updated 1/28/2009 5:24:18 PM ET 2009-01-28T22:24:18

Guest: Nicole Gelinas, Daniel Schulman

High: Rod Blagojevich goes on TV to defend his record.

Spec: Illinois; Rod Blagojevich; Crime; Politics

DAVID SHUSTER, HOST:  Chris, thank you so much.  I‘ve got to ask you, Chris, with all the stuff that‘s going on with Rod Blagojevich, and we are going to show a great montage here in a moment that you will love of everything that he said today.

But I‘ve got to ask you, it does seem so clear, Chris, that he‘s simply trying to work the jury.  That he knows there‘s no chance, right, he‘s getting out of this impeachment conviction by the Senate in Illinois?

CHRIS MATTHEWS, MSNBC HOST:  No.  He‘s probably going to get convicted by that Senate.  But look, the thing, though, on his side of this case, let‘s look at what triggered this.  He‘s getting impeached because the U.S.  attorney, Patrick Fitzgerald, made that complaint publicly.  Arrested him in the morning - all the public, we know he was arrested.

It‘s all about that.  Saying he tried to sell Barack Obama‘s Senate seat.  Yet, all of that, the arrest, all that in that complaint, none of that is allowed to be brought into testimony in his defense.  He‘s not allowed to call witnesses.  None of that is allowed to brought up because Fitzgerald wants to bring that up at trial in the criminal trial.

Wait a minute.  You‘re going to impeach a guy, convict him, kick him out of office.  But you can‘t use the evidence against him that clearly brought this to where he is now.  You‘ve got to wonder can politics look any worse than this?  They‘re impeaching him because they know he is unpopular and smells.  And that‘s why they want him out of the room.  Not because they‘ve got a case.  Certainly not a fresh case.

SHUSTER:  Well, in his effort to increase his popularity has certainly sky rocketed with a number of appearances he is making and the sympathies he‘s getting.  He certainly seems like a compelling figure no matter what you think of the case.

Here he is, here‘s a montage of Rod Blagojevich over the last couple days making the rounds on the television networks.  Watch.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH, (D) IL:  It‘s a kangaroo court and they‘ve decided to essentially do a hanging without even a fair trial.  Whether it‘s Jimmy Stewart or Gary Cooper, I do, I see myself that way.  In those movies, “Mr. Smith Goes to Washington,” “Meet John Doe,” “Mr. Deeds Goes to Town” or “It‘s a Wonderful Life.”

You can conceivably bring in 15 angels and 20 saints led by Mother Teresa to come in and testify to my good character and my integrity and all the rest.  It wouldn‘t matter.

And then I thought about Mandela, Dr. King, Gandhi, and tried to put some perspective in all of this.

(END VIDEO CLIP)

SHUSTER:  Chris, Mother Teresa, Dr. King, Gandhi, Jimmy Stewart, Gary Cooper, is he forgetting anybody in all this?

MATTHEWS:  No, I think he hit most of the Frank Capra movies there except “It Happened One Night.”  He skipped “It Happened One Night.”  Maybe we ought to go to that one.

SHUSTER:  Chris, what‘s going to happen here.  I assume he‘s going to get convicted by the Senate in Illinois, by the legislature.  He‘ll be out of office and then I suppose, then he has to wait for Patrick Fitzgerald to bring this criminal case, and the opportunity to actually follow, to have an opportunity to sort of use the standard rules of criminal defense where you can actually call in witnesses.  What do you think is going to happen with the trial when it eventually happens?

MATTHEWS:  He also skipped “Lost Horizon” and “Pocket Full of Miracles

“ and a few others.  Anyways - I‘m a Capra fan.  I think he‘s going to get

he‘s already been impeached.  He‘ll be convicted and removed from office by the Illinois Senate.  He‘ll be out of office, they‘ll reach the requisite 40 votes.  They‘ll get rid of him.  He‘ll then have to face criminal trial sometime in the spring, indictments will be brought by Patrick Fitzgerald.  I think a bit slow.  That indictment will be a tough, tough case to beat.  He is going to have to find himself first-rate lawyers to defend him.  He doesn‘t have them yet.

I think it‘s going to be a tough case.  He needs to raise some money now to get his legal defense up.  Maybe that‘s what he‘s doing.  Maybe he‘s selling a book, making $5 million on the book.  He can spend most of that advance on his legal defense.

He‘s fighting for his freedom and wants to be with that family, with his wife Megan and his kids.  I tell you, the guy wants to stay out of prison.  That‘s what this is about.  He wants to stay out of prison.  We‘re watching the fight for his freedom here.

SHUSTER:  Chris Matthews on West Coast tonight.  Chris, thanks so much for joining us.  We appreciate it as always.

MATTHEWS:  Hey, thank you.  Good luck with the show tonight.

SHUSTER:  Thank you.  And for more on Hot Rod Blagojevich‘s media blitz, let‘s bring in nationally syndicated radio talk show host Bill Press and MSNBC political analyst Pat Buchanan.  You‘re laughing, how come?

BILL PRESS, RADIO TALK SHOW HOST:  Am I laughing?  You know what?  I think he is the most colorful political criminal since James Traficant.  But anybody—Look, I have found myself suddenly liking Blagojevich.  Anybody who can compare himself to Mother Teresa, Jimmy Stewart, Gary Cooper, Nelson Mandela, Martin Luther King and Gandhi in the same sentence, you know who‘s off the list?  Jesus Christ.  I mean, why not?  You might as well throw him in too.

