updated 3/5/2009 2:48:00 PM ET 2009-03-05T19:48:00

Guest: Jon Decker, John Barrasso, John Harwood, Tim Grieve

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HOST (voice-over):  Tonight, the conservative conference in Washington.

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  What is so strange about being honest and saying I want Barack Obama to fail?

SHUSTER:  With Rush Limbaugh on center stage, the White House could not be happier.

RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF:  He is the voice and the intellectual force and energy behind the Republican Party.

SHUSTER:  Coming up, the Obama strategy as the president heads towards health care reform.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  Kathleen has a remarkable intellect, unquestioned integrity. 

SHUSTER:  Also, remember those bank CEOs who testified to Congress? 

UNIDENTIFIED MALE:  We love what we do.  If you gave me no bonus in the best year, I would still be here. 

SHUSTER:  We will have the latest on CEO pay, the bailout for AIG, and the Dow dropping to its lowest point in years. 

Later, “Hypocrisy Watch.”

GOV. BOBBY JINDAL ®, LOUISIANA:  Eight billion dollars for high-speed rail projects. 

SHUSTER:  Louisiana‘s Bobby Jindal hated government money for trains last week, but is asking for government money this week. 

And radar.  Pele, soccer‘s greatest, wants to visit the White House as he‘s done before. 

And hear questions during Twitter time. 

All tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA:  Thank you, everybody.  We‘re going to go get to work. 

(END VIDEOTAPE)

SHUSTER:  Day 42 of the Obama administration. 

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

While the White House faces a series of complex policy challenges, their strategy for dealing with the Republican opposition became clear today—highlight at every opportunity Rush Limbaugh.  And Limbaugh, who tends to turn off moderates, is all too happy to be the leader of the GOP. 

This weekend, he was the keynote speaker at a huge conservative conference. 

(BEGIN VIDEO CLIP)

LIMBAUGH:  They hoped George Bush failed.  So where is it—what is so strange about being honest and saying I want Barack Obama to fail if his mission is to restructure and reform this country so that capitalism and individual liberty are not its foundation?  Why would I want that to succeed? 

(APPLAUSE)

(END VIDEO CLIP)

SHUSTER:  Well, today, for the second day in a row, the White House was happy to keep Limbaugh in the spotlight. 

Watch. 

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  ... ask individual Republicans whether they agree with what Rush Limbaugh said this weekend.  Do they want to see the president‘s economic agenda fail?  In watching a few cable clips of Mr. Limbaugh‘s speech, his notion of presidential failure seemed to be quite popular in the room in which he spoke. 

(END VIDEO CLIP)

SHUSTER:  In just a moment we‘re going to ask a high-ranking Republican. 

But first, joining us now from the White House is Jon Decker, Washington correspondent for Reuters. 

And Jon, explain the political strategy here at the White House. 

JON DECKER, WHITE HOUSE CORRESPONDENT, REUTERS:  Well, for the White House, what they‘re trying to do, and doing it quite well, actually, is driving a wedge in the Republican Party.  We saw Rush Limbaugh, as you mentioned, this weekend, talking to the CPAC conference, getting a huge ovation for the things that he was saying.  And we also saw this back and forth between Rush Limbaugh, who gets 20 million listeners every week on his radio program, and Mr. Steele, the chairman of the RNC. 

This is exactly what the White House wants, they‘re loving it.  They‘re relishing this fight that‘s happening in the Republican Party because it‘s showing them as right now, anyway, being very disunified. 

SHUSTER:  And it was so intriguing, Jon, that yesterday, Rahm Emanuel, the White House chief of staff, he was the one who brought up Rush Limbaugh unprompted.  Watch.  Here‘s Emanuel from yesterday. 

(BEGIN VIDEO CLIP)

EMANUEL:  He has laid out his vision, in my view, and he said it clearly, and I compliment him for that.  He‘s been very up front.  And I compliment him for that because he‘s not hiding. 

He‘s asked for President Obama and called for President Obama to fail.  That‘s his view, and that‘s what he‘s annunciated.  And whenever a Republican criticizes him, they have to run back and apologize to him and say they were misunderstood. 

(END VIDEO CLIP)

SHUSTER:  Jon, how quickly was the White House essentially jumping on what Rush Limbaugh said Saturday night?  Because there was essentially Rahm Emanuel Sunday.  They must have thought, this is great. 

DECKER:  No, they like it.  It‘s good stuff.  It‘s good fodder for their base. 

You know, in the same vain that it shows disunity in the Republican Party, it unifies the coalition that President Obama put together that won him the White House.  So any time that you pick an enemy, an enemy that the coalition really doesn‘t like, that being Rush Limbaugh, it‘s good.  It helps them unify behind the message that President Obama is pushing and the policies that President Obama is pushing. 

SHUSTER:  Jon Decker, Reuters White House correspondent.

Jon, we appreciate it very much.  Thanks, as always. 

DECKER:  Thank you, David. 

SHUSTER:  Rush Limbaugh claims that he speaks for all Republicans, saying, “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.”

Joining me now is Senator John Barrasso, Republican from Wyoming and a member of the GOP whip team. 

Senator, do you want the president‘s economic policies to fail? 

