updated 3/2/2009 10:42:20 AM ET 2009-03-02T15:42:20

Guest: John Harwood, Rep. Chris Van Hollen, Amy Goodman, Richard Engel, John Yang

DAVID SHUSTER, HOST:  President Obama says 18 more months until the U.S.  combat operations end in Iraq.  Support on the right; frustration on the left.

Day 39 of the Obama administration. 

Hello, everybody, and welcome to the show.  I‘m David Shuster. 

Today, President Obama headed to Camp Lejeune in North Carolina, where the commander in chief addressed U.S. troops for the first time. 


UNIDENTIFIED MALE:  The president of the United States. 

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  So let me say this as plainly as I can.  By August 31, 2010, our combat mission in Iraq will end. 

You have endured tour after tour after tour of duty, and you have borne an enormous burden for your fellow citizens.  The situation in Iraq has improved, but let there be no doubt, Iraq is not yet secure. 

We cannot police Iraq‘s streets indefinitely until they are completely safe, nor can we stay until Iraq‘s union is perfect.  We cannot sustain indefinitely a commitment that has put a strain on our military and will cost the American people nearly $1 trillion. 

I intend to remove all U.S. troops from Iraq by the end of 2011.  And we will bring our troops home with the honor that they have earned. 

Thank you.  God bless you.  God bless the United States of America. 

Semper fi


SHUSTER:  The way President Obama handled the Iraq issue today was intriguing on many levels.  Even before he landed at Camp Lejeune this morning, the president made two phone calls, one to Iraqi Prime Minister Nuri al-Maliki, and the other to Mr. Obama‘s predecessor, President George W. Bush. 

For more on that, let‘s bring in NBC News White House Correspondent John Yang.  He is live on the north lawn. 

And John, what do we know about the Obama/Bush conversation?  Any details an what President Obama said? 

JOHN YANG, NBC NEWS WHITE HOUSE CORRESPONDENT:  To which conversation?  He called Nuri al-Maliki in the air from Air Force One on his way down to North Carolina.  Once he landed at Lejeune, he called the former president as a courtesy, we‘re told by Press Secretary Robert Gibbss, to let him know what he was going to announce. 

Gibbs said he only heard one side of the conversation, obviously.  He said it was a businesslike, straightforward conversation.  It lasted about five minutes or so. 

He explained what—Mr. Obama explained to his predecessor what he was going to say, what he was going to announce.  And he also—at the end, they had a little discussion about Mr. Bush‘s life in retirement, his new home in the Preston Hollow section of Dallas. 

It was done as a courtesy to the president, obviously President Bush, obviously since because the Iraq War has been such a major issue in his presidency.  It‘s going to likely define him in the history books in the years to come.  He did not call any of the other former presidents this morning. 

SHUSTER:  John, there was a nod by President Obama today to some of the accomplishments in Iraq.  Watch, and I‘ll ask you about it. 


OBAMA:  We sent our troops to Iraq to do away with Saddam Hussein‘s regime, and you got the job done. 


We kept our troops in Iraq to help establish a sovereign government, and you got the job done. 


And we will leave the Iraqi people with a hard-earned opportunity to live a better life. 


SHUSTER:  John, the key word there being “opportunity.”  I mean, it feels like a clear effort by the Obama White House to remind Americans that if Iraq still fails, it‘s because the Iraqis didn‘t take advantage of what we‘re trying to give them. 

YANG:  That‘s exactly right.  He said in the speech it‘s time for the Iraqis to seize the opportunity, that they—that the U.S. military has been there day after day, month after month, year after year, fighting province to province, neighborhood to neighborhood, to give the Iraqis the opportunity to choose another way.  And it‘s now up to them to seize it.

It was a very interesting speech.  The president ending a war he didn‘t want to begin in the first place, praising troops for fighting a war that he opposed, and praising what they had done.  But I think that this was his way of sort of saying that this is going to end. 

It‘s also interesting that he was very careful to say, or he said that the combat would end, that the war was coming to an end.  He never used the sorts of words that the previous administration used about victory, about winning the war, and certainly not the phrase “mission accomplished.” 

SHUSTER:  And critics are not satisfied.  Congressman Dennis Kucinich has said today, “I do not think that his plan”—Obama‘s plan—“goes far enough.  You cannot leave combat troops in a foreign country to conduct combat operations and call it the end of the war.  You can‘t be in and out at the same time.”

How is the White House dealing with this sort of criticism? 

YANG:  Well, they had a briefing.  Defense Secretary Robert Gates spoke to a bunch of us on a conference call, and he is very clear that this will be a new mission.  That one mission is ending, another mission is beginning.  That the troops that are left, as many as 50,000, perhaps as few as 35,000, are going to be there not for combat forces. 

