updated 3/12/2009 2:33:59 PM ET 2009-03-12T18:33:59

Guest: John Yang, Kit Bond, Elijah Cummings, Dan Gross, Jeanne Cummings, Harold Ford

Jr., John Feehery

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HOST (voice-over):  Tonight, President Obama hammers the congressional hypocrisy on earmarks. 

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  And some of those who rail most loudly against this bill because of earmarks actually inserted earmarks of their own. 

SHUSTER:  We will show you the list. 

Plus, “Follow the Money.” 

UNIDENTIFIED MALE:  There‘s something inherently wrong in this picture. 

SHUSTER:  A House committee tries to track the bank bailout funds. 

REP. ELIJAH CUMMINGS (D), MARYLAND:  They don‘t like their rules?  You know what to say?  Screw you. 

SHUSTER:  Louisiana Senator David Vitter stepped in front of the cameras today to talk about stimulation of the economy. 

SEN. DAVID VITTER ®, LOUISIANA:  We can‘t continue to borrow huge amounts of money to do it. 

SHUSTER:  Vitter lands in “Hypocrisy Watch.”

Later, the dramatic news from Zimbabwe involving Roy Bennett. 

And things I thought you should know: The House speaker welcomes another celebrity, the U.S. Ag secretary meets the Cookie Monster, and Twitter time, all tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA:  I‘m actually optimistic about the prospects. 

(END VIDEOTAPE)

SHUSTER:  More pressure on President Obama over spending and priorities. 

Hello, everybody.  I‘m David Shuster. 

This was day 51 of the Obama administration, and it was a big one in the debate over pet projects and earmark funding. 

This morning, President Obama signed the $410 billion government spending bill, and in the process, he rebutted Republican calls for him to veto the legislation because of earmarks. 

(BEGIN VIDEO CLIP)

OBAMA:  Individual members of Congress understand their districts best and they should have the ability to respond to the needs of their communities.  I don‘t quarrel with that.  But leadership requires setting an example. 

This piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability. 

(END VIDEO CLIP)

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

And John, the White House, of course, is still taking heat over signing this.  How does the Obama administration justify signing the bill, and what are the new rules from here on out? 

JOHN YANG, NBC NEWS WHITE HOUSE CORRESPONDENT:  Well, they‘re pushing very hard on this, David.  They say this was last year‘s bill.  This was a bill that was started, drafted, was drafted under President Bush, and it was not their bill, that it—they also say it would be disruptive to veto it and send it back at a time when they need Congress to focus on getting the economy going, on trying to get other pieces of their legislative agenda through. 

And it was an effort.  They tried to sort of make a virtue out of a necessity today.

On the same day he was signing the bill that was full of earmark projects, of pet projects from Capitol Hill, he announced changes to this, changes to the process.  He wants to make sure that pet projects are worthy spending. 

He doesn‘t want to eliminate them, as you heard in that bite you played earlier.  He is not arguing against earmarks.  He said that when they‘re done right, they can be good tools for bringing money back to Congress members‘ districts. 

But he‘s saying he wants to make sure that they‘re worthy.  He wants them transparent, as Congress already does.  He wants them on a member‘s Web site.  He wants a member to defend it in the regular appropriations process.  And if it‘s to a for-profit, a private for-profit institution, not a public entity like a police department, a fire department, a school district, he wants it subject to the same competitive bidding process as any other federal spending—David. 

SHUSTER:  John, politically, there‘s some huge issues the White House is going to need congressional help on, whether it‘s health care or energy legislation.  Is that what the White House feels that it gained out of this, essentially holding on to their chips with members of Congress so they can be used not in terms of angering them over earmarks, but it terms of using them to get this big agenda through? 

YANG:  Well, I think there was also that—in addition to the arguments they were making about this being last year‘s business and not wanting to bog Congress down right now, I think there was some sense that they were going to take it now.  They would sign this bill now, but that there would be some tough sledding (ph) ahead, or tough rules of the road, as Robert Gibbs, the White House press secretary put it, in the future of earmarks and spending. 

And clearly, yes, they‘ve got a lot they‘re trying to get through Congress.  They‘ve got to work with a lot of members.  But I think they‘ve sort of laid down the gauntlet here on earmarks.  And Gibbs actually used the “veto” word as a way of—when he was asked how the president was going to enforce these rules in the future. 

SHUSTER:  NBC News White House Correspondent John Yang.

Great reporting as always, John.  And thanks for joining us. 

YANG:  Thanks, David.

SHUSTER:  President Obama signed the $410 billion government spending bill behind closed doors.  There was no signing ceremony.