SEN. JOHN BARRASSO ®, WYOMING:  David, I want everybody president to succeed, always have.  I think it‘s the best for this nation.  If this president and every president does well, it means our country does well, and I want to work with this president to improve our economy and to get jobs back into the economy. 

SHUSTER:  So then you‘d be willing to say Rush Limbaugh was wrong, then, right? 

BARRASSO:  Rush is a very powerful, strong voice of conservative values.  And I will tell you, I agree with him on limited government, on lower taxes, on fewer regulations, more freedom for the American people.  I want to work with the president, with this administration, but I‘m not happy with what Nancy Pelosi has done in Congress, the very bloated...

(CROSSTALK)

SHUSTER:  I hear you.  But when Rush Limbaugh says—I hear where you‘re going.  But when Rush Limbaugh says that Republicans want President Obama to fail, Rush Limbaugh is wrong?

BARRASSO:  What I‘m telling you is that I want this president to succeed at—because when he succeeds, the entire nation succeeds.  And I will...

(CROSSTALK)

SHUSTER:  Senator, I hear, but explain to me, why do Republicans have such a difficult time—why do Republicans in general, yourself included, have such a difficult time saying the simple words “Rush is wrong”?  Why is it so hard? 

BARRASSO:  Because I believe Rush is right on so many things—on limited government, on lower taxes, on giving us more individual freedoms, on opportunities for America, on accountability in government.  Those are the things that Rush has talked about for years.  They‘re very important, core conservative principles.  I believe in those. 

But I am telling you, also, that I want to work to improve our economy.  The stock market today dropped 4.25 percent.  It is the lowest it‘s been in 12 years.  So if you try to deal with distractions, that‘s what Americans are focused on.  What is happening to their retirement?  What‘s happening to our economy? 

For the stock market to drop that much today, that‘s where people ought to be paying attention, to the economy, to rebuilding the economy, to working together and stimulating the economy. 

SHUSTER:  Right, but isn‘t it difficult for us—agree, but isn‘t it difficult for us to have that conversation when you have such a prominent voice as Rush Limbaugh saying the Republicans want President Obama to fail, and you, yourself, aren‘t willing to say on national television that on that narrow issue, Rush Limbaugh is wrong? 

BARRASSO:  I‘m happy to say on national television that I want the president to succeed, because I want America to succeed.  And we‘re going to continue to work to do that.  But we really need to focus on the economy and the kind of spending that these policies coming out of the Democrats in the House and the Senate are such that they are unsustainable. 

They‘re adding to the debt.  We cannot succeed that way as a nation.  And the stock market has been voting with its feet by people taking money out, and the stocks continuing to drop as a result of policies which to me are not solid, conservative policies.  And that‘s the way that the nation is going. 

SHUSTER:  Well, let‘s talk about those policies.  I think we‘ve exhausted the whole Rush Limbaugh/Michael Steele controversy. 

What exactly—if you were president and you inherited the economic environment that President Obama did, what would you do about it? 

BARRASSO:  I would aim at fixing housing first.  That was the problem that got us into this mess in the first place. 

Warren Buffett just came out with his report over the weekend from Berkshire Hathaway.  He has a whole section on housing, about people that took loans that they shouldn‘t have taken, from bankers who shouldn‘t have loaned the money to them in the first place.  We needed to fix housing first. 

You know, I voted against the stimulus package.  I thought it was too big, spent too much, didn‘t really focus on the kind of shovel-ready projects that we needed right away, as well as it didn‘t focus on the kind of tax reductions that we should have done.  We needed to let people keep more of their hard-earned money. 

SHUSTER:  Understand.  Well, two questions for you.

In terms of taxes, if a company is losing hundreds of millions of dollars and you cut their taxes, how does that help them hire more workers if they‘re losing money? 

BARRASSO:  The engine that drives this economy, David, and you know, is small business.  Seventy percent of the jobs created in this country are through small businesses. 

You give them opportunities to then keep their employees, hire more over the long term.  That‘s what builds this economy.  That‘s the engine of the economy.  It‘s small businesses.  And to take away the incentives of small business owners to want to invest in their own companies and hire more people isn‘t good for the economy. 

SHUSTER:  All right. 

But let‘s take the stimulus, for example.  You mentioned it was too big.  What particular legislation—what particular part of it did you think was wasteful or spent improperly? 

BARRASSO:  Well, I think some of the things that are going to take eight or 10 years to get done.  I mean, “The Wall Street Journal” had a lengthy article about how to spend the money, where it‘s going to go. 

Some of the things they‘re talking about the technology hasn‘t even been developed with the Department of Commerce, the Department of Energy.  Some of these things may not even be spent in eight or 10 years. 

I thought we ought to focus on shovel-ready projects, things like roads, highways, bridges, projects that have already been approved and are ready to go.  So I just thought that the project—that spending was much too big, you know, looking at the—looking at our economy and the wall of debt that‘s coming up with the entitlements—with Medicare, Medicaid, with Social Security. 

SHUSTER:  I agree with you that I think the money does need to be spent immediately, but when the CBO and other sort of nonpartisan groups say that 70 percent of the money is going to be spent within the first two years, are you saying that they‘re wrong? 