SHUSTER:  Well, Pat, someone he used to work for he was actually invited to draw a comparison with Richard Nixon today on “The View” and he refrained, watch this exchange.

Again, here is on the “View” earlier today, he was asked about one of the more famous lines that Richard Nixon ever said.  Here it is and watch Blagojevich.

(BEGIN VIDEO CLIP)

JOY BEHAR, “THE VIEW”:  Wait a minute.  He has a fabulous Nixon impression.  Do it for us?

BLAGOJEVICH:  Who said that?

BEHAR:  Somebody told me, cop on.  Just say, I‘m not a crook.  Do it. 

Come on.

BLAGOJEVICH:  Let me make it perfectly clear.  I didn‘t do anything

wrong.  All I ask for is a chance to be able to prove my innocence.  In the

State Senate, if they let me bring a case and bring witnesses, I can prove

.

(END VIDEO CLIP)

SHUSTER:  Pat?

PAT BUCHANAN, MSNBC ANALYST:  I agree with Blago.  I think he is being railroaded in the State Senate.  This is outrageous.  I mean, they‘re accusing him.  The big accusations, Pat Fitzgerald said he tried to sell the senate seat.  He talked to Rahm, he talked to Jarrett, he talked to Burris, he talked to other people about it.  Nobody has ever come forward and said he tried to solicit a bribe or did some dirty deal.  And if could have made that case in the State Senate he could have helped himself.

I also think Pat Fitzgerald has asked for another three months to gather evidence when he drops all this evidence on this guy‘s doorstep, arrests him, humiliates him, disgraces him.  Now look, I‘m sure Pat Fitzgerald has got other stuff.  But I‘ll tell you this.  I will bet that guy will never be convicted of attempting to sell a United States senate seat.  If you wanted to trade it for a Cabinet seat and say sure, I can help you out, can you guys get me in the Cabinet?  That is not a crime.

PRESS:  I think it is pretty clear.  There was no crime committed in trying to attempt the Senate seat.  He might have been thinking about it.  He never got there.  Number one.  Number two, the other stuff when he was giving contracts in return—maybe not return, but he got political contributions from the guys who were getting contracts.  Man, that happens in every state capitol, every city hall and the Congress of the United States every day.

He can beat this thing.

SHUSTER:  There are other things.  He allegedly tried to sell Rahm Emanuel‘s House seat.  There was the effort to try to shake down “The Chicago Tribune” with the sale of Wrigley Field.

BUCHANAN:  He can‘t sell that.  He doesn‘t appoint to the House.  The House is an election.

SHUSTER:  But he certainly felt like he could profit.  The other question though, is .

PRESS:  He is being hung in the legislature before the evidence is out.  Which I just think is unjust.

BUCHANAN:  Let him bring his own series of witnesses in there.  And frankly if he called Rahm and these folks they would get up and say, no, no, no, and at least you would stop this thing.  He is being railroaded, and by the way, so was Nixon.

SHUSTER:  One thing, when Rod Blagojevich said they‘re coming off me because I wanted to hold the line on taxes, let‘s remember.  The Illinois legislature .

BUCHANAN:  I don‘t believe that.

SHUSTER:  In Illinois you have to try to balance the budget.  This guy refused to raise taxes, he refused to fire anybody, he refused to pare down costs.  They‘re facing a $5 billion shortfall and he refused to do anything.  So of course the Illinois legislature is going to be angry with this guy.  Because he‘s not doing anything.

BUCHANAN:  But you don‘t impeach a guy because you‘re angry with him. 

Pass a piece of legislation over his veto.  That‘s the way you do it.

SHUSTER:  Fair point.

PRESS:  That‘s the process.

SHUSTER:  Now the other thing that we want to talk about in the first block, Barack Obama, this was a huge victory, would we agree for environmentalists today with some of the executive orders that Barack Obama signed today that essentially we will now have caps on emissions, a lot of pressure now on the auto industry to start developing and delivering on better fuel efficiency, Bill?

PRESS:  This started in California.  California wanted to have tougher emission standards than the Bush administration was willing to go along with.  And the Bush administration—they have to ask permission by the EPA.  Bush administration turned them down.  Attorney General Jerry Brown sued the Bush administration.  That‘s where it was.  Obama gets elected.  He had promised to turn this around and did today which I think is a significant victory.  What Obama is saying, you believe in states‘ rights or you don‘t.  And if the states want to get tougher air emission standards than the federal government, they have got the right to do it and Detroit is going to have to meet them.

SHUSTER:  Here‘s what the president said about the automakers today. 

And Pat, I‘ll get your reaction on the other side.  Watch.

(BEGIN VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT:  As we move forward we will fully take into account the unique challenges facing the American auto industry and the taxpayer dollars that now support it.  And let me be clear, our goal is not to further burden an already struggling industry.  It is to help America‘s automakers prepare for the future.

(END VIDEO CLIP)

SHUSTER:  Pat, it is some tough love.  It‘s appropriate though, I would argue.

BUCHANAN:  Here‘s the thing.  He can do what he wants.  But what he‘s done, he‘s given the greenies a victory at the expense of blue collar America.

