updated 1/13/2009 4:08:48 PM ET 2009-01-13T21:08:48

DAVID SHUSTER, HOST:  Tonight, he was wistful, aggressive and once again controversial.  This morning, President Bush conducted his final press conference in office, and it was one of his most remarkable.

Plus, President-elect Obama met today with the leader of Mexico.  Will Mr. Obama next week really face the surreal moments President Bush predicted this morning? 

Also, as Hillary Clinton prepares for what is shaping up to be an intriguing confirmation hearing tomorrow, questions now about she is going to handle the Israeli/Palestinian conflict. 

Later, what a scene today in New York City.  A judge ruled that Bernie Madoff doesn‘t have to go to jail just yet.  Our “Muckraker of the Day” reports that many more Madoff-like scandals are coming. 

And “Joe the Plumber” is now Joe the war correspondent. 

(BEGIN VIDEO CLIP)

JOE WURZELBACHER, CORRESPONDENT:  You report what‘s happening day to day, you make a big deal out of it.  I think it‘s asinine. 

(END VIDEO CLIP)

SHUSTER:  All tonight on 1600 PENNSYLVANIA AVENUE.

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

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

This morning, President Bush gave the final news conference of his presidency.  It was a remarkable session that touched on the image of the United States around the world, his assessment of the Republican Party, some advice for president-elect Obama, and a look back at the past eight years. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  There‘s plenty of critics in this business.  I understand that.  And I thank you for giving me a chance to defend a record that I‘m going to continue to defend because I think it‘s a good, strong record. 

(END VIDEO CLIP)

SHUSTER:  A good, strong record. 

Well, here to discuss that and some of the other remarks the president made today, former presidential candidate and MSNBC political analyst, Pat Buchanan, and radio talk show host Bill Press. 

I want to start, both of you, with what I thought was one of the more intriguing parts of the news conference, and that is when President Bush listed his mistakes.  Watch. 

(BEGIN VIDEO CLIP)

BUSH:  Clearly, putting a “Mission Accomplished” on a aircraft carrier was a mistake.  It sent the wrong message.  Obviously some of my rhetoric has been a mistake. 

I believe that running the Social Security idea right after the ‘04 elections was a mistake.  I should have argued for immigration reform. 

Abu Ghraib obviously was a huge disappointment during the presidency.  You know, not having weapons of mass destruction was a significant disappointment. 

(END VIDEO CLIP)

SHUSTER:  Pat Buchanan, obviously that was a disappointment, but why didn‘t he say that having the wrong intelligence to begin with was a mistake? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, I think a lot of us feel you would ask the president of the United States, is it—was not the war, itself—forget “Mission Accomplished,” a sign up on an aircraft carrier.  The war itself, the United States going to war, and a war of choice against a country that did not possess the weapons that you were sure and insisted it has, and that was the main cause of the war. 

I think that is really the big problem with President Bush, his legacy, his years in office.  And I think, David, he indicated that, because as you saw, something like four out of the six mistakes or disappointments all related to the Iraq war, the failure to have weapons of mass destruction, going in there, the handling of the war. 

SHUSTER:  Bill? 

BILL PRESS, RADIO TALK SHOW HOST:  You know, David, I want to get to the mistakes, first of all.  But I have to—this is—what is this, the longest good-bye in presidential history?  I mean, news conference after news conference and interview after interview. 

But I have to say, overall, I thought this was such a sad performance on the part of the president.  I mean, here‘s my take on it. 

He knows his presidency was a miserable failure.  He knows that we know it.  And yet, he‘s going through all this motion of trying to say, you know what, it‘s not really as bad as it looks.  Yes, it is. 

Pat is right.  It wasn‘t the “Mission Accomplished” banner.  It was going to war in the first place, as Pat and I talked many times on our show. 

Let‘s take the Social Security.  The mistake was not raising it after the 2004 election.  The mistake was suggesting that you privatize Social Security.  What if we had done that?  People would be worse off today than they already are. 

You just go down the list and you wonder if this guy really lives in the real world at all. 

SHUSTER:  Well, that‘s why, Pat, here‘s what he said about Hurricane Katrina today.  Watch. 

(BEGIN VIDEO CLIP)

BUSH:  You know, people said the federal response was slow.  Don‘t tell me the federal response was slow when there was 30,000 people pulled off roofs right after the storm passed.  Could things have been done better?  Absolutely.  Absolutely.  But when I hear people say the federal response was slow, then what are they going to say to those chopper drivers or the 30,000 that got pulled off the roofs? 

(END VIDEO CLIP)

SHUSTER:  Pat, they‘re not saying that the Coast Guard was slow.  They‘re saying that him getting there and actually realizing that there was a problem—I mean, is he out of touch, to Bill‘s point? 

BUCHANAN:  You know, on the Katrina thing, I‘ve got some empathy for the president for this reason.  He was horribly misserved by his staff. 

Someone should have called him up that Monday when the dikes broke and all that—the levees busted and the place was flooded and those people were at that convention center.  They should have called him up and said, “Mr. President, we‘ve got to say something.  It‘s all over television.  They‘re howling into the cameras.” 

If the governor can‘t do it, and the city can‘t do it, send in the 82nd Airborne.  And they arrived on Saturday, of course, and did it. 