BARRASSO:  Well, only 22 percent of the money, David, is going to be spent in 2009.  That leaves 78 percent in 2010 and beyond.  And they also questioned—the Congressional Budget Office has questioned how well this will work to stimulate the economy, and there have been multiple articles written about that.

SHUSTER:  Senator John Barrasso, Republican from Wyoming.

Senator, I know we‘ve given you a hard time, but it‘s good of you to come on.  We appreciate you coming on here.  You‘re always welcome on the show.  You can say whatever you want.  You‘re free to say whatever you want, Senator.

BARRASSO:  Great to be with you, David.  Thank you very much.

SHUSTER:  OK.  Good to have you.

BARRASSO:  Thank you.

SHUSTER:  American International Group, better known as AIG, is getting another federal bailout.  It‘s their third, and the White House is not ruling out even more help.  But who‘s keeping track of how the money is being spent? 

And where do things stand now with CEO pay?  Just ahead, we will follow the money.

Later, Governor Bobby Jindal has criticized federal funds being spent on trains.  So why is he asking Uncle Sam to help pay for a new passenger line in Louisiana?  That‘s coming up in “Hypocrisy Watch.”

And we‘re taking your questions during the hour over Twitter.  You have two options: shuster.msnbc.com or twitter.com/shuster1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.

Today, for the first time in nearly 12 years, the Dow closed below 7,000, dropping 300 points to end the day at 6,763.  The market dive was driven by bad news from insurance giant AIG, which reported a $61.7 billion loss, the largest quarterly loss by a corporation in U.S. history. 

The Obama administration said it will now pump another $30 billion into the ailing company.  Just months ago, AIG‘s CEO said the company was “on the road to recovery.”  Today, you can buy a share of AIG for 50 cents. 

Furthermore, when asked where the federal bailout money is going in the case of AIG, the White House answer today wasn‘t exactly brimming with confidence. 

(BEGIN VIDEO CLIP)

JAKE TAPPER, ABC NEWS:  Is the administration confident that it knows what happened to the tens of billions of dollars previously given to AIG? 

GIBBS:  Yes.  Yes.  The—I mean, I don‘t think it‘s a—well...

(END VIDEO CLIP)

SHUSTER:  He went on to say that it‘s a big company, therefore it has big problems. 

Joining us now is CNBC‘s John Harwood, also a correspondent with “The New York Times.”

John, here‘s a listing of the recent history of federal money going to

AIG. 

In September, $85 billion.  Then in October, that was pumped up to a total o f $123 billion.  Then it was pumped up in November to $150 billion.  And now, come March 1st, pumped up to $162.5 billion. 

Why continue to pour more money into AIG?  And how does the federal government know that it‘s just not pouring bad money after good? 

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  Well, they certainly don‘t know that.  And that, in fact, is the danger, David, that not only AIG, but the auto companies, some of these financial institutions are going to turn out to be bottomless pits. 

Think about the situation that AIG was in, though.  You know, more than the homeowner who borrowed too much, more than the bank that overextended and made an unwise loan.  How would you like to be the insurance company that insured all those bad debts?  That‘s what AIG was. 

And the problem is they were so big, and have so many tentacles out across the economy, that the government decided, as it has in a couple of other cases, that they‘re too big to fail.  Well, once you make that decision, you‘re sort of that the mercy of how much cash these companies are burning.  And with AIG, it‘s just an amazing burn rate here -- $61 billion. 

You know, they‘ve just got to try to keep this thing afloat until the economy turns around.  I think that‘s their hope. 

SHUSTER:  And John, who in our government, either the Treasury, the Obama administration, is trying to make sure that the money that AIG is receiving is being well spent? 

HARWOOD:  Well, I think one of the things that happens when you have this sort of nationalization by another name—and we saw the same thing with Citi, the federal government upping its stake to 36 percent in Citi—you have increasing involvement, whether or not you‘re explicitly or overtly running the company.  You have more and more to say about how that company is run. 

I think the options in the case of AIG just aren‘t very good.  And frankly, they aren‘t very good for Citigroup either. 

And that‘s one of the reasons why the stock market is now down more than 50 percent from its peak in 2007, is that people are coming to grips with just how bad this recession is, how bad this subprime mushroom situation has become across the economy, and it‘s a bleak picture.  It‘s pretty scary, really. 

SHUSTER:  And as the economy gets worse, there‘s even less of an appetite in the public, if there was to begin with, to see these CEOs making a lot of money.  Where does the sort of cap or the cut in CEO pay, where does all that stand now? 

HARWOOD:  Well, in the case of AIG, it doesn‘t apply, because you remember the regulations that were put out by the Obama administration prospectively were about companies that were applying for future bailouts.  AIG was already in line for that. 

Now, the legislation in Congress, which the Obama administration wasn‘t too keen on, they thought it went too far, doesn‘t explicitly include the cap of $400,000 which was contemplated, or $500,000, which was contemplated by the administration for a few top executives.  It goes more to limiting the reach of bonus payments.  And what we‘re now seeing in response is some of these firms receiving aid are switching from bonus to salary, although still at much reduced levels from what many of these executives are used to. 

