updated 2/12/2009 10:34:20 AM ET 2009-02-12T15:34:20

Guest: Adam Putnam, Claire McCaskill, John Harwood, Dan Gross, Ed Schultz, Todd Harris, Mark Benjamin

High: House and Senate negotiators reach a compromise on the economic recovery plan.

DAVID SHUSTER, MSNBC ANCHOR:  Tonight, it‘s a done deal.  House and Senate negotiators reach a compromise on the economic recovery plan.  We‘ll bring you the details and have the reaction from President Obama.

Later, is public humiliation enough for CEOs of bailed out banks?  They were forced to testify in Congress today and got an earful about their bad judgment and ridiculous bonuses.  Where does the cap on CEO pay stand now?  We will talk live with Senator Claire McCaskill.

Plus, Rush Limbaugh has landed in our “Hypocrisy Watch” following his claims about healthcare modernization.

And today is Sarah Palin‘s birthday.  We will pay tribute with a video montage you will never forget.

All tonight on “1600 PENNSYLVANIA AVENUE.”

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

The President‘s economic plan is now moving towards final passage.  We will get to that in a moment.

But first, the public disgust and frustration over the state of our economy spewed out today in dramatic fashion when CEOs of bailed out banks testified before the House Financial Services Committee.  Together the banks represented at the table received $165 billion in federal bailout money.  And lawmakers hammered the CEOs over everything from their inability to explain where much of the money went to bonuses that were given to executives.

The hearing was jolted even before it began by a front page story this morning in the “New York Daily News.”  A report revealed that executives from the now defunct Merrill Lynch pocketed $121 million in bonuses just days before taxpayers helped finance a deal to buy out the collapsing firm.  At the hearing, the lawmakers hit all of the CEOs hard.

(BEGIN VIDEO CLIP)

REP. CAROLYN MALONEY, (D) NEW YORK:  And I can understand paying bonuses for outstanding performance, for building jobs, growing the economy, but how can you justify paying bonuses to managers that were running their company into the ground?

KEN LEWIS, CEO, BANK OF AMERICA:  We had no authority to tell them what to do, just urge them what to do.

REP. BARNEY FRANK, (D) CHAIR HOUSE FINANCIAL SERVICES COMMITTEE: 

You‘ve got bonuses over time.  If in good times you were told you weren‘t going to get a bonus, what part of your job would you not do?

JOHN MACK, CEO, MORGAN STANLEY:  We love what we do.  If you gave me no bonus in the best year I would still be here.

REP. FRANK:  So I will not bill you for my services as an efficiency consultant.

REP. PAUL KANJORSKI, (D) PENNSYLVANIA:  Why does it appear to the general public that all the finest minds in finance missed the most obvious?  This disaster, if you will.  I don‘t want you to stampede now, I want you to answer that question.

(END VIDEO CLIP)

SHUSTER:  Joining us now from Capitol Hill, Republican Congressman from Florida, Adam Putnam.  Representative Putnam sits in the House Financial Services Committee.  He was at the hearing today.

And Congressman, what did you accomplish today?

REP. ADAM PUTNAM, (R ) HOUSE FINANCIAL SERVICES COMMITTEE:  Well, I was on a plane back from Florida, but I was able to monitor what happened in that hearing.  And what you saw was just a taste of the frustration that Members of Congress are hearing from their constituents about the despicable misuse of investors‘ money.  And now what is taxpayers‘ money by these firms who are refurbishing their offices at $1 million a clip and are taking out performance bonuses for poor performance and, as my colleague said, for driving their companies into the ground.

It is the kind of abuse of the public trust and abuse of investors‘ dollars that is undermining the support for any other discussion about economic recovery plans.

SHUSTER:  Well, I think a lot of the public is actually with the committee, today, and all of you for raking these guys over the coals and essentially forcing them to humiliate themselves and offer their apologies.  But then what, I mean to what end does this hearing take you?

PUTNAM:  Well, where it should take us, is finding a way to get the money back.  It‘s not enough for public humiliation.  That‘s just playing to the cameras.

If we‘re really going to do something, if were really going to do this thing the right way, we need to find a way to make sure that there will be no performance bonuses for firms that are taking TARP money and for firms that misstated their books or deliberately misled their investors through shuffling papers and falsifying records.

We need to be able to go after that compensation and after those performance bonuses that were ill-gotten gains.

SHUSTER:  I want to play for you one of the more intriguing sound bites of the hearing.  This is Representative Capuano, watch this.

(BEGIN VIDEO CLIP)

REP. MICHAEL CAPUANO, (D) MASSACHUSETTS:  But basically you come to us, today, on your bicycles after buying Girl Scout cookies and helping out Mother Teresa.  Telling us, “We‘re sorry, we didn‘t mean it, we won‘t do it again.  Trust us.”

Well, I have some people in my constituency that actually robbed some of your banks.  And they say the same thing.  The problem I have is that, honestly—none of us—America doesn‘t trust you anymore.

(END VIDEO CLIP)

SHUSTER:  Congressman, do you trust the CEOs?  In other words, would you on a specific proposal, for example, to cap CEO pay?  Do you think that‘s a wise idea now based on everything that has come out in this whole story?