That was the real failure, those pictures and the perception of him going out giving some award to a country music singer while all this was going on.  But in his defense, it was the city that failed, and the state that failed, as well as Brownie‘s agency. 

PRESS:  You know, David, I remember Al Gore used to say denial is not just a river in Egypt.  I think proven true again today. 

Look, with FEMA, yes, they might have been pulled off the roofs, 30,000, after they had been there three days.  And it wasn‘t FEMA that pulled them off the roof.  But I want to go back to the beginning. 

George Bush is responsible, because he took FEMA from a cabinet agency, put it in the boughs of the Department of Homeland Security.  He put a nonprofessional in charge of it, and he slashed his budget in half.  And so when he needed FEMA, it couldn‘t deliver, and he made sure it couldn‘t deliver. 

SHUSTER:  Here‘s the other one at the news conference today that was just striking.  And this was when the president is talking about the world view of the United States thanks to his administration. 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  I view those who get angry and yell and say bad things and, you know, all that kind of stuff is just very few people in the country.  I don‘t know why they get angry, I don‘t know why they get hostile.  I strongly disagree with the assessment that our moral standing has been damaged.  My view is, is that most people around the world, they respect America. 

(END VIDEO CLIP)

SHUSTER:  They do respect America. 

But Bill, I know why they get mad. 

PRESS:  I was going to say, I‘ll tell you...

SHUSTER:  It‘s because no health insurance, they lost their job, maybe they know somebody who served in Iraq and got killed.  I mean, the list goes on and on. 

PRESS:  Sure.  Yes, I‘ll tell you why I‘m angry, because I loss my house, I lost my job, I lost my retirement income, and he did nothing about it. 

And as far as our standing in the world, I mean, he, Bush, can‘t travel anywhere in the world, you know, without hostility.  We have lost our moral leadership in the world, mainly because of his war in Iraq. 

I mean, the world is eagerly anticipating a change in direction today with Barack Obama.  They don‘t blame the American people; they just blame this president and his administration. 

SHUSTER:  All right.  Bill and Pat, stick around.

BUCHANAN:  Let me tell you, David...

Well, I‘ll tell you what, let‘s get to it on the other side of this break, Pat. 

BUCHANAN:  OK.

SHUSTER:  I want to get back to this very point. 

But up next, we‘re going to talk more about President Bush‘s advice for Barack Obama and what 43 thinks that 44 will be going through on that first day in the Oval Office.  Plus, the tone from this news conference. 

But first, David Letterman‘s look at President Bush‘s final days. 

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, “LATE SHOW WITH DAVID LETTERMAN”:  George W. Bush, now, I don‘t know, a couple of weeks and he‘s out of office.  People are saying, “Mr. President, what are you going to do now that you‘re out of office?”  I mean, eight years of being a president, what are you going to do now? 

And he said, well, I‘m not sure what I want to do.  He said, I‘m hoping to find something where I just get in up to my head. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH:  When I get out of here, I‘m getting off the stage.  I believe there ought to be, you know, one person in the klieg lights at a time.  And I‘ve had my time in the klieg lights.

(END VIDEO CLIP)

SHUSTER:  Welcome back.

President Bush is just about to step off the stage, and his final news conference today was an encore tour de force.  The president was defiant, thoughtful and generous towards his political critics and to his successor, Barack Obama.

Still with us, former presidential candidate and MSNBC political analyst Pat Buchanan, and nationally syndicated radio talk show host Bill Press.

Pat, the point you were going to make at the end of the last block, President Bush said, “I strongly disagree with the assessment that our moral standing has been damaged.”

What‘s your view?

BUCHANAN:  Here is the wild moment of this press conference.  He was as passionate, as angry, as defiant, as direct as I‘ve seen him.  He was stung by the question, and he came out, in effect, and said, look, I liberated two countries, I did the right thing.  I‘ve taken the heat.  A lot of these effete Europeans and these elite columnists and opiners—he‘s talking about us three—whatever they say, I did the right thing and history will vindicate me.

I mean, frankly, he‘s aiming it at us.  But I thought it was a terrific and real and honest, raw moment of politics, the highlight of that press conference.  It was quite something, and it did call forth Nixon‘s last press conference out there in California in 1962 -- “You‘re not going to have Dick Nixon to kick around anymore.”

(CROSSTALK)

SHUSTER:  Well, I agree, Pat.  I thought it was great.  It was a terrific part of the news conference, but the issue is he‘s wrong.

I mean, it‘s not just the pundits and the elitists who don‘t like what he did.  I mean, you go to Europe, you go to some of our allies across the Middle East, and the polls show 70 percent or so hate what the United States stands for right now. 

But the part of the news conference I also thought that was perhaps the most moving and that our audience may find most moving is when there‘s President Bush talking about the first moment that he walked into the Oval Office and realized the powers of the presidency.  And he talked about his impressions of Barack Obama and what that is going to be like. 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  And in terms of the decisions that have I made to protect the homeland?  I wouldn‘t worry about popularity.  What I would worry about is the Constitution of the United States and putting plans in place that makes it easier to find out what the enemy is thinking. 

(END VIDEO CLIP)

SHUSTER:  Now, that, of course, is controversial because of the whole issue of the Constitution and whether he was following the Constitution.  We‘ll get to that.  But again, here‘s the president talking about the president-elect. 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  I wish him all the very best.  I found him to be a very smart and engaging person.  And then he‘ll walk in the Oval Office and there will be a moment when the responsibilities of the president lands squarely on his shoulders. 