This is going to be a tremendous blow to the auto industry and I disagree with Bill to this extent.  In the environment and smog and these things, these things travel in interstate.  The idea that one state can get the standard for the whole nation is preposterous.  I think Bush was right.  I think it‘s going to hurt the auto industry.

And frankly, to the degree he keeps caving in to the greens on climate change and the rest of it, he will losing working-class base that left the Republican Party in Pennsylvania, Ohio and Michigan and came to Barack Obama.

PRESS:  Here‘s where you‘re wrong on two points, pat.  Number one, there are 13 other states that joined California that want to do the same thing.  It‘s not just California.  And number two, blue-collar makers can make better cars.  They can make more fuel efficient cars and they will, Pat.

SHUSTER:  Somebody has to hold the feet to the fire of the executives in order to get them to do this.

We‘re going to talk more about this on the other side of this break but in the meantime, we want to show you live picture from Capitol Hill where the Senate has begun voting now on whether to confirm Tim Geithner as treasury secretary.  We‘ll bring you the final tally once the vote concludes.  It does not appear there is anything to will stop this confirmation from going forward.

Pat, Bill, stick around because coming up, we‘re going to look at some of the controversial projects in the proposed $800 billion stimulus package.

Will growing grass on the National Mall really help grow the U.S.  economy?

Plus Rush Limbaugh said recently he hopes President Obama fails.  Now Limbaugh is in damage control mode as Obama warns Republicans not to listen to him.

Later, hypocrisy watch.  If you want to know where the Wall Street bailout money is going, look up at Citigroup‘s new $50 million corporate jet.

And hypocrisy update, the former Merrill-Lynch CEO spent more than a million dollar on office renovations while his company was collapsing says he will try to make amends.

Also this hour, seven years after 9/11, how come nothing is getting done at Ground Zero?  Is it time to get rid of the Freedom Tower plan and start rebuilding the Twin Towers?

And our muckraker of the day is all over Sarah “Barracuda” Palin and the governor‘s unwillingness help endangered whales.  1600 returns right after this.

(COMMERCIAL BREAK)

SHUSTER:  Breaking news.  Right now the U.S. Senate has apparently confirmed Tim Geithner as treasury secretary.  Several republicans and one democrat, Tom Harkin of Iowa, voted against Geithner.  More after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  Under the Obama/Limbaugh stimulus plan of 2009, $530 billion of the $1 trillion will be spent on infrastructure as defined by President Obama and the democrats.  The remaining 54%, $540 billion, the remaining $460 billion or 46 percent that voted for Senator McCain will be directed toward tax cuts.  As determined by me.

(END VIDEO CLIP)

SHUSTER:  Welcome back to 1600.  That was Rush Limbaugh, today quote, “offering his solution” to the bipartisan wrangling over the $825 billion stimulus plan.  Hmm.  This is also the guy who said last week he hoped the new president would fail.

(BEGIN VIDEO CLIP)

LIMBAUGH:  We are being told that we have to hope he succeeds.  That we have to bend over, grab the ankles, bend over forward, backwards, whichever because his father was black, because this is the first black president.

(END VIDEO CLIP)

SHUSTER:  What was that?  Here‘s more of Limbaugh‘s self-proclaimed helpful advice from today.

(BEGIN VIDEO CLIP)

LIMBAUGH:  President Obama‘s definition of bipartisanship is when Republicans cave and agree with his plan so he can then claim it‘s bipartisan.  But he‘s not compromising on anything here .

(END VIDEO CLIP)

SHUSTER:  Joining us now, nationally syndicated radio talk show host Bill Press, and former Reagan White House communications director and MSNBC political analyst, Pat Buchanan.  Pat, why is Rush Limbaugh making metaphors like the one we just saw?

BUCHANA:  I was - what we call an unfortunate metaphor.  I think it was mildly disrespectful to the president of the United States.  But Rush is, as Mike Barnicle said today is basically an entertainer, he‘s got enormous attention because the president of the United States is saying don‘t follow Rush Limbaugh.

But Rush Limbaugh has clearly got an enormous following in the country, 20 million or 15 million people a week.  And he speaks for a lot of people and he is very partisan, he is very Republican, very conservative and he‘s got a right to his views.  I would not have used the metaphor.

PRESS:  We‘ve seen this movie before.  This is 1993 all over again.  Clinton came in and had an economic recovery plan.  Newt Gingrich said there will be a massive recession if this passes.

Clinton got not one Republican vote in the House or the Senate for his economic recovery plan.  And we ended up having eight years of the most robust economic growth in the history of this country.  The Republicans have decided under Limbaugh‘s leadership, not Boehner‘s leadership, not Mitch McConnell‘s leadership, that they‘re going to oppose the stimulus package because Obama is for it.  Obama‘s for it, they‘re against it.  They‘re just going to be the party of opposition.

I think - if I can finish that, I think they‘re wrong.  I think the American people want to see both parties come together behind the stimulus plan.  That‘s their M.O.

BUCHANAN:  I think that‘s really mistaken.

The Republicans, the ones I know, would like to work with the president on this.  But they take a look at this.  I mean, it really is all this spending, it‘s all porked up, there‘s earmarks in it.  There‘s condoms in it.  There‘s stuff for the Mall.  Stuff for the National Endowment for the Arts.  And what they‘re saying is, look, we would like to work for the president.  But the tax cuts have been slimmed down.  We‘ve got to go back to our people.  They‘re going to say, what are you doing?  There‘s bailout fatigue in this country.  Republicans opposed the 700 billion and they were right.