But this is a red-hot issue with the public.  It‘s something that Barack Obama has hit on, certainly in his speech to Congress last week, and other members of the administration and people in Congress.  That‘s why Congress couldn‘t be stopped when the Obama people tried to get them to back off in the stimulus bill. 

SHUSTER:  And the fact some of these companies are now moving money toward salaries and out of bonuses to try to get around the intent of what Congress did, you‘re right, that is a big story, and it‘s one we‘re going to be talking about at this time tomorrow night in “ Follow The Money.”

John Harwood from CNBC and “The New York Times.”

John, thanks, as always.  We appreciate it. 

HARWOOD:  You got it.

SHUSTER:  Up next, remember that speech to the nation by Louisiana Governor Bobby Jindal?  He declared that federal stimulus money spent on trains was wasteful.  But it turns out that Jindal‘s own administration wants some of that money for trains in Louisiana. 

Governor Jindal, tonight, in our “Hypocrisy Watch.”

But first, Illinois Senator Roland Burris has a new campaign Web site, even though he hasn‘t officially announced he will try to hold on to his seat in 2010.  Well, there‘s not much content on the site yet.  There is a button where you can click and contribute via Visa, MasterCard or America Express. 

More 1600 after this.

(COMMERCIAL BREAK)

SHUSTER:  The state of Louisiana is now making a bid for some federal stimulus money that will be distributed for new high-speed rail lines.  And that takes us to tonight‘s “Hypocrisy Watch.”

First, the background. 

It was a week ago when Louisiana Governor Bobby Jindal gave the Republican response to President Obama‘s address to Congress.  Jindal sharply criticized the stimulus bill and said it was full of unnecessary pork. 

(BEGIN VIDEO CLIP)

JINDAL:  While some of the projects in the bill make sense, that legislation is larded with wasteful spending.  It includes $8 billion for high-speed rail projects such as a magnetic levitation line from Las Vegas to Disneyland. 

(END VIDEO CLIP)

SHUSTER:  As a matter of fact, there is no proposal in the bill for a rail line from Las Vegas to Disneyland.  The $8 billion goes to the Department of Transportation.  And the secretary of that department, former Republican Congressman Ray LaHood, will decide how to spend the money. 

Every state can submit rail project proposals for consideration.  So guess which state is submitting a proposal now?  That‘s right, Louisiana. 

“The Times-Picayune” newspaper reported this weekend that Louisiana‘s Transportation Department intends to request federal stimulus funds for a proposed passenger rail service between Baton Rouge and New Orleans.  A spokesman for the department says the state will ask for $110 million. 

The secretary of this Louisiana department is Dr. William Ankner.  Secretary Ankner was appointed transportation secretary by Governor Bobby Jindal and reports to Governor Jindal. 

Again, this Louisiana request is for money in the federal stimulus fund that Jindal criticized. 

Governor, when you argue to a nationwide audience that $8 billion for high-speed rail projects are wasteful, and then your own transportation department asks for some of that same pot of money, that‘s hypocrisy, and it‘s wrong. 

As President Obama lays out his new legislation, it‘s up to the House speaker, Nancy Pelosi, to try and carry it out.  We‘ve learned that Pelosi keeps a list of friends and those she “disfavors.”  We‘ll bring you the list and update the reporting on tensions between the speaker and president ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.

President Obama may have a new problem in Congress, and it‘s not just saying no Republicans.  It‘s House Speaker Nancy Pelosi, an old school, strong-arming liberal whose political bully pulpit is second only to that of the White House.  She even keeps a naughty and nice list. 

One of her congressional allies told Politico, “She‘s not a vengeful person, per se, and she thinks that people who do bad things eventually get their due without her intervention.  But that doesn‘t mean she forgets.”

We‘re going to put this to our panel, Ed Schultz, nationally syndicated radio talk show host, Ryan Grim, senior Congressional correspondent for “Huffington Post,” and Michelle Bernard, president of the Independent Women‘s Forum, and an MSNBC political analyst. 

First, let‘s bring in Tim Grieve, “Politico‘s” Congressional bureau chief, who did a lot of reporting on this.  Tim, how does Pelosi‘s godfather style mesh or not with Obama‘s bipartisan approach? 

TIM GRIEVE, “POLITICO”:  Well, is Obama certainly a good game about bipartisanship.  Pelosi‘s list, to be fair, is not really a partisan list.  Many of the people who are on Pelosi‘s list, as we call it, are in fact Democrats. 

SHUSTER:  Let‘s talk about that.  Here is the list—we‘ll call it her naughty list, Representative Heath Shuler, Democrat North Carolina, voted against the stimulus, Rush Limbaugh, Paul Kanjorski, Democrat, Eric Cantor, Republican, the Stimulus Committee, Leon Panetta.  Kanjorski is the one that seems intriguing, because didn‘t Pelosi campaign very hard for him?  What happened there?

GRIEVE:  She went out, helped him a lot, even the Democratic leadership, helped him a lot win a close race for reelection, and he comes back and votes against the stimulus bill the first time out.  He ultimately votes for it the second time around.  But his initial vote, Pelosi definitely saw that as a sign of disloyalty, a sort of thumb in the eye. 

SHUSTER:  What about the reports of tension between Pelosi and Rahm Emanuel? 

