updated 2/9/2009 11:20:42 AM ET 2009-02-09T16:20:42

Guest: Sally Regenhard, Jim Riches, David Corn, Tim Kaine, Ron Brownstein, Steven Pearlstein, Pat Buchanan, Ed Schultz

DAVID SHUSTER, HOST:  Tonight, there is every indication that the bipartisan group of senators have reached a deal on the stimulus bill.  We‘re just getting reports that a tentative deal has been brokered.  It is said to total just under $800 billion. 

Meanwhile, President Obama ratchets up his urgent tone on the heels of the worst jobless report in 35 years. 

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  The situation could not be more serious. 

(END VIDEO CLIP)

SHUSTER:  Later, Econ 101.  Some lawmakers are floating market principles and claims that wouldn‘t get them through high school. 

Also this hour, “Hypocrisy Watch,” the senators who oppose salary caps on Wall Street CEOs but embrace restrictions on anybody else getting a government bailout. 

And would you pay 250 bucks for a painting of “Joe the Plumber?” 

All tonight on 1600 PENNSYLVANIA AVENUE.

Welcome to 1600, everyone.

We are just getting in reports now that a bipartisan group of negotiators in the Senate have tentatively reached a deal and that Senator Harry Reid, the Senate majority leader, is now trying to essentially discuss this deal with the Democratic Caucus and possibly bring this to a vote tonight.  All of this action in the Senate at this hour comes as the Obama offensive has already begun. 

After a week of Republicans slamming his $900 billion stimulus plan as a Trojan horse packed with pork, the president is taking his message straight to the people in the form of a primetime news conference Monday and two swing state town halls early next week. 

Last night, the president delivered fiery remarks to Democrats in Virginia.  And today, the president met with his special economic recovery team headed by Paul Volcker, the former Fed chair under President Reagan, and adopted a distinctly Reaganesque tone. 

(BEGIN VIDEO CLIP)

OBAMA:  Somewhere in America, a small business has shut its doors.  Somewhere in America, a family said good-bye to their home.  Somewhere in America, a young parent has lost their livelihood and they don‘t know what‘s going to take its place. 

These Americans are counting on us, all of us in Washington.  We have to remember that we‘re here to work for them.  And if we drag or feet and fail to act, this crisis could turn into a catastrophe. 

(END VIDEO CLIP)

SHUSTER:  Joining us now is Governor Tim Kaine, the new chairman of the Democratic National Committee. 

And Governor Kaine, based on these initial reports, this agreement that appears to have been reached will be about $780 billion.  The president had said that his bottom line was $800 billion.  A lot of economists said it needed to be far more than that. 

Are you disappointed? 

TIM KAINE, CHAIRMAN, DEMOCRATIC NATIONAL COMMITTEE:  Well, David, obviously, this is a bill that‘s going to go into conference with the House bill as they try to hammer out differences.  But the key is, it‘s a balanced approach that has three basic components. 

First, spending on tax relief for working Americans and small businesses so that they can pay their bills and hopefully spend again in this economy.  Second, infrastructure spending in our states and cities so that we can put people back to work and build a platform for greater economic success.  And finally, spending in the safety net at Medicaid and unemployment insurance so hard-hit people who have been hurt by this economy, the 600,000 people who have just lost their jobs in last month, can get some assistance. 

These are the three critical elements.  The right dollar amounts in each, they‘ll work it out in conference.  But the need for this is urgent in our state and elsewhere, and we need to make it happen. 

SHUSTER:  It was so striking for people who saw President Obama last night.  You were with him.  I want to play just a clip.  Here‘s part of the president‘s fiery tone from the event last night. 

(BEGIN VIDEO CLIP)

OBAMA:  And then you get the argument, “Well, this is not a stimulus bill, this is a spending bill.”  What do you think a stimulus is?  That‘s the whole point.  No, seriously, that‘s the point. 

(END VIDEO CLIP)

SHUSTER:  Governor, did he talk at all about this new approach?  I mean, it was such a dramatic difference in tone.  And clearly, he seemed so energized. 

You were there.  What did he say about the way his message is getting out? 

KAINE:  Well, I think that the president is very concerned about the misinformation that‘s been put around.  And when you see the House pass a stimulus package and every single Republican votes against it in the midst of the worse financial crises we‘ve faced in the last century, he‘s got to be frustrated.  And then he sees people going around talking about this bill and saying it‘s not going to stimulate the economy, they don‘t like it. 

Well, what‘s wrong with tax relief for low and middle income Americans and small businesses?  That‘s precisely the kind of thing that‘s going to get people through a tough time and enable them to start spending to stimulate the economy. 

You sometimes get the feeling that folks don‘t like tax cuts unless they‘re for the very wealthiest or the largest businesses, that tax cuts to working Americans and their families and small businesses don‘t count.  So I know he was frustrated by this.  But the news about the potential of a deal in the Senate tonight is a very, very positive development. 

SHUSTER:  There was a response to the president today on the Senate floor. 

Here‘s Senator Jon Kyl from Arizona.  Watch. 

(BEGIN VIDEO CLIP)

SEN. JON KYL ®, ARIZONA:  When the president says, of course it‘s a spending bill, that‘s the whole point, he‘s acknowledging what we‘ve been saying on this floor for a week now, which is that this is a spending bill.  Now, he would say, but it also stimulates, and what I said yesterday was that‘s kind of a trickle-down theory.  The government spends a trillion dollars throwing it against the Wall, and hopes that some of it trickles down. 