Joining us now is Senator Kit bond, Republican from Missouri and a member of the Appropriations Committee.  He voted in favor of the spending bill, unlike most of his colleagues. 

And Senator, why did you break ranks with most of the GOP on this? 

SEN. KIT BOND ®, MISSOURI:  Because this is the annual appropriations bill.  Every year we have to turn out an appropriations bill that funds all the activities of the federal government, things like veterans‘ health, affordable housing, and unemployment assistance.  This was as good as we could do.  It‘s—no appropriations bill is perfect, but this is a bill that‘s needed, unlike the $1 trillion stimulus bill which will stimulate the growth of government, the growth of debt, but not the economy or jobs. 

SHUSTER:  President Obama suggested there was some hypocrisy going on, and people who were complaining about the bill being bloated, and then even after they had essentially put in their own earmarks.  Here‘s what the president said earlier today.  Watch. 

OK.  He said, “I find it ironic that some of those who rail most loudly against this because of earmarks actually inserted earmarks of their own.”

Senator, I want to run through the list.  I mean, a lot of senators did complain about this, but here‘s the sort of list of those who complained and yet had their own earmarks in this: Leader McConnell, $51 million; Senator Inhofe, $53 million worth of earmarks; Senator Martinez, $18 million; Bennett, $18 million; Voinovich, $13 million; Brownback, $12 million; and others who opposed the bill and are still getting earmarks—

Barrasso, Bayh, Bunning, Burr, Chambliss, Collins, Corker, Cornyn, Crapo, Enzi, Graham, Grassley, Gregg, Hatch, Hutchison, Isakson, Kyl, Lugar, Roberts, Sessions, Thune, Vitter.  Most of them Republicans. 

Are they hypocrites, Senator? 

BOND:  No.  I think that one of the things that those of us who serve in Congress know is we have the power of the purse.  And when money is going back to the states, if there are good projects in our state where the local leaders have said that these are priorities and they have put some of their money into it, I think that we make a better decision than unelected bureaucrats. 

The other 98 percent of the money in the discretionary bill is earmarked by bureaucrats, most of whom don‘t know anything about what‘s going on in our states.  So I disagreed with them.  I voted for the bill, and I believe that the earmarks I put in will continue to help Missouri grow and develop their communities, their health care, and care for the elderly and the children. 

SHUSTER:  Well, certainly you‘re being consistent.  I mean, you put in your earmarks, but you voted to send the bill forward.  You didn‘t vote against it because you thought it was bloated, unlike some of your colleagues. 

I do want to ask you about sort of the overall economy.

On the Senate floor last Friday, you said that nothing the government has done, to date, is working.  How do you know that? 

BOND:  Because we‘ve seen two million jobs lost.  We see complete confusion in the marketplace.  The credit crisis is the basis of the problem.  The president said it in his address to the joint conference between House and Senate a couple of weeks ago. 

We need a simple, clear-cut cleanup plan to identify troubled banks, take out the toxic assets, remove the failed executives and boards, clean up the banks or the institutions...

(CROSSTALK)

SHUSTER:  Well, that‘s a great point, Senator.  It‘s a great point, and it sounds very similar to when you hear Paul Krugman, the more liberal economist, talking about nationalization or intervention, however you want to call it. 

Do you support that? 

BOND:  I don‘t support nationalization.  I support using the Federal Deposit Insurance Corporation‘s existing powers, just like they did in the savings and loans crisis in the late ‘80s and ‘90s.

SHUSTER:  But isn‘t that what a lot of analysts are suggesting the government would do if it did—regardless of the term, isn‘t that suggesting they would do?  They would use the FDIC, as you suggested.  They would have regulators.  They would take the toxic assets and try to sell the good stuff back to private financiers. 

BOND:  Bingo.  And then you turn the bank back, or the savings and loan back as a cleansed bank.  You put it back...

SHUSTER:  Senator, that‘s nationalization. 

BOND:  Pardon?

SHUSTER:  That‘s exactly the plan.  That‘s nationalization, whatever you want to call it. 

BOND:  I haven‘t seen it.  All right.  I haven‘t seen anybody to do it yet. 

I‘ve heard a lot of talk.  The old country music song “I want a little less talk and a lot more action”—nobody has done it yet. 

We haven‘t seen that focus.  We are still hearing people talk about putting billions and billions more into failed banks.  Stop throwing money down the rat hole. 

SHUSTER:  Senator Kit Bond, Republican from Missouri.

Senator, always a pleasure having you on. 

BOND:  Thank you, David.

SHUSTER:  And thanks for coming on tonight. 

BOND:  Thanks very much. 

SHUSTER:  You‘re welcome. 

Up next, remember that Wall Street bailout money?  Well, today, Congress tried to find out what the banks did with the funds. 

