updated 1/9/2009 1:54:11 PM ET 2009-01-09T18:54:11

Guests: John Harwood, Michael Smerconish, Chris Kofinis, Dan Gross, Doris Kearns Goodwin, Ed Schultz

DAVID SHUSTER, HOST:  Tonight, one of the most remarkable photo-ops you will ever see.  The current and former presidents meet with the President-elect, offering their support and counsel as Barack Obama continues his transition to 1600 PENNSYLVANIA AVENUE.

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

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

Sure, it was an impressive photo-op, but who was in charge of the choreography today?  Just ahead, I‘ll give you my view on one of the most interesting White House gatherings we‘ve seen in years. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  One message that I have and I think we all share is that we want you to succeed. 

BARACK OBAMA (D-IL), PRESIDENT-ELECT:  I just want to thank the president for hosting us.  This is an extraordinary gathering. 

(END VIDEO CLIP)

SHUSTER:  Extraordinary is how most economists are now describing the ambitious economic recovery plan the president-elect wants.  Earlier today, he announced a chief performance officer. 

(BEGIN VIDEO CLIP)

OBAMA:  In order to restore confidence in our economy, we must restore the American people‘s confidence in their government.  That it‘s on their side, spending their money wisely. 

(END VIDEO CLIP)

SHUSTER:  Also this hour, Roland Burris, the man named by the embattled Illinois governor to fill Obama‘s Senate seat and stiff-armed by Harry Reid.  Today, Burris met with Reid. 

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER:  He obviously is a very engaging, extremely nice man.  He presents himself very well. 

(END VIDEO CLIP)

SHUSTER:  That‘s nice.  But Senator Reid, what about that little thing in Burris‘ favor called the Constitution?  You know, that thing you swore in oath yesterday to uphold? 

Later, our “Muckraker of the Day.”  He‘s a key voice in the progressive versus establishment Democratic fight. 

Plus, “Myth Buster Wednesday.”  Newsweek‘s Daniel Gross will join us to separate economic fact from fiction. 

And finally, a stroll through memory lane.  We believe this Al Franken impersonation of Mick Jagger is one of the reasons that Republicans are going nuts. 

But, first—oh, to be a fly in that soup—the presidential power lunch.  All five living presidents met for an hour in the private dining room at the White House to break bread and trade stories of war and peace, of the residents‘ bathrooms and the cool gadgets on Air Force One.  It was a historic guy, the first since Ronald Reagan‘s commander-in-chief coterie in 1981.  And today, both the current and future president spoke with a sense of history. 

(BEGIN VIDEO CLIP)

BUSH:  To the extent we can, we look forward to sharing our experiences with you.  All of us who have served in this office understand that the office, itself, transcends the individual. 

OBAMA:  All the gentlemen here understand both the pressures and possibilities of this office.  And for me to have the opportunity to get advice, good counsel, and fellowship with these individuals is extraordinary and I‘m very grateful to all of them. 

(END VIDEO CLIP)

SHUSTER:  But content aside, how about the staging?  President-elect Obama cozied up between two Bushes, keeping his distance from Democrats Clinton and Carter, curiously wearing red ties, while the Republicans and one self-described post-partisan Democrat wore blue. 

And how about that goalpost between Carter and Clinton?  This had to be especially grating to Carter, whose beef with Clinton started because Clinton didn‘t show him enough respect when he was in office. 

Bush 43, of course, got elected in part by saying that Clinton didn‘t show enough respect to the office.  So it was a bit jarring and kind of amusing when President Clinton turned to Bush 43 as the cameras were being ushered out and made an observation. 

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FMR. PRESIDENT OF THE UNITED STATES:  I love this rug. 

(END VIDEO CLIP)

SHUSTER:  Yes, that was Bill Clinton saying, “I love this rug.”

And as for Barack Obama, don‘t think the president-elect spent the whole day out to lunch.  This morning, he not only held a news conference, he also created a new position in our government, the chief performance officer. 

That officer‘s job is to find and eliminate waste in the budget.  The performance officer‘s partner in crime will be the budget director.  Remember him? 

The president-elect made government cooler by linking strong math skills with “The Sopranos.” 

(BEGIN VIDEO CLIP)

OBAMA:  Peter doesn‘t need a map to tell him where the bodies are buried in the federal budget. 

(END VIDEO CLIP)

SHUSTER:  But in the effort to find the bodies, perhaps the performance budget tag team will come across this one—GAO director. 

What, you ask, does the Government Accountability Office do?  Well, according to the Budget and Accounting Act of 1921, it “... makes to the president and to Congress reports and recommendations looking to greater economy or efficiency in public expenditures.”

It sounds exactly like the chief performance officer, except, of course, that the GAO has a big staff already and has already done this sort of thing.  Hmm.

Anyway, back to the news conference. 

There were some sparks today when the president-elect took questions, including one from our own NBC News Chief White House Correspondent Chuck Todd, who pushed him about the Middle East. 

(BEGIN VIDEO CLIP)

CHUCK TODD, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  Is it important for you to send a message to the Arab world right now that you are involved in the cease-fire talks, that your national security team is working with the Bush administration national security team, rather than just getting updates? 

OBAMA:  Look, I will repeat what I‘ve said before.  We can‘t have two administrations running foreign policy at the same time.  We simply can‘t do it. 