SHUSTER:  What‘s wrong with helping the states with Medicaid, with healthcare, with all the sorts of things the state might have to cut back on in order to balance budgets?  If you give money to the states for education or health care, the states then are not suddenly going to say, oh, we‘ve got to eliminate 10,000 teachers jobs in order to balance the budget.

BUCHANAN:  But ultimately, David—The whole idea of the stimulus package is to get the private economy moving again.  Because that‘s what pulls the wagon.  We all know that.  You can‘t have 100 percent of the country run by government.  There‘s not enough to do that.  Reagan‘s policy worked and Jack Kennedy‘s worked.  They‘re saying it‘s not enough like those.

PRESS:  Here‘s what‘s wrong with that.  First of all, there are tax cuts in there.  The reason the Republicans don‘t like the tax cuts is because the tax cuts go to the middle class and not to the wealthiest Americans who got the George Bush tax cut.  Secondly, this gang that says, Republican gang that says suddenly, we don‘t want government spending, they‘re the same gang that gave $700 billion to Wall Street without any questions asked and that was all government spending.  We still don‘t know where the first half of it went.  Now, suddenly, they‘re getting religion when it comes to government spending.

SHUSTER:  Here is the point that I think Rush Limbaugh was getting at, this actually was made by John McCain on the Sunday shows talking about getting cut out of the process.

Watch.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, ® AZ:  The Republicans have not been brought in to the degree we should be to these negotiations and discussions.

So far as far as I can tell no Republican proposal has been incorporated.

(END VIDEO CLIP)

PRESS:  Just quickly, can I just say, this is Barack Obama who went out of his way to meet with John McCain right after the election, who went to a dinner for John McCain and praised him as one of the greatest living Americans and John McCain is stabbing him in the back.

Let me tell you something.  Barack Obama went up to Capitol Hill before he was elected, met with Republicans, he invited them down to the White House, met with the Republicans.  He‘s going to the Hill tomorrow to have lunch with the Republicans.  They‘re still stabbing him in the back.  Bipartisanship is overrated.  These guys don‘t want it.  I say Barack Obama should take this stimulus plan and move.

BUCHANAN:  First off, John McCain would not do that unless he believed it.  He is Mr. Bipartisan in the Republican Party.  And there is the slim possibility, Bill, that he is telling the truth.  That he‘s speaking for the Republican senators and himself, that, look, we are being dealt this thing and told swallow it, you‘re getting a few tax cuts, take it, and if McCain, quite frankly, is standing up and saying, no, then I‘ll tell you the Republicans all have cover to say no.

PRESS:  Pat, how many times did George Bush go up to the Capitol and sit down and have lunch with a Democratic Caucus?

BUCHANAN:  OK.  He had none - are you using him as your model?  He‘s your model?

PRESS:  I‘m just saying Obama has gone out of his way to seed bipartisan and they‘re not coming .

PRESS:  They‘ve gone through and said only shovel-ready projects, in other words, they‘ve only been able to find $90 billion in infrastructure spending not because they would like a lot more but in order to make sure there isn‘t pork.  They‘re looking for projects that are shovel-ready and ready to go right now.  And they want to soften the blow to the states and Medicaid, Medicare and education.  What‘s wrong with that?

BUCHANAN:  The point is some of the states have got to cut back.  I‘m cutting back, you‘re cutting back, everybody is cutting back.  Cut up the credit cards, do this.  And the state governors say, look, we don‘t want to have to cut back five percent.  Have the feds go to the federal taxpayers, borrow the money so we can maintain our political position.  This is a gift to Democratic mayors and Democratic governors.  Everybody knows it.  It‘s your constituency that‘s being taken care of.

SHUSTER:  Bill you get the last word.

PRESS:  I was going to say this is going to people who cannot afford health insurance to make sure they are covered.  That is not fat.  That is not pork.  This is Medicaid, Pat.  The poorest of the poor, you know what?  In our universe, they deserve attention too.

BUCHANAN:  $200 million for condoms?

SHUSTER:  That‘s part of the health care proposal.

PRESS:  That‘s a very small part of it.

SHUSTER:  In any case—thank you both very much.  Good to see both of you, terrific.

As our nation tries to get out of this recession, many U.S. companies are slashing costs, laying off workers and asking us for government bailouts.  And that takes us to tonight‘s hypocrisy watch.  Citigroup, a U.S. financial conglomerate has received federal bailout money to the tune of $45 billion.  But we learned today thanks to the “New York Post” that Citigroup has decided to go ahead and upgrade its corporate jet.  Company executives have reportedly been given the green light to a decision first made two years ago to acquire a brand new Dassault Falcon.  The jet seats 12, has a plush interior, is made in France and costs $50 million.  Citigroup could have chosen to continue using two older aircraft in its fleet but executives apparently decided the brand new jet would be a great acquisition.

These are the same executives who decided just last November to lay off nearly 10,000 employees as part of an effort to cut costs.  When you fire employees and take government bailout money acquiring an expensive brand new corporate jet, it‘s hypocrisy and it‘s wrong.

Just ahead, seven years after 9/11, why is Ground Zero‘s reconstruction still going nowhere?  The Freedom Tower project has been a national shame.  So is it time to rebuild the Twin Towers?  We‘ll talk about it in our next half hour.