They will not be combat troops.  They‘ll be there to help train the Iraqis, to carry out discreet and targeted counterterrorism missions, and that they are there also to protect State Department provincial reconstruction teams.  And I think, also, the administration, what they‘re hoping people will focus on is the idea that the combat mission is ending October, 2011 --

2010, rather—and that all troops will be home by the end of 2011, as the president promised in his campaign. 

SHUSTER:  NBC News White House Correspondent John Yang. 

Great reporting, as always, John.  Thanks for joining us. 

YANG:  Thanks, David.

SHUSTER:  President Obama‘s plan is being praised by Republican congressional leaders John Boehner and Eric Cantor, while the response from Democratic House Speaker Nancy Pelosi was more measured. 

Joining us now, a member of her leadership team, Congressman Chris Van Hollen, Democrat of Maryland.  He‘s chairman of the Democratic Congressional Campaign Committee. 

First of all, Congressman, your reaction to what the president announced today.  Are you satisfied? 

REP. CHRIS VAN HOLLEN (D), MARYLAND:  I am satisfied.  What I heard today was President Obama following through on the commitments that he made in the campaign. 

As soon as he got elected, he brought the military leaders in the White House.  He said, I want a plan for ending the war in Iraq.  He‘s got that plan. 

During the campaign, he made it very clear that he would always have a residual force for a more limited purpose, and that‘s what he announced today.  Exactly how many forces you need for that purpose he said he would discuss with his military leaders.  And that‘s how he‘s come up with the number. 

As Secretary Gates said, it could be 35,000, it could be 50,000.  But no matter what, by the end of 2011, under the Status of Forces Agreement, all U.S. forces would be out of Iraq. 

SHUSTER:  Except that that is two and a half years away.  And I want to play for you what House Speaker Nancy Pelosi said when she was asked about the plan. 



RACHEL MADDOW, MSNBC:  Doesn‘t 50,000 seem like an awful large residual force? 

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  It does.  It does.  I completely agree with that.  And I don‘t—the president hasn‘t made the statement, so I don‘t know what he‘s going to say. 

I know what the rumor is.  And I don‘t know what the justification is for 50,000 -- the presence of 50,000 troops in Iraq. 

I do think there‘s a need for some, and I don‘t know that all of them have to be in country.  They can be platformed outside.  But I‘ll just be interested to see what the president has to say. 


SHUSTER:  Congressman, on that point, 50,000 troops in a non-combat role?  Doesn‘t that seem a bit large if you‘re talking about combat operations being over in a year and a half? 

VAN HOLLEN:  Well, I as Secretary Gates had said, the number could be between 35,000 and 50,000 troops.  And the question is, what‘s that mission?  And how many troops do you need to accomplish that mission? 

And I‘m sure we‘ll get testimony on Capitol Hill explaining why you need that level of forces in order to, number one, continue training Iraqi forces so we can make sure that we transfer responsibility for the combat fighting over to the Iraqis, 100 percent of that combat responsibility.  Two, protecting U.S. embassy personnel.  And then, again, having a residual force that can respond to al Qaeda-type attacks until the Iraqi military is able to totally take over that capacity as well. 

So I guess the question we will have is, you know, show us why you need this level of forces.  But look, this was a number that the president arrived at in consultation with the military leaders.  That‘s what they said they need for this more narrow and more limited mission. 

So I think the big news for today is that the president is following through on his promise to begin to end the war in Iraq.  He started that when he—in the very first days in office.  He‘s fleshed out the plan to do it.  I think the American people are going to be satisfied that we‘re doing exactly what he said he wanted to do and doing it in a responsible way. 

SHUSTER:  There are some Democrats, though, who are not satisfied, particularly on the left.  And there‘s this group called Accountability Now, which is vowing to go after centrist Democrats, perhaps on this issue, but perhaps on others. 

Here‘s what “U.S. News” wrote about it. 

“When Republicans were ascendant, groups like Club for Growth aimed to start weeding out insufficiently conservative lawmakers, targeting them in primary races.  The strategy worked in a sense.  There are certainly few moderate Republicans left standing.”

Your reaction to that?  And what do you make of this effort to possibly go after centrist Democrats by Democrats on the left? 

VAN HOLLEN:  Well, I think the concern, as always, is the unintended consequences.  Many times, these groups may go after centrist Democrats, but the consequence is getting a Republican who‘s even more conservative.  We saw that happened on the Republican side just in my state of Maryland, where the Club for Growth went after a centrist Republican, Wayne Gilchrist. They then had their preferred candidate, a much more right-wing Republican, Andy Harris. The result was a very moderate centrist Democrat, Frank Kratovil, won. So it‘s very tricky when you get into trying to target people like that. You can often have unintended consequences and end up getting somebody who is much farther away from your views than the person who is there.

DAVID SHUSTER, MSNBC ANCHOR, 1600 PENNSYLVANIA AVENUE:  Congressman Chris Van Hollen, member of the Democratic leadership in the House.  Congressman, thanks for joining us. We appreciate it, as always.

