updated 3/5/2009 12:17:45 PM ET 2009-03-05T17:17:45

Guests: Jonathan Martin, Ari Fleischer, Gary Ackerman, Robert Menendez,

John Feehery, Baratunde Thurston, Beth Fouhy

High: As the president unveils his plan to stop government waste, the congressional pork projects roll along.


DAVID SHUSTER, HOST (voice-over):  Tonight, the new effort to stop government waste. 

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  The days of giving defense contractors a blank check are over. 

SHUSTER:  But as the president unveils his plan, the congressional pork projects roll along. 

SEN. JOHN MCCAIN ®, ARIZONA:  My constituents are really angry when they see this kind of corruption taking place. 

SHUSTER:  The battle intensifies between the White House and Rush Limbaugh. 

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  So let‘s have the debate.  I am offering President Obama to come on this program. 

SHUSTER:  Republican Leader John Boehner says nothing to Limbaugh, but tells the White House to stop fanning the flames.  Boehner in “Hypocrisy Watch.”

Wall Street greed.  As Merrill Lynch was crumbling, the top 10 executives at the bank collected over $10 million each. 


UNIDENTIFIED MALE:  Madame Speaker, the prime minister of the United Kingdom of Great Britain and northern Ireland. 

SHUSTER:  ... the joint meeting of Congress for Gordon Brown and a new title for Senator Kennedy. 

GORDON BROWN, BRITISH PRIME MINISTER:  On behalf of the British people, an honorary knighthood for Sir Edward Kennedy. 

SHUSTER:  Strong emotions from the senator‘s son, and Twitter time, all tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA:  Thank you, everybody.


SHUSTER:  Day 44 of the Obama administration. 

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

Today, the battle between Rush Limbaugh and the Obama White House took another remarkable turn.  With both sides seeing a lot of benefit in keeping their fight going, Limbaugh added a new twist and challenged the president of the United States to debate him live on his show. 


LIMBAUGH:  I have an idea.  If these guys are so impressed with themselves, and if they are so sure of their correctness, why doesn‘t President Obama come on my show?  We will do a one-on-one debate of ideas and policies.  They wanted me to be the focus of attention, so let‘s have the debate. 


SHUSTER:  For more on that, let‘s bring in Politico White House reporter Jonathan Martin.  He‘s live on the north lawn. 

And Jonathan, any White House response to Rush Limbaugh‘s challenge? 

JONATHAN MARTIN, POLITICO WHITE HOUSE REPORTER:  I sure haven‘t heard any, David, tonight.  I think they‘re going to try and stay away from I think engaging Mr. Limbaugh tit for tat.  Robert Gibbs, the White House press secretary, sort of said today that he may enjoy the back and forth a little bit too much.  So I think they‘re going to probably not going to come down to the level of Rush Limbaugh and engage him in this debate offer. 

SHUSTER:  Is the feeling inside the White House that they have essentially squeezed as much out of this as they can, and that now it‘s time essentially to move on? 

MARTIN:  That‘s a good question.  I think that there is more to come, I think, certainly from the Democratic Party, David.  I‘m not sure that we‘ll see Gibbs do much more from the podium here in the White House, but I think it‘s very clear that the sort of allies of this White House, outside of the actual building, folks in liberal organizations, the DNC, what have you, I think will still try and get some fodder and get some mileage out of Limbaugh here. 

SHUSTER:  And certainly, of course, there was the former Obama campaign manager, David Plouffe, who had an op-ed today. 

MARTIN:  Right.

SHUSTER:  There are also various Web site.

Here‘s what Rush Limbaugh though is saying about all of this.  He says, “The administration is enabling me.  They‘re expanding my profile, expanding my audience, and expanding my influence.  An ever larger number of people are now being exposed to the anecdote to Obamaism: conservatism as articulated by me.  An even larger number of people are now exposed to substantive warnings, analysis and criticism of Obama‘s policies and intentions.”

The fact that the White House is enabling Rush Limbaugh, they acknowledge that, right? 

MARTIN:  Well, there is a bit, as they call it in science, of symbiosis, here, David.  Even though I‘m a liberal arts guy, I can still pronounce that word.

Look, I think that what‘s happening is that, you know, Limbaugh is being enabled by the Democrats in the White House because this just gives him more buzz.  It gives him more attention in the media and probably draws him even more listeners. 

His entire schtick is, you know, being a player, being relevant, sort of stirring it up.  And this only helps him in that cause.  And if you‘re a Democrat, as James Carville put it to me yesterday, look, this is only good news for them, too, to try and make the face of the GOP somebody who is as polarizing as Limbaugh—and his negatives in polls are pretty high—is mostly upside for Democrats. 

SHUSTER:  Jonathan Martin, Politico White House reporter. 

Jonathan, thanks for joining us.  We appreciate it. 

MARTIN:  Thank you, David.

SHUSTER:  As Jonathan pointed out, the White House and its allies have been happy to crown the controversial Limbaugh as king of the Republican Party, and quick to call attention to the GOP leaders who kowtow to him. 

Clearly, many congressional Republicans are now in a tough spot.  If they align themselves with Rush‘s statements about wanting the president to fail, they appear unpatriotic.  But if they criticize Limbaugh, they may face the wrath of the conservative base that listens to Rush. 

Joining us now to talk about this is Ari Fleischer, former White House press secretary to President Bush. 

And Ari, first of all, when Rush says that all Republicans want the president to fail, Limbaugh‘s wrong; right? 