(END VIDEO CLIP)

SHUSTER:  And Governor, as you know, it‘s not just members of the Senate.  One of your fellow governors, Mississippi Governor Haley Barbour, a Republican, told Chris Matthews that he opposes the stimulus.  There are a handful of other governors that oppose it as well. 

Make the case.  Why should Governor Barbour, for example, come on board on this? 

KAINE:  Well, look, there are a few governors who are against it, but I tell you, David, the overwhelming majority, Democrat and Republican, say we have to have a stimulus bill.  We just lost 600,000 jobs in the country in the last month, 1.2 million jobs in the last two months.  These are the biggest job losses that our nation has faced in over 35 years. 

And there are some who just want to sit on their hands or get in the way or vote no without coming up with plans of their own.  But the balanced plan that‘s tax relief for working Americans and small businesses, infrastructure spending so that we can fix roads and bridges and fix schools across our nation, and then the safety net funding so that people who are going unemployed as a result of the job losses, or who need Medicaid, are going to have these services to back them up. 

This is not, you know, out of the ordinary, unusual stuff.  And I think that those who are trying to say, like Senator Kyl, we‘ll just throw a billion dollars against the Wall and see what sticks, that may be the kind of stuff he‘s used to.  That‘s not what this bill is.  This bill is what‘s needed to put Americans back to work. 

SHUSTER:  Virginia Governor Tim Kaine, and also chairman of the Democratic National Committee. 

And Governor, thanks for joining us tonight.  We appreciate it. 

KAINE:  Very glad to be with you, David.

SHUSTER:  Let‘s bring in now Ron Brownstein.  He‘s the political director for Atlantic Media and a columnist for “The National Journal.”

Ron, first of all, what do you make of the news that‘s breaking now?  It appears that there is this bipartisan negotiation team that have reached a bill.  It will be less than $800 billion.  You were pointing out a few minutes ago, Harry Reid was having some discussions with the past hour. 

Tell us what you know.

RON BROWNSTEIN, POLITICAL DIRECTOR, ATLANTIC MEDIA:  Well, I was told he was meeting in his office with Senator Collins and some of the moderate Democrats, as well as Rahm Emanuel from the White House.  Look, I mean, as Jill Zuckman said on “HARDBALL,” this is what the Senate does. 

I remember in the spring of 2001, there was an amendment in the Senate that caused a significant reduction in the original George W. Bush tax cut.  You know, the 60-vote hurdle, the modern, in effect, requirement that any major decision in the Senate should receive a filibuster-proof majority, give enormous power to the minority.  And here, even though Obama may need only as few as two Republican votes, he‘s had a lot of trouble leveraging those last two Republican votes.  And as you were talking about with the governor, the sharper tone here, I think, is a reflection of the fact that sometimes the carrots, the outreach have more effect when people are also worried about the stick. 

SHUSTER:  And speaking of the sharper tone, it was Congressman Clyburn today who said—suggested that—he said, “We cannot sit back and just let the Republicans define us.”  The argument that the Republicans have essentially controlled the message in this. 

BROWNSTEIN:  Oh, I think that‘s right.  I mean, look, I think most analysts, including one I quote today in my column, a Democrat, says that the administration has lost control of the definition of what this bill is.  And I think the underlying problem is, they are trying to do two things at once here. 

Governor Kaine talked about three elements, but there‘s a fourth element.  There are tax cuts, payments to states, and some short-term spending that really is stimulus.  But there‘s also a lot in this bill that is the Democrats‘ long-term investment agenda. 

We‘re not talking about pork.  We‘re talking about policies that Obama and most Democrats believe are essential for long-term growth—education, scientific research, things like that, college grants.  But that is all in here as well, and that is not immediately stimulative, most of it, and it‘s made the bill more vulnerable to the Republican charge that it‘s a lot of spending without a lot of stimulus. 

And I think that they have lost some control.  You see in the polls this week support for the bill has declined, even though support for Obama has maintained—has been strong.  So they have had a tough time, I think, with the debate over the last several days. 

SHUSTER:  And as far as the debate now, we hear the Republicans like John McCain, who was arguing on the Senate floor that this is not a bipartisan bill—here‘s Senator McCain from earlier today. 

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN ®, ARIZONA:  Now it‘s 15 Democrats, 3 Republicans.  That‘s not bipartisan.  And if they come up with an agreement, then it will mean that 3 Republicans out of 535 members of Congress have supported this unnecessary, wasteful bill that could have been so much better. 

(END VIDEO CLIP)

SHUSTER:  What do you make of the argument that he just made? 

BROWNSTEIN:  Well, first of all, the reality is, every Republican in the Senate voted for the McCain alternative, which was almost entirely tax cuts.  I mean, the overwhelming push from Republicans I think can be boiled down to continue the Bush economic policy as tax cuts as the centerpiece of your efforts to drive economic growth. 

It is difficult for Obama to reach agreement with that because the Democrats are operating from a very different premise, which is tax cuts, but fundamentally, public spending to drive the economic recovery.  And you add to the fact that there are so few Republicans in both the House and Senate left from swing districts and swing states, most of the remainder after these two tough elections are from conservative places.  There just aren‘t that many people for him to work with. 