Thank you, David.

SHUSTER:  You‘re welcome.

Still ahead, Republicans are railing against wasteful spending on pet projects. But how many earmarks are they actually responsible for? The answer‘s ahead in “Hypocrisy Watch.”

But up next, the president‘s new timetable for Iraq has sparked a flood of reaction across the blogosphere. We‘ll bring that to you and talk about what it means for the president‘s progressive coalition.

Later, live report from the region by NBC‘s Richard Engel. We‘ll ask him, on TV, some of the questions about Iraq that you post on Twitter. Just go to Shuster.msnbc.com and click on the Twitter link. It‘s all ahead on “1600.”



BARACK OBAMA, (D) PRESIDENT OF THE UNITED STATES:  Let me say this as plainly as I can. By August 31st, 2010, our combat mission in Iraq will end.


SHUSTER:  Welcome back. That was President Obama, today, announcing a new timetable for the end of the Iraq war. A date certain is what many Americans have been waiting to hear, especially those Americans who believe, as President Obama did, that the war should have never been fought in the first place.

Still, the president‘s timetable is slower than what he proposed during the campaign. Amy Goodman is a host of “Democracy Now”, radio and T show. And she‘s blogging at democracynow.com. She‘s also the author of the book “Standing Up To Madness: Ordinary Heroes in Extraordinary Times.”

Amy, the Pulitzer-prize winning reporter Thomas Ricks, from “The Washington Post” said today on MSNBC, “I was struck by how similar President Obama was in discussing military affairs to President Bush.”

Your reaction?

AMY GOODMAN, DEMOCRACY NOW.ORG:  Well, I think that‘s very interesting, David. Because, yes, when President Obama was speaking at Camp Lejeune he told the soldiers they had gone to do what their mission was, to take out Saddam Hussein. That was not what they were originally sent to do.  Of course, it wasn‘t their fault. But President Bush floated the idea, convinced the American people Saddam Hussein had weapons of mass destruction. It didn‘t happen to be the truth. It was a lie.

And President Obama would have had the backing of the American people, most people opposed to this war, to simply tell the truth. So that didn‘t bode too well. I think Thomas Ricks was right there.

SHUSTER:  Does it bode poorly for you that the timeline is essentially a little slower than he said during the campaign? What do you make of it?

GOODMAN:  It‘s not just the three months, from 16 to 19 months. What we‘re really talking about here is an army that remains. When we‘re talking about 50,000 soldiers, saying, well, they won‘t be engaged in combat, of course, these are soldiers. They‘re there. They‘re trained in that way.  This is what is a grave concern to people, why the United States is continuing to occupy Iraq.

And, of course, with the SOFA, the Status of Forces Agreement, they could go on for years and years to come. Not to mention, I‘ve been speaking with some of the engineers who built the largest embassy on earth, the U.S.  embassy, it‘s right there in Baghdad. What‘s it going to take to protect this embassy? Is it something like four square miles in downtown Baghdad? I questioned Senator Obama, when he was running for president, when he came here to New York and asked him, for example, about the mercenary forces, the para-militaries. You know, the Black Waters -well, now it‘s called Z, XZ.  But these companies, would he support a ban on them in places like Iraq? He said no. That‘s another question that hasn‘t been answered today in president‘s speeches. What‘s going to happen with these mercenary forces? How many of them are going to be there?

SHUSTER:  What would you like Congress to do? I mean, we just had Congressman Chris Van Hollen talking about the hearings coming up. If you had the ear of a congressman, what would you tell him or her to say? And what would you demand to know from the Obama administration? Would you essentially argue some Democrats should take a stronger position against this plan?

GOODMAN:  Well, you know, I question Congress members all the time on Democracy Now, and ask them. I mean, our job as journalists is to hold those in power accountable. It‘s about Iraq and it‘s also about Afghanistan; about a surge in Afghanistan, promising thousands more soldiers and a greater war in Afghanistan. These are very serious issues.

I think the global economic meltdown, for one thing, is an indication we cannot afford war. I was just interviewing the Nobel economist, the Nobel-prize winning economist Joe Stiglitz, who wrote the book “The $3 Trillion War.” Yes, Iraq, $3 trillion over time, and also in paying for the veterans‘ health benefits as they come back and their care for a lifetime.  We cannot afford these wars.

Separate the morality just from the economics of it, both Iraq, and we can‘t forget the whole issue of Afghanistan. There has to be a greater debate in the media about greater war in Afghanistan. Barack Obama came out early opposed to the war in Iraq. And, yet, we don‘t hear that same kind of opposition or discussion around Afghanistan now.

SHUSTER:  Amy Goodman from Democracy Now.

Amy, good of you to join us. We appreciate it.

GOODMAN:  Thanks, David.

Up next, pork in the spending bill. Republicans on Capitol Hill are upset about earmarks,  Democratic earmarks. And that narrow focus by the GOP is a big problem. “Hypocrisy Watch” straight ahead on 1600 PENNSYLVANIA AVENUE.