ARI FLEISCHER, FMR. WHITE HOUSE PRESS SECRETARY:  Well, David, I think this entire issue is nothing but ridiculous.  You know, I‘m reminded of a president who, at his inaugural address, said the following: “We have come to proclaim an end to the petty grievances and recriminations that have strangled our politics.”  He cited the scripture, and he said, “The time has come to set aside childish things.”

Well, Barack Obama‘s chief of staff is acting childish, and so is everybody else in the Democrat Party who‘s picking this ridiculous fight at a time when they should be worried about fixing the economy. 

SHUSTER:  What about Rush Limbaugh though, Ari?  I mean, I agree with you, but it isn‘t the easiest way for Republicans...


FLEISCHER:  Rush Limbaugh was not elected to anything.  The president was.  And it was the very president who said put aside the childishness.  What I think is happening here...

SHUSTER:  Then why are so many Republicans already kowtowing to him?  Why did the Republican Party chair feel the need to apologize after first criticizing?  Why did so many Republicans this week—they have not been able to bring themselves to say, of course Rush Limbaugh is wrong when he says that all Republicans want the president to fail.  What is it so difficult? 

FLEISCHER:  It‘s not the issue, and I don‘t think Republicans should take the bait and talk about whatever Rush Limbaugh has said.  Rush Limbaugh is a conservative radio host, a very popular one.  And I like him. 

But the issue is the behavior of the president of the United States and his staff.  Which Barack Obama is it?  Is it the post-partisan Obama, or the Obama who sends his chief of staff out to act childish? 

This is the problem Barack Obama has.  And he is acting more as a petty partisan instead of a president. 

This is the issue.  These are our leaders.  The economy is melting. 

It‘s been two weeks, and we haven‘t even gotten the specifics of his banking proposal yet.  Instead, he‘s reliving the worst moments of the campaign when we dealt with “lipstick on a pig.”  Is this what Barack Obama wants his presidency to be about?

SHUSTER:  But Ari, I mean, you know politics.  Ari, you know politics.  I mean, wouldn‘t you acknowledge though from a pure political play that this is a wise White House strategy?  Because you‘re marginalizing Republicans, you‘re painting the entire Republican Party, your opposition, you‘re painting them as being like Rush Limbaugh. 

FLEISCHER:  This is just as foolish as it was when everybody got into a fuss about “lipstick on a pig” during a campaign.  America is sick of this type of petty politics, and it was started by Barack Obama.  That‘s what I cannot get over.  He is so different now than the Barack Obama he promised in that inaugural. 

SHUSTER:  Ari, wasn‘t it started by the Bush administration?  I mean, I seem to recall that during the Bush administration, when Republicans had legitimate concerns and complaints about the direction of the war, there was a straw man that was set up involving General Petraeus.  And that straw man was moveon.org, and you played a pretty crucial role about trying to portray all Democrats as somehow being unpatriotic and against General Petraeus, as opposed to being against the strategy. 

FLEISCHER:  Well, my point was it was the Barack Obama administration that began this whole nonsense about Rush Limbaugh, which is what I thought you wanted to talk about.  But there‘s always room to differ with people involved in politics. 

But coming from the president, the president‘s chief of staff, to allege that a radio host is the leader of the Republican Party?  This is the petty nonsense that I don‘t think anybody expected from a Barack Obama.  This is childish. 

SHUSTER:  Fair point.  But Ari, if it‘s nonsense and if it‘s childish, wasn‘t it nonsense and childish started by Rush Limbaugh? 

FLEISCHER:  Well, Rush Limbaugh didn‘t give an inaugural address promising to be somebody different. 

SHUSTER:  Oh, come on, Ari.

FLEISCHER:  Rush Limbaugh, like the liberal hosts on the left...

SHUSTER:  He‘s got 20 million listeners a day.  He‘s got more power over conservative listeners than anybody in this country. 

FLEISCHER:  David, the wings of both parties are entirely entitled to have vociferous voices represent each.  That‘s why they‘re called wings.  And Rush does a great job at it. 

The president of the United States, though, he is the one in 2004 who said there‘s not a red America or a blue America, there‘s one America.  But then he doesn‘t act like it.  He is trying to stir up the same...


SHUSTER:  But then why can‘t Republicans, Ari, say the same thing?  Why can‘t Republicans say, you know what, this is childish, this is ridiculous, Rush Limbaugh is wrong when he says Republicans want the president to fail, and we need to isolate Rush Limbaugh because we do have important issues to talk about? 

FLEISCHER:  Because then they would be chasing the same childish game that Rahm Emanuel started.  And I think it‘s to the Republicans‘ credit if they have the discipline not to take the question and not to chase the issue. 

This is about Barack Obama and the manner and the style, the tactics that he‘s choosing to govern, because he held himself out as something very different.  And now he‘s not being different.  He‘s being just like all the rest of the politicians in Washington of both parties who came before him.  But that‘s not what people expected. 

How can he give an inaugural address saying to move beyond these childish things and then let his chief of staff engage in those very childish things? 

SHUSTER:  Ari, is it unpatriotic for somebody to say they hope the president fails? 

FLEISCHER:  Patriotic?  You know, I think...

SHUSTER:  Is it unpatriotic if they say—is it unpatriotic—since patriotism was such a crucial theme in the run-up to the Iraq War and the way that the Bush White House defended it, is it unpatriotic to say that you hope the president fails? 