But up next, this former CEO spent more than a million dollars to redecorate his office including a $1,400 trash can before he got canned.  John Thain now says he will pay up.  Not good enough.  We‘ll explain with CNBC‘s Dylan Ratigan when 1600 returns.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  Today John Thain, the former CEO of Merrill Lynch, whose outrageous $1 million decorating spree we chronicled on Friday, promised he would pay the money back on an interview this afternoon with CNBC‘s Maria Bartiromo.

(BEGIN VIDEO CLIP)

JOHN THAIN, FORMER CEO OF MERRILL LYNCH:  This was a year ago.  Actually a little bit more than a year ago.  In a very different economic environment, but it is clear to me in today‘s world that it was a mistake.  I apologize for spending that money on those things.  And I will make it right.  I will reimburse the company for all of those costs.

(END VIDEO CLIP)

SHUSTER:  Despite the equivocations in that interview and the fact he blamed the bank‘s $15 billion in losses last quarter on his predecessor, way to go, John.  Now what about the $3 billion bonuses you gave out to other executives last year just before Bank of America took over?

A new investigation by the “Wall Street Journal” today shows banks that receive billions in bailout money are actually loaning less than they were before.

Joining us now, anchor of CNBC‘s “Fast Money” Dylan Ratigan.  Dylan, thanks for coming on.

DYLAN RATIGAN, CNBC CORRESPONDENT:  A pleasure to be here, David.  How you doing?

SHUSTER:  Good.  Dylan, the banks are loaning less.  So how can the bailout then be described as a success, simply because the financial industry didn‘t freeze completely?

RATIGAN:  Again, we talked about this a lot.  Part of the problem, Jonathan Alter used this from “Newsweek” this morning, I‘ll echo it.  The dog that didn‘t bark.  Avoiding the collapse or depression is impossible to know.  Not that I am saying it worked or didn‘t work, but when you hear people advance the case for the TARP in this context, that‘s what they‘re referring to.  Two thoughts occur to me, though, David.  One on John Thain and the one just on the situation we‘re in.

Forget the million dollar bathroom and honestly in the scheme of bank CEOs, if you want to give somebody a hard time, while John Thain may be one of the appropriate individuals, there are others, not the least of which is former Treasury Secretary Hank Paulson, Bob Rubin, Alan Greenspan, who are far more responsible for the system we‘re dealing with of creating this credit, accumulating billions for themselves and then sticking America with the bill.  If anything, John Thain proved that public shame is effective for clawbacks, in this case for a million bucks.

We should all be so lucky as to accumulate enough understanding of what the bank CEOs were doing the past few years that the same shame can be brought to bear to get them to claw back those bonuses from the past three to four years.  Because in my opinion that should be in the TARP money.  John Thain, a minor example of what is a bigger problem in my opinion, David.

SHUSTER:  And, Dylan, as far as big problems, some awful economic indicators today, lay-offs across the board, Caterpillar 20,000 jobs, Sprint/Nextel 8,000 jobs, Pfizer 19, 500, Home Depot 7,000, General Motors 2,000 jobs.  How bad was it today? 

RATIGAN:  The market, quite honestly, has been anticipating this.  I know Pat will say the stock market is about—got him at the end of his line here.  But the fact of the matter is the stock market dealt with this in relative stride.  The unfortunate reality is the reason why the stock market went from 14,000 to 8,000 is because it was anticipating headlines like this. 

I‘ll go further, David, to suggest that we‘re going to see months more of this.  So get used to this narrative and understand that this is why the political rhetoric around things like Cobra, things like unemployment, all these sorts of things with job losses, are going to be part of this stimulus package, ultimately whether I or anybody else likes it or not.  Can I say one last thing before you let me go here, David? 

SHUSTER:  Sure.  Sure. 

RATIGAN:  I look at the situation we‘re in and it reminds me of 2002 after 9/11, when George Bush had that uniform support.  There are few moments in a country‘s history where you can actually alter the way a system functions.  That was one in ‘02.  This is one once again.  I hope that Barack Obama and the people around him not only argue should we tax cut, should we spend, but demand terms for the money, demand transparency. 

I know they talk it.  Before we give 300 billion dollars to the states, let us demand that the states put on the web every state job, every state expenditure, because between Rod Blagojevich and Joe Bruno, I don‘t want to find another quarter million dollars going for toner in an office that doesn‘t exist.  The least we can do when we‘re going to write a trillion dollar check is demand some changes in the terms of use, so we stop sticking money in black holes, wherever it may go. 

SHUSTER:  Dylan, I‘m with you.  Thanks so much for coming on.  CNBC‘s Dylan Ratigan. 

Up next, skyline shame.  The United States vowed to rise and rebuild after 9/11.  But seven and a half years later, that promise seems as empty as the gaping hole at Ground Zero.  On this hallowed ground, when will something actually get rebuilt?  That‘s next when 1600 returns.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  For decades, our nation has had a standing policy that we don‘t deal with or accommodate terrorists.  Yet, accommodation is what we still have in New York City more than seven years after terrorists knocked down the World Trade Towers.  America‘s most famous skyline still has a gaping hole where the iconic images of capitalism and the American spirit once stood. 