SHUSTER:  On Capitol Hill, Republicans continue to rail against wasteful government spending and pet projects known as earmarks. That takes us to tonight‘s “Hypocrisy Watch.” first, the background. This week the House passed a $410 billion appropriations bill. It included $7.7 billion in earmarks or pet projects that did not go through the usual budget review. Here‘s the Republican House Minority Leader John Boehner.


REP. JOHN BOEHNER, ® MINORITY LEADER:  I‘ve challenged the Democrats to join us in an earmark freeze until we determine a more responsible way to deal with this process. They refuse to participate with us.


SHUSTER:  But in the meantime, Republicans aren‘t freezing anything themselves. Out of a $7.7 billion in earmarks this week, Republicans championed 40 percent, or roughly $3 billion. To be fair, Mr. Boehner has never requested an earmark in 18 years. But here‘s a sample of what his colleagues pushed through this week.

Wyoming Republican Barbara Cubin, $200,000 for a Buffalo Bill Historical Center. Montana Republican Denny Rehberg, $300,000 for a World Trade Center in Montana. Republican Rob Bishop, $100,000 for a World Trade Center in his state, Utah.

Democrats have also gotten some remarkable earmarks. Hawaii Democratic Senator Daniel Inouye, $238,000 for something called the Polynesian Voyaging Society. Vice President Joe Biden, $115,000 for surveillance cameras in Newark, Delaware; Secretary of State Hillary Clinton‘s efforts led to $29 million for cemetery improvements in Calverton, New York.

As Republican Senator Lindsey Graham said the other night:


SEN. LINDSAY GRAHAM, ® SOUTH CAROLINA:  Let me tell you about earmarks. We need a process. We need reform.


SHUSTER:  But until there is reform, Senator Graham isn‘t exactly holding back. According to Taxpayers for Common Sense, Senator Graham sponsored earmarks totaling more than $183 million.

To be clear, some earmarks contribute to the greater good and a lot of these projects create jobs. However, when you complain about earmarks or government spending then load pet projects and earmarks into a bill, that‘s hypocrisy and it‘s wrong.

And, hypocrisy update about something we told you about on Tuesday.  After Illinois bank Northern Trust went on a weekend spending blitz at a golf tournament in Los Angeles after it had received $1.6 in federal bailout money, today the bank sent a letter to the House Financial Services Committee Chairman Barney Frank saying it wants to start the process of paying back the $1.6 billion it got from the TARP. Amen. We‘ll keep you posted on the status of the check.

Coming up, do all Democratic first ladies strike the same pose for portraits? It‘s an unusual question we know, but we are asking it after watching the unveiling of Michelle Obama‘s official portrait and comparing hers to previous first ladies.

Up next, it was day two for the big conservative conference here in Washington. What does a burlap bag on your foot have to do with political recovery? Newt Gingrich seems to think there‘s a connection. We‘ll talk about that and the politics ahead on “1600.”


SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  Newt Gingrich stormed into the Conservative Political Action Conference today with “The Eye of The Tiger” blaring.  It offered words of hope to the minority party.  Gingrich said things could always be worse.  He said conservatives could be George Washington soldiers wearing burlap bags on their feet, followed by a group of mercenaries across the Delaware. 


NEWT GINGRICH, FMR. HOUSE SPEAKER:  You hear somebody who tells you, well, it‘s too hard, or I can‘t do it, we‘ll never win, or I am so disappointed?  One-third of them had no boots.  They were going to cross an icy river at night to take on a professional German military unit.  And their commander said to them, the password tonight is victory or death. 


SHUSTER:  With 2012 presidential hopefuls and GOP power brokers taking the podium one by one and celebrated in absentia, the attempt to locate a leader produced some bizarre moments.  Last night, Minnesota Congresswoman Michelle Bachmann made an awkward shout-out to RNC Chair Michael Steele, perhaps taking the hip hop party thing too literally. 


REP. MICHELLE BACHMANN ®, MINNESOTA:  Michael Steele, you be the man.  You be the man. 


SHUSTER:  Wow.  To interpret the odd, awkward, important moments today, let‘s bring in our political panel, Michael Crowley, senior editor of the “New Republic.”  Joshua Green is senior editor of the “Atlantic.”  And Emily Heil writes the “Heard on the Hill” column for “Roll Call.”

Michael, first of all, what was Michelle Bachmann—what was that about? 

CROWLEY:  David, you know, the questions what was she thinking?  My answer when it comes to her, does she think?  I don‘t think she does.  The woman just seems to say wacky things every time she opens her mouth and I think the people she represents by now should be a little embarrassed that she‘s representing them in Washington.  I mean, I think she thought she was being funny, I guess. 

SHUSTER:  Joshua Green, why would conservatives give a big megaphone and platform to Michelle Bachmann?  That‘s also puzzling, right? 