Just a quick point.  My colleagues at nationaljournal.com looked at the first 18 roll call votes in the Senate on this bill, and only four Republicans broke with their party at least five times: Collins, Snowe, Specter, and Voinovich. 

So it is probably a pretty small universe that he is able to work with.  There may be a few more votes if, in fact, they have a deal.  But it is not going to be easy. 

We saw this, by the way, David, on the Children‘s Health Insurance Program as well.  The number of Republicans who voted for it this year was less than last year. 

So it is going to be a struggle for him.  And he does need to find ways to bring them in, because it does help with the point you made before with the governor.  If there are Republicans voting for this, it is easier to sell it to the country as well.  It‘s a validation that, in fact, it is a balanced approach, but it is not going to be easy.  It‘s going to be a very tough climate for him on each one of these bills, because the universe of people inclined to work with him is not large right now. 

SHUSTER:  Ron Brownstein, political director of Atlantic Media, also a columnist at “The National Journal,” helping us with breaking news tonight. 

Again, the news does appear that there‘s a deal in the U.S. Senate.  We‘ll wait and see what Harry Reid, the Senate majority leader, does as far as bringing it to the floor. 

Up next, stimulus smart.  A top columnist says one of the best investments our nation could make right now is to send lawmakers to a rudimentary Econ 101 class.  The claims in the House and Senate have been way off. 

Plus, President Obama wants to close Guantanamo Bay.  Today, he decided to explain his rationale directly to 9/11 families.  We‘ll talk to a few of them about this afternoon‘s White House meeting. 

And later, some conservatives are still mad that President Obama often goes without a suit jacket while working in the Oval Office, but we believe the criticism from former White House chief of staff Andy Card is going to stop.  We‘ll explain.

All that, plus our stimulus showdown video montage.

Ahead on 1600 PENNSYLVANIA AVENUE. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  We‘ve got some economists and some folks who think they‘re economists.  By the way, these days everybody thinks they‘re an economist. 

(END VIDEO CLIP)

SHUSTER:  Welcome back. 

While everybody may think they‘re an economist, some of them need to go back to school, especially the folks in Congress.  And one very smart journalist who writes on the economy has an idea. 

“As long as we‘re going to spend gazillions to stimulate the economy, I‘d like to suggest we throw in another $53.5 million for economic literacy.  My modest proposal is that lawmakers be authorized to hire personal economic trainers to sit by their sides as they fashion the government‘s response to the economic crisis and prevent them from uttering the kind of nonsense that has characterized the debate over the stimulus bill.”

Joining us now to cut through some of the nonsense in this debate, the author of that modest proposal, Steven Pearlstein of “The Washington Post.”

And Steven, let‘s start with one of the elements that you picked out, Senator Johanns from Nebraska talking about the spending bill.  Watch. 

(BEGIN VIDEO CLIP)

SEN. MIKE JOHANNS ®, NEBRASKA:  You‘re not going to get any kind of stimulative impact here from what you are trying to accomplish.  The governor, the mayor is simply going to look at these dollars as found money.  And they are going to take their state and local dollars, set them to the side, and spend the federal dollars, and no stimulation will happen to the economy.  No new jobs will be created. 

(END VIDEO CLIP)

SHUSTER:  Steven, what do you make of that? 

STEVEN PEARLSTEIN, “THE WASHINGTON POST”:  Well, you know, I don‘t exactly how Senator Johanns knows that.  However, the senators and—I mean, the mayors and the governors who have come to Washington have said quite clearly, and there‘s lots of evidence of it, that if you don‘t send us money, we are going to start cutting thousands and tens of thousands and millions of public employees because we don‘t have the money and we cannot live on deficit spending, so we will cut.  If you send us the money, we will not. 

Now, maybe Senator Johanns considers there to be a huge economic difference between a job that is created and a job cut which is foregone.  But most people who go to economics class don‘t see that difference. 

SHUSTER:  Some of the senators are also trying to suggest there‘s a distinction, and a clear distinction, between sort of stimulus and spending. 

Here‘s Senator Nelson from yesterday. 

(BEGIN VIDEO CLIP)

QUESTION:  What are the areas of greatest concern? 

NELSON:  Well, just what Senator Collins mentioned.  That is, whatever you have in there, that you want it to be as robust and stimulus as you can have it so that it‘s not just a spending bill.  And a lot of items that are solid public policy items that can be in other locations because they‘re not as stimulative, although very good, can be put in other—we‘re scrubbing that out and keeping in that that we think is the most stimulative. 

(END VIDEO CLIP)

SHUSTER:  Is there a difference between stimulative as far as, say, highway construction and building, I don‘t know, some super highway in terms of medical records online? 

PEARLSTEIN:  You know, this is just the biggest nonsense that I have ever heard.  A dollar spent is a dollar spent. 

Now, it is true, David, there are multiplier effects.  OK?  But if the dollar is spent at the same time—you know, a dollar delayed, as opposed to a dollar spent, today, there‘s a different stimulative effect there.  But if you‘re spending the dollar, you know, the differences of the stimulative effect are—the knock-on effects are very small.  OK?

The difference of 1.5 to 1.4 to 1.6 -- and by the way, the margin of error is quite great there.  These are not differences that members of Congress or two journalists sitting here should be talking about.  A dollar spent is a dollar spent. 