PUTNAM:  I‘m a perfect guy to ask that question though, because I believe that markets should set salaries.  And I had opposed that type of an approach before they came to Congress, before they came to the taxpayer and asked for these bailouts.

And now, they absolutely ought to have their salaries cut because it‘s no longer a market decision.  They are now taking taxpayer dollars.  And so that free market, the competition among the banks no longer exists.  And they‘re going to have to play by Congress‘ rules now.

They‘re going to have to play by the public‘s rules now.  And their behavior has seriously undermined public policymakers‘ confidence and the public‘s confidence in their ability to see us through this economic crisis.

SHUSTER:  Some of that behavior, as you know, involves, for example, continuing forward with a plan to essentially get a corporate jet after taking taxpayer money.  The CEO of Citigroup has now recanted on that and apologized.

But here was his explanation today.  Watch.

(BEGIN VIDEO CLIP)

VIKRAM PANDIT, CEO CITIGROUP:  And I take personal responsibility for that mistake.  In the end, I canceled delivery.  We need to do a better job of acknowledging and embracing the new realities.

Let me be clear with the committee.  I get the new reality and I will make sure Citi gets it as well.  And I‘ve told my Board of Directors that my salary should be $1 per year with no bonus until we return to profitability.

(END VIDEO CLIP)

SHUSTER:  Congressman, are you satisfied with the pound of flesh that you got out of that?

PUTNAM:  The new reality should be new personnel in leadership positions in these firms and not just the CEOs but the Boards as well.

Now, there needs to be a thoughtful way of changing the deck hands because clearly we don‘t need to have a mass firing in the middle of an economic crisis.  But the bottom line is the real way to get their attention is to get new personnel in at the helm of the financial ship of states.

SHUSTER:  Congressman Adam Putnam, thank you very much for joining us we appreciate it.

PUTNAM:  Thank you.

SHUSTER:  As we said, Merrill Lynch has become the biggest target of public disgust following revelations that executive bonuses were doled out even as the firm was collapsing just days before Merrill Lynch was bought by Bank of America with the help of $45 billion in taxpayer money.  Yes, $45 billion with a B.  The company handed out $3.6 billion in bonuses.  That‘s right.  Close to $4 billion.  A $121 million went to just four people.

New York Democrat Carolyn Maloney got right to the point in today‘s hearings putting Bank of America Ken Lewis, CEO of course the Bank of America and she put his feet to the fire.

(BEGIN VIDEO CLIP)

REP. CAROLYN MALONEY, (D) NEW YORK:  Those that were most responsible for the losses were the most richly rewarded.  And for me, the worst aspect of this business is that Merrill paid these bonuses out just before the January merger with your bank and couldn‘t this reasonably be described as looting the company prior to the merger.

(END VIDEO CLIP)

SHUSTER:  Joining us now live from Capitol Hill is Missouri Senator Claire McCaskill, a Democrat and Senator.  In the last interview you just picked up a House Republican supporting your idea.  You were the first to float it, of capping the CEO pay of companies that get federal bailout money.  What‘s your reaction?

SEN. CLAIRE MCCASKILL, (D) MISSOURI:  Well, I think these guys are beginning to get it.  Some of the responses in the hearing today really were encouraging, that they finally figured out that it‘s a new set of rules once taxpayers are on the hook for hundreds and billions of dollars.  And I do think we‘re going to get in the final recovery act some form of law limiting executive compensation.

The details are still being worked out, but I am confident that when this bill is sent to the President‘s desk within the next few days there will be for the first time in the law something that will limit executive compensation at these firms that have received public money.

SHUSTER:  One of the hurdles, as you know, and to sort of enlighten our viewers involves with this issue of what do you do when you have a separate board that‘s determining compensation?  That actually came up from the CEO of Bank of America today.

Let‘s play that then I will get your reaction.  Watch.

(BEGIN VIDEO CLIP)

LEWIS:  I will remind you, though, that they were a public company until the first of this year.  They had a separate board, separate compensation committee and we had no authority to tell them what to do, just urge them what to do.

(END VIDEO CLIP)

SHUSTER:  Again, he was talking about Merrill Lynch and these massive bonuses they got right before the merger.  What do you make of that?  Is there essentially nothing Bank of America could have done?

MCCASKILL:  Well, I think they could have put out a press release and that would have solved the problem.

Really, the public knowing this is what has really brought the severity of the compensation issue to the American public.  You know, whether it was the jet or whether it was the fancy wastebasket.

I mean, the thing that‘s really hard to get your arms around is that the CEO of Merrill Lynch thought he deserved $30 million.  I mean, give me a break.

So but I do think they have now figured it out between the President‘s pronouncement, between the laws that have been introduced over the last few weeks and now with something going into this bill, I think we‘re going to turn the page and see more accountability to taxpayers in these companies that are getting public money.

And by the way, talk about incentives.  What a great incentive to pay the taxpayers back.  Because they‘re going to want to get compensation and the incentive now is you can‘t get a whole bunch of money until you pay us back.

SHUSTER:  Senator, where does your proposal stand now?  Are you getting enough support to move it forward?  And then what‘s the direction?