TODD:  Do you worry that the Palestinians, though, are interpreting your silence...

OBAMA:  You know, there are—I can‘t control how people interpret what I‘m saying other than to repeat what I‘ve said.  And hopefully they hear what I‘m—hear my message. 

The silence is not as a consequence of a lack of concern.  In fact, it‘s not silence.  It is—I‘ve explained very clearly exactly what institutional constraints I‘m under when it comes to this issue. 

(END VIDEO CLIP)

SHUSTER:  Maybe this is why number 44 chose to stand where he did at the presidents‘ lunch today, away from Carter and Clinton, who have significant legacies in that part of the region.  Carter successfully brokered a peace between Israel and Egypt in the late 1970s, but has come under fire for his recent criticism of Israel in his book “Palestine: Peace Not Apartheid.”  Clinton made arguably the most significant progress towards a peace deal between Israel and the Palestinians before being burned by Fatah leader Yasser Arafat, a betrayal he warned an incoming President Bush about when he took office. 

Now to another Kumbaya photo-op, this one on the other side of Pennsylvania Avenue. 

Roland Burris, who had started the week holding court with reporters in front of a discount airline at a middle Illinois airport, today found himself in the proverbial embrace of two of the most powerful Democrats in the Senate, Majority Leader Harry Reid and Whip Dick Durbin, also known as the only fully accepted senator from Illinois.  But interestingly enough, the Burris/Reid/Durbin photo-op intersects with the presidential photo-op at the White House.  Why?  Because even though Harry Reid says he works with Obama, not for him, the support of the president would carry a lot of weight, and the endorsement of a president is exactly what Burris came armed with today. 

(BEGIN VIDEO CLIP)

OBAMA:  You know, that is a Senate matter, but I know Roland Burris.  Obviously he‘s from my home state.  I think he‘s a fine public servant.  If he gets seated, then I‘m going to work with Roland Burris just like I work with all the other senators. 

(END VIDEO CLIP)

SHUSTER:  That, of course, was Barack Obama, who‘s talking about l‘affaire de Burris.  And here‘s exactly what Roland Burris said today. 

(BEGIN VIDEO CLIP)

ROLAND BURRIS (D), ILLINOIS SENATE APPOINTEE:  I had an important phone call before I went to that meeting.  And that phone call was from my friend, former president of the United States Jimmy Carter.  And we chatted very briefly, and he indicated to me to, “Just tell everybody I said, when you‘re in the Senate, Roland, you will make a great senator.” 

(END VIDEO CLIP)

SHUSTER:  In other words, the president-elect defectively punted the matter to Senate Democrats, while Harry Reid punted this to the state of Illinois.  And there is Jimmy Carter grabbing the ball and running with it.  Amazing. 

Getting a read on the president-elect is not easy, whether you‘re Roland Burris, Harry Reid or one of the four living presidents.  But we are still intrigued to hear from our next guest, a reporter who got some individual face time today with Barack Obama today, CNBC‘s John Harwood. 

John, you just wrapped up an exclusive interview with the president-elect. 

Here we are 13 days before inauguration, he had the big lunch today. 

What was his mood?  Was he relaxed, nervous, anxious about the job? 

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  David, he was very relaxed and joking.  We talked a little bit about the BCS college football game coming up tomorrow.  He said he thinks Florida is going to win, but that undefeated Utah has a claim on the championship. 

He talked about the advice he got from ex-presidents.  He said keeping mom happy is job number one, to keep the family happy. 

He talked about the stimulus plan.  And interestingly, he said that—you know, I asked him if the dangerous, as his aides have said, is doing too little rather than doing too much, why stop at $775 billion?  And he said, we may not stop at $775 billion.  He said he was proposing his stimulus package, which he‘ll outline in his speech tomorrow, with the idea that it might grow during the legislative process. 

And don‘t think he won‘t pay attention to market reaction.  Take a listen to what he said here. 

(BEGIN VIDEO CLIP)

OBAMA:  What I will be doing is making sure that I‘m communicating with key market participants on a regular basis, again, to explain to them what exactly our plans are and to solicit from them good ideas.  And overall, though, one thing I‘m pretty clear about is that as president, I‘ve got to be looking out at the horizon.  I can‘t be looking at today‘s headlines, because if I do, then I‘m probably not going to make decisions based on what‘s best for the country, I‘m going to be spending a lot of time worrying about day-to-day politics.

(END VIDEO CLIP)

HARWOOD:  And David, he talked about the need for bipartisanship, the

inclusion of tax cuts in his plan, which is something that Republicans want

to hear from.  He also indicated that he‘s going to propose an ambitious

plan for housing to try to mitigate some of the foreclosure problems in the

coming weeks, as well as a comprehensive overhaul of the financial

regulatory system to try to restore some confidence in the American people

David. 

SHUSTER:  John, the big picture, I mean, what Barack Obama is trying to do, as you know, with this economic stimulus package, it‘s the most ambitious package for the economy, even bigger, of course, than FDR in terms of real dollars. 

Did you get the sense that the president-elect sort of acknowledges just how huge this is? 