Let me give you another example.  They say, well, a dollar spent on a highway, that‘s good, but a dollar sent to someone on unemployment insurance, well, that doesn‘t create any jobs.  Well, you know, hello?  What do you think the guy who is unemployed does with the dollar?  He goes out and buys something, and the buying, the demanding of a good and service is the same as the government spending it. 

It may take another month, OK, so there‘s a little delay.  But there‘s no real fundamental difference.  And this notion that there‘s a difference between spending and stimulus, I don‘t know where they—they pulled this out of the air.  This is craziness. 

SHUSTER:  I agree with you.  And the logic, or the attempted logic, is really difficult to understand or follow. 

We are going to follow up with Senator Johanns and Senator Nelson and invite them both on this program since we‘ve taken issue to try to explain what they were getting at.  I am not quite sure they can explain it.  But in any case, we‘ll see. 

Steven, thanks so much.  Great piece today.  And we appreciate you coming on. 

PEARLSTEIN:  Thank you.

SHUSTER:  Earlier this week, President Obama unveiled a proposal to cap the pay of CEOs at companies that receive federal bailout money.  Some Republicans in the Senate just announced they oppose the move.  And those Republicans have earned a spot in tonight‘s “Hypocrisy Watch.”

First, the background.  Here‘s President Obama on Wednesday. 

(BEGIN VIDEO CLIP)

OBAMA:  Top executives at firms receiving extraordinary help from U.S.  taxpayers will have their compensation capped at $500,000, a fraction of the salaries that have been reported recently. 

(END VIDEO CLIP)

SHUSTER:  Now, here‘s the reaction from a few Republicans. 

Arizona Senator John Kyl, “The United States government telling a company what it can pay its employees, that‘s not a good thing it America.”  Florida Senator Mel Martinez, “It‘s troubling to have government telling shareholders how much they can pay the executives.”  And Senator James Inhofe of Oklahoma, “Is this still America?  Do we really tell people how to run a business and who to pay and how much to pay?”

Actually, Senators, our government does that and more, in countless instances, when a business or an individual receives government fund. 

In the 1990s, for example, Congress passed a welfare reform program called Temporary Adistance for Needy Families.  Recipients are still required to take regular drug tests, document their activities, and verify all kinds of financial information.  There‘s also a cap.  All in exchange for government help. 

Of course, there is a difference between welfare recipients and Wall Street CEOs.  Welfare recipients are not responsible for putting our nation‘s economy in a ditch.  Some Republican senators understand all of this, and they have no problem capping the pay of CEOs who drove their companies into near bankruptcy and now need government bailout. 

But for the Republicans, including Senators Kyl, Martinez, and Inhofe, when you give Wall Street executives a free pass and require restrictions on everybody else who gets government help, that‘s hypocrisy and it‘s wrong. 

Up next, the political risks and rewards in the economic stimulus plan.  Will Republicans be seen as the party of “no?”  And will Democrats pay a price for saying “yes” to the costliest bill in U.S. history? 

More 1600 after this.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back.  And some breaking news this hour on 1600. 

A tentative deal on the stimulus package has been reached.  The deal would put the price tag at just under $800 billion. 

The Senate is in recess right now.  They are expected to reconvene in just a few minutes.  And to underscore just how significant and how close the vote may be, the Dow Jones wire is now reporting that Senator Edward Kennedy, Democrat from Massachusetts who is battling a brain tumor, is now on his way back to Washington to cast a vote on the stimulus package. 

Let‘s bring in Ed Schultz, host of the nationally syndicated “The Ed Schultz Show”; MSNBC political analyst Pat Buchanan; and back with us, of course, is Ron Brownstein, political director for Atlantic Media and columnist for “The National Journal.”

Ed, every vote counts.  It looks like the Democrats—it‘s going to be close to get to 60.  What do you make of it? 

ED SCHULTZ, RADIO TALK SHOW HOST:  Well, they need Al Franken now; don‘t they?  They all count. 

It‘s a victory for the president.  He got animated last night, got off script, told it like it was, spoke for the American people.  This is what the American people want. 

I think it‘s a good strategic package.  Eighty percent spent of it‘s going to be spent probably in the first two years.  They‘re going to hold back 20 percent of it to see how it plays with the economy and where they can patch up from there.  It‘s kind of patterned after what happened back in the ‘30s. 

And I think this will get people working.  The Republicans have been hung up on tax cuts.  How do you give somebody a tax cut if they don‘t have a job?  This is about getting people back to work, and I think this package will do that. 

SHUSTER:  Pat?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  How do you give somebody a tax cut if they don‘t pay any taxes? 

But look, this afternoon, the bill was at $935 billion.  It‘s now down at $790 billion.  That means Susan Collins and Harry Reid just rearranged $140 billion. 

Is this the way the government of the United States legislates?  This is an absurdity.

Politically, my guess is it‘s going to get through one way or another.  I don‘t know if some Democrats will bail out because there‘s not enough pork or their stuff has been taken out.  But they‘re going to get this thing.  But I‘ll tell you, it had better work, because if this thing doesn‘t get the economy really moving up by 2010, in the fall, the people behind this monstrosity, there will be a bloodbath. 