MCCASKILL:  Well, there are three or four different compensation bills that have been added to the recovery act.  And now as we‘re doing the conference, one of the problems with my provision, honestly, David, was it scored very high because these bonuses and compensation had been so high it‘s going to cost the Treasury over $10 billion to enact the specific bill I introduced.  And that‘s a very high price tag.

SHUSTER:  Explain that.  Because I‘m not sure—I‘m not sure our viewers can follow the logic there.  Explain why.

MCCASKILL:  That‘s how much taxes are paid to the federal government on these moneys.  So that‘s gives you some idea.  If the federal government is taking in over $1 billion a year in taxes from these salaries, then you know that they are making huge money in this sector.

So when the bill gets scored that high it‘s very hard for my specific bill to make the final cut.  Because we‘re trying to get the cost of it down under $800 billion in order to get these Republican votes that we need to go forward.

So that‘s a complicated long way of explaining that we‘re going get something in the bill.  It‘s not going to be exactly what I introduced.  It‘s going to be something along the lines of what the President has announced.  But the important thing is we‘re getting it into law.

SHUSTER:  And finally what do you make of the New York Attorney General Andrew Cuomo, he‘s got a criminal investigation into some of these Merrill Lynch bonuses and some of the rest based on your view of what‘s been going on, do you think that‘s justified?  And do you hope that in fact there are criminal charges at the end of this?

MCCASKILL:  Well, I never—I hope that justice is—and the truth.  And we find that out.  I don‘t think it‘s ever healthy on the former prosecutor to hope for criminal charges.  We should let the facts dictate whether or not there are criminal charges.

But here is what I really want.  I want everyone to figure out that we must have the confidence of the American people.  They need to believe that we‘re out here doing their work on their behalf.  And the people that are taking taxpayer money must be conscious of the fact that they have an obligation to instill confidence, too, because until we get the anger calmed down and get back to feeling positive about who we are as a country then we‘re never going to turn the corner on this crisis.

SHUSTER:  Missouri Democratic Senator, Claire McCaskill.  Senator, thanks for being with us today and we appreciate it.

MCCASKILL:  Thank you.

SHUSTER:  Up next, it did not take long to reach a deal.  Negotiators in the House and Senate came to an agreement today over the competing versions of the Economic Recovery Plan.  We will bring you the latest details.

Plus, Republican Congressman Eric Cantor got into big trouble today, after his office released a video lampooning unions.  We will bring you Congressman Cantor‘s response.

And later, this is Sarah Palin‘s birthday.  The video tribute you do not want to miss.

All ahead, on “1600.”

(COMMERCIAL BREAK)

SHUSTER:  Rush Limbaugh and his friends claim the stimulus bill contains a horrible new health care modernization office.  Actually, it‘s not new.  And Rush didn‘t have any problems when the office was created by President Bush.  “Hypocrisy Watch” is ahead on “1600.”

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D-NV) MAJORITY LEADER:  Like any negotiation, this involved give and take and if you don‘t mind my saying so, that‘s an understatement.  Legislation is the art of compromise, consensus building.  And that‘s what we did.

(END VIDEO CLIP)

SHUSTER:  Welcome back to “1600.”  That was Senate Majority Leader Harry Reid this afternoon announcing the $789 billion deal the House and Senate reached on the stimulus.

House Speaker Nancy Pelosi is just about to come out now to talk about the House being briefed.  In fact, she‘s there now.  So let‘s listen.

NANCY PELOSI, HOUSE SPEAKER:  Hi, they‘re very proud of the work that we did in the House to create up to four million new jobs, to do so in a way that builds the infrastructure of America, improves our health care through technology and science, make our schools—schools for the 21st century for our children, reduces our dependence on foreign oil by investment and renewable energy and the technology to transmit it.

We have come to an agreement with the Senate as to how we will go forward and I think people are pretty happy about that.  It‘s always the consideration of what we had in the bill that we wish was still—we wish that were still there.

But the fact is that there‘s plenty there to create that nearly four million jobs that the President has set as our goal.  The President, we‘ve been in consultation with him during the day, with the Senate.  I got off the phone with Senator Collins and as you know, the conference is meeting right now as we speak.

I hope that the issues will be resolved soon and that we can take up the bill in the House and the Senate in the next day or two.  And that the bill will be signed by the President before President‘s weekend as was our goal.

SHUSTER:  Again that was House Speaker Nancy Pelosi speaking there.  And the news coming out of that is that every indication now that the House Democratic Leadership as expected also supports what has come out of these negotiations.

And what happens is the members—the House members and the Senate members have to essentially brief their respective chambers and House Speaker Nancy Pelosi, who a day ago said she was going to fight hard to put some of the money back in that the Senate version have stripped out, regardless of what was done, the House Speaker making it very clear that Democrats are united and on board.  And this means that, of course, the passage is almost guaranteed now in both the House and the Senate.

In terms of the negotiations, there were three crucial players including three essentially three Republican moderate Senators.  Susan Collins and Olympia Snowe of Maine, and Pennsylvania Senator Arlen Specter in announcing the deal earlier today one Senator called them the “Job Squad.”