HARWOOD:  Absolutely.  And one of the things we talked about was, you know, just as an exit strategy is important for a war in Vietnam or in Iraq, it‘s important to Barack Obama in terms of this fiscal war that he‘s fighting against the meltdown of the credit markets and the financial difficult the country is facing.  He said he‘s going to take a look at how credit is flowing, what economic conditions are, and try to look as rapidly as possible, perhaps before the end of his first term, to when you can start to wean the political system off of some of this largesse and some of this spending, trying to get back on the path toward fiscal responsibility. 

SHUSTER:  CNBC‘s John Harwood.

John, great work today, terrific interview.  And thanks for joining us to tonight. 

HARWOOD:  Thanks, David.

SHUSTER:  Coming up on 1600, the Senate seat standoff.  Roland Burris says it‘s just a matter of time and soon he‘ll be able to serve as the junior senator of Illinois.  Does he have the law on his side?  Yes, and Harry Reid‘s foot-dragging is not sitting well in Chicago. 

Plus, it‘s not over until it‘s over.  Two months past Election Day, and the Minnesota Senate race is moving further away from a conclusion.  What‘s going on with that? 

And Mr. Flynt goes to Washington.  That‘s right, “Hustler” publisher Larry Flynt is now lobbying for, get this, a $5 billion porn bailout. 

More on 1600 in a moment. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REID:  People ask a lot of times why we have to do various things procedurally in the Senate.  Because we‘re the Senate.  That‘s how we operate. 

(END VIDEO CLIP)

SHUSTER:  That was Democratic Majority Leader Harry Reid saying—what exactly?  What did that sentence mean?  I don‘t know, but it does speak to the bizarre world on Capitol Hill where arcane rules and protocols that often defy common sense can make some people really mad. 

Right now, supporters of Roland Burris are really mad.  Here‘s Reid. 

(BEGIN VIDEO CLIP)

REID:  We know that there‘s been a lot of issues raised as to why we held this up.  Well, it‘s obvious; we had a man who was arrested for trying to sell the office. 

BURRIS:  I have no knowledge of that, Lynn (ph), and if they did, there was certainly no pay to play involved, because I don‘t have any money. 

(END VIDEO CLIP)

SHUSTER:  Joining us now, Chris Kofinis, a Democratic strategist, and Michael Smerconish, a radio talk show host on WPHT in Philadelphia and soon to be syndicated on WOR in New York. 

Michael, congratulations.

MICHAEL SMERCONISH, RADIO TALK SHOW HOST:  Thank you, David.

SHUSTER:  First, your take.  What is Harry Reid up to? 

SMERCONISH:  Well, I think he‘s getting caught up in the protocol and maybe in someone‘s interpretation of the law, but not mine.  And he‘s ignoring the political reality, which is, you can‘t beat somebody with nobody. 

There is no opponent to Roland Burris, so it‘s only Burris who is front and center.  He‘s eligible, he‘s qualified, he‘s African-American, and that‘s significant.  And I think he will win this battle.  So I think politically speaking, Reid is just wrong on all counts. 

SHUSTER:  Chris, here‘s what I think is going on.  I think Harry Reid and a lot of the Democrats see Roland Burris being a very bad candidate two years from now when the seat is up for reelection.  Why don‘t they just say that, say, look, this is not the guy we want, he‘s awful, and we don‘t want him to be in a position of facing a tough challenge two years from now?

CHRIS KOFINIS, DEMOCRATIC STRATEGIST:  Well, I mean, that would be a harsh statement on a guy who may end up being the senator, and actually may end up running for the seat.  I mean, listen, I think maybe that‘s the concern of some Democrats. 

I mean, you know, whether Roland Burris is a good candidate or not, you know, I think we can wait and see.  But at the end of the day, whether it‘s a Senate race, it‘s going to depend on who the Republicans put up. 

If they put up somebody like Alan Keyes, Roland Burris can beat him.  And listen, he‘s won statewide.  win it.  So I think that‘s maybe less of a concern for some folks than others.

At the end of the day, I think a lot of this stems from real frustration, if not anger, at Governor Blagojevich basically sticking it in the eye at Democrats in the Senate and across the country, basically choosing someone when he had initially said—or at least his lawyer had said—he wasn‘t going to choose one, choose a replacement for President-elect Obama.  So I think part of that is what is explaining a lot of this frustration. 

SHUSTER:  Well, part of the frustration, confusion, is just the evolution in Harry Reid‘s reasoning as to why Burris can‘t be sworn in. 

On December 30th Reid stated flatly, “Anyone appointed by Governor Blagojevich cannot be an effective representative of the people of Illinois.”  But by January 5th, it became a paperwork issue that Burris had not been certified by the state of Illinois.

Yesterday, Reid said it was because of a specific signature that was lacking, saying a court case in Illinois is pending to determine whether the secretary of state, Jesse White, is obligated to sign, et cetera, et cetera.  Jesse White, for the record, said that‘s been made “the fall guy” in this. 

Michael, this is horrible for Harry Reid, isn‘t it? 

SMERCONISH:  It sounded to me like, you know, the proctor telling you as you were walking down the hall in high school that you needed the signature from the homeroom teacher.  And I just don‘t think it‘s going to wash, and that‘s why I think it‘s bad politics for Harry Reid, who‘s already showing signs of cracking. 

You know, on “Meet the Press” last weekend, cracking relative to this issue, he said that there was room for negotiation.  So, fold the tent already and move on, because I‘m convinced, David, this guy is getting the job. 