GREEN:  CPAC is all about celebrating the most intense conservatives.  She certainly ranks among them, even if she does have a propensity for saying whacked out, crazy things like that.  Who knows.  That‘s one reason the GOP is in the state it‘s in today, I think, is that people like that get the microphone at big rallies.  And, you know, that‘s the public face of the GOP. 

SHUSTER:  Emily, I know a lot of conservatives who are deep thinkers, intellectual, who would make the argument, look, President Obama is up at 68 percent approval rating.  Why would you want to give a platform to somebody who said President Obama should be investigated and that members of Congress should be investigated for possibly being anti-American, which is what Michelle Bachmann said during the campaign? 

HEIL:  Sure.  I think there are Republicans who are absolutely cringing at this kind of stuff.  They cringe when they see Joe the Plumber addressing those crowds, too.  I mean, these are novelties and sideshows.  I think there are members of the very, you know, party faithful, the people who are really the intellectuals behind this and the big thinkers, who see this kind of stuff and they really do cringe.  This is not the face of the party that they want to project. 

Certainly, these are the kinds of things that do catch our interest and they get talked about.  I don‘t think in a way that really helps the party on the mission it seems to think it‘s on. 

SHUSTER:  The person who seemed to have the biggest impact today was Newt Gingrich.  Here‘s what he said about Obama and Bush and spending.  Watch. 


GINGRICH:  We‘ve got big spending under Bush.  Now we have big spending under Obama.  There‘s a Bush/Obama continuity in economic policy, which is frankly a disaster for this country and cannot work. 


SHUSTER:  Emily, the problem is a lot of Americans feel like government spending is the only thing our country can do right now to get us out of the economic rut that we‘re in. 

HEIL:  Well, Republicans would say it‘s tax cuts too.  So we‘ve tried both and will see which, if any or both, work.  That is the conundrum for Republicans.  Their answer to that is the problem is deficits too.  It‘s like, you know, we can spend and maybe get our way out of this recession, but we‘re going to end up with deficits.  I think deficits are going to be the thing that Republicans really focus in on and they‘re going to run against it.  That‘s something we‘re going to be hearing no matter what happens with the economy. 

SHUSTER:  Josh, is there a Republican leader right now? 

GREEN:  You know, Rush Limbaugh, as much as anybody, seems to be leading the party.  No, I think that‘s one of the reasons why people like Michelle Bachmann and Michael Steele are out there occasionally embarrassing the party.  There isn‘t somebody out there who is thought of as the voice of the party, certainly not the type of voice that you could see leading the Republican party out of the wilderness and back into the majority. 

I think it‘s one of the reasons why Newt got the standing ovation he got today.  He is sort of a glimmer of the days when the GOP were really on top of the world, instead of where they are today. 

CROWLEY:  David, if I could jump in.  Go back to what you said at the opening.  OK, so who did that rag tag band of defeated hopeless men in the burlap sacks have leading them?  George Washington, one of the great men of history.  The Republican party doesn‘t have anything like George Washington right now.  The closest thing they have, I guess, is Newt, who stirs some of them up, but who is a throwback to the mid-‘90s. 

What you have is Michael Steele, Michelle Bachmann, Joe the Plumber.  It‘s a joke.  I think that if—Newt, in a way, drove home the wrong point, I think, because they don‘t have anybody like George Washington to lead them back to victory. 

SHUSTER:  Speaking of President Bush, Gingrich brought back a Bushism today.  Watch. 


GINGRICH:  North Korea, Iran, and Hamas are mortal threats to the survival of western civilization.  In all three cases, we need non-military but very sophisticated efforts at regime replacement.  We have to understand, and this administration had better learn pretty quickly, we may not be interested in war, but our enemies are. 


SHUSTER:  Josh, how much is fear a part of the conservative movement these days? 

GREEN:  I think it‘s a residual part.  If you think back to after September 11, that was a very effective motivating factor for years and years and years.  It helped George Bush win election in 2004, when a lot of the fundamentals were going against him.  It‘s not easy to let go of that.  That‘s been the case that Republicans have made over the last six years.  They clearly don‘t have a newer one or a better one to make.  I think a lot of them are going to fall back on that. 

SHUSTER:  Joshua Green, Michael Crowley and Emily Heil, they are sticking around.  We‘ll talk with them in our next segment. 

Before we go, this popped up on 1600‘s radar today.  We wanted to tell you about it.  The White House today released an official portrait of First Lady Michelle Obama.  Mrs. Obama can be seen here standing in the Blue Room, posing with her hand leaning against a marble top table.  Behind her is a portrait of James Monroe. 

Now, look at this book cover with Hillary Clinton posing in the same room, similar portrait.  We wondered, how have other first ladies posed for the camera?  Lady Bird Johnson took it outside.  Remember, she was all about beautification.  Here she is standing outside the White House, amongst a bed of flowers.  We found Michelle Obama is not the only first lady to go sleeveless.  Here‘s a picture of Eleanor Roosevelt at her desk, dressed to the nines for a formal occasion at the executive motion. 