But most Republicans especially in the House disagreed.

Here‘s Minority Leader John Boehner.

(BEGIN VIDEO CLIP)

JOHN BOEHNER, (R-OH) HOUSE MINORITY LEADER:  It appears that they have made a bad bill worse by reducing the amount of tax relief for American families and small businesses and adding more wasteful Washington spending.

(END VIDEO CLIP)

SHUSTER:  Joining us now for more on the politics of the stimulus deal, is John Harwood, CNBC‘s chief Washington correspondent.

John, this will be a victory for President Obama but it‘s also a victory for the power of Collins, Snowe, and Specter, right?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  It is.  But I think we shouldn‘t underestimate the magnitude of this early victory for Barack Obama.

There has been a lot of talk over the last few days.  Daschle‘s nomination went down.  The Geithner financial bailout package got some flak yesterday and the market went down a few hundred points.

But to get an $800 billion stimulus package in your first couple weeks in office, that‘s not bad for a start for Barack Obama.  And, of course, now the proof is going to be whether it works.  He didn‘t achieve, as you indicated, the broad cut of bipartisan support that he wanted.  But be that as it may, he‘s got his bill.

SHUSTER:  And speaking of trying to get bipartisan support, some of the unions including AFSCME are now targeting 21 lawmakers who voted no with a television ad.  Here‘s the ad.  I want to get your reaction on the other side.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Our economy in crisis, millions out of work.  That‘s why 80 percent of Americans support a plan like President Obama‘s to create jobs.  But Republican leaders?  They are just saying no.  No to changing the failed economic policies of the past eight years.  We‘re in an economic crisis.

(END VIDEO CLIP)

SHUSTER:  John Harwood, is that ad effective?  And will it be effective?

HARWOOD:  Well, I think is effective.  It‘s political hard ball.  They‘re trying to leverage the President‘s popularity and the desire of the American people for change.  It‘s a way to get around some of the specific arguments that Republicans were making substantively against the bill.

And if it provokes more people to react the way Eric Cantor reacted it‘ll be a big victory for organized labor because that was a damaging mistake by his office.

SHUSTER:  Well, in fact, let‘s talk about that.  It was sort of a bizarre day for Congressman Cantor because his office sent out the following video that‘s making fun of AFSCME and other unions.  Watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  No way you work them on instead of sitting around with your finger up your [bleep].  Look around.  There‘s a union out there called AFSCME and there‘s a [bleep] you take for granted.  For example, we pick up your [bleep] garbage.  You plug up the holes in the road so you don‘t [bleep] your car.  A lot of little old ladies from Florida.

(END VIDEO CLIP)

SHUSTER:  Again, it‘s an old video that is essentially mocking the unions and suggesting they‘re like somehow the Mafia.

Cantor, to his credit, apologized.  And here‘s what he said in his apology.  If I can find it right here.  He said, “I would like to apologize for a joke that was in no way an official response from Congressman Cantor, but instead an inappropriate email.  I apologize to AFSCME for my inappropriate email containing a old video.  Let me be clear.  We know people are hurting in these trying times.”  That is according to Congressman Cantor‘s spokesman.

John, what do you make of this, what was he thinking, what was his office thinking?

HARWOOD:  He may want to repeat that apology a few times.  I‘ve got to tell you, David, that is one of the stupidest things I‘ve ever seen a Congressional staffer do.

I think Republicans have conducted themselves by and large pretty well during this process.  They‘ve taken on a popular President in terms of his stimulus package.  They have made substantive arguments which are deeply believed by many of these Republican members that this is not the right way to go.  That some of this spending is wasteful.

And I think they have come across as principled in doing so.  But to have somebody, in effect, mock the other side at a time when it is a reality that many Americans want some action.  They are not following the back and forth.  They don‘t know about the particular provisions of the bill.

But to have that kind of a mocking profane video out there as a response to the new President‘s desire for a stimulus package is just a big setback, I think, politically, to the extent that people hear about it.

SHUSTER:  I agree.

John Harwood, CNBC and the “New York Times.”  John thanks so much for coming on and we appreciate it.

HARWOOD:  You bet.

SHUSTER:  We will get to our “Hypocrisy Watch.”  We normally do that segment this time in our show but we‘re going to float it just a little bit.

And up next on “1600:” it is “Myth Buster Wednesday.”  Tax cuts and government spending, what is stimulative and what is not?  “Newsweek‘s” Daniel Gross will join us.

Plus, President Obama was on the road again today, pushing for his economic recovery plan.  Is going back to campaign mode the best approach for the President?  We‘ll bring you the political risks and rewards ahead on “1600.”

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to “1600” and it‘s time now for one of our favorite weekly feature, “Myth Buster Wednesday.”

Both the President and Vice President tried to sell the stimulus plan today with traditional infrastructure projects behind them.

President Obama spoke at a highway construction site in Springfield, Virginia.  Tomorrow he heads to Peoria, Illinois to visit employees of the world‘s leading manufacturer and construction and mining equipment.

The public, shaped by many Republican and several Democrats seems to believe that a dollar of government spending on a highway has more of an impact than a dollar of spending on a digital highway.  Say, for medical records.

