect gift for their young kids would be wise to pay attention. 

And remember 18-year-old Levi Johnston, the boyfriend of Sarah Palin‘s daughter Bristol?  The couple are supporting a newborn, but Levi just quit his job after some reporting by an Alaskan newspaper. 

We‘ll explain, ahead on 1600. 

(COMMERCIAL BREAK)

SHUSTER:  We‘re back with our daily segment, “The Briefing Room.”

And we begin with Levi Johnston.  Remember him? 

Levi is the boyfriend.  He is the boyfriend of Sarah Palin‘s daughter, Bristol.  Levi and Bristol just brought into this world Palin‘s new grandson, a baby boy they named Tripp. 

Anyway, having a steady job is fairly important when you are a parent.  And Levi had been working as an electrician at an Alaska oilfield.  But yesterday, he quit. 

Levi‘s decision came in the wake of reports in “The Anchorage Daily News” that questioned whether he was really eligible for his line of work.  Apprentice electricians cannot work without a high school degree.  And right now, Levi does not have one. 

So how did he get the job to begin with?  Levi‘s father is employed at the company and says he is the one who cleared the way for Levi.  As for Governor Palin, she said she had nothing to do with it. 

In any case, it was just last week when Governor Sarah Palin lashed out at news organizations who called Levi and Bristol unwed parents and high school dropouts.  Palin told “People” magazine the couple is working their butts off to parent, and going to school and working at the same time.  Except now, of course, Levi is not working, and the couple remain unwed parents who have not yet finished high school. 

Ever heard of Twitter?  It‘s a social networking site that lets people send e-mail-like updates on what they‘re doing to their friends.  Well, the president-elect is pretty tech-savvy.  He twitters, but now his account has been hacked. 

The fraudulent message asked, “What is your opinion of Barack Obama?  Take the survey and possibly win $500 in free gas.”  And it gave a link to another Web site. 

The message, or tweet, as it‘s called, was taken down pretty quickly.  The president-elect was just one of 30 targets in this attack.  The vandals also hit Britney Spears, CNN anchor Rick Sanchez, and Fox News.  And those folks got victimized in a fashion that wasn‘t quite as innocent as the fake Obama offer for free gas.

The messages about Spears made obscene references to her body parts.  And the messages to CNN‘s Rick Sanchez and to Fox News were so graphic and, in some cases, so obscene, that we cannot even give you a family-friendly description. 

Sasha Obama may be about to move into a pretty cool house, and her dad is going to have a pretty important job, but the thing that may have impressed her new classmates most on Monday, her very hip accessory known as an Uglydoll.  Take a look at this picture from the first day of school on Monday.  That blue stuffed animal key chain hanging off her backpack?  It‘s an Uglydoll.  In case you‘re keeping track, this specific Uglydoll is named Babos Bird (ph).  There are two dozen or so Uglydolls.  Each have their own back story.  The Uglydoll line even includes books and clothing.  So parents, beware, Uglydolls are the in thing, even if I can‘t say it. 

Perhaps even more so now, thanks to a very cute Sasha Obama. 

By the way, first kids have long been trend setters when it comes to toys and other assorted items.  When Caroline Kennedy was living in the White House in the 1960s, she had a collection of 75 dolls and puppets that were sent to her by foreign dignitaries from 30 countries between 1961 and 1963.  In the 1970s, President Carter‘s daughter Amy made it cool for all of kids to collect teddy bears.  At one point in the White House, she apparently had 39 of them. 

Coming up, supporters and staff alike call him No Drama Obama.  But even Obama‘s team is acknowledging that 2009 has begun with a few bumps in the road.  The president-elect is getting some heat for his CIA pick and for staying quiet about the crisis in the Mideast.  But he‘s getting credit on both issues as well. 

Plus, some republics were salivating in recent days over the prospect of former Florida governor Jeb Bush.  Maybe he would run for senator, and then possibly the White House in order to restore the Bush Dynasty.  Apparently not.  Our Muckraker of the day has the inside story, later on 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

SHUSTER:  Still ahead tonight, 2008 proved to be mostly smooth sailing for President-Elect Barack Obama.  But 2009 is producing a few bumps in the road, now that Obama is trying to navigate some of the tricky political waters here in Washington, as he transitions to 1600 PENNSYLVANIA AVENUE. 

Welcome back to 1600 PENNSYLVANIA AVENUE.  The president-elect was known as No Drama Obama back when he was campaigning.  But he‘s not in Kansas anymore.  And he and his team are hitting more than a few stumbling blocks on the Yellow Brick Road to the White house.  The honeymoon ended quickly, when Illinois Governor Rod Blagojevich brought new dishonor on the old political machine by allegedly attempting to sell Obama‘s vacant Senate seat for favors or cash, not exactly the kind of change Obama wants to be connected to. 