GRIEVE:  It‘s interesting.  They have different approaches to things.  Early on, even before Obama took office, Pelosi, we reported, told Emanuel to butt out of House Democratic affairs.  Just this week, we saw a very interesting thing.  Emanuel now is working hard to paint Rush Limbaugh as the face of the Republican party.  When Pelosi was asked about Rush Limbaugh, somebody else who is on her list last week, she said, I‘m the speaker of the House.  In other words, I don‘t concern myself with radio talk show hosts. 

SHUSTER:  Pelosi last week also challenged the White House Iraq strategy, questioning the need for 50,000 residual forces in Iraq.  Any blow back for the speaker on that? 

GRIEVE:  We‘re not hearing that.  You know, the—Obama has said that the Democrats were challenging him on Iraq weren‘t particularly listening when he campaigned.  There‘s blow back in that sense.  I don‘t know if you‘re going to see any dramatic internal complaining back and forth on that. 

SHUSTER:  Explain the general dynamics between the White House and the speaker.  Do they just sort of let Nancy Pelosi cut as large a sort of profile as she wants?  She can do whatever she wants, say whatever she wants?  Is there any sort of coordination there?  Explain it.   

GRIEVE:  It seems on the stimulus that Pelosi was willing to be the fall guy for Obama.  She was out there willing to take the heat for whatever he needed on the stimulus.  Some of that heat was sort of self-generated, in that the House Democrats passed a bill that did have things that were sort of easy targets for the Republicans to tee off on. 

It is pretty clear now that she is not willing to do that indefinitely.  She‘s not willing to do that on issues that really matter to her, on things like Iraq, on the environment.  She‘s going to watch out for herself.  She‘s going to watch out for the House Democrats.  In the end, that‘s her most important constituency, the other members of the House Democrats. 

SHUSTER:  From your reporting, is the speaker‘s office confident that the White House, then, will carry the agenda of what Pelosi wants on some of the issues like, for example, the environment or Iraq? 

GRIEVE:  I think on the environment, I think they probably are confident.  On Iraq, clearly Obama has a slower path than a lot of liberal Democrats like Nancy Pelosi want.  I don‘t know that you can really say they‘re confident about that one. 

SHUSTER:  All right.  It‘s going to be certainly an interesting relationship to watch.  Tim Grieve of “Politico,” great reporting as always.  We appreciate you coming on. 

GRIEVE:  Thanks a lot. 

SHUSTER:  So does the Obama White House have a Pelosi problem of any kind?  Let‘s put it to the panel, Ed Schultz, Ryan Grim, Michelle Bernard.  Ed, let‘s start with you.  Tensions between the speaker and the White House, even when they‘re from the same party, that‘s nothing new.  But anything to worry about in this particular case? 

SCHULTZ:  You know, David, it may seem like tensions to us and the American people, because it was always a get in line mentality with the Bush administration.  I‘m being told tonight that this is more of an ally list.  Nancy Pelosi has a reputation among House Democrats, if she‘s in your corner, you can count on her, that she will go to the fire wall for you. 

There are people that she obviously doesn‘t like.  OK, Rush Limbaugh.  All right, this Cantor dude, who seems to be constantly siding with Limbaugh on so many different things.  Nancy Pelosi, her job is to get her team on board to get things done when it comes to the stimulus package, when it comes to health care, when it comes to education and the environment.  That‘s her focus.

Her focus is not answering questions about Limbaugh.  Her focus is not answering questions about any other talk show host.  She‘s on a mission to change this country.  And where was it written that the speaker of the House has to get along with everybody?  Tip O‘Neill had a few bifs, didn‘t he? 

I think she‘s a fighter and I think she‘s a very loyal person to people who support her and I think we‘re seeing that now. 

SHUSTER:  Michelle Bernard, why not have some issues with these Blue Dog Democrats, Heath Shuler or Paul Kanjorski?  They didn‘t fall in line on the stimulus.  Why shouldn‘t the speaker be upset with him? 

BERNARD:  That‘s just politics.  That‘s the way it is.  You know that phrase we always here, you‘ve got to go along to get along.  Maybe that‘s what we are seeing with Nancy Pelosi. 

But the other thing I want to add that think is important to note is that, regardless of whatever type of Pelosi problem President Obama might have, one of the things that—one of the ways that we should look at this is a sort of typical good cop, bad cop retune.  A lot of the things that Nancy Pelosi is interested in we‘ve seen pullback from the Obama administration. In certain instances, she makes the president look like a centrist. 

You know, she said she wanted troops out of Iraq immediately.  We‘re pulling troops out slowly, but we‘re going to—we‘re going to do it slowly, and we‘re still going to leave I think 50,000 troops in Iraq for years to come.  It makes President Obama look like a centrist to people on the right, who would say he is so far absolutely left and taking this country so far left, that he‘s the worse thing we‘ve ever seen. 

SHUSTER:  Ryan Grim, is that the proper role for the House speaker? 

GRIM:  It is.  If you look at what House Republicans have said, they‘ve been very explicit that they‘re going to try to drive a wedge between Speaker Nancy Pelosi and President Obama.  Whenever they get asked a question about Obama, notice that they always answer, well, this is what Speaker Pelosi has done.  They‘re not willing to attack President Obama yet, in his 65, 70 percent approval rating. 