FLEISCHER:  David, I think it‘s the very nature of our system that people can believe that policies are not going to work.  And you should stand on principles.

SHUSTER:  Right, but they can also believe whether it‘s patriotic or unpatriotic.

FLEISCHER:  If you don‘t think the policies are...


FLEISCHER:  I don‘t think it has anything to do with...

SHUSTER:  Ari, a lot of people...

FLEISCHER:  ... patriotism to say that I don‘t think raising taxes and going on a spending spree is going to help the economy.  If that‘s what you believe as a Republican, you ought to say it.

SHUSTER:  But it was unpatriotic, therefore, to criticize the surge in Iraq and to somehow issue some criticism with the surge and thereby take issue with General Petraeus.  That was unpatriotic, but...

FLEISCHER:  No.  I think what you‘re confusing here is MoveOn...

SHUSTER:  ... it‘s not unpatriotic for Rush Limbaugh to say that it‘s OK for the president to fail? 

FLEISCHER:  What I think you‘re trying to throw into a Rush Limbaugh/Barack Obama conversation is an ad that MoveOn put on that called General Petraeus “General Betray Us.”  Now, they took their lumps for that, as they should have taken their lumps for that.

SHUSTER:  Right.  An ad that Democrats widely—here‘s the difference, Ari.  Here‘s the difference.

Democrats roundly criticized MoveOn for that ad.  I don‘t think you can find more than one or two Republicans this week who have roundly criticized Rush Limbaugh for saying, “I hope, the Republicans hope President Obama fails.”  That‘s the difference.

FLEISCHER:  Well, I think what you‘re misreading in that statement is Republicans, on philosophy, believe that the president‘s policies are not going to succeed.  But I can tell you, I want my 201(k) to be a 401(k) again.  I want the economy to get going.

SHUSTER:  But that‘s a very different—Ari, it‘s fine to argue—it‘s fine to argue that you think the president‘s policies are going to fail, but it‘s a very different matter when you say you hope the president fails. 

In any case, Ari, it‘s always great sparring with you. 

FLEISCHER:  All right, David.  Good to see you again. 

SHUSTER:  Thanks for coming on the program.  We appreciate it.

FLEISCHER:  My pleasure. 

SHUSTER:  Former White House spokesman Ari Fleischer. 

Up next, when Merrill Lynch was falling apart last fall, 11 top executives still collected $10 million each.  Now the matter is under state investigation.  Should there also be a federal criminal investigation? 

We will talk with Gary Ackerman, a key member of the House Financial Services Committee. 

Plus, President Obama is promising to get tough on those no-bid contracts, but why isn‘t the White House ready to target congressional earmarks and pork barrel projects? 

We‘ll take a closer look.

And we‘re taking your questions during the hour over Twitter.  Just go to twitter.com/shuster1600 or shuster.msnbc.com. 

It‘s all ahead on 1600.


SHUSTER:  Welcome back to 1600.

Call them the $10 million men.  Today, “The Wall Street Journal” reported that the 10 executives at the tiller of tanking at Merrill Lynch raked in $209 million in cash and stock in 2008 as the company was taking a $28 billion loss.  Among the highest paid, Andrea Orcel, who received $33.8 million.  Since base salaries for top Merrill brass mostly ranged from $200,000 to $750,000, much of the compensation was given in bonuses. 

New York attorney general Andrew Cuomo was investigating bonuses that were pushed through at the last minute during Bank of America and Merrill‘s shotgun marriage.  Bank of America CEO Ken Lewis was deposed by Cuomo but is arguing that salary information should not be made public. 

Joining us now to help us follow the money is House Financial Services Committee Chairman (sic) Gary Ackerman—actually member Gary Ackerman of New York. 

Congressman, do you want a federal investigation to go along with what New York State is doing? 

REP. GARY ACKERMAN (D), NEW YORK:  Well, I think Attorney General Cuomo is going to do a very good job.  He‘s a very serious player and thorough actor.  I think we‘re watching very closely to see what‘s happening to make a determination and an evaluation of whether or not there will be a federal investigation. 

SHUSTER:  What is the most outrageous aspect of this, in your view? 

ACKERMAN:  I think the most outrageous aspect of all of this is the runaway greed that we have seen that basically has taken over Wall Street and fixed a deal that everybody thought was legitimate all these years.  These people basically just reached in and grabbed for money, millions and millions and millions of dollars, to reward themselves and compensate themselves for being total failures.  And the public is outraged. 

SHUSTER:  Ken Lewis is the CEO of Bank of America.  Here he‘s talking about revenue producers and defending some of this money that goes to these financial institutions.  Watch, and I‘ll get your reaction. 


KEN LEWIS, CEO, BANK OF AMERICA:  When you start talking about the top 20, you‘re getting into some revenue producers that can really hurt your company if they leave.  And a lot of questions around, well, who would they go with?  The facts are there are foreign banks hiring, and the fact is that there are boutique investment banks hiring, and so there is a place for the top revenue producers to go.  And we‘ve got to find a way to be able to pay them and keep them. 


SHUSTER:  Congressman Ackerman, how about that argument? 

ACKERMAN:  I don‘t completely buy it.  It‘s not just a matter of producing revenues, it‘s a matter of making companies healthy and sound and having some value to them rather than just inflating stock prices. 