Since then, it‘s been a daily drip of political side shows and some serious blunders; Bill Richardson having to withdraw his name for Commerce Secretary because he‘s under federal investigation; and this most recent misstep, letting the top Democrat on the Intelligence Committee learn about your pick for CIA director from the media.  Today, the president-elect spent the day apologizing profusely to incoming Intelligence Chairwoman Dianne Feinstein, and pushed back on criticism of the spy choice, Leon Panetta. 

(BEGIN VIDEO CLIP)

OBAMA:  As chief of staff, he is somebody who—to the president, he‘s somebody who obviously was fully versed in international affairs, crisis management, and had to evaluate intelligence consistently on a day-to-day basis.  It is not only going to assure that I get the best possible intelligence, unvarnished, that the intelligence community is no longer geared toward telling the president-elect what they think the president wants to hear. 

(END VIDEO CLIP)

SHUSTER:  Let‘s bring in our panel, Richard Wolffe, senior White House correspondent for “Newsweek,” Michelle Bernard, president of the Independent Women‘s Forum, and Bill Press, syndicated radio talk show host. 

Richard, you covered the Obama campaign.  What happened here with not notifying Dianne Feinstein about your pick for the CIA? 

RICHARD WOLFFE, “NEWSWEEK”:  They came to Washington and lost control.  Look, you‘ve got a sprawling operation, which should have all the manpower it needs to do this kind of thing properly.  This was totally avoidable.  You can‘t control the kind of investigations that happen and how they‘re going to spin out of control when it come the to certain appointees.  You‘re going to lose one nominee somewhere.  But this kind of thing was a really dumb mistake.  You know, there‘s no excuse for it.  That‘s they spent all day trying to apologize for it. 

When it comes to the pick, itself, I don‘t think there‘s any real problem.  People who want a CIA insider don‘t understand how the CIA director‘s job has changed.  He‘s now subordinate to the director of national intelligence.  How Obama values managerial expertise, that‘s what Panetta brings to this. 

SHUSTER:  Diane Feinstein said today, she accepts the apology.  She understand that sort of thing happens.  But she still has some serious questions about Panetta, since he has a lack of intelligence experience.  That does seem to gives cover to Republicans, Michelle, who may not like this pick. 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  It definitely gives cover for Republicans, simply because the Democrats seem to be eating their own now, when you looking at the things that are going on with the Illinois pick in Congress and all of the other different things that are happening with Democrats.  It gives Republicans a perfect time to be able to go in and say, you know what, your own people don‘t even like your pick.  If Republicans decide they don‘t want Panetta, they might make some trouble. 

SHUSTER:  Bill, as far as Bill Richardson, we have woken up each day to some stunning revelations, where the Richardson camp is blaming the Obama camp for—and the Obama camp is blaming the Richardson camp.  What‘s going on with that?  

BILL PRESS, RADIO TALK SHOW HOST:  First of all, I have to say, as a talk show host, I‘m glad it‘s no longer No Drama Obama.  This is like the Metropolitan Opera.  You never know what‘s going to happen next.  It‘s been great. 

Look, I think Bill Richardson let Obama down by down playing this investigation.  I think the Obama team was a little lax there in not pushing farther.  They like him.  They wanted to have a job for him.  So they both kind of went along.  That was a mistake.  It was a mistake not to call Dianne Feinstein. 

I think it‘s a mistake not to seat Roland Burris.  This is not Obama‘s mistake.  It‘s Harry Reid‘s mistake.  The guy is qualified to be a United States senator, no matter to me how corrupt Blago might be; that‘s not the issue.  By refusing to seat Burris, they‘re just dragging this issue on, letting it drag on for another three months.

SHUSTER:  Let‘s talk then about Burris, since you brought it up.  Michelle, is there responsibility for Barack Obama to tell Harry Reid, look, you‘ve created enough of a circus already by how you‘ve handled this; just go ahead and seat the guy? 

BERNARD:  I think that Senator Obama, when he came out with the statement that he made a few days ago, I think he didn‘t have a choice.  He was trying to play ball with his former colleagues in the Senate.  His former colleagues in the Senate have also now made it clear that they feel there‘s not enough room in the sand box for everybody to play and they‘re not going to go along with everything he does. 

If I were Obama, I would pick up the phone, have an off the record conversation with Reid and tell him, this, frankly, is unconstitutional.  We are a party that needs to stand for the rule of law.  This man is absolutely qualified.  Yes, Blago stinks, but the appointment is constitutional.  Seat him.  Get it over with.  Don‘t make me drag this into my inauguration on January 20th

SHUSTER:  Richard, is there is a sense within the Obama inner circle that Harry Reid is not doing them any favors right now? 