He will feel the effects the minute he walks in the Oval Office.  At least that‘s when I felt it.

I have never felt isolated and I don‘t think he will.  He‘s a 45-second commute away from a great wife and two little girls that love him dearly. 

You never escape the presidency.  It travels with you everywhere you go.  And there‘s not a moment where you don‘t think about being president.  And I would hope that, frankly, for the sake of the system itself, that if people disagree with President-elect Obama, they treat him with respect. 

(END VIDEO CLIP)

SHUSTER:  Bill, there was a humanity there to President Bush that I think a lot of people who want to criticize him would find very comforting and make it more difficult for them to criticize him at the end as you actually watch him making this handoff to President-elect Obama. 

PRESS:  I thought that was a very real, a very human and a very moving moment.  I mean, think of it.  Only 43 people in history have had that experience.  Pat‘s been a lot closer to it than I have, working right there alongside of a couple of presidents.  But at that moment, when the parade‘s over and you walk in, baby, and all of that weight is on your shoulders, it must be an awesome experience. 

Back to the earlier clip that you played, you know, he certainly is right.  He didn‘t worry about his popularity.  That‘s for sure. 

I wish he had worried more about the Constitution, because I think there are some violations of the Constitution which we have all suffered from and he will live to regret. 

SHUSTER:  Pat, what was it like the first time that you went into the Oval Office with your old boss, Richard Nixon?  What was going through your mind? 

BUCHANAN:  I can‘t remember the first time I walked in there.  I‘ll tell you what I did the first cabinet meeting I showed up, or the first big meeting.

I walked in and I was late to the meeting, and I went and sat in an empty chair, which, it turned out, was a couple inches taller than the others.  And it was the president‘s chair.  And I was told to get out.  So that was my first meeting in the cabinet room. 

But I‘ll tell you, my first meeting with Richard Nixon was, as president, I was told to get off the walk and walk into the reviewing stand, that the president of the United States was right behind me.  President Nixon walked in there.  He had been on his motorcade. 

The first thing he said to be as president was, “Buchanan, was that you throwing the eggs?”  Apparently, they had egged his motorcade.  And that was the very first thing said to me as president of the United States. 

(LAUGHTER)

SHUSTER:  You know, one of the—obviously, very different times that we‘re facing now.  That was the Cold War, and now, of course, we‘re dealing with terror and al Qaeda.  And President Bush spoke about that in very sort of a sobering way today. 

Here‘s the president talking about U.S. enemies and the biggest challenge, the most urgent threat that President-elect Barack Obama will have to deal with or may deal with once he gets into office. 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  The most urgent threat he‘ll have to deal with and other presidents after him will have to deal with is an attack on our homeland.  You know, I wish I could report that‘s not the case, but there‘s still an enemy out there that would like to inflict damage on America. 

I‘m telling you there‘s an enemy that would like to attack America and Americans again.  There just is. 

(END VIDEO CLIP)

SHUSTER:  Bill? 

PRESS:  I think—I think he‘s right about that.  I think, clearly, about the greatest threat to this country. 

But my question is, are we really safer because of the policies of George W. Bush?  And I think the answer to that is no.  Even the State Department has said there are more terrorists today, there‘s more terror today around the world—maybe not here on our homeland, thank God, but ask London, ask Madrid, ask Mumbai—than there was before the war in Iraq. 

There are more people around the world who do want to do damage to the United States because of the policies of this administration.  So I think he has given Barack Obama an even more serious problem to inherit than certainly he had when he became president. 

SHUSTER:  And Pat, isn‘t that going to be the ultimate legacy question, as far as when we look back on the Bush administration? 

BUCHANAN:  Well, what‘s going to be the ultimate legacy question, I think, will be Iraq and, number two, Afghanistan.  But the third thing is, that‘s exactly right. 

Did these wars—did they control the cancer and begin to cut it out?  Or did the cancer metastasize as a consequence of our going in there and all the death and destruction that was rained down on that Islamic community, that Arab community?  And did it spread to the world and increase the pool out of which the terrorists recruit and the terrorists come? 

I think that‘s the big question of the foreign policy of George W.

Bush. 

PRESS:  David, just maybe a footnote here.  The one thing I felt was sad today is that the president was in front of a Washington White House press corps that I don‘t believe did its job either.  And I‘m not talking about the people who are necessarily in those chairs, because there has been some turnover and there are some new people there. 

But I don‘t think we would have gone to war in Iraq, or may not have gone to war in Iraq, if the White House press corps had done its job and challenged the assertions of this president and his spokespeople from the beginning.  They didn‘t do it and they bear responsibility for it. 

SHUSTER:  Well, and certainly, the relationship between the press corps and the presidency has changed for a generation, I think, because a lot of reporters feel that way. 

In any case, Bill Press and Pat Buchanan, thank you both very much. 

We appreciate it. 

PRESS:  Brother Pat.

BUCHANAN:  Thank you, David.

Thank you, Bill.

PRESS:  And by the way, President Bush—you‘re welcome.