SHUSTER:  While the process may be viewed as an absurdity by a lot of people, there was President Obama last night, fired up and talking about the largest context, the mess that he found himself and this administration found himself in. 

Here is President Obama from last night. 

(BEGIN VIDEO CLIP)

OBAMA:  First of all, I found this deficit when I showed up.  I found this national debt doubled, wrapped in a big bow waiting for me as I stepped into the Oval Office. 

(END VIDEO CLIP)

SHUSTER:  I mean, Ron, it‘s not as if they had several months to try to figure this out or to try to deal with this. 

BROWNSTEIN:  And in fact, one of his most powerful arguments, I think, in this debate is that what Republicans are essentially calling for is a continuation of the Bush policies focused on tax cuts that have left the economy in this condition and did not produce medium income growth over eight years.  So he does have some assets here, but I think both sides have taken on some risk. 

Pat‘s point here that this has become a—this bill has been stamped as the Democratic solution.  And that Obama, I think, has also, as we talked about before, lost control, to some extent, of the debate, over certainly the past week. He made it tougher for some of those red-state Democrats to come along with him from your part of the woods.  People like Kent Conrad or Claire McCaskill were uneasy about this as well.  It will be, in the end, an important policy victory.  If they get this through, he is redirecting federal priorities in a profound way to a degree that presidents often don‘t get to do over their entire first term. 

There is no doubt there is political risk.  There is also political risk, as we were talking about before, for Republicans, if they‘re seen as obstructionists, on something at a moment of this gravity. 

SCHULTZ:  What is it that the Republicans don‘t get about 600,000 people losing their job in one month?  This is about putting people back to work.  The best way to do that is to get an infusion of federal dollars, because there‘s a guarantee that the money is going to be spend.  GDP is going down.  Demand is going down.  The market‘s shaking.  Credit‘s tight. 

What else can you do?  We‘re out of options at this point.  I think this is our best available option right now.  And if the Republicans want to say tax cuts, tax cuts, that‘s not going to ring good.  The thing that I find amazing, Republicans just got off the campaign trail.  Didn‘t they listen to the American people? 

BUCHANAN:  How did we get into the mess?  You‘re right, George Bush walked us into it.  Had a 480 billion dollar deficit this year.  And you had cheap money and Greenspan had cheap money in the entire decade.  That‘s what got us into it.  So now we say big deficits and cheap money got us into it; bigger deficits and cheaper money are going to get us out of it.  This is a gamble with the economy.  It‘s not simply with politics.  That doesn‘t matter that much. 

But this is a gamble with Democratic capitalism.  I don‘t know when this has ever worked before, this approach. 

SHUSTER:  The issue is, with Democrats, it doesn‘t matter.  If this doesn‘t work, it‘s not going to matter.  They‘re going to be in deep trouble.  I would suggest the Democrats have a greater risk by doing nothing or by going along with the Republicans, because, again, they‘re out of plays.  They don‘t have anything left. 

BROWNSTEIN:  I would be cautious about assuming who‘s going to be in trouble if the economy stays weak in 2010.  I think it‘s not clear.  All the polling as Obama came in was that people recognized what he said in your clip, that he was handed a very difficult situation.  There‘s an incentive to give him some time to try to work it out.  Obviously, the economy is bad.  That‘s not going to be good for Democrats in 2010.

As we were saying, there‘s also risk for Republicans, in seeming both to either be simply obstructionists or continuing on the same course that we‘ve had for the last eight years, without really adjusting.  Every Republican in the Senate, every single one, voted for that McCain alternative that was almost entirely focused on tax cuts. 

SHUSTER:  Every Republican also voted for an alternative that essentially had no spending, only tax cuts. 

BUCHANAN:  Let‘s take a look at history though.  Clinton, his tax bill, every single Republican voted against it.  It got through.  The economy wasn‘t doing that well in ‘94.  They lost both houses of Congress.  Do does anybody think the economy is going to be doing as well in 2010 as it was doing in 1994? 

SHUSTER:  The thing is, if you don‘t give some of these states some education money, money for health care, you‘re going to see a lot of teachers starting to be laid off.  You know, 600,000 people losing their jobs in January, sure, it strikes people as the worst in 34 years.  But when thousands of teachers start getting laid off because states have to balance their budgets—you know what?  They have to balance the budget and they have to do it—that‘s when people are going to start—

BUCHANAN:  Government is the one area where there‘s been plenty of jobs and the jobs are growing. 

SHUSTER:  Pat Buchanan, Ron Brownstein, Ed Schultz, thank you very much.  I appreciate it. 

Coming up, more on the Senate‘s tentative deal on the president‘s economic stimulus plan.  We‘ll talk with “HARDBALL‘s” Chris Matthews next. 

And Mr. Obama kicked off his first trip on Marine One and Air Force One with both a salute and handshake.  There is a learning curve.  I‘ll tell you about the history behind presidential salutes coming up. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  Just a short time ago, President Obama wrapped up a meeting with families of USS Coal and 9/11 victims.  The president was expected to explain his decision to close the controversial prison at Guantanamo Bay.  Jim Riches and Sally Regenhard both lost their sons in the World Trade Center and were in that meeting with the president.  They join us now.

Sally, first of all, how did the president explain his effort to close Guantanamo?  Were you satisfied? 