WOLFFE:  I think they‘re more concerned about how Blagojevich is not doing them any favors. 

(CROSS TALK)

WOLFFE:  If they have sense, they stay out of this.  Really, this is not their fight.  They got into this mess in the first place because they were trying to manipulate, behind the scenes, privately, who was going to take President-Elect Obama‘s seat in the Senate. 

SHUSTER:  By they, we‘re referring to Harry Reid trying to manipulate, in the sense that he didn‘t want Blagojevich making the choice, right? 

WOLFFE:  Actually, first of all, Rahm Emanuel and everyone else was trying to weigh in, not weigh in, signal some preference and not.  Really, this is for the Senate, for the club of senators to figure out for themselves.  And honestly, for the White House to get involved, when they have got so much other stuff on their plate doesn‘t make any sense. 

PRESS:  There‘s another issue here, which is the law.  I think the law is clearly on the side of Roland Burris. 

BERNARD:  It is.  Absolutely. 

PRESS:  That Supreme Court decision, I read it the other day; it says the Senate can seat or not seat somebody based only on the qualifications spelled out in the United States Constitution.  In other words, was that person duly elected or appointed, and is that person 35 years of age?  If so, boom, he‘s a senator.  He‘s going to win this.

BERNARD:  They‘re also on thin ground by refusing to seat him because the secretary of state Illinois signature was not on the certification.  I think, according to the Senate rules, it‘s recommended.  It‘s not an absolute.  They‘re really on very, very thin grounds here.  If you think about it, at least what is being reported out of Illinois is that the secretary of state there, he signed off on pardons that have been issued by Blagojevich.  He has signed off on the special election that‘s going to be held to take place for Rahm Emanuel‘s seat.  He‘s sort of picking and choosing when he‘s going to accept mandates of the governor and when he isn‘t.  People have to ask, why not Roland Burris? 

SHUSTER:  The other issue that is seemingly more than a bump in the road and is, of course, largely out of Obama‘s control right now is Israel‘s war against Hamas in Gaza.  But Obama has been getting some criticism, some, by those who suggest he heeds to come out and say more.  I‘m not one of those people who agrees that he does.  I think he‘s handling it just fine.  But here‘s what the president-elect said today. 

(BEGIN VIDEO CLIP)

OBAMA:  I am not backing away at all from what I said during the campaign, that I—starting at the beginning of our administration, we are going to engage effectively and consistently in trying to resolve the conflicts that exist in the Middle East.  That‘s something that I‘m committed to. 

(END VIDEO CLIP)

SHUSTER:  Despite my view on this, do any of you have criticism with how he‘s handled this? 

BERNARD:  I don‘t have a criticism at all, simply because there‘s so many other things going on and he‘s not the president yet.  He‘s the president-elect, and George Bush needs to somehow get involved and remember that he‘s still in office until January 20th

PRESS:  I have to say, absolutely, there‘s only one president at a time.  On the economy, Barack Obama is clearly ready to step up and be the president.  Good for him.  I think on foreign policy he has to as well.  I think his silence on what‘s happening in Gaza has hurt.  He doesn‘t have to say that much.  But I think get back in the role of being on honest broker and say that the hostilities have to stop.  Israel has made its point and it‘s time for a cease-fire. 

SHUSTER:  Bill Press, Michelle Bernard, Richard Wolffe, thank you all very much.  Good to see all of you.  Happy New Year. 

(CROSS TALK)

SHUSTER:  George W. Bush is about to leave 1600 PENNSYLVANIA AVENUE.  New reports say brother Jeb will not seek the Florida Senate seat.  Is the Bush political dynasty over?  Our Muckraker of the day has the inside story. 

But first, the fascinating and outrageous stories of life aboard the flying White House.  Journalist Ken Walsh has ridden on Air Force One more than 200 times and he joins us to talk about the presidents, their plane, and to show us what Barack Obama will find on board. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  You get on the plane, and it‘s big and it‘s pretty spiffy.  You‘ve got all kinds of people in there, doing all sorts of stuff.  But the truth is the best thing about flying on Air Force one is we were flying through a thunderstorm when we got to Washington, and we were bumping and shaking and knocking all around.  And I knew we weren‘t going down. 

(END VIDEO CLIP)

SHUSTER:  That was Barack Obama last spring on the campaign trail, talking about a flight he made with President Bush aboard Air Force One.  On Sunday, for the first time since being elected, Mr. Obama traveled to Washington on a 757 that is part of the presidential fleet.  He met his future Air Force One pilot, Air Force Colonel Scott Turner, who will fly the president-elect in the bigger 747s once he‘s inaugurated. 