President Bush made a remark today that fits into the category that has come to be known over the past eight years as “Bushisms.” 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  I have respected you.  Sometimes I didn‘t like the stories that you wrote or reported on.  Sometimes you misunderestimated me.  But always a relationship I have felt has been professional. 

(END VIDEO CLIP)

SHUSTER:  Ah, misunderestimated.  In fact, that‘s now a word in the urban dictionary. 

Well, in honor of the Bushisms and the unique verbal syntax President Bush has been delivering these past eight years, tomorrow on 1600 we will look back at some of our favorites. 

Here‘s a sample from 2002. 

(BEGIN VIDEO CLIP)

BUSH:  There‘s an old saying in Tennessee, I know it‘s in Texas, probably in Tennessee, that says fool me once, shame on—shame on you.  Fool me, but can‘t get fooled again. 

(END VIDEO CLIP)

(LAUGHTER)

SHUSTER:  Our top 10 favorite Bushisms, that‘s tomorrow, right here on 1600. 

But up next, during the presidential election he was known as “Joe the Plumber.”  Now he‘s Joe the war correspondent, although he doesn‘t believe there should be any. 

We‘ll explain straight ahead. 

(COMMERCIAL BREAK)

SHUSTER:  We‘re back with a segment we call “The Briefing Room.”

And today at the White House press briefing room, a reporter asked President Bush about his retirement plans. 

Watch. 

(BEGIN VIDEO CLIP)

BUSH:  I‘m a Type A personality.  You know, I just can‘t envision myself—you know, the big straw hat and an Hawaiian shirt, sitting on some beach, particularly since I quit drinking. 

(END VIDEO CLIP)

SHUSTER:  Well, maybe the president can‘t picture himself in that environment, but our—we asked our terrific graphic artist to imagine it.  So here you go, President Bush with a straw hat, relaxing on a beach.  You can almost smell the shrimp cooking on the grill. 

And Mr. President, a safety tip.  Drink lots of water, and remember suntan lotion because of that little global warming ozone—the issues you didn‘t get to. 

By the way, speaking of a change in pace, the man who we‘ve come to know as “Joe the Plumber” is now in Israel as Joe the reporter.  Samuel Joe Wurzelbacher is in southern Israel, along the Gaza border, observing the war against Hamas and reporting for the conservative Web site PJTV.com. 

While trying to interview the Israeli military, Joe was interviewed himself and said no reporters, including himself, should be there. 

(BEGIN VIDEO CLIP)

JOE WURZELBACHER, REPORTER, PJTV.COM:  To be honest with you, I don‘t think journalists should be anywhere allowed (ph) war.  I mean, you guys report where our troops are at, you report what‘s happening day-to-day, you make a big deal out of it.  I think it‘s asinine. 

You know, I like back in World War I and World War II, when you would go to the theater and you‘d see the troops on the screen, and everyone would be real excited and happy for them.  Now everyone‘s got an opinion and wants to down soldiers.  You know, our American soldiers, Israeli soldiers. 

I think media should be abolished from reporting.  You know, war is hell.  And if you guys sit there and say, well, look at this atrocity, well, you don‘t know the whole story behind it half the time. 

(END VIDEO CLIP)

SHUSTER:  Joe the reporter, we salute you.  And we are sending you a three pack DVD, “Saving Private Ryan,” A Bridge Too Far,” and “Apocalypse Now.”  With this, you can do all the reporting on war you want from the safety of your own home. 

Godspeed, Joe. 

And finally, today is the start of Senator John Kerry Appreciation Week here at 1600 because all of us, probably even Joe the Plumber, can relate to being left off a team at some point in our life. 

John Kerry, of course, endorsed Barack Obama‘s candidacy early in Obama‘s campaign fight with Clinton.  And yet, it was Clinton who got the job Kerry wanted as secretary of state. 

And tomorrow, John Kerry will have to preside over the Foreign Relations Committee confirmation hearing for Clinton.  That brings us back to the many reasons we appreciate John Kerry. 

Here‘s one moment from back in 1971, as a 27-year-old Navy veteran of Vietnam.  Kerry testified before the Senate Foreign Relations Committee about the war and made this memorable statement. 

(BEGIN VIDEO CLIP)

JOHN KERRY, NAVY VETERAN:  How do you ask a man to be the last man to die in Vietnam?  How do you ask a man to be the last man to die for a mistake? 

(END VIDEO CLIP)

SHUSTER:  It was a great moment in the history of Capitol Hill testimony, and it came from a guy who had actually served under fire. 

Senator Clinton, you might be tempted to try and match it in gravitas or tone tomorrow, but we think you should stay away from at least one topic in that effort, coming under gunfire in Bosnia. 

And to all of you, remember, Senator Clinton may own the news tomorrow, but John Kerry is going to own the week, at least here on 1600.  

Up next, if you make a mistake on Sunday, you can always correct it on Monday.  Aides to Barack Obama say he‘s preparing to issue an order next week to close down Guantanamo Bay prison.  This follows a comment he made yesterday about having to keep it open for a year. 

Both may be true.  We will take a closer look at the political steam on the left that Obama has been facing. 

Meantime, Senator Hillary Clinton is just 14 hours away from her Senate confirmation hearing.  There are many issues that could make the hearing exceptionally controversial or dramatic. 