Virtually no progress has been made in building up the site that al Qaeda destroyed.  There is a transportation hub that is taking shape beneath ground.  But the Freedom Tower Projects, the four building planned above ground, are still just a set of blueprints and artist projections. 

The building effort has been marked by bureaucratic bungling, engineering incompetence, a lack of planning, architectural flaws and endless delays and sky rocketing projected costs. 

But it gets worse.  Key tenants for the proposed Freedom Tower have pulled out because the rent is now slated to be among the most expensive in the world.  You see, the occupied part of the building will only go up to about the 70th floor.  The stuff above, including wind mills, turbines and an antenna like thing, may be pretty as it reaches the 1776 feet, but it has to be paid for by building tenants. 

Again, the number of tenants will be equivalent to a 70 story building, even though the overall cost they will have to share is for a 110 story high building. 

Joining us Nicole Gelinas, an editor with “New York City Journal” and a financial analyst who has written extensively about the proposed Freedom Tower.  Nicole, I want to get to the projected cost issue in a second.  But first of all, Ground Zero is hallowed ground.  Why has this project been so badly bungled and who is responsible? 

NICOLE GELINAS, “CITY JOURNAL”:  Sure, good evening David.  Well, the travesty of all of this started with the fact that this was misconceived from the start, starting with ex-Governor George Pataki, New York State, essentially conspired—the political world conspired to try to reinvent the wheel as a square and then proceed to deny for more than half a decade that it wouldn‘t roll. 

This was not a difficult task.  They made it into a very difficult task with all the beauty pageants they had for architectural renderings and so forth.  The job was to recreate the office space lost that was in the transit infrastructure and so on and so forth.  We wasted the biggest boom years that the city has ever seen dithering over this rather than just getting it done. 

SHUSTER:  By the way, I should point out that the artist sketches we‘re seeing now, that‘s not even for the proposed Freedom Tower.  That‘s done by somebody else, who has plans to rebuild the Twin Tower.  They actually have very extensive blueprints and models.  We‘re going to get to that in just second. 

As far as the costs, it‘s been my understanding that you don‘t build a building, an office tower, if you don‘t have any tenants.  When is the city of New York—how can they essentially move forward with the project, as delayed as it has been, given these costs and given that nobody wants to rent there? 

GELINAS:  Sure.  First of all, David, with the costs, unfortunately there is no reasonable estimate today of how much this will cost.  Almost a year ago, the state essentially admitted that all of its cost estimates, timetables, even what they could build in terms of how the new transit structure would fit into the rest of the site, whether the memorial was feasible, that all of these had to be thrown away.  And they‘re still in the process of putting it back together. 

That‘s to your point about how do you build office buildings with no tenants?  That is another major problem, particularly as the credit markets have completely fallen apart.  Because what people don‘t realize is that the private landlord, Mr. Silverstein, he has federal tax credits to raise financing, but he has no guarantees of those financings.  So, in other words, he could have a difficult time finding bond holders with no guarantee that there are going to be tenants in these building to repay him, once the buildings are built.  That‘s going to be another big delay in this process, tacking on to seven years of delays. 

SHUSTER:  We‘re going to be talking to tomorrow to somebody, this designer who has the detailed plans to rebuild the Twin Towers.  I guess, here is the key question: there is a movement out there where people say, you know what, if we want to reclaim that skyline, if we want to reclaim the American spirit that the terrorists took away, why not rebuild the Twin Towers? 

There is this plan to rebuild them taller, stronger, safer.  Here‘s the key question: is it too late to rebuild the Twin Towers in Lower Manhattan? 

GELINAS:  It certainly doesn‘t look like it‘s too late when you go down there and see how much has done above ground.  If this—there is certainly plenty of opportunity to make sure that we are rebuilding as efficiently as possible, using scarce dollars wisely, and rebuilding something that the people and future tenants and the public actually want.  If there‘s still an opportunity to make sure that we are going about this in a rational way, which we have not done so far, then I would certainly welcome that opportunity. 

I hope the new governor—he certainly doesn‘t want to become the third governor to fail at Ground Zero.  If there‘s an opportunity to rethink this fiasco, I would suggest he go for that. 

SHUSTER:  There are so many people who describe the Freedom Tower, which I don‘t know why anybody would want to go into a building where you can only go as high as the 70th floor—who would want a window on the world at the 70th floor?  Everything above there is going to be unoccupied.  That‘s a whole other question. 

Is there anybody in the city or state government who recognizes what, for example, Donald Trump has said when he calls the Freedom Tower plan a piece of junk? 

GELINAS:  Well, there has been little city or state leadership here, unfortunately.  When you look at the Freedom Tower, in terms of the renderings, it‘s very clear that this was a building built by a committee of political factions trying to make everybody happy, and making no one happy in the process.  Then the problem, of course, economically, in addition to the psychological factors of having a building there that possibly could just become a laughing stalk, is that who is going to want to rent space in an impracticably built, unattractive building? 

This is certainly something we have to continue to think about as the climate for rebuilding and the opportunity for public financing here dries up, or has dried up. 

SHUSTER:  Such a great point.  Nicole Gelinas is an editor with New York City‘s “City Journal” and a financial analyst.  Nicole, thank you so much.  Terrific reporting and fascinating story and an important one for all of us. 

As we mentioned, there is a detailed counter-proposal for Ground Zero. 