With us now, someone who has been on Air Force One more than 200 times, Ken Walsh, chief White House correspondent for “US News and World Report.”  He is also the author of “Air Force One, a History of the Presidents and Their Planes.”

Ken, take us through the interior of the 747 that‘s going to be waiting for Barack Obama.  What will he and his family find the most interesting? 

KEN WALSH, “US NEWS AND WORLD REPORT”:  Well, when he flew into Washington on the 757, he didn‘t get a real sense of what he‘s in for, because this is a fabulous perk of being president.  If you start in the nose of the plane, there‘s what seems to be a first-class hotel suite that the president can use.  There are two couches there, one of which is always made up as a bed. 

Then, as you go back from the—from that suite, there‘s a shower, which people don‘t realize presidents didn‘t used to have showers before this was brought on the plane. 

SHUSTER:  Is this the suite we‘re looking at here, at the front of the plane? 

WALSH:  Yes, that‘s it.  Then as you—there‘s a medical facility, a bathroom.  This is the office that the president can use.  It‘s very spacious.  And what they‘ve done is they‘ve allowed now an upgrade, so the president can actually broadcast live from the plane, from that office.  Then that‘s his big chair there you see. 

Then you go back into the plane.  There are staff quarters, senior staff, VIP offices.  You go farther and farther back, Secret Service compartments, a galley.  Then, as you get way in the back of the plane, who do you think sits there?  Having experienced it, it‘s the press corps. 

SHUSTER:  The press area—that area right there, I believe, is maybe Secret Service, because the press—unless they‘ve changed it in the ten years, I remember it being a small compartment, First Class seats, but they don‘t go back very far.  But as far as the personality of Air Force One, what sort of opportunities will the Obama family have to make it their own, so to speak? 

WALSH:  Well, this has happened before.  When President Kennedy was in office, he delegated to his wife, Jackie, the idea of redesigning the plane.  She came up with this blue and white color scheme that people remember, so vivid, putting the United States of America on the plane, rather than a military designation.  She came up and put fine china on the plane, artwork.  So it can be done. 

But since the 747 was brought on, it has so many amenities now that presidents haven‘t really changed it very much.  It could be done. 

SHUSTER:  President George H.W. Bush banned broccoli? 

WALSH:  Right, the father of the current president.  That‘s one of the famous stories.  He was on the plane.  A steward served him lunch with broccoli on the plate.  He said, you know, my mother made me eat broccoli when I was a little boy.  I‘m president of the United States, and I‘ve always hated broccoli.  I‘m banning it from the plane.  So that‘s what he did.

SHUSTER:  Before they had these jets, Harry Truman wanted to buzz the White House during his presidency? 

WALSH:  This is when being commander in chief really meant something.  In those days, they didn‘t have the security we have today.  But Truman was a practical joker.  He knew his wife and daughter would be watching an air show from the rough of the White House.  He was on a separate trip.  He took off and said to the pilot before he took off, I‘ve always wanted to dive bomb something.  Do you think we can dive bomb the White House right now?  So they went ahead and did it.  They came within 500 feet of the roof. 

His wife and daughter were not sure what happened, so he said, let‘s do it again, and they jumped up and waved at them.  That‘s one of the famous Truman stories.

SHUSTER:  As far as the experience now of flying on Air Force One, whether you‘re the president, his family, staff, or the press, once he‘s on board, the doors close, they take off.  There‘s no waiting.

WALSH:  That‘s the other amazing perk.  The president never has to wait.  They clear all the traffic for him.  There‘s a path in the sky for Air Force One.  Planes cannot take off and land within 15 minutes of Air Force One‘s arrival or take off on an airport, no matter where it is.  So the president always finds it a fabulous way to travel.  For the president, it really is. 

SHUSTER:  Ken Walsh, so good of you to come in.  So interesting.  Nice to see you, and happy New Year. 

WALSH:  Nice to see you again.

SHUSTER:  Coming up, Jeb Bush won‘t run again for Governor of Florida.  Late word tonight, he won‘t run for Senate either.  What‘s next?  No one named Bush in any part of our government?  We‘ll get the scoop from our Muckraker of the day, the “Washington Post‘s” Chris Cillizza. 

Remember, you can get the latest political news and a sneak peak of what‘s coming up on the show sent straight to your inbox with the 1600 daily briefing.  Be part of the briefing and our online community by logging on to Shuster.MSNBC.com. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CONAN O‘BRIEN, “THE LATE LATE SHOW”:  George Bush Senior recently said he would like his son, Jeb, to be president, but that right now is a bad time for him to run.  Yes.  Yes.  When asked what a good time would be, Bush Senior said eight years ago. 