Joining us now to bust a myth, is Daniel Gross, a senior editor at “Newsweek.”  Dan, first of all, welcome.

What do you make of the whole distinction that some Republicans and some Democrats are making that, oh, highway construction, the dollar goes farther than a dollar, say, on constructing an Internet highway of some type.

DAN GROSS, NEWSWEEK:  Well look, you have to think in two dimensions.  You spend $3,000 say filling a pothole.  You buy the asphalt, you pay the labor, it‘s done.  But it doesn‘t change the way people drive or really change anything about the nature of the economy.

You spend $3,000 say weatherizing a house and putting a new layer of fiberglass in, insulation in, and basically you‘re buying the labor, you‘re buying the material but then you‘re saving the homeowner say, $300 or $400 a year for the rest of the life of that house.

In many of the same ways, it‘s technology investments, say in broadband by improving productivity and pay dividends no further down the road.

So the question on comparing two types of spending is looking at, A, does it stimulate the economy now?  Are you buying goods and services.  But the second dimension is does this change something about our economy that gives people either more money in their pocket or business greater profits down the road.  I think with new types of investments, there‘s a better argument there.

SHUSTER:  What about the comparison, say, between 3,000 dollars in tax cuts that somebody may get and 3,000 dollars in government spending, say, on unemployment benefits or education benefits, for example? 

GROSS:  Look, most economists will tell you that a dollar is a dollar.  A dollar of a tax cut is a dollar of government spending has the same effect on the economy.  But when you‘re in a recession like we‘re in now, when the economy is shrinking at a four percent rate, when things are in a downward spiral, there‘s something to be said for government spending now. 

First of all, there‘s a certainty when Congress appropriates money, government will spend it.  With a tax cut, you might buy, you know, a sandwich.  You might put the money under your mattress.  You might travel to Italy and spend it there.  In those last two instances, that tax cut has done nothing to stimulate the local economy. 

SHUSTER:  A couple people have mentioned that food stamps don‘t do anything to stimulate the economy.  Is that a myth?  Or what is the truth behind that?

GROSS:  Food stamps is a transfer of taxpayer money to a consumer, not in the form of cash.  It can only be used at a store to buy food that is theoretically produced locally.  So yes, look, government spending—direct spending, when the government buys something, that‘s stimulus.  A cash transfer, which is an unemployment benefit or something like food stamps, is the same type of stimulus. 

SHUSTER:  Daniel Gross, great stuff as always.  If it‘s Wednesday, it‘s Myth Buster Wednesday with “Newsweek‘s” Daniel Gross.  Dan, thanks for coming on.  We appreciate it. 

GROSS:  You‘ll learn to say that at some point. 

SHUSTER:  One of these years.  Thanks, Dan. 

Up next, President Obama hits the road for a third straight day to sell the stimulus in Virginia.  Is the president‘s road trip effective?  Some Democrats think he made a mistake by leaving so much on the shoulders back here in Washington of his Treasury secretary, Tim Geithner. 

Plus our favorite Governor/hockey mom turns 45 years old today.  A birthday tribute for Sarah Palin that you do not want to miss, still ahead on 1600 PENNSYLVANIA AVENUE.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  Today was day three of the Obama administration‘s economic recovery road show.  Today‘s destination for the president was Springfield, Virginia, where Mr. Obama tried to underscore how government spending, particularly on infrastructure, will help create jobs. 

Joining us now is Ed Schultz, host of the nationally syndicated “Ed Schultz Show,” and veteran Republican strategist Todd Harris.  Todd, let‘s start with you.  It would seem that the president‘s road show is working.  He‘s mixing it up with people who love him dearly.  It seems to have an impact.  Would you agree or disagree? 

TODD HARRIS, REPUBLICAN STRATEGIST:  The Democrats control the White House.  They control both chambers of Congress.  It‘s not a big surprise that this thing—that he was going to get to do what he wanted.  I think we still are owing a huge debt of gratitude to House Republicans who voted en masse against this bill, because what that did—all of the scrutiny that this bill has received over the last ten days or so, that all came about because Republicans drew a line in the sand.  They said this is not a good bill.  Then the media started picking it apart. 

They made some tiny improvements.  But it‘s still not a good bill, still filled with pork. 

SHUSTER:  Like what?  I‘ll stop you right there, before we give Ed a chance.  Like what?  What‘s the pork? 

HARRIS:  Six hundred fifty million dollars to upgrade the computers in the State Department.  I don‘t see how that‘s stimulative. 

SHUSTER:  Stop right there.  Doesn‘t it create jobs for computer engineers?  Doesn‘t it create jobs for software programmers?  Doesn‘t it create jobs for the people who make those computers? 

HARRIS:  I would rather take the 650 million and give it directly to the American taxpayers.  Let them keep more of that money, which is, by the way, their money in the first place. 

SHUSTER:  That‘s fine.  But that‘s an argument over priorities and not stimulus.  Ed?