True, you need people who know how to run the companies.  But to pay people who have not run the companies well, to reward them, I mean, what do you give bonuses for?  Bonuses are supposed to be over and above your salary for doing a job better than ever expected. 

That‘s not what happened there.  This was a total collapse, a calamitous collapse, the likes and dimensions of which we haven‘t seen in the history of our economy.  And indeed, where are these people going to go? 

SHUSTER:  Have you heard from any of the people—have you heard from any of these executives?  Well, that‘s the thing. 

Have you heard from any of these executives?  Have any of them ever apologized during the course of any of these investigations?  Have you heard of any of these Merrill executives or former Merrill executives saying, you know what, I didn‘t deserve that money, I‘m sorry? 

ACKERMAN:  Very, very few.  I mean, we have some current executives right now that are saying that they‘re reducing their salaries to $1.  And that‘s very admirable.  And I think that should be the standard to which we hold people.  People should want to get paid and compensated based on the job they do. 

Sorry?  They‘ve not said they‘re sorry.  They‘re trying to justify in ridiculous ways and terms what they did.  And what they did is totally unacceptable to the American people. 

SHUSTER:  I agree.  It is ridiculous.  And it‘s outrageous.  And I hope that New York Attorney General Andrew Cuomo makes some progress and does turn this into a criminal investigation. 

In any case, Congressman Gary Ackerman, thank you very much.  We appreciate it. 

ACKERMAN:  Thank you.  I do want to say, what we have to do is get away from the market-to-market rule and reinstate the uptick rule.  And maybe we can come back, David, and talk about that again on 1600. 

SHUSTER:  We will talk about that in days ahead.  I promise.

And again, everybody, you just heard about the outrageous behavior at Merrill Lynch last fall.  Well, coming up, we will look at what some of the banks are doing now.  They want bailout money and are trying to get around congressional limits on CEO pay. 

But up next, House Minority Leader John Boehner is demanding the White House stop talking about conservative talk show host Rush Limbaugh.  And what is Boehner demanding from Rush?  Nothing.

“Hypocrisy Watch” is straight ahead. 


SHUSTER:  Today, Republican House Minority Leader John Boehner urged the Obama White House to stop fanning the flames over Rush Limbaugh.  And that takes us to tonight‘s “Hypocrisy Watch.”

First the background.

You will recall that the Limbaugh/Obama fight began when Rush said, “The dirty little secret is that every Republican in this country wants Obama to fail, but none of them have the guts to say so.”

All week long, a string of Republicans have refused to condemn Limbaugh or distance themselves from him.  That‘s been noted at the White House, including when RNC chair Michael Steele did a 180. 


ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  I was a little surprised at the speed in which Mr. Steele, the head of the RNC, apologized to the head of the Republican Party. 


SHUSTER:  Meanwhile, Rush has been bombastic in attacking President Obama‘s supporters. 


LIMBAUGH:  These are really odious, empty, nasty people, who are feasting on their own arrogance.  They are power hungry. 

But you know what?  They‘ve never had a serious debate over ideas. 

Their goal is to destroy opponents, which is what they‘re trying to do now. 


SHUSTER:  Today, House Republican Leader John Boehner issued a statement about the battle but focused only on the White House. 

“Political operatives in the White House are trying to divert attention away from the challenges facing our economy.  White House staff should have higher priorities than this cynical strategy.”

That‘s a fair argument about the White House strategy, but did Boehner criticize Rush Limbaugh or urge Rush for the good of the country to disengage?  Nope. 

Congressman Boehner, there are some important issues our nation needs to focus on, but when you only criticize the White House and don‘t say a peep about Rush Limbaugh, that‘s hypocrisy, and it‘s wrong. 

Up next, the banks that want bailout money and are still trying to get around limits on CEO pay.  We will talk about the congressional effort to crack down with Senator Robert Menendez, a key player on the Senate Banking Committee. 

Plus, Rush Limbaugh is offering to pay all White House travel expenses if the president will meet him for a debate.  We will talk with our panel about the Obama/Limbaugh crossfire ahead on 1600. 


JAY LENO, “THE TONIGHT SHOW WITH JAY LENO”:  How much is Rush Limbaugh loving all this publicity?  You see, he‘s everywhere now since he said he wanted Obama‘s policies to fail.  This is the greatest thing that happened to Limbaugh since they started making that center cut bacon. 




Rush Limbaugh today challenged President Obama to a debate.  The White House is laughing off the ongoing drama as counterproductive.  But is stoking the Rush fire the right strategy for Democrats or letting it go now? 

We‘ve got a great panel tonight to discuss it.  Baratunde Thurston, Beth Fouhy and John Feehery.

But first, we want to look at the issue about bailed out banks and whether they are pulling a fast one regarding executive bonuses.  Senator Robert Menendez is now asking the Obama administration to dig into the fine print in some of these deals to find the subtle and not so subtle ways that Wall Street executives are managing to fatten their wallets even as their companies are in danger of failing.

Joining us now is Senator Robert Menendez, Democrat from New Jersey and member of the Senate Banking Budget and Finance Committees, he‘s also chairman of the Democratic Senate Campaign Committee.  Senator Menendez, I want to play an audio clip I think you‘re familiar with.  This is an executive saying, essentially encouraging employees to talk about bonuses in a different manner in order to get them through.  Watch, then I‘ll get your reaction.


JAMES GORMAN, MORGAN STANLEY PRESIDENT:  There will be a retention award.  Please do not call it a bonus.  It is not a bonus.  It is an award.  And it recognizes the importance of keeping our team in place as we go through this integration.