SALLY REGENHARD, MOTHER OF 9/11 VICTIM:  I was very satisfied with the meeting.  He was—he was so sincere.  He was concerned.  He was compassionate.  I see he made every effort to allay our fears.  Any fears that someone might have had regarding what‘s going to happen to these people, are they being let go, he explained very thoroughly, comprehensively, that we need—that he‘s very committed to the same things we want, you know, a swift and complete justice for the families of the victims. 

He wants to see people prosecuted.  But he spoke about Gitmo and how that had really hampered the ability to have a swift and complete prosecution.  He assured us that he will use his staff.  They will investigate all the cases thoroughly, and that they will do every effort to achieve justice. 

SHUSTER:  Jim, there had been some suggestion that some of the families would be pretty fiery, because they don‘t want Gitmo closed.  Did it get contentious at all?  Was there any of this sharp debate? 

JIM RICHES, FATHER OF 9/11 VICTIM:  Well, some of the families from the Cole and some of the other families wanted to see Gitmo opened.  They asked him to reconsider it.  He shot them down.  He‘s not happy with the process that‘s going on down there.  Basically, he is saying that whatever his lawyers and he decide, that‘s what it‘s going to be.  It looks like it‘s going to go toward bringing them to U.S. soil, and trying them here, probably in federal court. 

We voiced our concerns.  He heard our questions for 45 minutes.  He answered our questions.  We told him—I was at the trials at Guantanamo.  These guys laughed, said they bragged that they killed our sons.  We want justice.  And he promised that he would get us swift and certain justice. 

SHUSTER:  You‘re going to get justice with these people, even if it‘s not at Guantanamo Bay, at least according to what the president—

RICHES:  You know, basically, it‘s—you know, you can‘t look back.  We have to look forward.  Seven years we‘re waiting.  Let‘s get the process going good.  He said the Guantanamo process, the military commission was a stall process.  The Supreme Court knocked down a couple things.  Nothing was really getting done.  The guy from the Cole, he was just arraigned.  That‘s like five years later.  He said they could have lost on appeal.  So it would have went wrong all along. 

SHUSTER:  One of the issues we‘ve been focusing on on this show—we‘ve been talking to a lot 9/11 families, firefighters, police organizations, what they describe as the catastrophe at Ground Zero, in terms of the rebuilding effort.  We‘re now seven years later.  Not a lot has been done.  They‘re starting to build up the base of the Freedom Tower.  What do you make of the process down there?  Are you satisfied?  What do you say to those, like Governor Pataki, who came on and said, you know what, we do have to look forward?  The Freedom Tower, the memorial will be a tribute to those who are lost.

REGENHARD:  We are totally dissatisfied.  I really feel the majority of the 9/11 families are outraged, totally dissatisfied.  The design, the memorial, the museum, these were never designs that were picked, selected by the families.  The idea that the memorial and museum is underground is not only dangerous for the public, it‘s very, very dishonorable. 

It is outrageous.  There is no other memorial, museum in the world that—on this level, to be under the ground.  But we have to—the bottom line—what‘s really wrong with Ground Zero and the World Trade Center Redevelopment is that the Port Authority that owns this land and runs this show, they‘re completely exempt and immune from all New York City building and fire codes.  They operate above the law in a clandestine manner.  They make one mistake after the other. 

It‘s really outrageous.  I really advocated—I wanted to see the city of New York take over Ground Zero. 

SHUSTER:  What about the argument made by Christopher Ward on that point.  He had an opportunity to essentially have an independent third party oversee what they‘re doing at Ground Zero.  He said, no, we‘re not going to do that.  His argument was it would only slow down the process further.  The process is inevitable.  We need to get it done. 

RICHES:  Yes, well, it‘s seven years later.  They haven‘t done anything.  We had meetings with Chris Ward.  We asked him—we wanted to be on the jurisdiction of New York City building and fire code.  He told us no in no uncertain terms.  They weren‘t going to do it.  We kept getting the runaround.  He told Shelley Silver right out, you‘re not getting it.  That‘s the way it‘s going to be.  We‘re above the law.  That‘s the problem. 

They never let the families have any input.  They had workshops and everything before they built the memorial.  And they threw our thoughts right in the garbage and did whatever they wanted to do.  That‘s a shame. 

SHUSTER:  Aside from the memorial, there‘s also the issue of the office tower.  Does it really matter to rebuild the Twin Towers?  In your view, would you be satisfied with a Freedom Tower, if it‘s as spectacular as Governor Pataki and Christopher Ward suggest it is going to be? 

RICHES:  I don‘t really care about that.  But then when they say they‘re going to put stores and retail stores—that‘s a cemetery for a thousand people that were never found.  That insults me.  I think they should have done something—the economy is hurting right now.  Tone down your plans a little maybe, but let‘s get it done right and do it the right way, so these buildings don‘t fall down again. 

SHUSTER:  Regards to the retail stores, that‘s a reference to the fact that, because of the economic environment, they‘re changing the plan to put some of these stores ground level. 

REGENHARD:  If you look back and see how many times the Port Authority has changed their plans, it‘s just unbelievable.  I really echo what Jimmy said about the retail stores.  I think it is very, very insulting that money is the bottom line with the redevelopment of Ground Zero.  It‘s the bottom line with everything.  I would like to see the Twin Towers come back.  But I would like a respectful and honorable memorial, simple, above the ground.  The families never asked for billions and billions of dollars to be spent on. 