Finally, the producers of the fictional “West Wing” must have caught on.  Take a look at this portrait of TV‘s favorite first lady, Abby Bartlett.  Look, she‘s also touching a table. 

Up next, the government reported today that in the last quarter of last year, our economy shrank the most it has in 27 years.  Analysts say the year, which was worse than expected, will be even more severe this quarter.  All of this as our government takes a bigger ownership stake in a another huge bank.  We will talk about the implications and new challenges to the Obama White House. 

Plus, NBC chief foreign correspondent Richard Engel will join us live to talk about the latest plans for Iraq.  Richard will answer some of your questions via Twitter.  Go to Shuster.MSNBC.com and click on the Twitter link.  More 1600 in a moment.


SHUSTER:  Welcome back to 1600.  There was another horrifying economic report today that indicated this recession is going to be even deeper and more severe than some of the recent projections suggested.  The Commerce Department reported today that in the fourth quarter of last year, the Gross Domestic Product fell 6.2 percent.  That was the steepest decline in 27 years. 

However, the White House message continues to be one of optimism.  While rolling out their budget yesterday, Christina Romer, who chairs President Obama‘s Counsel of Economic Advisers, predicted the economic down turn will stop by the end of the year. 


CHRISTINA ROMER, COUNCIL OF ECONOMIC ADVISERS:  We are projecting year over year GDP growth of minus 1.2 percent in 2009.  We anticipate the real GDP will fall significantly in the first quarter of this year.  We expect it to bottom out sometime around mid-year 2009, and begin growing again by the end of the year.  And more robust growth in 2011, 2012, and 2013. 


SHUSTER:  To talk about the politics of all of this with our panel, Michael Crowley, Joshua Green, and Emily Heil.  But, first, joining us is John Harwood, political writer for the “New York Times,” and cNBC‘s chief Washington correspondent.  John, the GDP number was worse than economists thought it would be today.  How significant is the report? 

JOHN HARWOOD, “THE NEW YORK TIMES”:  Well, you know, in some ways, you can see an advantage for Obama, because of the nowhere to go but up issue.  On the other hand, the worse it is right now, the worse it is in the first quarter of 2009, the slower it‘s going to be to turn this thing around, get back into positive territory. 

The Obama administration hopes, as Christina Romer was indicating—

By the way, David, she is the most cheery economist you‘re ever going to see.  They need to put her on television as much as possible.  If they can get it going by, at minimum, the first quarter of 20120, that will be a healthy position politically for them to be in for the 2010 elections.  The steeper the hole, the longer the climb. 

SHUSTER:  In reality, is Romer‘s forecast, and that of, say, Shaun Donovan (ph), who was on our show, saying that the recession would end within a year—are those forecasts too rosy? 

HARWOOD:  Well, we‘ll find out.  I was at that briefing with Christina Romer yesterday.  She said that the Blue Chip estimates, the CBO estimates that conflict with the administration‘s are pre-policy.  In other words, they factored in the affects of their stimulus package.  If you spend 800 billion dollars, you‘ve got to think it‘s going to have some effect. 

It will have some.  We just don‘t know if it‘s going to have as much, in terms of saving jobs and stimulating growth, as the administration has projected.  How it turns out, how credible those forecasts make, are going to be an important aspect of what voters use to judge the performance of the administration. 

SHUSTER:  But as far as GDP, if it‘s shrinking even more than people have thought, doesn‘t that back up the argument that the government stimulus President Obama signed needed to be even bigger? 

HARWOOD:  Well, yes, except that the results are going to tell whether it was big enough.  We‘re talking about retrospective adjustment for a quarter that already happened.  So, yes, Obama conceded that argument—economists were telling him the stimulus ought to be as big as 1.3 trillion dollars.  They couldn‘t get that through the Congress.  As you know, the legislative process forced that down just below 800 billion dollars being. 

But still, 800 billion dollars, even in reduced form, is a big chunk of change.  You can fill a whole in the productive capacity of the country and apply some serious jumper cables to an economy flat on its back with that much money.  We‘ll see how big a kick they get. 

One of the keys is going to be, look at the forth quarter of 2009.  Are we growing by that point?  If so, that‘s a running start for 2010, which will be welcome news for the Democrats. 

SHUSTER:  CNBC‘s John Harwood, also with the “New York Times.”  John, good of you to come on, we appreciate it. 

HARWOOD:  You bet. 

SHUSTER:  For more on what the economic bad news means for the president, let‘s bring back our political panel, Michael Crowley, Joshua Green, and Emily Heil.  Emily, if this recession, as every indication suggests, is going to be deeper and last longer than a lot of people seem to have thought, doesn‘t that mean the American public‘s patience for what the president is trying to do is also going to be much shorter? 