SHUSTER:  What was James Gorman from Morgan Stanley, what was he doing there?  And what are you prepared to do about it?

MENENDEZ:  Well, this is exactly one of many examples that I cited to the secretary of the treasury in a letter that I sent to him and said, look, whether it‘s retention award or whether it‘s an incentive award or whether we‘re going to defer the bonuses for those entities that receive federal funds under the program to help them be stable and be able to move forward, it‘s simply not acceptable.  And so circumventing the will of the Congress and clearly the understanding of the agreements they signed in order to receive that money is just simply not acceptable.  We want the treasury secretary to go after it.

SHUSTER:  And clarify, because I think a lot of Americans may remember that—or may have thought they remembered that Congress essentially limiting CEO pay in the stimulus that just passed, right?  So why is that not effective?

MENENDEZ:  Well, no, it is.  It should be effective certainly on CEO compensation.  It should—the agreements that they signed to receive some of these entities received a total of $60 billion that are in question in terms of how they‘re trying to circumvent the agreement they signed which clearly would not provide for bonuses and so a bonus is a bonus is a bonus whether you call it a retention or an incentive.  At the end of the day that‘s not the purpose under which we gave federal funds.  This was to stabilize banks, to liquefy the credit market, to get loans out there in the communities that need it, to keep businesses going, to give consumers the opportunity to buy the car they need to get to work.  And so this is why my letter to the secretary of the treasury is such that, you know, we just can‘t—we‘ve got to send a very clear message here.  We want to help the financial institutions because ultimately it‘s about helping the country.  But they‘ve got to change the culture under which they operate.

SHUSTER:  And what‘s been the response from the treasury secretary?

MENENDEZ:  Well, we just sent them this setter because we found out about it based upon a series of public reports and we‘re waiting for his answer.  I‘m sure we‘re going it get him to look at it.  He understands very clearly, Secretary Geithner understands very clearly that there is no public appetite in this country for the type of actions that we‘re talking about here, about providing bonuses.  There‘s no appetite for it in the Congress of the United States.  And to the extent we want to solidify these financial institutions, which we understand ultimately means an incredible movement forward on our economy, fine.  But it cannot be done in ways that ultimately continues the culture.  These institutions must understand that they have to tighten their belt similar to the belt tightening that average families are taking place around this country.

SHUSTER:  Senator Robert Menendez from New Jersey.  Senator, good of you to join us.  And good luck with this.  It is outrageous these executives essentially trying to work around the will of the Congress and American people.  That‘s crazy.  And something needs to be done.  We appreciate you coming on.

MENENDEZ:  We‘re going to stay on it, David.  Thank you.


For more on all this let‘s go to our panel, Baratunde Thurston is the co-founder of jackandjillpolitics.com.  Beth Fouhy, political reporter for the Associated Press.  And Republican strategist John Feehery founder and CEO of the Feehery Group.  John Feehery, first to you.  What do you make of these executives who are now essentially trying to get around what Congress just tried to do?

JOHN FEEHERY, REPUBLICAN STRATEGIST:  Well, David, it‘s a cautionary tale for any business that comes to the federal government for help.  If you‘re going to do that, you have to play by the federal government‘s rules.  If you do that, you‘re going to have to abide by these spending or these pay limits.  I think that them trying to get around that is bad for them, it‘s bad politics, bad P.R.  Essentially, it serves as a cautionary tale for any business that comes to the federal government for a loan or for a bailout, beware.  Buyer beware.

SHUSTER:  Baratunde, are we wrong to be outraged by this or should we just sort of expect this is how business is done now in this culture?

BARATUNDE THURSTON, JACKANDJILLPOLITICS.COM:  No, I don‘t think we‘re wrong to be outraged.  And I do understand there‘s probably a handful of people in these banks who actually did a solid job.  They didn‘t burn the publics‘ and shareholders‘ money over the past few years.  And some of those people probably do deserve some kind of bonus.  And John is right and I‘m happy to agree with you on this that the P.R. on this was a massive failure.  Look, people are losing homes once every 13 seconds.  And a lot of that is due to pushing, you know, unacceptable terms on people who weren‘t ready for them and banks like this made a lot of money off of it.  So when a college students gets financial aid they‘re held to a certain standard by the government.  When a welfare recipient gets aid from the government they‘re held accountable.  Nothing less should be expected from our bankers.

SHUSTER:  Beth Fouhy, I want to turn to a different topic with you. 

You covered the presidential campaign.  Know the Obama team pretty well.  Give us your sense about this whole fight between Rush Limbaugh and the Obama White House and how much longer you think the White House feels like they can keep this going and what the benefit is to them.

BETH FOUHY, ASSOCIATED PRESS:  Yeah, sure.  At risk of inflaming the cable driven hyperbole that Robert Gibbs and others in the White House are always complaining about, I think we have to hand them the tactical victory.  They sort of rope-a-doped the Republicans in a corner, defending, protecting Rush Limbaugh who really isn‘t a spokesperson for the Republican Party, he‘s a spokesperson for himself.  He‘s got great appeal among the hardcore conservatives in this country but not much beyond that.