SHUSTER:  Chris Kofinis, 20 seconds.  You get the last word. 

KOFINIS:  Yes, listen, I think at the end of the day, I think Roland Burris is going to probably get the job.  It‘s probably not worth the long-term distraction of this kind of soap opera, and basically move on.  Roland Burris will be the candidate and then you fight another day fight on another issue. 

SHUSTER:  Chris Kofinis and Michael Smerconish, thank you both so much. 

And Michael, again, congratulations to you.

And Chris, congratulations to you just for making it into the new year. 

KOFINIS:  Thank you.

(LAUGHTER)

SHUSTER:  Chris and I are old buddies.

Coming up, you might think that‘s the Rolling Stones‘ Mick Jagger performing, but you would be wrong.  That man could actually be the next senator from the state of Minnesota.  That‘s right, that‘s Al Franken. 

And sure, lots of us love watching football, but is that enough of a reason to stop everybody from working in the House of Representatives? 

It‘s ahead on 1600. 

(COMMERCIAL BREAK)

SHUSTER:  We‘re back with a segment we call “The Briefing Room,” although one of our producers suggested we change the name to “Strange Universe.” 

Hmm.  We‘ll keep you posted. 

First up, many of us have had previous lives and lines of work, even that producer, of course.  President-elect Obama is no exception. 

Eight years ago, while a senator in the Illinois legislature, Mr. Obama taped a segment for a TV show that profiled restaurants and was called “Check, Please.”  Yes, that‘s right, Barack Obama was invited to talk up one of his favorites, the Dixie Kitchen and its peach cobbler. 

The segment apparently got lost and never aired, but the tape has been found, and through the magic of YouTube, and because I love peach cobbler, watch. 

(BEGIN VIDEO CLIP)

OBAMA:  I do have to put in a plug for their peach cobbler, which people tend to gobble up. 

UNIDENTIFIED FEMALE:  See, if I would lay it on the cart case (ph) when they set them on the table, maybe I would have some room for some. 

OBAMA:  That‘s the problem with those Johnny Cakes.  You know, they‘ll get you early and then you won‘t have room for the peach cobbler. 

(END VIDEO CLIP)

SHUSTER:  The program “Check, Please” will finally air the lost episode next week.  The TV producers said they were impressed and amazed at Obama‘s on-air presence even back then.  We agree. 

Now, many of you may recall that Minnesota Senate candidate Al Franken was a star comedian on “Saturday Night Live,” but did you also know that he once donned tights and a tank top to impersonate Mick Jagger on the 1980‘s hit show “Solid Gold”? 

Watch. 

(MUSIC)

SHUSTER:  Franken‘s comedy writing partner Tom Jones (ph) is the guy playing Keith Richards.  You can understand now why Republican Norm Coleman is currently pulling his hair out. 

If you‘re losing a Senate race to a former restaurant reviewer, that‘s fine.  But a Mick Jagger impersonator, ouch. 

Then again, I suppose Coleman might feel even worse if he were losing to a pornography peddler.  Actually, I don‘t think Coleman or any politician has to worry about Larry Flynt, the publisher of “Hustler,” running for office.  But Flynt‘s lobbying of lawmakers is in full swing.

Yes, the king of smut is asking the government to provide bailout money to the film industry—the adult film industry.  Flynt is teaming up with “Girls Gone Wild” founder, Joe Francis, to ask the feds for $5 billion.  They say the adult entertainment industry is hurting because of the economic downturn. 

Flynt told tmz.com, “With all this economic misery and people losing all that money, sex is the farthest thing from their mind.  It‘s time for Congress to rejuvenate the sexual appetite of America.”

That‘s an interesting point of view, but instead of hiring a few more porn actors, I think Uncle Sam needs to focus on helping a few other type of workers first. 

No offense though, Mr. Flynt. 

Finally, a Florida man who now works in Congress as an elected lawmaker just got back to work yesterday in the House of Representatives, but he already wants a break.  Republican Congressman Cliff Stearns doesn‘t want to work tomorrow or Friday because he says it will interfere with his plans to watch football. 

Stearns actually wrote to House Speaker Nancy Pelosi and asked her to move Thursday night and Friday votes so House members from Florida and Oklahoma could go to the championship series national title game. 

To help his cause, Stearns even added a handwritten note: Madame Speaker, kindly consider.  Thanks, Cliff. 

Pelosi‘s office said no. 

Now, I‘m a huge football fan.  I go nuts when I can‘t watch my beloved Michigan Wolverines.  However, Congressman Stearns, given all the huge problems our country is facing right now, if you really want the entire Congress to suspend its work so you can attend a football game, go for it.  Leave Washington, enjoy the game, and don‘t come back ever. 

Barack Obama inherits the Oval Office and, along with it, an eye-popping large federal deficit.  And it could grow even bigger when the President-elect‘s recovery plan comes up. 

Up next, Newsweek‘s Daniel Gross joins us to bust some myths about the economy. 

Plus, a history-making occasion.  All the living presidents do lunch with the man who‘s about to live into their old home at 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

SHUSTER:  Still ahead tonight, trillion dollar deficits for years to come, and the president-elect‘s recovery plan will end up adding to it.  Barack Obama says he has some economic juggling to do when he moves into 1600 PENNSYLVANIA AVENUE. 