We will talk about those and how Clinton is preparing, ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Tonight, new reports that President-Elect Obama plans to issue an Executive Order in his first weeks in office to close down the controversial Guantanamo Bay prison, as the transition continues to 1600 PENNSYLVANIA AVENUE.

Welcome back to 1600 PENNSYLVANIA AVENUE.  Tonight, NBC News chief White House correspondent Chuck Todd is reporting that Barack Obama will announce a process to close down the controversial U.S. military prison at Guantanamo Bay, likely in the first week of his presidency.  This is a move that many on the Democratic left have been hoping for, and it follows remarks Obama made yesterday that created something of an uproar.  Watch. 

(BEGIN VIDEO CLIP)

OBAMA:  It is more difficult than I think a lot of people realize.  How to balance creating a process that adheres to rule of law, habeas corpus, basic principles of Anglo-American legal system, but doing it in a way that doesn‘t result in releasing people who are intent on blowing us up. 

(END VIDEO CLIP)

SHUSTER:  Joining us now, Democratic strategist Bob Shrum.  Tony Blankley writes a column for the “Washington Times” and is executive vice president of Edelman Publications.  Michael Crowley is a senior editor with the “New Republic.”  His new book is called “‘08: A Graphic Diary of the Campaign Trail.”

Bob, I want to start with you.  Some of the groups on the left today were just firing off press releases ad nauseum, complaining about the idea that Guantanamo may stay open for another year.  This idea of Obama officials sort of leaking to reporters or confirming to reporters that no, he‘s going to try to close it down.  It‘s going to make that announcement within the first week or two, that was damage control.  Wasn‘t it? 

BOB SHRUM, DEMOCRATIC STRATEGIST:  I don‘t think so.  I want to say first, I think people on the left spend way too much time waiting to be disappointed.  Secondly, I think Obama said the same—I think Obama said the same thing both days.  I mean, there‘s going to be a process.  That process is going to take awhile.  It‘s the responsible thing to do.  But he‘s going to order it closed.

Thirdly, this isn‘t a left/right question.  Secretary of Defense Gates recommended that Guantanamo be closed months and months ago.  He lost the argument to, of all people, Alberto Gonzalez.  On December 18th, he said that he was perfectly happy with closing Guantanamo, and that a process would be gotten underway so that it could be done. 

SHUSTER:  Michael Crowley, is it very difficult to close down Guantanamo?  So many of us think, you just say, hey, we‘re going to close it down.  You figure out what you‘re going to do with the prisoners and you move them. 

MICHAEL CROWLEY, “THE NEW REPUBLIC”:  Right, you figure out what you‘re going to do with the prisoners.  That‘s the problem.  They exist in this legal limbo right now.  Some of them have evidence against them which was elicited by torture, but which may not be false information.  What do you do with that information?  You think it may actually be valid and give you cause for worrying about what they might do if you let them go.  But it was evidence we got through means that people find morally repugnant. 

It seems like he‘s going to have to construct some sort of a new military legal system, possibly, to kind of find a thread between the Bush system, that almost no one likes, and the standard U.S. domestic court system, which might allow—which might require us to reveal things about sources and methods that would make it virtually impossible to try these guys. 

Some of them are—their cases are hopelessly tainted forever by this evidence that was elicited by torture.  This is the real stumper, I think, that no one has really found a good solution for yet.  It is really hard.  And briefly, the last point, once you bring them into US territory, out of Guantanamo, they may then inherit a whole new set of legal rights.  It‘s not that simple to just relocate them and start over.  It‘s very complicated. 

SHUSTER:  Tony, if you had your druthers, would you keep the prison open? 

TONY BLANKLEY, “THE WASHINGTON TIMES”:  If there was a better way to do it, I don‘t think we would have used Gitmo in the first place, in any event.  The problem that Obama is now coming to grips with, and his followers will eventually have to come to grips with, is that there‘s no good solution.  Gitmo is not a bad solution, given all the challenges, given that no country wants these people, given that no community in America wants to have the most dangerous terrorists in the world in their local prisons, with their home towns being able to be threatened by terrorists. 

As Michael pointed out, once they‘re on our territory, then a full panoply of legal rights attaches to them.  Now, I think, one of the mistakes a lot of people have made is they confuse what you can do with foreign POWs, even if these were normal POWs and not illegal combatants, with what you do when you‘re a citizen in a domestic American court.  They have less rights than the former.  I believe Obama is going to have to deal with and wants to have to deal with separating them from all the nice platitudes we have been hearing for the last couple of years. 

SHUSTER:  Bob Shrum, what about the argument that keeping Guantanamo Bay open is the best of a very complicated and bad situation? 

SHRUM:  Well, it‘s not going to stay open.  I think John McCain would have closed it.  Secretary Gates says it‘s hurting us in the war on terror.  It‘s going to close.

The administration got into this—Michael was right—first, because they elicited evidence by torture.  Secondly, because instead of treating these people, for example, as POWs, which meant they would have been subject to the Geneva Convention, they decided to create this new category, illegal enemy combatant, use Guantanamo Bay, and create a prison that has become, along with Abu Ghraib and torture, a stain on the reputation of the United States, and that‘s hurt our security, not helped it. 

SHUSTER:  The other big story today, and one of the new faces we‘re going to see in Washington, who is going to have to deal with some of these very issues as a US senator, is Roland Burris.  The Senate Democratic leadership has now essentially said that, yes, he is qualified and he will be the senator from Illinois, taking Barack Obama‘s vacated Senate seat.  Here‘s what Roland Burris said this afternoon.  Watch. 