But my only question for the White House is really what was the end result they were seeking here?  What are they trying to accomplish by doing this?  It‘s a very good short-term tactical strategy.  It shows Rahm Emanuel and others inside the White House still know how to play the inside game very well.  That they‘re tough, they‘re not just going to lay down and be too accommodating with Republicans since they soundly beat Republicans in November.  Again, I‘m still a little confused given the big agenda the White House has with this body of Republicans on Capitol Hill, what they tried to accomplish with this.

SHUSTER:  John Feehery, it did put Republicans in a box, though, right?

FEEHERY:  Obviously a little bit uncomfortable to guys like Michael Steele and Phil Gingrey who are forced to apologize.  Look, this is really good for Rush Limbaugh because it builds up a huge following for him.  It gets free publicity and now he‘s in the middle of everyone‘s thought process.  And people are going to tune in.  It‘s good for the White House in a small way because it actually dilutes from the real messages and the real concerns that are going on.  I will say, I think Beth is absolutely right.  What‘s their end game?  Remember Bill Clinton tried to set up the straw man of Rush Limbaugh and what happened was more people listened to Rush and at the end of the day it wasn‘t good for Bill Clinton.

SHUSTER:  Baratunde, what do you make of it all?

THURSTON:  I think the end game is certainly not Rush Limbaugh.  I certainly hope it‘s not for the White House.  The end game is bolstering the Endangered Species Act like they did today and reining in contractors.  And one of the things that‘s really interesting to me is the Republicans slammed Obama throughout the campaign saying you guys are looking for a savior.  And this is your savior figure.  But essentially they did the same thing.  Sarah Palin was supposed to be the future of the party.  They grabbed the first woman they knew, they grabbed the first black guy their party, Michael Steele.  They go to Bobby Jindal.  Flameout.

And now Rush Limbaugh is up.  The fact of the matter is, the Democrats won.  Obama has his highest approval rating at 68 and the Republicans are at 26.  That‘s the conversation they don‘t want to have, so Rush is out there boosting his ratings but the real work is actually getting done.

SHUSTER:  I absolutely agree and I think he‘s filling a vacuum that exists whether your like it or not on the Republican Side.  In any case, our panel is staying with us.  Baratunde, Beth and John.  They are coming up next.

But u next, the president is against earmarks.  So it stands to reason his Cabinet would not partake in any pork barrel spending projects, right?  Wrong.  We‘ll explain.

Plus British Prime Minister Gordon Brown addressed a joint meeting of Congress today and paid tribute to Massachusetts Senator Ted Kennedy.  It was an emotional moment.  And we will bring it to you.

And later, your twitter questions.  You can find the link at shuster.msnbc.com or twitter.com/shuster1600.


SHUSTER:  Welcome back to 1600.  With Congress facing a Friday deadline, debate continues on the $410 billion omnibus spending bill that will keep federal agencies running.  But some Republicans are pointing fingers at the White House saying the 9,000 earmarks tucked into the bill, 40 percent of them sponsored by Republicans are not the change Obama promised.  And a few congressional Democrats are asking the president to veto the bill.  The message from the White House and the president‘s supporters, let‘s move on.


PETER ORSZAG, WHITE HOUSE BUDGET DIRECTOR:  This was a deal that was done last year, it is last year‘s business.

RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF:  This is last year‘s business.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  The president believes that we can work with Congress to reduce wasteful spending in the future.  And we‘ll change the rules going forward understanding that we have to deal with last year‘s business.


SHUSTER:  But some lawmakers are not so ready to move on.  Here‘s Senator John McCain this morning.


SEN. JOHN MCCAIN, ® AZ:  This is this year‘s business.  This is this year‘s spending.  This is this year‘s pork barrel projects.  This is this year.  And to somehow set an example by signing this into law that you are accepting businesses a usual for this year, obviously, is not what the president campaigned on.


SHUSTER:  Let‘s welcome back our political panel.  Baratunde Thurston, Beth Fouhy and John Feehery, and Beth Fouhy, is the politics of this as simple as the White House does not want to sort of anger members of Congress when it‘s got some big issues it‘s trying to deal with?  And given some of the earmarks come from Ray LaHood, they come from Rahm Emanuel .

FOUHY:  Barack Obama.

SHUSTER:  . Barack Obama, you might as well let it go and deal with the next one?

FOUHY:  I think that is what they‘re thinking.  The problem is, this White House has been a little bit slow to the realization that symbols really, really matter.  Particularly in this economy, particularly when this country is handing out taxpayer money hand over fist to banks, to all sorts of people we may feel like don‘t deserve it.  Example, all these earmarks which don‘t represent much of the budget, it‘s probably one percent or two percent still symbolically is important to the American people, who is wondering why they‘re broke, why they have no job, taxpayer money is going to others who perhaps don‘t deserve it.

So I think the White House needs to develop a better message on this.  Not dismiss it as last year‘s business, but really address is head on.  Why this is the kind of thing that does upset the American people and American voters and explain in very vivid terms why in this particular case they‘re going to move on but the piper has yet to be paid on this particular issue.

SHUSTER:  And let‘s explain for our viewers exactly what we‘re talking about.  It‘s an omnibus spending bill, $410 billion.  It includes 8,570 earmarks worth about $7.7 billion.  Forty percent sponsored by Republicans.  Less than one percent of the entire bill.  However, there are some interesting earmarks.  Hillary Clinton, secretary of state, $109 million in earmarks.  Hilda Solis, the labor secretary, $38.4 million in earmarks.  Ray LaHood, transportation secretary, $31.2 million.  Rahm Emanuel, White House chief of staff, $8.5 million.  Baratunde, is this is big issue or not?