So if Pelosi can continue to deflect the heat from Obama, then the Republicans strategy might actually fail and allow Obama, like you said, to continue to be this 65 percent, extremely popular president, who is driving the country into a more liberal position, yet appearing more centrist.  So it might end up backfiring on them. 

(CROSS TALK)

SHUSTER:  Set it up for you.  Here‘s the House speaker speaking talking to Chris Matthews, my colleague on “HARDBALL.”  It was a fascinating interview when Chris asked Nancy Pelosi about this very issue of her essentially taking the flak on behalf of the White House.  Watch. 

(BEGIN VIDEO CLIP)

CHRIS MATTHEWS, MSNBC ANCHOR:  The political guys have decided that they can‘t beat Barack Obama right now.  His numbers are too high.  So they have to go after you.  Have you noticed? 

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  I‘m used to that.  I‘ve been through it now one, two, three elections.  Yes.  Yes, I‘ve noticed.  I notice a bit, but I think it just shows the poverty of their ideas.  We hope that we can find common ground with them, but if they—you know, I‘m in the arena.  I love it. 

(END VIDEO CLIP)

SHUSTER:  Ed Schultz? 

SCHULTZ:  Well, there you have it right there.  She‘s spot on, David.  She is the new Hillary Clinton.  She is the new target.  The conservatives love to have a target.  I think that you need to point out, in my opinion, you can call anybody a Marxist and a socialist, and that‘s what they‘re saying about Nancy Pelosi, but that doesn‘t create one job. 

They are void of ideas.  And she has the guts to stand up and say it and go up against the right wing.  That‘s why a lot of people on the left admire what she‘s doing.  Her job is to deliver the votes in the House.  She‘s been doing that.  She‘s mended a lot of fences with Steny Hoyer.  They‘ve moved it forward.  They said they‘d have the stimulus package done by the middle of February.  That‘s exactly what happened.  Now we‘re going to start seeing this thing kick in, and it will create jobs. 

SHUSTER:  Michelle Bernard, I think the Democrats are doing a much better job of dividing the Republicans, in terms of Rush Limbaugh, than the Republicans are, in terms of using Nancy Pelosi somehow to divide the Democrats. 

BERNARD:  Yes.  It‘s actually very disturbing on both sides.  I think one of the things we see with Nancy Pelosi—and whoever said this earlier was absolutely right—President Obama‘s approval ratings are at 70 percent now.  Most people think—I think the approval ratings for members of Congress, both Democrats and Republicans, are hovering somewhere around 35 percent.  Nancy Pelosi‘s job is to get—is to continue to keep Republicans in the minority party and, of course, one would assume she‘s going to take the knocks—any knocks she can for President Obama.  That is absolutely her job. 

That being said, the way she is driving the country left, she‘s got to absolutely expect that Republicans and conservatives are going to attack her.  That‘s what they do.  I don‘t think it means Republicans or conservatives are necessarily void of any ideas, but that‘s the type of government we have.  People are either for something or against something.  And it‘s very difficult to get away from the type of government that we have, where one party says yes and the other part says no.  It doesn‘t mean they‘re void of ideas.  It means that this is what makes government work best. 

SHUSTER:  Michelle, Ed, Ryan are staying with us.  Ryan, I promise you‘re getting the first crack in the next segment.  No worries. 

President Obama today nominated Kansas Governor Kathleen Sebelius for Health and Human Services Secretary, as reports emerge from Capital Hill that health care reform negotiations are well underway. 

And your Twitter questions coming up at the end of the hour.  Two options, Shuster.MSNBC.com or Twitter.com/Shuster1600. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  President Obama formally kicked off his battle to reform health care today, naming Kansas Governor Kathleen Sebelius as secretary of Health and Human Services and Nancy-Anne Deparle to coordinate policy from the White House. 

(BEGIN VIDEO CLIP)

OBAMA:  The fact that we‘ve got Democrats and Republicans here I hope is a symbol of how we can move this issue forward.  I don‘t think anybody has any silver bullet when it comes to health care.  What I do know is this: that people of goodwill collectively recognize that the path we‘re on is unsustainable. 

(END VIDEO CLIP)

SHUSTER:  Let‘s welcome back our political panel, Michelle Bernard, Ryan Grim, and Ed Schultz.  Ryan, first to you.  Is Sebelius a good pick?  Health care reform has been tried before and gotten nowhere. 

GRIM:  Well, it‘s a measure of the administration‘s sophistication on this issue that they—you actually wouldn‘t say that they kicked off the campaign today.  They jammed hundreds of billions of dollars into their budget proposal to lay the groundwork, what he called a down payment on health care reform.  So this is something that‘s—you know, that they‘re taking seriously and that they‘re going to try to move step-by-step. 

By having Sebelius as HHS, they‘ve got kind of a star power potential there, where, you know, she can come down to Capitol Hill and she‘s going to garner media attention.  Having been involved in the insurance industry in Kansas, she understands the issues.  So this is something that they‘re ready to fight for.  Everybody that focuses on this—whether or not there‘s going to be a mandate.  Yes, a mandate; no, not a mandate. 