(BEGIN VIDEO CLIP)

BURRIS:  If you are among the many in Illinois who are disheartened by the cloud that hangs overhead and darkens our state‘s image, I ask that you join me in remembering the old saying, it‘s always the darkest before the dawn. I believe the dawn is near and brighter days are ahead for Illinois.  I‘m looking forward to serving in the United States Senate. 

(END VIDEO CLIP)

SHUSTER:  Michael, despite all the craziness with the Rod Blagojevich and the selection of Roland Burris, which a lot of Democrats said they would never honor it, if it came from Blagojevich, Roland Burris today essentially capped a miraculous week, where he essentially rolled the Democratic Senate leadership, right? 

CROWLEY:  David, this is much like that great movie, “Being There.”  You know, Chauncey Gardner, who emerges; he‘s this kind of unassuming, quiet guy in this storm, this whirlwind of Washington politics.  He sort of walks graciously through it all, smiling and uttering these placid aphorisms, and somehow conquers everyone in the end. 

Roland Burris seems like a perfectly inoffensive guy, who would be a fine senator, who‘s going to wind up in the Senate as a consequence of this really kind of twisted set of circumstances.  It‘s really—you just have to laugh in the end.  At the end of the day, there doesn‘t seem to be anything so about the guy.  He seems perfectly fit to be a senator.  So why not, I guess? 

SHUSTER:  Tony, is there a political lesson that the incoming Obama administration and his team and even the Democratic leadership have learned as a result of this? 

BLANKLEY:  Yes, sure.  They should have closed down this opera bouffe weeks ago.  It was absurd to let this drag on, day after day, week after week.  It hasn‘t done critical damage to Obama‘s transition, but it has been a substantial subtext, kind of a mar, on a daily basis, sort of nipping at his heels.  They should have just closed it down and accepted the reality and got on with it.  This would have been a two-day story. 

SHUSTER:  Bob Shrum, you agree with that, right?

SHRUM:  It couldn‘t have been closed down after they said they wouldn‘t seat anybody appointed by Blagojevich.  Never—

BLANKLEY:  That was the beginning of the mistake, of course.  

SHRUM:  I agree with that.  Never has a Senate leadership been happier to see someone named Jesse White sign a piece of paper, saying this man was actually appointed to the Senate. 

SHUSTER:  Michael Crowley, what do you make?  Final word on this, with Roland Burris.  What‘s it going to be like to cover somebody who is really sort of a “Mr. Smith Comes to Washington” sort of figure, who none of us really know? 

CROWLEY:  I think he may wind up charming Washington.  His little aphorism there, “it‘s always darkest before the dawn”—He does seem to have this gentle side.  I will say, on a down not, I thought the whole process around him, the racialization and the talk of lynching was absolutely disgusting.  It was why initially I really thought—I was sort rooting against him being seated.  I know he never said it, but he allowed people like Rush Holt and Blagojevich to talk about lynching and racialization.  I thought it was totally disgraceful. 

SHRUM:  Not Rush Holt. 

CROWLEY:  I apologize, Bobby Rush.  I apologize to Congressman Holt, yes.  Big difference. 

SHUSTER:  Michael Crowley, thank you very much.  Bob and Tony, stick around.  The president-elect‘s economic team has a lot of work ahead to get the economy back on track.  Still ahead, our Muckraker of the day says there‘s something big and unexpected standing in there way. 

But first, the Obamas are closer to picking out the presidential pooch. 

(BEGIN VIDEO CLIP)

OBAMA:  They seem to have narrowed it down to a Labradoodle or a Portuguese Water Hound. 

UNIDENTIFIED MALE:  Medium size.

OBAMA:  Medium sized dog.  We‘re going to start looking at shelters to see when one of those dogs might come up. 

UNIDENTIFIED MALE:  You are closing in on it. 

OBAMA:  We‘re closing in on it.  This has been tougher than finding a Commerce Secretary. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  Today was the 17th day of Israel‘s campaign in Gaza.  Mideast envoy Tony Blair says he is optimistic about an Egyptian proposal for a truce.  Tomorrow, UN Secretary General Ban ki Moon heads to the region to urge an end to the fighting. 

Meanwhile, Hillary Clinton is cramming for confirmation hearings that start tomorrow and may touch on this very subject.  Barring unforeseen land mines, she‘s expected to be easily confirmed to lead the State Department. 

Back with us now to talk to her confirmation hearing and the crisis she will face in the Middle East are Democratic strategists Bob Shrum and “Washington Times” columnist Tony Blankley. 

Tony, What are the potential pitfalls for Hillary Clinton tomorrow? 

BLANKLEY:  On a policy basis, she‘s going to presumably be asked about Gaza, that Obama has been careful not to talk about it.  She‘ll want to get ahead of the president-elect, and start talking policy before he‘s president.  Can she fall back on one president at a time?  You know, I don‘t know exactly how she finesses that.  She can‘t get ahead of him, I can‘t imagine.  And yet, she‘s going to be asked questions about what her administration will be on those issues.  That‘s, at a policy level, I think the most imminent challenge that she‘s going to have. 