It‘s much more expensive to build something below the ground.  There‘s no reason for it.  They say it‘s going to be a green memorial.  It‘s not going to be a green because look at the money it cost to heat these ridiculous water falls? 

SHUSTER:  Yes, the fountains.  We‘ve got to wrap it up there.  Sally and Jim, thank you very much.  Again, we‘re sorry about your loss and appreciate that you‘re trying to take the pain and focus our politicians on your concerns and your issues.  We appreciate you coming in tonight. 

REGENHARD:  Thank you. 

RICHES:  Thank you very much. 

SHUSTER:  We have a new segment we‘re going to debut tonight.  Several days a week, we‘re going to take you through the must-see moments of a big story, all in under 90 seconds.  Today‘s version, the stimulus showdown starts now. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Here we go. 

SHUSTER (voice-over):  First up? 

UNIDENTIFIED MALE:  Republicans are ready to support a stimulus bill. 

UNIDENTIFIED FEMALE:  Buying patterns have changed. 

SEN. JOHN MCCAIN ®, ARIZONA:  The whole point is to stimulate the economy. 

OBAMA:  It is inexcusable to get bogged down in distractions while millions of Americans are put out of work. 

SEN. HARRY REID (D-NV), MAJORITY LEADER:  I think that we‘re going to be able to work something out. 

SEN. LINDSEY GRAHAM ®, SOUTH CAROLINA:  What‘s in the offset, not only could wait, a lot of it could wait until hell froze over. 

UNIDENTIFIED MALE:  The problem here, it‘s not good legislation. 

OBAMA:  The bill that‘s emerged from Congress is not perfect, but the package is the right size.  It is the right scope.  It has the right priorities. 

UNIDENTIFIED MALE:  It‘s a virus.  It‘s a virus that we have that says you don‘t have to worry about what it costs in the long run. 

UNIDENTIFIED MALE:  When the president says, of course, it‘s a spending bill, that‘s the whole point, he‘s acknowledging what we‘ve been saying on the floor for a week now. 

REID:  Everyone knows this crisis was not created by Barack Obama. 

The crisis was inherited from his predecessor. 

SHUSTER:  So in the end—

JOE BIDEN, VICE PRESIDENT OF THE UNITED SATES:  That‘s why Barack and I believe, and I think you all do, too, that it‘s so critically important there be transparency and accountability. 

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  We must act quickly to get legislation to move forward in this process. 

OBAMA:  These Americans are counting on us, all of us in Washington. 

Now is the time for Congress to act. 

(END VIDEO CLIP)

SHUSTER:  Again, those are your highlights of the last 24 hours from the big story of the day. 

Still ahead, President Obama has been hard at work here in Washington selling the stimulus to Congress.  Our Muckraker of the day asks, what about beyond the beltway?  It appears the president was listening. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  The Senate at least appears to have reached a tentative deal on the president‘s economic stimulus plan.  The price tag is now estimated at 780 billion dollars.  Chris Matthews is the host of “HARDBALL.”  He is also a hell of a reporter at heart.  He‘s been working the phones the last couple of minutes.  Chris, what do you have? 

CHRIS MATTHEWS, MSNBC ANCHOR:  Here‘s what‘s happening inside the Democratic Congress: the Democratic senators are meeting.  Harry Reid, the leader, is trying to make the case to them, better to take 90 percent and live with the fact you‘re not going to get that other 10 percent.  Take the 780 billion that‘s left after the compromise with the moderate Republicans and Democrats and go with that. 

He‘s facing opposition on the left right now as we speak.  That‘s the latest word.  They‘re still try to convince the Democratic members of the Senate, who are 58 senators, including the ailing Ted Kennedy, that they can live with the fact they won‘t get all they want. 

SHUSTER:  Chris, that means, obviously, as you pointed out, caucuses are about the left or right.  He‘s got some work to do if they‘re still trying—if Harry Reid has not yet brought it to the floor, we can interpret that to mean he‘s still trying to sell the Democrats on these cuts, cuts that some of them found near and dear to their hearts, including education, money for health care and what not. 

MATTHEWS:  What people don‘t understand about politicians is they really care about certain things.  It isn‘t all about compromise.  Compromise comes at the end.  Most of the time, they fight for what they believe in, whether on the left or the right.  It‘s very hard for a Democrat to give up education, just like it would be hard for a Republican to give up defense.  It‘s very hard. 

They believe in these programs.  These believe, as you know, David, in Pell grants.  They believe in giving kids a break on student loans.  They would like to see more kids go to college who can‘t afford it.  They would certainly like more kids not to be stuck with tough financial bills after they get out.  They want to do everything they can to help with education.  They‘re going to hate to have to give away some of these programs. 

But that said, not everything is stimulus just because you call it stimulus.  This is an emergency bill.  It‘s not just a bunch of truck loads of overdue liberal legislation.  A lot of it is very valuable, very defensible.  But it‘s not essential to calling something a stimulus package.  By the way, 780 billion dollars in spending is one hell of a huge bill.  Even if it comes out at that paired down level.  