Welcome back to 1600 PENNSYLVANIA AVENUE.  We are debuting a new segment today, the Myth Buster.  And with President-Elect Obama giving a major speech on the economy and his stimulus plan tomorrow, we have decided to start there.  The myth is this. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  FDR, during the Great Depression, did put a lot of this infrastructure spending into place and it actually now based on—based on all kinds of studies and academic works done on the Great Depression, that kind of massive intervention actually prolonged the Great Depression. 

(END VIDEO CLIP)

SHUSTER:  In a normal situation, the myth would be that Fox News and its contributors care about accuracy and the busting would end there.  However, this particular line of reasoning about FDR, who you will remember from your third grade social studies book as the president who led us out of the Depression, that he actually made things worse has been spreading from the Fox universe into others. 

(BEGIN VIDEO CLIP)

GEORGE WILL, “THE WASHINGTON POST”:  We turned a Depression into the Great Depression.  It didn‘t end until the Japanese fleet appeared off Hawaii.  There were no rules.  Investors went on strike because the government was completely improvising and would not let rules and markets work. 

(END VIDEO CLIP)

SHUSTER:  Here to do some myth busting, Daniel Gross, senior editor at “Newsweek.”  Dan, good to see you. 

DAN GROSS, “NEWSWEEK”:  Good to see you, David. 

SHUSTER:  So, this idea that more spending in the midst of a depression or recession will simply make things worse? 

GROSS:  You remember, you know, one of our favorite movies “Animal House,” and there‘s that great song, you know, “Don‘t Know Much About History?”  That‘s what my colleague George Will and Monica Crowley and so many others have proved.  From March 1933, when FDR came into office, the economy had shrunk for 43 months, longest recession ever.  They called it a depression.  It then embarked on the longest expansion to date in American history, all the way through 1937. 

From 1932 to 1936, the Dow Jones quadrupled.  So this notion that things got worse after he came into office and started these public works programs and all the reforms he put in is just not true. 

SHUSTER:  Why do they make the argument? 

GROSS:  There is kind of a cottage industry on the right.  You‘ll see it in the “Wall Street Journal” editorial page that is very invested in FDR, who actually saved capitalism, making us think that he made things worse, because he put in things like regulation, the FDIC, the Security Exchanges Commission, because he started Social Security, which, you know, everybody thought would lead to socialism.  There‘s a lot of people have a great deal invested in == you know, ideologically in those sorts of things not working, although they did. 

And the point, of course, the effort on the right is to say, when Barack Obama wants to spend 1.2 trillion dollars to try to help the economy, oh, no, that will only make it worse.  The circumstances, of course, now, as you‘ve written, are different from the Depression.  What about that argument they‘re making about the current circumstances? 

GROSS:  We‘re going to hear a lot of that, this notion that the old Keynesian response, which is you spend money, make deficits larger when you need to, because there is no private sector demand.  The government has to create demand.  That is now accepted conventional wisdom among a lot of economists.  It‘s mostly people in the sort of political world who are saying that.  We‘re going to hear a lot of that argument and it‘s probably going to be just as wrong today as it was in 1933. 

SHUSTER:  Also, finally, the argument that, well, never mind spending; you‘ve got have to tax cuts if you want to stimulate the economy. 

GROSS:  Look, all things being equal, tax cuts help.  We saw from this last round of tax rebates, what did people do with the cash they got?  They used it to pay down debt and it all got eaten up by higher gas prices.  That didn‘t find its way into consumer spending.  This proposal about stimulus of creating jobs through—whether it‘s public works, whether you want to call it infrastructure or green technology, that seems to be a better boot. 

SHUSTER:  Daniel Gross, senior editor from “Newsweek,” two myths busted there.  We‘re going to have Dan on every week.  Every week, he wants to come back to be our official myth buster on the economy.  Dan, good to see you and happy new year.

GROSS:  As long as you provide the car, I‘ll be here. 

SHUSTER:  Thanks, Dan.  Truth or myth aside, nearly a trillion dollar stimulus proposal could be a political land mine, especially for Republicans eager to rally around fiscal conservatism, lower taxes and less spending. 

For more on that, let‘s bring in Bob Shrum, Democratic strategist, and Michael Smerconish again, radio talk show host and columnist for the “Philadelphia Daily News.”

Bob, you‘ve heard the clips there.  Dan, effectively, busted the myth about somehow spending is going to make things worse.  What do you make of the political effort on the right to try to get that argument out there? 

SHRUM:  Well, it‘s very dangerous.  I don‘t think Republicans in the Congress are for the most part going to follow it, because people are too afraid of what would happen if we don‘t get this stimulus package.  Republican economists, conservative economists, almost across the board, think we need stimulus of 500 to 800 billion dollars.  This is a moment when we really are all Keynesians.  I just don‘t see a lot of those Republicans who might have endangered seats in 2010 deciding that they‘re going to be obstructionists at a time when the country, as Obama says, wants action and action now. 

SHUSTER:  Michael, is that the case in Pennsylvania? 

SMERCONISH:  I‘m tending to agree with Bob.  I think things are so dire in certain quarters, including in this state, that folks tend to be selfish and don‘t view this as an ideological battle.  They‘re not sitting back and offering words like—or terms like Keynesian.  They‘re thinking, what does it mean to me, and what is going to put the most money in my pocket?  If they‘re convinced on a grassroots level that it best suits the interests of their house hold, they‘ll go along with it regardless of the ideology. 