It involves rebuilding the Twin Towers stronger, taller and safer.  Tomorrow night, we‘ll talk to Ken Gardner, the design engineer who has detailed the blueprints and plans for that proposal.  Gardner‘s plan is receiving a lot of support from 9/11 families, New York Fire and Rescue and assorted columnists across the country who believe the Twin Towers should have been rebuilt, to begin with. 

Also, if you want to weigh in on this topic with your views, we have a poll on our website.  Let us know whether New York should go forward with the existing Freedom Tower plan or scrap it and rebuild the Twin Towers.  Just go to Shuster.MSNBC.com. 

Coming up next, Rahm Emanuel brings his bare-knuckle approach to the West Wing.  We‘ll explain next in the briefing room when 1600 returns. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  We‘re back with a look at what‘s going on inside the Briefing Room.  There‘s a lot of things we already know about White House Chief of Staff Rahm Emanuel, like his nickname, Rahmbo.  He tends to be brash and likes to use four-letter words. 

Did you know that Rahm Emanuel often cracks his knuckles?  According to a report in the “New York Times,” “Barack Obama was meeting with House Speaker Nancy Pelosi and other law makers when Rahm Emanuel, his chief of staff, began nervously cracking a knuckle.  Mr. Obama then turned to complain to Mr. Emanuel about his noisy habit.  At which point, Mr. Emanuel held the offending knuckle up to Mr. Obama‘s left ear and, like an annoying little brother, snapped off a few special cracks.”   

Rahm Emanuel obviously has President Obama‘s ear, but good grief.

Next up, the Obama administration talks a lot about transparency.  And in many respects, they are already way ahead of the Bush administration.  Here‘s the proof.  For the first time ever, you can see the vice presidential residence on Google Maps and Google Earth.  For the past four years, while Dick Cheney was living there, the Naval Observatory was obscured from satellite images. 

What was the former vice president trying to hide?  His wife, Lynn Cheney, recently gave NBC News an exclusive tour of the 9,100 square foot home.  It has 33 rooms and sits on 13 acres of land.  On the ground floor, they have a reception hall, a living room, a sitting room, a sun porch, a dining room, a small pantry and some bathrooms. 

On the second floor, there‘s two bedrooms, a study and a den.  The third floor attic used to be the servant quarters, but now it‘s just bedrooms.  The kitchen and laundry room are in the basement. 

Next, the tech-savvy Obama White House continues to have some problems with their e-mail.  And because of the break down today, aides had to distribute information the old-fashioned way, on paper.  White House Press Secretary Robert Gibbs started off his daily briefing with an apology. 

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  Our apologies if you‘ve e-mailed any of us in the last two and half hours, our e-mail system is not working so well.  So our apologies on that.  We‘ll endeavor to get you information from earlier in the day hopefully in a little bit more of a timely manner, if we can get the e-mail to work. 

(END VIDEO CLIP)

SHUSTER:  It‘s not clear yet what is causing the problem.  But Gibbs didn‘t seem too upset about it.  He said that this was the calmest morning he‘s had in five years. 

Finally, remember actress Zsa Zsa Gabor?  Well, we learned today that she was one of the victims of the Ponzi scheme perpetrated by Bernie Madoff.  Gabor‘s lawyer says she lost at least seven million dollars, possibly as much as 10 million.  Zsa Zsa Gabor is known for calling everyone darling and also for her many rich husbands.  What might concern Madoff, Zsa Zsa Gabor spent some time in jail 20 years ago for slapping a police officer. 

Up next, Sarah Palin bad for animals, and not just the ones in this unfortunate turkey interview.  Remember that?  Why an environmental group is giving Governor Palin its do-do award for her new policy towards the endangered Beluga Whales when 1600 returns. 

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA:  Certainly, we‘ll probably invite criticism for even doing this too.  But at least this was fun.

(COMMERCIAL BREAK)

SHUSTER:  As we reported earlier this hour, Tim Geithner, the Treasury secretary nominee, was confirmed by the U.S. Senate within the past hour.  The vote was 60 to 34.  They‘re going to do the swearing in ceremony very soon at the Treasury Department.  That‘s a live picture of the Cash Room at Treasury.

President Obama will be there.  Geithner will be sworn in by Joe Biden.  The official vote at the U.S. Senate was 60 to 34.  The Democrats voting against him included Sherrod Brown, Tom Harkin, Robert Byrd, Russ Feingold and the independent Bernie Sanders.  A couple of them took issue with some of the tax problems that Geithner had.  Geithner said his failure to pay some 42,000 dollars in taxes was an unintentional oversight. 

In any case, the Senate voted to confirm him.  His official swearing in will happen at the top of the hour.  We‘ll bring it to you live. 

Moving on.  Critics of Alaska Governor Sarah Palin said she‘s, again, putting the con in conservation.  First, some background.  Last fall, the Center for Biological Diversity, a non-profit organization dedicated to the preservation of the endangered species, gave the Alaska governor its second annual rubber do-do award, named after the most famous extinct species on Earth, the flightless, overly trusting, not so bright bird which earned its original scientific name, Didus Ineptus (ph). 

The center‘s executive director wrote at the time of Palin, quote, “her position on global warming is so extreme, she makes Dick Cheney look like an Al Gore devotee.  Palin‘s insistence that arctic melting is uncertain is like someone debating the theory of gravity as they plunge off a cliff.  It‘s hopeless, reckless, and extremely cynical.” 