The real fight is going to be over whether or not there‘s going to be a public plan available for people to buy into.  Democrats are going to phrase it as a choice.  People should have a choice to buy into a public plan.  That‘s going to be the real fight. 

SHUSTER:  I want to update both of you.  That was a terrific analysis, Ryan, on the health care situation.  It‘s something, of course, the president later this week is going to be having sort of a formal event, as they start to provide the contours. 

But we‘re getting some breaking news now about Michael Steele.  We told you about how he was very critical of Rush Limbaugh over the weekend.  He‘s now given an interview where he‘s essentially tried to back track.  But first, to set this up for our panel, here‘s what Michael Steele said on Saturday night about Rush Limbaugh.  Watch. 

(BEGIN VIDEO CLIP)

D.L. HUGHLEY, CNN ANCHOR:  Rush Limbaugh, who is the defacto leader of the Republican party -- 

MICHAEL STEELE, RNC CHAIRMAN:  No, he‘s not. 

HUGHLEY:  I tell you what—

(CROSS TALK)

HUGHLEY:  You know what? 

STEELE:  Rush Limbaugh is an entertainer.  Rush Limbaugh—his whole thing is entertainment.  Yes, it‘s incendiary.  Yes, it‘s ugly. 

HUGHLEY:  I‘ll tell you what, you‘re the first Republican I‘ve talked to, and I‘ve talked to a lot, that said he‘s not the leader of this party.  I‘ve never heard anybody say that on any show. 

(END VIDEO CLIP)

SHUSTER:  Again, you heard Michael Steele say that Rush is incendiary and it‘s ugly.  Well, here‘s what Rush Limbaugh said in response today.  Watch. 

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  Michael Steele, you are head of the RNC.  You are not head of the Republican party.  He took the bait.  He bit down hard on the bait.  He launched an attack on me, even though the premise of what was said to him was false.  Why are you running the Republican party?  Why do you claim you lead the Republican party when you seem obsessed with seeing to it that President Obama succeeds? 

(END VIDEO CLIP)

SHUSTER:  Here‘s what Michael Steele said to “Politico:” “I went back at that tape from Saturday night and I realized words that I said were not what I was thinking.  I was maybe a little bit inarticulate.  There was no attempt on my part to diminish his voice or his leadership.” 

Ed Schultz, isn‘t this a perfect example that was reinforced at the top of our show with Senator Barrasso, why you don‘t criticize Rush Limbaugh if you‘re a Republican? 

SCHULTZ:  David, there‘s a pattern here.  They all come back and apologize to Rush.  That‘s what they all do.  I talked to Richard Viguerie today, longtime conservative activist, goes back before the Reagan years.  He told me, yes, Limbaugh is the head of the Republican party, and so is every other right wing talk show host in the country.  He grouped them all in there, saying—because they‘re the only ones being strong and telling the good conservative parties. 

I mean, we have a fight breaking out within the Republican party, as to who to listen to.  Now for Rush Limbaugh to get up there the way he did at CPAC on Saturday night, there isn‘t a talk show host in America in the industry that wouldn‘t love to have that kind of visibility.  Not only is walking them like a dog, but he‘s gaming the party as well and building himself up.  It‘s hilarious to watch this. 

This goes back to show that the Republican party void of ideas, but they have got an identity crisis right now.  They do not have a stand up leader other than talk show hosts.  This does not bode well for them. 

SHUSTER:  Michelle Bernard, aren‘t they laughing the loudest over at the White House on this? 

BERNARD:  I‘m sure everybody is laughing over this, including everyone at the White House.  But I‘ve got to tell you, I think one of the things that‘s very important to note for our viewers is that there many people who believe that being a Republican and being a conservative are not necessarily the same thing.  What I would like to see is for someone to ask Rush Limbaugh if he feels that he is head of the Republican party.  I believe rush sincerely believes that there‘s a difference between Republicans and conservatives. 

Rush is a die-hard advocate for conservative principles.  Republicans care about one thing and that is getting Republicans re-elected.  I think you see a lot of people within the Republican party trying to figure out how they keep themselves in power, and how they make sure they don‘t become an old relic or geographic party of the south.  Those are two very, very different things. 

SHUSTER:  Michelle Bernard, Ed Schultz and Ryan Grim are all sticking with us. 

Still ahead, legendary soccer superstar Pele is on a presidential mission.  He started a tradition with President Kennedy, Nixon, and Clinton and he wants to make sure he continues it with President Obama. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  Here‘s a look at what‘s on our radar tonight.  Iowa is one state that won‘t be forgotten during Obama‘s presidency.  Roughly 40 new White House and cabinet employees have lived and worked in Iowa at some point.  Many of them first worked for Obama during the campaign in the state.  You remember Obama‘s decisive victory in Iowa, that set him on the road to the Democratic nomination. 

(BEGIN VIDEO CLIP)

OBAMA:  Thank you.  Thank you.  Thank you, Iowa.  They said this day would never come.  You have done what the cynics said we couldn‘t do. 

(END VIDEO CLIP)

SHUSTER:  First Lady Michelle Obama‘s chief of staff comes from Des Moines, and was a top adviser to Obama‘s Iowa campaign.  And another high-profile Hawkeye connection, former Governor Tom Vilsack is now the secretary of Agriculture. 