SHUSTER:  Will they go along with spending a trillion dollars after 700 billion dollars has gone to the financial industry.  A lot of that can‘t be tracked.  There today, we hear about this performance officer that‘s going to somehow make sure the money is efficiently spent.  I mean, it does sound like there are gimmicks associated with this, and to the extent that people hear about these gimmicks, don‘t they begin to lose trust that the government can carry this out? 

SHRUM:  I think they have—

(CROSS TALK) 

SMERCONISH:  The argument I hear from a lot of folks is where is it going to end?  Maybe I‘m the only one in the country not laughing at Larry Flint.  I love the fact that he wants the porno industry bailed out, because I think it‘s a great portrayal of how insane this all seems to gets.  Who else is going to be written a check? 

SHUSTER:  Bob?

SHRUM:  It would be funny if it weren‘t so serious.  The fact is that the TARP was never designed to get the economy started again.  It was designed to prevent a complete financial collapse.  Whatever we think of it, we at least have not had that happen to us.  If we had, we would already be in a Great Depression.  We now need to injection demand back into the economy, because, as Michael says, families are sitting around.  They don‘t have money.  If they do have any money, they won‘t spend it.  It‘s called a liquidity trap.  If we don‘t get out of it, we‘re going to be back where we were in 1933. 

SHUSTER:  The most interesting political side of this, in my view, is the horse trading that I think you might start to see.  When you‘re talking about spending a trillion dollars, mostly on public infrastructure, works, perhaps some education, imagine the leverage the Obama administration now has on some of these members of Congress who are going to be looking for the new bridges and tunnels, when it comes to some of these other issues that he wants to deal with?  We‘re going into unchartered political waters with that, aren‘t we, Michael? 

SMERCONISH:  I think you‘re right, David.  What I note taking place is that the Obama folks tend to be approaching this more like it‘s the campaign, still on in earnest.  In other words, there is this grassroots effort now, where progressive organizations are brought together under a singular umbrella.  President-Elect Obama, and I recognized in large part it‘s because the girls needed to start school, but he arrived three weeks in advance of the inauguration.  They‘re using those same campaign techniques to advance the economic stimulus.  I think that will be to their benefit. 

SHUSTER:  Bob Shrum, is there a danger that when you talk about, for example, the accusations of pay to play, which have dogged the Obama transition—when you‘re talking about a trillion dollars and trying to convince somebody to vote for you on a particular program and you say, by the way, if you want your piece of the trillion, I need to know I can count on you for health care reform.  It gets even murkier at that point, doesn‘t it? 

SHRUM:  I don‘t think he‘s going to do that.  I think he made it very clear there aren‘t going to be earmarks.  There isn‘t going to be special treatment.  I think he‘s on the level.  I know it‘s hard to believe and people just can‘t accept it. 

SHUSTER:  I agree.  I think Obama‘s on the level.  But I think a lot of those members of Congress are going to be so used to playing games the old way that they‘ll be the ones that say, I might go for this health care package you‘ve got coming down the pike, but you know that tunnel that I need back in Michael‘s old neighborhood? 

SHRUM:  Maybe I‘m naive, I think whether the tunnel is built will be determined by whether the plan is there and ready to go and whether it‘s needed.  Look, there will be mistakes.  There will be inefficiencies.  They told Harry Hopkins during the New Deal, Roosevelt‘s adviser, if you slowed things down, we‘d save more money in the long term.  He said, people don‘t eat in the long term. 

What we now have to deal with is an economy where we have enormous short term dangers.  If we don‘t get through those, we could be in for a decade of economic decline. 

SHUSTER:  Bob Shrum, I hope you‘re right, both about the Congress that is going to dealing with Barack Obama.  I think I know you‘re right about Barack Obama being on the level with this.  Michael Smerconish, thanks to you as well.  Again, congratulations. 

It‘s an elite group of four, the men who were once president.  Today, they invited Barack Obama to lunch and gave him some advice on one of the toughest jobs around.  Don‘t you wonder what they told the president-elect? 

More twists and turns in the on-going Minnesota Senate race.  It still isn‘t decided yet.  Al Franken had an apparent victory.  But it‘s on hold now that incumbent Norm Coleman is suing.  Stick with us.  This story changes by the day. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  The gentlemen here understand both the pressures and possibilities of this office.  And for me to have the opportunity to get advice, good counsel, and fellowship with these individuals is extraordinary, and I‘m very grateful to all of them. 

(END VIDEO CLIP)

SHUSTER:  That was President-Elect Barack Obama talking about an extraordinary meeting which took place earlier today.  Now we‘re going to put it in some context.  This kind of meeting hasn‘t happened since 1981, when all the living presidents met at the White House with then President Reagan, before traveling together to the funeral of Anwar Sadat. 

Today, President Bush hosted the president-elect, his father, and Presidents Clintons and Carter for lunch.  If only the walls could talk.  In a read-out from the meeting, Obama‘s team says he looks forward to staying in touch with these guys in the future.  How often has that actually happened and what words of wisdom might have been passed at lunch? 

Doris Kearns Goodwin is a presidential historian and MSNBC analyst.  How unusual was this meeting?  How often do presidents get advice from their predecessors? 