SHUSTER:  If you were advising Republican members of the committee, would you be urging them to press her on that or just to lay off? 

BLANKLEY:  If I were a Republican adviser, I would advise them to focus on her husband‘s fund-raising.  That‘s a legitimate issue.  In fact, it‘s going to be a burden for her as she travels.  She‘s going to get confirmed, presumably.  As she travels around the world, foreign intelligence services are going to use embarrassing little bits of information about her husband‘s fund-raising whenever it‘s useful, and get it into the media, whichever country she‘s in.  I think it‘s a legitimate area to discuss. 

As far as the policy, I think they can ask her.  I think she‘ll probably tap dance and probably should. 

SHUSTER:  Bob, on the issue of the fund-raising, the money that Bill Clinton has gotten from all these countries, including some Arab countries, what is the best way for Hillary Clinton to explain it? 

SHRUM:  By the way, first on Gaza, I have to say, she could always just answer by suggesting that we only have one secretary of state at a time.  She could take the lead straight from Barack Obama. 

Secondly, I don‘t think this is a big problem.  I think we‘re spending a lot of time talking about President Clinton‘s foundation, which, by the way, does a lot of good, and about the library and about who‘s contributed to.  I think she‘ll be confirmed, be a very effective secretary of state.

Tony, I‘ll buy you a beer the first time there‘s a really damaging piece of information that someone manages to plant about his fund-raising in a country where there‘s a foreign trip.  I just don‘t think it‘s going to happen. 

BLANKLEY:  If you will do a single malt whiskey, I‘ll take that bet. 

SHUSTER:  Here‘s the issue, they can put the same full screen up of Bill Clinton‘s foreign donors, 46 million dollars from foreign governments, including 10 million to 25 million from Saudi Arabia, five to 10 million from Norway, for the Dutch National Lottery—from the Dutch National Lottery, one to five million from Kuwait, Qatar, Brunei and Oman, 500,000 to a million dollars from the Swedish Post Code Lottery, whatever that is, and 50,000 to 100,000 from Jamaica and Italy.

At a certain point, as secretary of state, she‘s going to have to deal with Saudi Arabia on a whole host of issues.  Is there a proper way to say, look, of course, they were giving money for something that was charitable, for a good cause my husband was involved in.  It‘s not going to influence me, nor should it? 

SHRUM:  I think that‘s exactly what she‘ll say.  I think it‘s true.  It‘s clear to me, for example, that her position on the crisis in the Middle East is not going to be exactly what the Saudi Arabians would like.  She‘s going to go out there.  She‘s going to represent the United States. 

And, you know, the Dutch, the Norwegians, they gave this money, in large part, because Bill Clinton‘s doing extraordinary work on issues like AIDS in Africa.  Whatever else you think of him, we ought to at least give him credit for that. 

BLANKLEY:  But it‘s not whether it‘s fair to her.  It may be—I won‘t argue for the time being that the money was legitimately raised.  The fact is that when she comes down on one side of—against another in a particular country dispute, the country on the losing side many say, sure, because she was bought.  That may be unfair, but international politics is as unfair as domestic politics.  It will be used. 

SHUSTER:  On the issue of Israel‘s war against Hamas in Gaza, Hillary Clinton spoke out at AIPAC back in June, of course.  This was right before the primaries had ended.  She talked about U.S. support for Israel.  Here‘s what Senator Clinton, then candidate Clinton, had to say at the time.  Watch. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), NEW YORK:  I know that Senator Obama shares my view that the next president must be ready to say to the world, America‘s position is unchanging, our resolve unyielding, our stance non-negotiable; the United States stands with Israel, now and forever. 

(END VIDEO CLIP)

SHUSTER:  Tony, a lot of us who have been around this town, at least for a decade or so, will remember when Hillary Clinton was first lady and she got in some trouble when she posed there with Yasser Arafat‘s wife and had some comments that she made.  And that has at least led some people to wonder, was that the true Hillary Clinton view of the Palestinian plight, or was candidate Clinton‘s view of Israel her real position?  Or is it going to switch now that she‘s secretary of state? 

BLANKLEY:  Or is there a real position?  Is it just a question of whatever in the moment makes sense.  I suspect that now is a more sophisticated political expression of what she judges to be useful to her, because she‘s more experienced than she was when she gave a hug to Yasser Arafat‘s wife.  That may have been out of sort of political innocence in the early days. 

SHRUM:  The problem wasn‘t the hug.  The problem was that she didn‘t hear the translation or it didn‘t get translated, what Yasser Arafat‘s wife was saying.  We were in the middle of a peace process at that point, where Bill Clinton and Ehud Barak brought us very, very close to a peace settlement, and Yasser Arafat walked away. 

I think what‘s going to happen here is that she‘s going to represent the interests of the United States.  She‘s going to be very active in brokering peace in the Middle East.  Anybody who thinks that the Democratic party or the Republican party is going to produce a secretary of state or a president who isn‘t pro-Israel has been living on the wrong planet. 

SHUSTER:  I agree.  Bob Shrum, thank you very much.  Tony Blankley, thank you, as well.  We appreciate you both coming on. 

Up next, our Muckraker of the day on the new trouble that may be brewing for Barack Obama‘s economic oversight team. 