Former Brazilian soccer star Pele has met a number of American presidents, and wants to keep that tradition going.  Widely considered the greatest soccer player of all time, Pele tells the Latin American “Herald Tribune” he wants to have coffee with the new U.S. president.  Pele has met John F. Kennedy.  He met Richard Nixon in 1973 at the White House, went back to the White House in 1977 and met Jimmy Carter, seen here getting an autographed ball from the president.  And in 1997, Pele got to kick the soccer ball around with Bill Clinton during the president‘s visit to Rio de Janeiro. 

Pele tells the paper, “when Obama is a little calmer, without that pressure, I‘ll go to have a cup of coffee with him.” 

The Obama administration promised change and has delivered in D.C.‘s social scene.  The Obamas have hosted some of the town‘s hottest parties and concerts since they moved into the White House.  There have been cocktail receptions for Republicans and Democrats alike, a Super Bowl party, Stevie Wonder playing in the East Room, as the president gave his music idol the nation‘s highest award for pop music, and a black tie affair featuring the ‘70s rock group Earth, Wind & Fire.  The group played for the governors when they were in their town for the annual winter meeting.  Apparently, that party even got kind of wild. 

(BEGIN VIDEO CLIP)

OBAMA:  Thank you also for waiting until I had left before you started

the Conga line.  I don‘t know whether Rendell was responsible for that or -

but I hear it was quite a spectacle. 

(END VIDEO CLIP)

SHUSTER:  Indeed.  Finally, on our radar tonight, former Illinois Governor Rod Blagojevich has new career plans.  He‘s writing a book.  Blagojevich‘s publicist says he signed a six-figure deal to pen a book, quote, exposing the dark side of politics.  The book will apparently detail how Blagojevich selected President Obama‘s successor in the U.S. Senate.  What‘s more, the book will reveal information that, quote, will at times be embarrassing to Blagojevich as well as to others.  Hmm.  The book hits stores in October. 

And now it‘s Twitter time.  Joining us again, Ed Schultz, Ryan Grim, Michelle Bernard.  Ryan, a number of questions about the Republican party identity and how it is going to be resolved.  The question to you, how will it be resolved? 

GRIM:  Good question.  You know, 2010 is going to tell us a lot about that.  But in the near term, what you can look for is: is there anybody who‘s going to be willing to stand up to Rush Limbaugh?  The fact that Michael Steele stood up to him, and the day the stories come up about his standing up, that he backs down immediately, that‘s remarkable.  The RNC chairman can‘t stand up to Rush Limbaugh?  Who can?  That remains to be seen.

Is it going to be a governor?  It‘s unlikely, because the governors are out spending money, and nobody in the Republican base likes the word spend.  That leaves Congress.  And I don‘t know.  We‘ll see if anybody there will stand up to him.  Otherwise, Rush Limbaugh is the leader of the Republican party.  Obama is extremely happy about that. 

SHUSTER:  Ed Schultz, a number of questions about what it was like at the CPAC conference.  I know you were there for a couple days.  Why don‘t you take that one.  What was it like to be there?  How were you treated and what did you notice? 

SCHULTZ:  Well, I was treated fine.  I mean, they‘re Americans that want to, you know, do what they want to do for the American agenda in their world.  But the one thing that struck me, David, at the CPAC convention, nothing about the middle class, nothing about health care.  Their answer to everything is tax cuts and also fear mongering that the Congress is coming to take your gun. 

Now, that‘s not where Americans are right now.  And the sooner the Republicans recognize that they‘re not on the same page with conservatives who are losing their job, with conservatives who are losing their health care, the sooner they come to grips with the problems, the better they are going to be when it comes to reforming their party.  Right now, they are totally out of the mainstream.  And their agenda just does not reflect where the American people are right now. 

They were after Al Franken and Acorn and how liberals take election. 

Now, who‘s talking about that?  That‘s amazing to me. 

SHUSTER:  Well, the big policy fight that‘s coming, of course, involves health care, with a big event this week.  A number of questions there, including one for you, Michelle Bernard.  Somebody wants to know what your view is on universal health care. 

BERNARD:  My personal view on universal health care is that it could probably be one of the biggest disasters we have coming down the pike.  I think it‘s got negative implications for patients, negative implications for the country, negative implications for physicians and health care providers.  I think it‘s the worse thing we could possibly see. 

There has to be a better way to get people—to get most of the nation to be able to have health care and health care that actually works.  But universal health care I don‘t think is the answer and I‘m hoping that out of this administration, when we talk health care reform, we don‘t necessarily mean universal health care. 

SHUSTER:  Michelle Bernard, thank you very much.  We‘re going to be having Michelle involved in some these debates in the weeks ahead, same with Ed Schultz, also Ryan Grim, Congressional correspondent for “Huffington Post.”  Great panel.  Thank you all, very much.  We appreciate it. 

That‘s the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster.  We will see you back here tomorrow night, same time, 6:00 pm Eastern on MSNBC.  Remember, you can get the latest by going to our website, Shuster.MSNBC.com.  You can also get text messages, 622639.  Also Twitter.com/Shuster1600.  I‘m David Shuster.  “HARDBALL” starts right now.

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