DORIS KEARNS GOODWIN, PRESIDENTIAL HISTORIAN:  Well, one wishes they did it a lot more often.  Nobody else except a former president can understand not just the pressures and the burdens, but what it is like to walk in a room where everybody stands up, what it‘s like for “Hail to the Chief” to be played.  There‘s such a wealth of information, and it‘s been crazy that it hasn‘t been used more often.  When it does, it‘s fantastic.

SHUSTER:  Give us some examples.  I mean, Harry Truman and Herbert Hoover, apparently, worked together.  Talk about that. 

GOODWIN:  That‘s a great example.  Herbert Hoover was ignored by FDR during FDR‘s 12 years and he felt terrible about it.  Harry Truman came in in May of 1945, called up Hoover and said, I need your help with famine relief all over the world.  Hoover had been great in World War I organizing famine relief.  So he went all over the world for Truman, and then not only that, but he came back and he lobbied Republicans to go for Truman‘s program.  He later said that Truman asking him to do things, and he later did a governmental reorganizational commission, added ten years to his life.  He said, you‘ll never know, to Truman, how much your friendship mattered to me.  So why not do something like that?

SHUSTER:  We‘re showing pictures of Lyndon Baines Johnson and Harry Truman.  Talk about their relationship. 

GOODWIN:  This one really is a moving one, as well.  When LBJ went to sign the Medicare Act, he went to Independence, to be going to the home of Harry Truman, because Truman was the first person who had asked for national health insurance.  And Truman stood up and he said, I‘m so honored to have all these people here.  It‘s an honor.  I haven‘t had much lately, because he, too, had been ignored.  Later, he became one of the great presidents.  And he said, I‘m very, very happy to have you all here. 

Then LBJ, in a gracious way, said everybody loves Truman, not because he gives them hell, but because he gave us hope.  It was a great movie moment. 

SHUSTER:  Doris, with that historical context, when we saw the pictures today, it looked like Barack Obama, very comfortable to be around the Bushes, the bushes very comfortable around Bill Clinton.  There was Jimmy Carter, sort of off to the side.  The body language, Bill Clinton was sort of turned.  At times, there was sort of space in between when you see the head on shot.  Talk about the relationship between—and, in fact, there you can‘t even see Jimmy Carter, he is off to the side.  Between Bill Clinton and Jimmy Carter, that has been kind of an estranged one, right? 

GOODWIN:  No, that is true.  Of course, Clinton and Bush Sr. have developed a relationship.  They went on the tsunami relief thing together, the Katrina relief together.  They developed a relationship.  Ford actually had a good relationship with Carter.  They became very good friends coming back on the plane from Anwar Sadat‘s funeral. 

But Carter and Clinton had a trouble, I think, right from the beginning.  Both from a small state.  Both, in a certain sense, governors.  Never really developing that close relationship.  I‘m not sure, though, the fact that he was standing on the side should be made as much of.  He‘s never been the kind of person who liked to put his arms around people.  Maybe it‘s a good thing that he wasn‘t in the middle, trying to push his way in with everybody else.  He may have felt content to just be standing there on the side. 

SHUSTER:  What advice do you think each of the men gave Barack Obama today? 

GOODWIN:  If I had to guess what we were hearing behind those closed doors, I would think what Obama would want to hear was how do you manage your time?  How do you figure out ways to relax?  What do you do when the press irritates you so much, to contain that anger towards the press?  It‘s the daily life that I think he would want to know about.  I know that Bush Sr., for example, got great relaxation from going to Camp David.  I can imagine him talking to him about that. 

I would think it‘s the things that only presidents know that you‘d want to hear.  He might want to hear their views on what‘s going on in the Middle East.  I think right now, in that moment, it would be, what‘s it like to be president?  I think that would be great, if we could have only heard that conversation. 

SHUSTER:  What do you make of Barack Obama?  Our own John Harwood said earlier today, he seemed so relaxed.  Just, when you see these pictures—again, we don‘t know what was said.  Reading the body language, Barack Obama seemed so comfortable.  Do you get a sense he would be receptive to those kinds of conversations?  Or would just imagine that anybody in that situation would have to be receptive to that kind of stuff? 

GOODWIN:  As far as I understand, it was Barack Obama‘s idea to have the luncheon.  He asked Bush to hold it for him, which shows that he has an appreciation for history, that he knows he can learn from the experiences of the past, learn from their mistakes, learn from their successes.  It shows that he has the confidence to not feel that he cannot be surrounded by other people of power.

It‘s a very good sign going into the presidency that he‘s going to be spacious enough to be large enough to learn from everybody else in the past. 

SHUSTER:  Doris Kearns Goodwin, thanks for coming on. 

GOODWIN:  You‘re welcome. 

SHUSTER:  Nice to see you.  President-Elect Obama will move into his new digs in just 13 days.  Do you ever wonder just how much the White House is worth?  Wonder no more.  The real estate website Zillo.com calculated a value for it.  If it were actually a home that could be bought and sold in Washington, D.C., ready for the number?  More than 308 million dollars.  That would make it the most expensive residence in the United States. 

Even the White House is not immune to the housing problems.  This year‘s value is more than 23 million dollars less than a year ago. 