Well, Sarah Barracuda is at it again.  Now, she‘s fighting against those who would like to protect the Beluga Whale.  The whale is one of the biggest mammals in the sea.  It‘s also on the endangered species list.  We learned about Palin‘s controversial actions thanks to some terrific reporting by Daniel Schulman.  He‘s an associate editor from “Mother Jones” and our Muckraker of the day.  Congratulations. 

DANIEL SCHULMAN, “MOTHER JONES”:  Thank you very much.  It‘s an honor. 

SHUSTER:  Daniel, why is she not protecting the Beluga Whale?  What‘s going on here?

SCHULMAN:  I think it comes down to three words.  That is drill, baby, drill.  Basically, she views this endangered species listings, as well as the threatened listing of the polar bear, as a threat to Alaska‘s economic interest.  We‘re talking in terms of oil and gas development, but also in terms of the expansion of ports, the development of the Nick Arm Bridge (ph), which is just north of Anchorage, which is another kind of one of those bridge to nowhere boondoggle type of situations, or at least it‘s been criticized as such. 

SHUSTER:  As she‘s been essentially off the national radar—the national press is gone.  She‘s continuing obviously as governor.  She‘s essentially being even more aggressive now about trying to make sure nothing blocks the way of oil drilling in her state. 

SCHULMAN:  Certainly, you know, it‘s always been the way of Alaska politicians to kind of protect the interests of the extractive industries, oil and gas, which has really been the life blood of Alaska‘s economy.  This is very much in keeping with what her predecessors have done and very much in terms of her own environmental policies over the course of her term. 

SHUSTER:  What do you say to those who argue, you know what, as much as we may love the Beluga Whale, keeping the jobs in Alaska, increasing productivity, increases profits from oil, that‘s more significant than whatever may be in the ocean? 

SCHULMAN:  Well, I don‘t think that responsible development and the listing under the Endangered Species Act can‘t co-exist at the same time.  I really think that you can do both.  I don‘t think it‘s an either/or situation.  I think you can save the whales and also have the jobs in Alaska. 

SHUSTER:  Have you heard from Governor Palin‘s office about the story?  What was your connections or contacts with them in the course of trying to put this together?

SCHULMAN:  I haven‘t heard from Palin‘s office regarding this story.  I did talk to them for a previous story I did on them about Palin not attending the McCain dinner that Obama had for his inauguration, that she wasn‘t coming to it. 

SHUSTER:  What was their explanation for that?  How were they to deal with on that issue? 

SCHULMAN:  They were a little stand-offish.  They basically said, we don‘t know if she‘s invited.  No, she‘s not coming.  She‘s too busy.  She‘ll be preparing to do her State of the State Speech. 

SHUSTER:  Were they angry that you‘re pursuing this? 

SCHULMAN:  No, not that I could tell.  We had an e-mail correspondence.  So it was hard to—

SHUSTER:  Where is this going as far as the drilling?  Is there anything that can stop a governor of Alaska or any other state for deciding, you know what, to heck with the Endangered Species Act, I‘m going to do what‘s in the economic interest of my state? 

SCHULMAN:  Well, I mean, Governor Palin is trying to reverse this listing right now because she fears that it‘s going to get in the way of these sorts of things.  So she‘s basically taking that course.  Now, conservationists don‘t seem to think that this suite is going to get very far, but they view it as a threat. 

SHUSTER:  The Alaska attorney general has written “with this notice of intent, we‘re informing the federal agencies that, unless corrected, we will file suit due to decisions failure to comply with provisions of the Endangered Species Act and the Administrative Procedure Act.”  What does that mean? 

SCHULMAN:  Basically, they‘re attacking this listings on a number of procedural grounds, one of which is they‘re basically saying that this Beluga, which is basically a cousin of the other Beluga Whales that you know of, doesn‘t fit the criteria, because it‘s not a distinct sub-species.  Scientists say this is a genetically distinct and isolated population that lives in this one particular area and has for a long time. 

SHUSTER:  There you have an attorney general, somebody who is, I suppose, well steeped in the law, trying to argue science as a way of getting the governor to be able to get around the Endangered Species Act, simply by arguing science as opposed to the law. 

SCHULMAN:  Herein lies the problem.  The Palin administration is essentially making an economic and political argument.  Since they know that‘s not going to fly in the court, they are attacking the underlying science. 

This was much more egregious when it came to the polar bear listing, where they essentially convened their own commission, cherry picked their own science, and it came from scientists whose theories are not in the scientific mainstream.  They were global warming skeptics, one who acknowledged receiving funding from Exxon and the American Petroleum Institute for his work.  That‘s not science.  That‘s politics.

SHUSTER:  Daniel Schulman, an associate editor for “Mother Jones,” also our Muckraker of the day.  Well earned, Daniel.  Thanks so much for coming in.  Good to see you. 

SCHULMAN:  Thank you.

SHUSTER:  That‘s the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  Thank you for watching.  We will see you back 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 sent straight to your inbox with the 1600 Daily Briefing.  There‘s also a great poll there, as well as some great content, some stories that aren‘t available anywhere else.  Just log on to Shuster.MSNBC.com. 

“HARDBALL” and Tim Geithner‘s confirmation is up next.  I‘m David Shuster.  “HARDBALL” starts right now.

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

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