THURSTON:  I don‘t think it‘s a big issue.  But I do agree with Beth that on a politics level and a message level this doesn‘t look very good especially with the conversation we just had about banking.  I think one of the ways they could do a better job, they maybe tried to do that today, didn‘t win the cycle.  Look, we‘ve wasted trillions invading the wrong country.  Where were all these concerns about spending at that time?  We burned $50 billion apparently reconstructing Iraq and that didn‘t really go anywhere.  We spent $300 billion in contractors who overcharged the government, to try to shift the conversation with numbers that are much more meaningful and problems much more offensive to the American taxpayer.

SHUSTER:  John Feehery, as far as the politics of it all, there was President Obama this morning essentially declaring war on no-bid contracts.  That‘s a very separate issue from earmarks but the president was promising that I‘ll take care of no-bid contracts, the days of these types of contracts at the Pentagon over.  Who‘s following whom here?  Is it the White House essentially knowing McCain and Feingold and others are starting to complain louder about earmarks and the White House wanted to say, oh, yeah, we‘re taking care of part of this.  Or is it Congress realizing what the White House is doing with these no-bid contracts and saying, wait a second, what about earmarks?

FEEHERY:  I think there‘s a very important game being played here between the legislative branch and the executive branch.  Barack Obama, if he wants to say there‘s a new sheriff in town, what he should do is veto this bill.  He‘s already made strategic mistakes saying that he wants the Congress to draft the budget.  The Congress to draft the first stimulus package.  The Congress to draft the health care bill.  That‘s giving a tremendous amount of power to Congress.  The only way he has power is by vetoing a bill.

For him, if he vetoes this first spending bill coming down the pike, he can say, I‘m going to take the earmarks out, I‘m going to do the no-bid contracts, and I‘m going to have all the power.  He‘s giving an awful lot of power to Nancy Pelosi and Harry Reid.  That‘s going to be very dangerous for the long-term health of his presidency.

SHUSTER:  The other thing is to point out how cute the White House sometimes is with all the earmarks that there were some from President Obama when he was a senator.  Since he took office the White House said, oh, no, he‘s really not part of those anymore.  A lot of those projects, in fact, have other sponsors so they‘re able to claim, oh, no, President Obama is not sponsoring earmarks but he was sponsoring them last year in any case.

FEEHERY:  David, that‘s not good enough.  He‘s got to veto to show he‘s the one with the real power.

SHUSTER:  I agree with you.  John Feehery, Beth and Baratunde, you‘re all sticking around.

Up next, the president is calling for you on line one.  Mr. Obama‘s habits are giving recipients a surprise.  Plus who‘s on the commander in chief‘s speed dial?  We‘ll show you that ahead on 1600.




MICHAEL DOUGLAS, ACTOR:  Yeah, hi.  Is this Sydney?


DOUGLAS:  This is Andrew Shepard.

BENING:  Oh, it‘s Andrew Shepard.  Yeah, you‘re hilarious, Richard. 

You‘re a regular riot.

DOUGLAS:  No, this isn‘t Richard.  This is Andrew Shepard.

BENING:  I‘m glad you called.  I forgot to tell you today I‘m impressed you were able to get my phone number given the fact I don‘t have a home.  Good night, Richard.

DOUGLAS:  This isn‘t Richard .

BENING:  Hello?

DOUGLAS:  Sydney?

BENING:  Are you learning impaired?

DOUGLAS:  Do me a favor, hang up the phone.

BENING:  What?

DOUGLAS:  Hang up the phone then dial 456-1414.  When you get the White House operator, give her your name and tell her you want to speak to the president.


SHUSTER:  Welcome back to 1600.  That was a great movie moment between Annette Bening and Michael Douglas.  But that doesn‘t just happen in the movies.  Remember when Congresswoman Ileana Ros-Lehtinen from Miami hung up on President-Elect Obama not once but twice thinking it was a prank when he called to congratulate her on re-election?  Well, other lawmakers might want to brace themselves.  “The New York Times” reported today President Obama likes to make calls to the outside world in his spare time.  During the debate over the economic recovery package, several senators and representatives from both sides of the aisle reported receiving multiple calls from the president.  The last occupant of the Oval Office, George W.  Bush got a surprise call Friday when Mr. Obama let him know about the latest plans for combat troops in Iraq.

So who is on President Obama‘s speed dial?  The “Times” reports most of the president‘s top aides from senior adviser Axelrod to the CIA director have been programmed into the White House phones in almost every room.

By the way, we know that the president has a communications team to help him reach out to foreign dignitaries.  Well, the last few days talking with the British prime minister has only required a local call.  Gordon Brown is in the midst of a visit to Washington and today he became the fifth British prime minister to address both houses of Congress.  Mr. Brown used part of his speech to give Senator Edward Kennedy one of the U.K.‘s highest honors.


GORDON BROWN, BRITISH PRIME MINISTER:  I know you will allow me to give special mention today one of your most distinguished senators.  Known in every continent and a great friend.  I want to announce, awarded by her majesty the queen, on behalf of the British people, an honorary knighthood for Sir Edward Kennedy.


SHUSTER:  Kennedy joins an exclusive club of 85 other U.S. citizens to receive the honorary knighthood for the queen since she took the throne in 1952.  The list includes former Presidents Ronald Reagan and George H.W.  Bush, also former New York Mayor Rudy Giuliani, who received the recognition for his work following the September 11th attacks.  Microsoft Chief Bill Gates was recognized for his business skills.  And filmmaker Steven Spielberg got the royal honor for his contribution to films.