But, with just eight weeks to go, we‘re on inauguration watch.  If you‘re one of the lucky ones to snag an inaugural ticket from your congressman‘s office, you‘ll get them soon.  Law makers received the tickets today to dole out to their constituent lottery winners.  Each ticket has a high-tech security system to prevent counterfeiting. 

Dress rehearsals for the inauguration have gone off, apparently, without a hitch.  Army Staff Sergeant Derrick Brooks got to play the president during a full scale dress rehearsal held Sunday here in Washington, D.C.  Brooks even delivered a six-word inaugural address. 

President-Elect Obama and his family are truly making Washington, D.C.  their home.  All four made an unannounced visit to see the Lincoln Memorial on Saturday night.  Earlier in the day, Mr. Obama dropped by for a bite to eat at the famous Ben‘s Chili Bowl.  He ordered a chili half smoke, which is a quarter pound half pork and beef smoked sausage, on a bun with mustard, onions and chili sauce.  More 1600 in a moment.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back.  It‘s the penthouse, not the big house for accused hedge fund scammer Bernard Madoff.  Today, a federal judge opted not to send Madoff to jail while he awaits jail for allegedly running the biggest pyramid scheme in US history, defrauding investors of a staggering 50 billion dollars.  In the wake of the fraud, most of the questions have centered on, how did this happen?  How did no one catch it.

But perhaps because of the sheer magnitude of the scheme, no one has been asking whether it could happen again or if other schemers could be making off with investor savings right now.  No one has been writing or reporting on that, except for our Muckraker of the day, Eamon Javers with Politico.  He joins us now.  Eamon, what have you found? 

EAMON JAVERS, “POLITICO”:  We went and looked for this.  The question is, is Bernie Madoff the only guy who could create a Ponzi scheme.  The answer is, probably of this magnitude, yes.  But of smaller Ponzi schemes, investigators, members of Congress, people who are really savvy about this stuff told us that they think there could be half a dozen other Bernard Madoffs out there, just waiting to be discovered. 

There‘s an old saying on Wall Street, which is that you don‘t know who‘s swimming naked until the tide goes out.  That‘s what‘s happening right now.

SHUSTER:  What is the dollar figure that, in your reporting, you‘ve come up with, in terms of how big some of these other schemes might be? 

JAVERS:  We don‘t know how much is at stake here.  But what we do know is that there is probably a good way to find out where these frauds might be happening.  There are a couple of big red flags with Bernie Madoff.  The one that‘s the biggest is that he never reported a down quarter.  Here‘s a money manager who never failed.  People who study the market say, that‘s simply impossible. 

So we went to analyze the data and said, how many other funds have never reported a down quarter?  Working with Morningstar, we found that—over the past five years, we found 34 other funds that have never reported a down quarter in all of that time.  Investigators that I talked to said that‘s extremely unlikely.  That would be a red flag.  They would want to go and look and say, how did that happen exactly? 

SHUSTER:  Now, if you‘ve got money with a hedge fund or money manager, and you hear Eamon Javers, our Muckraker of the day, and you start looking back at their reports and you find out, OK, they never have reported a down quarter, what do you do? 

JAVERS:  You‘re in a tough box, actually.  You would think that the right answer to that would be, withdraw your money.  But what some of the Bernie Madoff investors are finding out now is that even if you made profits and withdrew your money, you can still be on the hook, because the people who lose money in these Ponzi schemes are sometimes able to sue the people who made money.  So even if you got out of the Bernie Madoff funds years ago with your profits and invested them somewhere else, you might still find yourself on the receiving end of a lawsuit asking for some of that money back because those were ill-gotten gains.

There‘s really no good answer.  A lot of people, unfortunately, just stick their heads in the sand and hide and wait for it all to blow over and hope nobody catches them.  That might have been what was going on with Madoff. 

SHUSTER:  The stories of all the investors who lost money with Madoff are so gripping.  Obviously, it sounds like there could be other investors who don‘t know it, who may be losing their money or their shirts because of what may be dug out.  What is Congress trying to do to find out what exists?  Is the SEC the proper agency?  Are they digging into this?

JAVERS:  We‘re just at the beginning of a long series of investigations here.  We‘re going to have hearings on Capitol Hill.  The SEC has launched an internal investigation to figure out how did they foul all this up.  Remember, Bernie Madoff had been flagged for the SEC a couple of times, and they never caught him.  The question is, why is that? 

It seems like a relatively easy thing to do, to uncover a Ponzi scheme.  All you do is you ask the firm to show you the money, basically.  If they can‘t do it, there‘s a problem.  That‘s a relatively easy scheme to catch.  The question at the SEC is how come they didn‘t do it?  There‘s a lot that we‘re still finding out about all this.   

SHUSTER:  Eamon Javers from Politico, our Muckraker of the day.  Great stuff, Eamon, as always.  We appreciate you coming in. 

That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  Thank you for watching.  We will be here tomorrow night, same time, 6:00 p.m. Eastern on MSNBC.  Remember, you can get the latest political news and a sneak peek at what‘s coming up on the show and some additional content that we don‘t have right here on the show.  You can get it all sent straight to your inbox, the 1600 Daily Briefing.  Plus, we‘ve got some fun content there and elsewhere. 

In any case, just log on to Shuster.MSNBC.com.  I‘m David Shuster. 

“HARDBALL” with Chris Matthews starts right now.

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