ED SCHULTZ, RADIO TALK SHOW HOSE:  Well, the Republican party has drawn that line in the sand.  And they have decided to put the American worker on one side and they‘re going to stand on the other.  It‘s amazing to me how they can come off the campaign trail, look at the numbers, listen to the voices, and be so obstinate about putting an investment into American workers. 

This is going to politically haunt senators in the Senate when the midterm comes up.  I think they‘re going to lose seats on this.  This is going to work, because it‘s going to public projects.  More people will have jobs.  More money will be circulating through the economy.  As far as this IT stuff going into the State Departments, this is exactly what they want to do when it comes to health care, stream-lining records.  This is an incubation for how we‘re going to fix our health care in this country. 

So it‘s a masterful plan.  Of course, there‘s some pork in it.  The fact is the American people are willing to have some money spent on them. 

SHUSTER:  Now, speaking of spending money, there was this big announcement yesterday by the Treasury secretary, Tim Geithner, this sort of new proposal to help out financial institutions.  Did the Democrats make a mistake by essentially having the president not talk much about that, avoiding some of the questions at his news conference, putting all of the trust on Geithner.  And the markets reacted horribly yesterday, when there wasn‘t enough details, a lack of specifics.  The market dropped by four percent. 

SCHULTZ:  Look at the controversial election that‘s going on in Israel too.  I mean, there are a lot of things that are playing out on the world scope right now that do affect the market.  The president did not want to steal the thunder of Geithner.  And he wants Geithner to earn the confidence of the American people.  So for him to hog the stage with a press conference and not let his Commerce secretary go up there—Treasury secretary go up there and do what‘s got to be done, there was a strategy to all of that. 

What was unfortunate today is that these executives show up without a balance sheet in front of the American people.  That hurts. 

HARRIS:  The idea the market dropped four percent because of the elections in Israel doesn‘t really pass the smell test. 

SCHULTZ:  Sure it does.

HARRIS:  The market—the market dropped because Geithner went yesterday and laid a big goose egg.  There‘s an old expression in marketing, satisfaction is based upon expectation.  President Obama raised expectations for what Timothy Geithner was going to say when Obama gave his prime time press conference.  He said, we‘re going to be specific.  We‘re going to roll out all of these details.  Timothy Geithner came forward yesterday, no details. 

John Kerry even said, I would have liked to have seen more substance. 

That‘s why the market reacted the way it did. 

SHUSTER:  The reason that we‘re in this sort of effort to try to give them another two trillion dollars is because there‘s still a financial crisis.  The credit crunch is still there.  There‘s not much liquidity.  A lot of people, justifiably, blame the CEOs who testified today.  How does that cut politically?  When people, despite all the apologies and the hat in that these CEOs had today.  When people hear, because these CEOs messed up, now we have to shell out yet another two trillion dollars to the financial institutions? 

HARRIS:  It cuts significantly.  If I were in the Republican leadership, I would be leading the charge right now to increase penalties for the kinds of white-collar crime, whether it‘s Bernie Madoff or some of these other people.  There‘s no such thing as a white collar crime of passion.  If you‘re committing white-collar crime, you have pre-meditated this.  You have thought this through.  I think the penalties need to be in line with the significant amount of damage that some of these people have caused. 

SCHULTZ:  I think the Congress has to bear some responsibility for the bonuses that were given out.  It just goes to show that there is a disconnect from some lawmakers that don‘t know the culture of the financial system in this country.  They‘ve been giving bonuses out for as long as Wall Street‘s been around.  That‘s how people get their income.  That‘s how they do it. 

When they gave them the money the first time around, they should have said, OK, no business as usual.  We‘ve got to change things here.  These guys got the money and said, well, OK, we‘ll just keep operating our business the way we‘ve always been doing it.  Now they‘re coming back after the fact.  I think it doesn‘t make the Congress look very good not knowing how the financial sector actually operates. 

SHUSTER:  As far as the effort to try to—as far as this effort to try to bail out the banks to continue doing it, add another two trillion dollars, does it make you nervous that essentially the Obama administration has decided to try and double down in order to solve this? 

SCHULTZ:  Well, they‘re doubling down on their watch, not doubling down on Bush‘s watch.  There is a difference.  There‘s an opportunity here for some accountability.  There‘s an opportunity for the Democrats to bone up to the American people on exactly what they campaigned on.  I say do it.  We‘re out of options.  This is something that has to be done. 

HARRIS:  What makes me nervous is not only the price tag, but the complete and utter lack of transparency.  Whether it‘s this stimulus bill that has had no markup, no hearings, no public hearings, no floor votes and no opportunity for debate, or whether it‘s, you know, on the Treasury‘s plan -- 

SHUSTER:  Everybody recognizes you don‘t have time.  Ideally, absolutely, you would spend months and months trying to figure out the best way to do this.  But the economy hasn‘t given anybody the time to do this. 

HARRIS:  We don‘t need to spend months and months.  It would be nice to know that if we‘re going to spend a couple trillion dollars, that at least our lawmakers have some clue as to where that money is going.  And right now they don‘t. 

SHUSTER:  I‘ll tell you what, if some of the lawmakers had half of the wit and intelligence and studiousness that you have, we‘d be in a lot of trouble, same with Ed Schultz.  When you hear some of the logic that comes out of lawmakers on this debate, it shocks you. 