HEIL:  It very well could.  I think there‘s going to be a lot of frustration and certainly a lot of anticipation to see how fast the stimulus happens and how fast the package takes effect.  One thing that was really key to note about this report is that the Commerce Department said this GDP number would have shrunk even more had it not been for government spending.  That was actually a key to keeping it where it was, that it didn‘t fall further. 

So I think that reinforces some of what the Obama administration has been saying, that the injection of federal dollars is key to propping up the economy, much less growing it in the future. 

SHUSTER:  Michael, when you hear things like worst report in 27 years, as the GDP was today, how does that affect the politics here in Washington? 

CROWLEY:  Well, I think it—it helped Obama make the case.  I mean, in a strange way, when the news is this bad, it lends support to the argument that you had to do a really big stimulus bill.  There may be some Americans who are skeptical of all the quote/unquote spending coming out of Washington.  This is a way of saying, look people, we‘re not making this up.  This is real.

I will say, though, that when the numbers are worse than they were forecast, that personally makes me very nervous, because I like to at least think that people in Washington have a grip; the economists know what‘s happening, have a grip on it.  Unfortunately, I really think we‘re kind of in uncharted waters, where people couldn‘t really tell you exactly what‘s happening, when it‘s going to turn around. 

I‘m skeptical that Christina Romer—although I do agree with John Harwood that her chipperness is very welcome and probably psychologically useful.  I‘m skeptical she can really put a point on this.  Though she knows more about economics than I do.  I fear that they really don‘t know what‘s happening.  And that‘s what makes me most nervous. 

SHUSTER:  Joshua, does it also change the dynamics in terms of what a lot of people don‘t want to talk about in Washington, but that‘s the possibility of Democrats, the Obama administration, going back to Congress and saying, OK, the stimulus wasn‘t big enough, we need more? 

GREEN:  I think it does.  If you look at this week‘s “National Journal” insiders‘ poll, it‘s uncanny; 66 percent or about two-thirds of Democrats and two-thirds of Republicans polled thought we would have to go back and do another stimulus package this fall.  Seeing numbers like this, this sharp drop in GDP, is only going to increase talk of that. 

While it may help Obama sell his policies in the short term, reassure people that big stimulus was necessary, it poses a much bigger problem long term, because there‘s certainly a sense in the country that people are beginning to get fed up, that there‘s bailout fatigue.  Getting a second stimulus through would be much, much harder, needless to say, than it was to get the first one through. 

SHUSTER:  Emily, on that point, can Republicans simply say, look, the people who want the government to spend more money are some of the same forecasters who suggested that it wouldn‘t be as deep as a recession as it is? 

HEIL:  I think it‘s going to be a huge political lift to get another huge stimulus package through Congress.  I think we might have to see more, you know, reports like this one, unfortunately, to put some impetus behind that.  I think it would be a giant lift.  I think Republicans really found their voice on this in opposing this stimulus package.  I think that if there were to be another one, the human cry might get even louder. 

SHUSTER:  There‘s a Democratic union that‘s got a fascinating ad out that is sort related to all of this.  I want to play it for you and get your reaction.  Watch. 


UNIDENTIFIED MALE:  An economy in crisis.  A president determined to act.  But what did Republican leaders say to President Obama‘s jobs and recovery plan? 


UNIDENTIFIED MALE:  What did they say to 3.5 million jobs? 


UNIDENTIFIED MALE:  What did they say to tax cuts for 95 percent of working Americans? 


UNIDENTIFIED MALE:  What did they say to rebuilding roads, bridges, and schools. 




UNIDENTIFIED MALE:  So who are Republican leaders listening to? 


UNIDENTIFIED MALE:  Tell them America won‘t take no for an answer anymore. 


SHUSTER:  Michael Crowley, effective ad? 

CROWLEY:  Well, yes.  I think it‘s effective right now, because I think, in particular, people have a sense that we need to do something.  They also want the parties to be working together.  I think Obama won that fight in defining the politics of the stimulus.  I think it looks like the Republicans dug in.  It was political.  It was Rush Limbaugh leading the fight.  They weren‘t really trying to cooperate and work with him. 

But look, let‘s say the stimulus doesn‘t work, the economy doesn‘t turn around, maybe it‘s not Obama‘s fault.  Republicans might be playing that ad on their own behalf in a couple years, saying, we thought this thing was a turkey and we said so at the time and people should have listened to us.  Politics can change fast.  That‘s the one hope they have at this point.  I think, in the moment, they must be nervous.  I think it‘s a good ad. 

SHUSTER:  Joshua, to tie this into our previous segment, all these conservatives meeting Washington.  There‘s a perception in large parts of the country, whether it‘s Joe the Plumber, Michelle Bachmann, the people who are speaking at this conference—it does send the message I think to a lot of moderates that somehow the conservatives are not serious right now about health care, jobs, housing, the issues that so many people seem so concerned about. 