Don‘t be tempted to call the senator from Massachusetts Sir Ted.  “The Times of London” explains only British citizens are entitled to use the sir before their name.  Kennedy, will, however, will be applied to place the initials, KBE, which stands for Knight of the British Empire, after his name.

In a moving moment after the prime minister‘s speech, Ted Kennedy‘s son, Congressman Patrick Kennedy embraced and shook hands with Prime Minister Brown.  Senator Kennedy, who is fighting brain cancer, could not attend the speech but did release this statement.

“I‘m deeply grateful to Her Majesty, the Queen and to Prime Minister Brown for this extraordinary honor.  For me this honor is moving and personal, a reflection not only of my public life but things that profoundly matter to me as an individual.”

And finally on our radar today, the Obama girls had a big surprise at the White House this afternoon.  After school, Sasha and Malia for escorted outside to find this.  A new swing set complete with three swings and slide and a tent.  It was set up just outside the Oval Office.  According to the chief usher, the swing set was a big hit.  The girls reportedly screams with delight when they saw it.  I bet.

And it is twitter time.  It appears that this habit of our colleagues and all of you, getting attention.  Watch.


JON STEWART, COMEDY CENTRAL:  There‘s a hot new trend sweeping the nation.  The media can‘t get enough.

RICK SANCHEZ, CNN ANCHOR:  Boom, let‘s go first to twitter board if we possibly can.

UNIDENTIFIED MALE:  Do you twitter?

UNIDENTIFIED FEMALE:  On my twitter page.

UNIDENTIFIED MALE:  They‘re talking about twitter.

UNIDENTIFIED FEMALE:  Keep twittering us.

UNIDENTIFIED MALE:  I‘ll be tweeting through the program.

UNIDENTIFIED FEMALE:  Time to go between the tweets.

CHARLIE GIBSON, ABC NEWS ANCHOR:  Here a tweet, there a tweet.

UNIDENTIFIED FEMALE:  We have a tweet on twitter.



SHUSTER:  Twitter time.

STEWART:  Yeah, let‘s tweet these twotters tween their twinks.

This new technology sounds adorable.


SHUSTER:  Thank you Jon Stewart.  Now let‘s bring back our panel and take your questions.  Baratunde Thurston, Beth Fouhy and John Feehery.  John, a lot of questions for you about the earmarks and the spending.  And given that there are Republicans and Democrats that have taken some of the earmarks.  The question is, is Congress brain dead?

FEEHERY:  Yes.  Do you want me to expand on that?  You know, it‘s obviously—brain dead in a sense they‘re putting earmarks from last year that are really going to put the administration in a very difficult situation.  Earmarks I think, it‘s a constitutional push and pull there, but on this one they should have kept it clean, sent the bill to the president, and got through it.  This is bad politics for the president.  So yes, they are brain dead.  They‘re brain dead for a lot of other reasons, too, David.

SHUSTER:  I agree with you there.  Beth, question for you via twitter.  A couple people want to know about Karl Rove, Harriet Miers, they of course worked in the Bush White House.  There appears to be a deal to get them to testify about a number of issues, perhaps the firing of U.S. attorneys, political motivation, et cetera.  What do you make of it?  Do you think Congress will get the information out of Rove and Miers lawmakers are hoping for?

FOUHY:  Well, it seems to me it‘s up to Democrats in Congress and the Obama administration whether they want to go back and revisit all of these old Bush-era scandals.  There are certainly a lot of Democrats and others who very much think it‘s deserved and that what happened during the Bush administration should be investigated in the event there was wrongdoing.

The question is whether it‘s politically astute for them, for the Democrats for them to do that at this point.  I think given the Democrats control the White House and Congress they have to make the decision and live with it.

SHUSTER:  And Baratunde, final question for you.  Back to Rush Limbaugh.  A couple people want to know, are there Republicans who have the courage to stand up with Rush Limbaugh?  I‘ll say, what do you make of that?  Do you think there are any Republicans and if so, who?

BARATUNDE:  Based on the available evidence, there doesn‘t seem to be any.  Everybody has been given the chance to say, no, we don‘t actually want the president to fail.  And I think the standards obviously shift.  There‘s politics involved in this.  Remember when Democrats were unpatriotic for not supporting the troops, whatever that was supposed to mean, signing off on everything this intellectually uncurious president who didn‘t make enough phone calls wanted to do.

So I don‘t expect many people to stand up to his highness, Rush Limbaugh.  For me, this is entertaining and sort of just desserts for a tactic that failed for the Republicans.

SHUSTER:  Well, it‘s just desserts for all of us here at this show to have a panel like this.  Baratunde Thurston, Beth Fouhy, John Feehery, a terrific panel.  Thank you so much for coming on tonight.  We appreciate it.

FOUHY:  Thanks, David.

SHUSTER:  You‘re welcome.  That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  Remember, you can get the latest political news and a sneak peek at what‘s coming up on the show sent straight to your inbox with the “1600 Daily Briefing”.  Just go to shuster.msnbc.com.  You can also get text alerts.  Text Penn to 622639.  Remember, we‘re always twittering.  Twitter.com/shuster1600.  What a day this one is, was.  What a day it will be tomorrow.  I‘m David Shuster.  HARDBALL starts right now.



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