SCHULTZ:  They should have been asking the questions when the money was going there the first time.  They didn‘t do that.  They let it go.  I maintain the position that I think there‘s a lot of people in Congress who don‘t understand the financial sector.  And now they‘re are getting a wake-up call and they‘re trying to take these guys with the wood shed.  But these eight executives today should have shown up with a balance sheet, just like small business; this is where the money went.  Millions went here, went here, went her. 

That‘s what the American people want right now.  They want it run like a business.  They want some accountability.  This is an opportunity for the Obama administration to make sure they deliver that to the American people.  Or they‘ll politically pay for it. 

SHUSTER:  This may come as a surprise to both of you, we‘re keeping you around for another block.  Ed Schultz and Todd Harris, thank you both. 

SCHULTZ:  Who‘s buying dinner? 

SHUSTER:  We are.  We‘ll have more from these two gentlemen after the break. 

Plus, how the military deals with the mental health of soldiers.  Our Muckraker of the day has some shocking stories about the way some troops are being treated after returning home from combat.  You‘re watching 1600.

(COMMERCIAL BREAK)

SHUSTER:  As the administration‘s economic recovery plan moves toward final passage, several right wing pundits continue to attack the health care provisions.  That takes us to tonight‘s hypocrisy watch. 

First, the background.  The economic recover plan calls for spending money to modernize health information systems, improve efficiency and thereby lower costs.  Rush Limbaugh and his friends claim the provisions would create “a big brother watching over you because of references to a National Coordinator for Health Information Technology.” 

Our friends at Fox News described it as: “this coordinator is supposed to monitor your health treatments to make sure your doctor is doing what the Feds deem appropriate.” 

Rush Limbaugh bragged, “I found it.  I detailed it for you.  Now it‘s all over the mainstream media, including Drudge and Fox News.” 

Well, a lot of people aren‘t talking about it without bothering to do a simple fact check.  The fact is the National Coordinator for Health Information Technology was actually created in 2004 by President George W.  Bush.  The office, quote, “provides counsel to the secretary of HHS and departmental leadership for the development and nationwide implementation of health information technology.” 

The office is not empowered and will not be empowered to monitor doctors or require them to do anything.  The bill does give the office more money to, quote, “provide appropriate information to help guide medical decisions.” 

What kind of information?  Independent scientific research, so doctors and patients can simply and quickly hear about the latest treatments, therapies, and success rates.  If right wing pundits are opposed to modernizing our medical information system, that‘s their prerogative.  But when you mislead the public and slam a government coordinator Republicans created and embraced, that‘s hypocrisy and it‘s wrong. 

Now for reaction.  Let‘s bring Ed Schultz, host of the nationally syndicated “Ed Schultz Show,” and veteran Republican strategist Todd Harris.  Todd, it is hypocrisy.  The Republicans created this office.  They can‘t complain about it now.  They can complain about it, but they can‘t bad mouth it, can they? 

HARRIS:  My issue is, regardless of what the office does—this goes back to the point we were making earlier.  I have a very hard time—as great as that may sound, I have a very hard time seeing how that is stimulative to our economy.  I‘m all for—we all live through this personal basis.  The problems need to be automated, computerized and easily transferable.  I don‘t see how that is going to create jobs and stimulate our economy. 

Hold on.  There‘s a big difference that I think we are losing sight of between spending and stimulating the economy.  We‘re talking a lot about spending.  But I‘m not sure how many of these things stimulate the economy.

SHUSTER:  Well, that‘s an argument that I disagree with you on, as you know.  But that‘s obviously a very different issue that somebody like Rush Limbaugh saying, big brother is going to be watching you.  Big brother is not going to be watching you.  This is a program they could have been complaining about for years, but they didn‘t complain about it because it was doing the right thing, trying to modernize medical information. 

SCHULTZ:  It‘s been proven that this is going to save money.  That is what the American people want to do.  It‘s not going to hinder the delivery system.  The American people are ready for changes here.  I think that the conservatives in this country heard the president sign the SCHIP bill a little over a week ago.  He said, this is a down payment on getting every American covered. 

Whoa.  Is he going to do the single payer thing?  Is he going to shift and go a little more to the left on getting every American covered?  How far will he actually go?  So they‘re going to throw out all kinds of stuff they possibly can. 

The conservatives had the power for eight years.  They did nothing but tell us to go out and get a health care savings account.  That‘s not enough. 

SHUSTER:  We‘re happy to tell you that today is Sarah Palin‘s birthday.  We have a very special tribute now for everybody watching the show.  Here it is.  Sarah Palin is 45.  She gave us so many gifts in her 44th year, we would be remiss if we didn‘t pay tribute. 

So happy birthday, Governor Palin. 

(BEGIN VIDEO CLIP)

(SINGING)

GOV. SARAH PALIN ®, ALASKA:  Governors do know best. 

I know that I know that I know. 

You know, they say the difference between a hockey mom and a pit bull? 

Lipstick. 

UNIDENTIFIED MALE:  They call her—what‘s that name they call her? 

Cara—What do they call her again, Tina? 