(END VIDEO CLIP)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  It looks like the possibilities for Senator Bush may be put on hold.  Former Florida Governor Jeb Bush spent much of today calling supporters to say he will not run for Senate in 2010.  Does this mean a presidential run in 2012?  On Sunday, Bush 41 waxed hopeful on the possibilities for his second son. 

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FMR. PRESIDENT OF THE UNITED STATES:  I would like to see him run.  I‘d like to see him be president someday. 

CHRIS WALLACE, FOX NEWS ANCHOR:  Really? 

BUSH:  Or maybe senator, whatever.  Yes, I would.  Right now is probably a bad time, because we have had enough Bushes in there.  But no, I would.  I think he‘s as qualified and as able as anyone I know on the political scene. 

(END VIDEO CLIP)

SHUSTER:  So is Washington about to become a Bush-free zone?  What does it mean for any faint prospect of resuscitating the Bush legacy?  Most days on this program, we‘re going to talk with a journalist, writer, pundit, blogger, or combination who is ahead of the curve in applying some heat or light to a story.  That person will be our Muckraker of the day. 

Today‘s Muckraker is Chris Cillizza, who writes the blog “The Fix” at WashingtonPost.com, and has been in front of this story throughout.  Chris, what happened with Jeb Bush today? 

CHRIS CILLIZZA, “THE WASHINGTON POST”:  David, we‘ve been hearing for the last 48 hours or so that a decision was imminent.  The Jeb Bush people keep a very close counsel.  They don‘t—it‘s not a leak-fest, let‘s put it that way.  So it‘s hard to get at exactly what he was thinking.  We knew that he was going to make a decision in the near future. 

That decision that came out this afternoon being no, I don‘t think surprised a lot of people.  Most people were excited that Jeb Bush was going to run heading into the holidays.  In the wake of the holidays, though, I think people were getting signals from Jeb Bush, maybe his close confidants, he wasn‘t going to do this. 

It‘s a major blow for Senate Republicans.  Remember, this is a party who has lost at least 13 seats—that‘s not counting Al Franken and Norm Coleman in Minnesota—over the last two elections.  They really needed a marquee name to get in early, so they could point to it and say, see, Jeb Bush thinks we‘re on the way back and you can be a part of this too. 

SHUSTER:  Chris, any suggestion within the Bush crowd that, perhaps, there‘s still the opportunity or that he‘s planning a run in 2012?  Any indications of that? 

CILLIZZA:  Not yet, David, but I don‘t think you should rule it out.  Maybe not in 2012, maybe in 2016.  The truth of the matter is anybody on the Republican side who is talking about 2012, all of those conversations are dependent on how Barack Obama looks politically.  This idea of Bobby Jindal, the young governor of Louisiana—Bobby Jindal won‘t run if Barack Obama is at 65 or 70 percent approval.  He‘s got plenty of time to wait.  Jeb Bush, same thing.  He could wait. 

So a lot of the 2012 talk is a little bit premature.  And I love premature talk about elections, don‘t get me wrong.  But it‘s a little bit premature, because it‘s dependent on how Barack Obama does over the next four years.  That said, we know Jeb Bush is interested in that kind of national office.  People talked about him as being the Bush brother who was the one who get to the presidency first.  He wound up losing a race in 1994, a good year for Republicans, but he lost the governor‘s race there, and that put him behind George W.  Of course, we know George W. spent the last eight years as president. 

SHUSTER:  The bottom line is it means at least the legacy of George W.  Bush, that is the enduring legacy of the Bush family, at least for a couple of years, right? 

CILLIZZA:  Absolutely, at least until 12012, maybe until 2016.  It‘s possible Jeb Bush says, I like private life; I like my business connections; I don‘t want to put myself through it again.  This is a family that is all too aware of the perils of being in the public eye as an elected official.  It‘s very possible he says, you know, I‘m perfectly happy where I am as a former two-term governor of Florida.  I‘m not going to run again. 

There‘s not a Bush to be seen after January 20th, when George W. Bush heads out of here and Barack Obama comes in, at least for the foreseeable future. 

SHUSTER:  Chris Cillizza, our Muckraker of the day, from the “Washington Post.”  Chris, thanks as always.  We appreciate it. 

CILLIZZA:  David, thanks for the title.

SHUSTER:  That is the view from 1600 PENNSYLVANIA AVENUE.  I‘m David Shuster.  “HARDBALL” starts right now. 

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

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