It‘s been 65 days since election day and there‘s still no official winner in the Minnesota Senate race.  What‘s more?  A new lawsuit means this thing may be months away from a resolution.  Up next, our Muckraker of the day, Ed Schultz, joins us to talk about what‘s going on in the North Star State. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARK RITCHIE, MINNESOTA SECRETARY OF STATE:  We‘ve counted three million—nearly three million ballots.  We‘ve determined how the citizens of Minnesota voted on November 4th

(END VIDEO CLIP)

SHUSTER:  That was Minnesota Secretary of State Mark Ritchie.  Norm Coleman has a message for him: not so fast.  It‘s now 65 days and counting and Minnesota‘s second senator still isn‘t seated.  Some folks are getting frustrated.  The latest twist?  Republican Norm Coleman, 225 votes behind Al Franken, has now filed a legal challenge to overturn the latest recount.  Coleman sure wasn‘t showing this outrage about the process when he was up by some 475 votes after election day. 

(BEGIN VIDEO CLIP)

SEN. NORM COLEMAN ®, MINNESOTA:  I would step back.  I just think the need for the healing process is so important.  The possibility of any change of this magnitude in the voting system we have is so remote.  That would be my judgment.  Again, Mr. Franken will decide what Mr. Franken will do.  I‘m not talking about taking any legal action whatsoever. 

Today, I‘m announcing that I‘ve instructed my legal team to file an election contest, according to Minnesota law. 

(END VIDEO CLIP)

SHUSTER:  Today‘s Muckraker has been following the counts and recounts, the cease-less lawyering on his radio show.  Ed Schultz is host of the nationally syndicated radio program “The Ed Schultz Show,” and he is our Muckraker of the day.  Ed, great to see you.  Happy new year.  I don‘t mean to get you wound up.  Why not let the lawyering and the courts deal with this now? 

ED SCHULTZ, RADIO TALK SHOW HOST:  Well, you‘re talking about a state, David, that‘s got 78 percent voter turnout and has had a history of tremendous civic pride when it comes to elections.  Now, I spoke with Mark Ritchie today, the secretary of state of Minnesota.  He‘s anxious to hear the Coleman lawsuit, because he told our audience that we have just been in Minnesota through the most open recount in American political history.  I mean, live television. 

So when Norm Coleman talks about the healing, Norm, I feel the healing as a Minnesota voter.  It‘s this healing, you know?  Can we get Norm Coleman on health care?  Is that possible?  This is a 180.  He deserves to be mud-raked all over the place.  He‘s embarrassing Minnesota.  This is not Florida, Norm.  And it‘s time for you to step aside. 

Now, another twist in the statement, late this afternoon, Governor Pawlenty, who was a real ally of the McCain campaign, and has got future aspirations, is doing everything he can to keep Al Franken out of the process.  He injected himself into the process today, and, of course, ordained the lawsuit and says, let‘s go along with it.  So it‘s getting more than interesting. 

SHUSTER:  What do you think of Pawlenty‘s move to join forces and get involved? 

SCHULTZ:  Well, I think it‘s a real political move.  And the—obviously, the Republican party does not want Al Franken in the Senate, but you can‘t deny the numbers.  You can‘t deny live television.  You can‘t deny the fact that this has been a bipartisan canvassing board, that has been so open, unlike anything in American political history.  And Norm Coleman doing a 180 -- you played the sound bites.  He condemns himself out of his own mouth.  And Minnesotans aren‘t buying. 

We‘ve counted enough votes.  We have a lot of snow up here.  Indoor vote counting is now a new recreational sport.  But it‘s time to move on and put Al Franken into the Senate, where he belongs. 

SHUSTER:  I should just point out, you‘re originally from Minnesota.  Do you still have relatives and friends there, and what are they telling you about all of this, and what they think the image of Minnesota that‘s being projected to the nation right now? 

SCHULTZ:  Well, obviously, they want the people across the country to know that this has been a fair and open process.  The “Minneapolis Star Tribune” newspaper had it on their website, the live coverage of it.  You could check in any time and see how it was going on.  You have some very reputable judges from both sides of the aisles on this canvassing board.  It‘s been an exhaustive process. 

Minnesotans are tired of this.  Norm Coleman is not acting Minnesotan by this.  You can tell by his sound bytes.  But the fact is, do you want—there isn‘t another politician on the face of the Earth that wants the dubious distinction of having lost to a professional wrestler in Jesse Ventura and somebody off “Saturday Night Live” like Al Franken. 

SHUSTER:  The “Wall Street Journal,” you talk about the bipartisanship nature of the judges—a number of bloggers and journalists have pointed out the way the “Wall Street Journal” op-ed page has totally misrepresented this.  What do you think is motivating the Rupert Murdoch empire to try to help Coleman in the way they have in such a misleading fashion? 

SCHULTZ:  Well, I think the conservative movement in this country is dreadful of the fact that we‘re getting closer to 60 votes in the Senate, so we don‘t have to listen to the conservatives anymore, after they screwed up the country.  The fact is, we‘re in this mess because of Bush‘s decision and the conservative agenda that has been harnessing this country for the last eight years. 

SHUSTER:  We got to wrap it up there.  Ed Schultz, our Muck-Raker of the day.  Ed, good to see you, happy New Year.  Thanks for coming in.  That‘s the view from 1600 PENNSYLVANIA AVENUE.  I‘m David Shuster. 

“HARDBALL” starts right now.

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