PALIN:  That would be Caribou Barbie. 

UNIDENTIFIED MALE:  Caribou Barbie.

PALIN:  I‘ll be in charge of the turkey, yes. 

That‘s exactly what we‘re going to do in a Palin and McCain administration. 

I knew I would like it, wearing his car hearts and steel toe boots. 

He‘s our kind of man. 

I told the Congress thanks, but no thanks. 

Thanks, but no thanks. 

Thanks, but no thanks. 

Thanks, but no thanks. 

Thanks, but no thanks on that bridge to nowhere. 

Can I call you Joe? 

(SINGING)

PALIN:  How are you feeling about the economy?  I‘ll betcha you‘re going to hear some fear. 

Certainly we‘re going to invite criticism for even doing this too. 

May I introduce to you my husband, Todd Palin?  He is Alaska‘s—

I must say your brother, Steven, is my favorite Baldwin brother. 

UNIDENTIFIED MALE:  You are a delight. 

(END VIDEO CLIP)

SHUSTER:  By the way, the terrific work on that piece came from producer/editor Chris Pendi (ph), brilliant.  Also, many thanks to Todd Harris and Ed Schultz.  We appreciate you coming around and sticking around with us. 

Up next, why is it so difficult for our soldiers returning from the war to get the help they need?  The shocking story about an Army private with Post-Traumatic Stress Disorder.  Our Muckraker of the day has a report all of us, including members of Congress, need to hear. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  The Army reported suicide numbers late last month that are the highest in three decades; 128 soldiers committed suicide last year, with 15 deaths still under investigation.  In an in-depth study of ten of those deaths, Salon.com found that many might have been avoidable if the soldiers had gotten need treatment for combat stress reaction. 

A recent study by the Rand Corporation found that nearly 20 percent of service members returning from Iraq and Afghanistan, 300,000 in all, report symptoms of Post-Traumatic Stress Disorder or major depression.  But only half have sought treatment and of those, only half got minimally adequate care. 

Mark Benjamin has covered the invisible wounds of war for Salon.com in a series called “Coming Home.”  He is our Muckraker of the day. 

First, tell us a little about—there‘s a story that you detail in this piece about a soldier who wrote a suicide note on a wall and the Army forced his family to paint over that? 

MARK BENJAMIN, SALON.COM:  That‘s one of the things we had covered.  We focused on Ft. Carson, Colorado.  We just picked a base and zeroed in on some deaths and some murders, I would say, that occurred at Ft. Carson, Colorado.  One of the things that‘s happening with these soldiers is they are not just getting—it‘s not just that they are not getting care.  It‘s also that they seem to be facing something more akin to harassment from their superior officers, who are saying that they‘re not tough enough. 

This soldier did paint his suicide note on the wall of the barracks of Ft. Carson before attempting suicide.  He barely survived.  The Army then charged him with destroying or desecrating government property.  In an effort to get that charge to go away, his mother sort of jokingly offered to paint over the wall and the Army took her up on it. 

SHUSTER:  Never mind that whatever was in that message might have actually been helpful to a psycho-analyst or therapist to try to understand what was going on in his mind.  It‘s ridiculous.  Tell us about how big a problem this is for the Army. 

BENJAMIN:  I think this is a huge problem.  As you mentioned, the suicide statistics are through the roof.  In January alone, 24 U.S. Army soldiers committed suicide.  That‘s really, really scary numbers.  When we looked at Ft. Carson, as I said, it‘s not just suicide.  The more you look at these soldiers who are coming back and having these problems and they‘re not getting proper diagnosis and they‘re not getting proper treatment and they‘re getting harassed by their chains of command, in some cases, all sorts of misbehavior is happening.  There‘s abuse of prescription drugs.  There‘s alcohol abuse.  There‘s terrible violence in the barracks, fighting. 

Now we‘re seeing murders.  That‘s one of the things that Salon is going to turn to next. 

SHUSTER:  What could the Department of Veteran Affairs and the Army be doing differently?   

BENJAMIN:  It‘s funny, the Army says they have this raft of good initiatives that they say are supposed to help the situation.  But when you get out into the field and you go to places like Ft. Carson, you don‘t see them.  I think what the Army needs to do is really, really incorporate into the way that they train soldiers, the way that they send them to war—they teach these guys to take care of their rifles, their tanks, and their Jeeps, all this stuff.  The fact that you might have to go to Iraq for two years and kill people, frankly, the way that might affects you doesn‘t seem to be part of the program. 

SHUSTER:  Mark, it is a terrific piece.  It‘s called “Coming Home” at Salon.com.  Mark Benjamin, our Muckraker of the day.  We‘re going to have you on again to talk about the series as it comes out.  Thanks for you great work.  We appreciate it.

BENJAMIN:  Thank you very much for having me.

SHUSTER:  That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  Thank you for watching.  We‘ll 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 at our Daily Briefing.  Just log onto Shuster.MSNBC.com.  If you‘re into Twittering, I‘ll be online right after the show.  Follow me on Twitter.com/Shuster1600. 

I‘m David Shuster.  “HARDBALL” with Chris Matthews starts right now. 

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