SHUSTER:  That‘s one hell of a great report, Chris.  Chris Matthews is going to be live at the top of the hour.  Again, based on his reporting, we now know that Senate Majority Leader Harry Reid is in the process of trying to sell this compromise to the more liberal members of the Democratic Congress.  Chris will be live at the top of the hour.  We‘re waiting to see what happens on the Senate floor, and how quickly or how long it takes Harry Reid to feel like he does have all the votes, all the member of his Congress, as well as the centrists and Republicans, who are apparently also going to speak at the top of the hour.  We‘ll keep you posted. 

Also ahead, our Muckraker of the day, David Corn, on whether President Obama is not doing enough to sell his ideas beyond the beltway.  You‘re watching 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  President Obama is urging Congress to pass his economic stimulus plan.  It just might happen soon, at least in the Senate.  Then it will be sent in to conference.  A tentative deal was reportedly reached in the Senate tonight, but not everyone appears to be on board in the Democratic caucus. 

The president mobilized his millions of supporters to help sway the public next week when the negotiations continue.  It was a tactic that President Ronald Reagan took when he was trying to pass his economic package in 1981.  White House Press Secretary Robert Gibbs was asked about that in today‘s daily press briefing. 

(BEGIN VIDEO CLIP)

DAVID CORN, “MOTHER JONES”:  He gave speeches asking people to pick up the phone and call their members and make an explicit demand to pass this legislation.  Rather than just saying it‘s good that people participate and are engaged, the president—

GIBBS:  I think it would be safe to assume that the president will ask those that support him or supported him in November to continue to support his efforts as part of a recovery plan to move this economy forward. 

(END VIDEO CLIP)

SHUSTER:  That was Robert Gibbs, and David Corn asking the question, Washington bureau chief for “Mother Jones” and blogger for CQPolitics.com.  He is also our Muckraker of the day.  Like the music? 

CORN:  It‘s a great honor. 

SHUSTER:  First of all, on your question—

CORN:  I accept. 

SHUSTER:  On the question of getting Obama out there, what did you make of his response?  It sounded kind of—

CORN:  He didn‘t say yes.  A lot of people I‘ve talked to in and around the White House, particularly people involved in technology and politics who watched Obama campaign and marveled at its ability to connect the candidate to millions of supporters, who gave money and volunteered, have wondered why in the last two weeks, as Obama has met the biggest challenge yet of his presidency and his number one priority, passing the stimulus bill, they have not resorted to using any of those tactics. 

They have not done anything to get the grassroots excited, to get them engaged.  Campaign for America‘s Future, a progressive group, says that they hear on the hill that the calls are running to one from conservatives to liberals. 

SHUSTER:  The irony is that people look up and see the picture that we see right now of that microphone, and members of the Senate are going to come forward.  And people want to do something.  They want to reach out.  They want to email.  They want to say to these senators, hey, how come you aren‘t you following the election results? 

CORN:  The premise behind Barack Obama‘s campaign was that I‘m Barack Obama, leading a movement for change that you can participate in.  He‘s asked for no participation of anybody the last two weeks.  As I noted in the press conference, when Ronald Reagan came to town with a very dramatic economic plan, draconian cuts in social spending, big cuts in taxes, he went on TV, time and time again, and said, pick up the phone, call the members of Congress.  He was dealing with a House that was controlled by Tip O‘Neil and the Democrats.  And the phones lit up in Congress. 

They he had a lot of blue dog, conservative Democrats running scared. 

And it engaged the Reagan base.  Barack Obama so far has done none of that.  I think they‘re inching towards it.  And he may need that next week to get this thing all the way through. 

SHUSTER:  I mean, we know there are people who worked for Obama during the campaign, like Steve Hildebrand, who has not joined the White House, who is the one who essentially has these 13 million e-mails.  They want to try to leverage that.  Is this simply a transition problem or have they simply been surprised by the way the Republicans have handled this? 

CORN:  They knew the day after the election that they needed—that they could do something with these 13 million names.  they didn‘t have to wait until January 20th to begin.  They‘ve had two and a half months to prepare for this.  They are—the Organizing for America Organization, which is what the campaign has turned into, they‘re organizing house meetings on the economic recovery this weekend.  If you look at the literature, and this was part of the question I asked, they‘re not being organized in order to mount political pressure.  People are supposed to come and discuss the package. 

I mean, so it‘s nice that people can come and discuss the package, but I think, you know, Obama had this tremendous political muscle that got him elected and he hasn‘t been flexing it yet.  I think that‘s odd. 

SHUSTER:  It‘s especially odd, given that there‘s still a lot of work ahead.  Next week, as you mentioned, Nancy Pelosi has already criticized, essentially, the compromise that‘s emerging out of the Senate.  They‘re going to have to now go back and sell it to liberals and progressives in the House. 

CORN:  Two bills have to be reconciled.  There will be conference.  All along this process, even if they have the votes to pass it, Republicans will be lobbing missiles at the bill and at the White House.  So having 13 million plus people out there engaged and working on this would help them and it would be a good precedent, because we have health care and other issues coming down the pipeline.  This is his team.  He should be using them. 

SHUSTER:  David Corn, Washington bureau chief for “Mother Jones.”  David, great stuff, thank you, as always.  Congratulations, our Muckraker of the day.  That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  Thanks for watching.  We‘re keeping a close watch of what happens in the Senate tonight.  A live edition of “HARDBALL” is going to start in just a minute.  I‘m David Shuster.  “HARDBALL” with Chris Matthews 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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