In that sense, in that sort of environment, doesn‘t this tend to go to the Democrats‘ favor? 

GREEN:  I think it does.  I think it makes them seem kind of truculent and angry and maybe have some sour grapes over the election.  But what it really poses a problem for the GOP is long term.  If they‘re going to get out of the minority, they need to have new ideas that they can sell to the American public, that will appeal to them.  Just saying no may feel good in the short term and allow you to bring your troops together.  And they did a very good job of that on the stimulus.  Ultimately it‘s not going to help your party advance.  That‘s a discussion that really needs to take place, and that‘s what some Republicans, the type who don‘t like Steele, who don‘t like Bachmann, have begun to think about and complain about.  That‘s really where the party needs to head, looking forward.  

SHUSTER:  Joshua Green, Emily Heil and Michael Crowley, thank you very much.  A terrific panel tonight.  We appreciate you all coming in. 

HEIL:  A pleasure. 

SHUSTER:  Up next, NBC foreign correspondent Richard Engel answers your Twitter questions about the president‘s plan to withdraw U.S. combat forces before September 2010. 

But first, “The Colbert Report” has some fun with Twitter.  Senator Claire McCaskill‘s mother, who scolded her daughter for Tweeting, and even President Obama. 


STEVEN COLBERT, “THE COLBERT REPORT”:  Now, Mama McCaskill, don‘t get mad at your daughter.  Everyone in Congress was Twittering during that thing.  You know how peer pressure is.  Besides, you couldn‘t see his hands, but even President Obama was doing it.  “OMG, totally addressing Congress.  LOL, Mitch McConnell looks like a turtle.” 



SHUSTER:  Welcome back.  It‘s Twitter time.  Today we‘re taking your questions on President Obama‘s timeline for the withdrawal of troops in Iraq and Afghanistan, adding troops to Afghanistan.  NBC chief foreign correspondent Richard Engel joins us now from Kabul, Afghanistan.  Richard, I‘m happy to report that you‘re even more popular on Twitter than you are with all of us at NBC, which is enormous.  The questions have been pouring in.  Let‘s get right to them. 

Melissa wants to know what the people of Iraq seem to be saying about President Obama in general and on the withdrawal plan specifically. 

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT:  The people of Iraq—starting with the withdrawal plan, because that‘s just what‘s happening today == are mixed.  A lot of Iraqis are very proud by the fact that they are now going to be having more sovereignty, more control of their country.  Nobody wants to be occupied.  No one likes to see American troops driving around the country. 

But they are still very skeptical that their own security forces are up to the task of maintaining stability in this country.  A lot of Iraqis have seen rampant corruption, a lot of abuse, and even torture carried out by the Iraqi police, and commandos, and Iraqi soldiers to a degree.  So there is a lack of faith in the security services.  So I think they‘re mixed. 

On Obama?  They‘re very encouraged.  I think they like the fact that he has an Islamic background, that he has Muslim relatives.  That is very popular across the Arab and Muslim world.  They like that he talks about change.  They saw the interview that he did not very long ago with an Arabic language television station, al Arabiya, when he talked about respecting the Arab and Muslim world.  That carried quite a bit of weight in Iraq and across the region. 

SHUSTER:  Richard, Jack wants to know what are the contingency plans if the draw down results in greater violence in Iraq or if there are requests for help from the Iraqi government? 

ENGEL:  I think the contingency plan that is in place right now is basically the timeline.  The key event that is coming up in Iraqi politics is the parliamentary election at the end of the year in December.  If you noticed in the plan laid out today, most U.S. combat troops would be in place through that key election, and then even after it, because generally it takes three months—or that is what the precedent has been so far—for the Iraqi government to get seated after the elections take place. 

So there is quite a bit of time built into this program, this withdrawal plan, for the elections to take place, for a new Iraqi government to be seated.  After that, if there is—all of this has happened and there‘s still a great degree of instability, I think it would be very difficult and I think the Iraqis would have trouble reaching out to the Americans and asking for yet another surge.  I think the plan, the message that was given today was this is your last shot. 

SHUSTER:  And, Richard, by the way, we‘re getting a ton of comments on Twitter, people saying Richard‘s reporting is phenomenal.  Is he ever able to get a good night‘s sleep?  We worry for him.  We admire his courage.  I can answer, since we‘re out of time.  But yes, Richard manages to get sleep.  Don‘t worry.  He‘s the best in the business. 

Richard, thanks so much for being with us.  We appreciate it. 

ENGEL:  You‘re embarrassing me now.  Thank you, David. 

SHUSTER:  That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  We‘ll see you back here Monday night, same time, 6:00 p.m.  Eastern on MSNBC.  Remember, get the latest political news and a sneak peek of what‘s coming up, go to Shuster.MSNBC.com.  You can also catch us on Twitter, Twitter.com/Shuster1600. 

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



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