(BEGIN VIDEO CLIP)

CUMMINGS:  The American people have got to see that they are getting something out of the deal.  That‘s the problem.  Duh.

(END VIDEO CLIP)

SHUSTER:  That was Democratic Congressman Elijah Cummings, one of several lawmakers trying to follow the money.  We‘ll talk to the congressman next. 

And later, the Cramer/Stewart smackdown.  Did the media mislead the nation last year about the state of our economy? 

We will dissect the battle that‘s been playing out between CNBC and “The Daily Show.”

And we‘re taking your questions and video suggestions during the hour over Twitter.  Just go to Twitter.com/shuster1600, or go to the link at shuster.msnbc.com.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.

And it‘s time to “Follow the Money.”

Where in the world did your taxpayer funds go after it was pumped into a bailout for banks and Wall Street financial institutions?  Well, now there are reports that Citibank loaned billions to Dubai and Bank of America just invested billions in a Chinese company. 

So today, the House Committee on Oversight and Reform called this guy, Neel Kashkari, one of the Treasury‘s top TARP overseers, to the Hill and demanded to know the answers to questions like these...

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH (D), OHIO:  So how do you justify to the American taxpayers a bank‘s decision made after receiving tens of billions of dollars in TARP moneys to make a $7 billion investment in a Chinese construction company? 

UNIDENTIFIED MALE:  To date, am I correct in saying that not one mortgage-backed security as been purchased? 

NEEL KASHKARI, TREASURY DEPT.:  Yes, sir. 

UNIDENTIFIED MALE:  And so I want you to take as much time as you possibly can to talk about this developing program to do exactly what was supposed to happen five months ago. 

UNIDENTIFIED MALE:  These fat cats that are running around are still wasting money.  And why not use some leverage of us being the investors to just off with those people? 

CUMMINGS:  Retention payments being paid for people who are leaving. 

That‘s shocking to the conscience, isn‘t it?

KASHKARI:  It sure is.

(END VIDEO CLIP)

SHUSTER:  Joining us now, one of the most outspoken lawmakers at that hearing.  You saw him, Congressman Elijah Cummings, Democrat from Maryland. 

And Congressman, what did you learn, today, if anything? 

CUMMINGS:  Well, I learned that money is being loaned and invested in Dubai, but certainly my constituents who can‘t get a loan aren‘t getting loans.  So it‘s a real concern for all of us. 

SHUSTER:  And whose fault is it?  I mean, is it the Treasury‘s fault for not having better oversight?  Is it the banks‘ fault for making these decisions and essentially not consulting anybody who they got the money from? 

CUMMINGS:  I think the initial TARP funds, there were simply not enough rules and regulations to accompany them.  The Obama administration, I think, has made it very, very clear, and I think Mr. Kashkari made it clear we have a new sheriff in town.  And they are demanding accountability, but again, we‘ve got to make sure that these banks are investing in American companies. 

We have many companies in my district that are going out of business, can‘t get a loan.  And again, one of the things that I emphasize is that these are the American people‘s tax dollars that are being spent here.  And that‘s a concern for all of us. 

SHUSTER:  What did you find to be the most egregious example you heard about today?

CUMMINGS:  Oh, just the fact we were spending—Citi was spending $8 billion, lending it to Dubai.  And at the same time, again, as I said before, I was concerned that the oversight that we should have had in the past simply was not there. 

I think we‘ve got to have—and we found out today, by the way, on a good note, that there are now, with President Obama‘s new plan, a lot of accountability and transparency coming forth.  And we have just got to make sure that there‘s enforcement of that. 

We had the IG from Treasury to come in and talk about new rules, and making it clear that he had put a taskforce together of law enforcement folks to make sure that the banks were giving us appropriate information.  But still, I want to see more—I want to see this money freed up at these banks so that our folks can get the loans that they need and so that we can get our economy moving even at a faster pace. 

SHUSTER:  There was a strong final statement from one of the Treasury auditors.  I want to play it and get your reaction. 

Watch. 

(BEGIN VIDEO CLIP)

NEIL BAROFSKY, TARP INSPECTOR GENERAL:  Our experience is that when a bank gets a huge influx of cash, they just don‘t say—you know, have a party.  They budget.  They plan for it.  These TARP programs are expensive for some of these banks. 

UNIDENTIFIED MALE:  Actually, AIG did have a party, if I remember right. 

UNIDENTIFIED MALE:  They did.

BAROFSKY:  If they do lie, if they do tell us a story, and it doesn‘t match up with their internal documents, with their public statements, with data that we can later obtain, they‘ll have committed a crime. 

(END VIDEO CLIP)

SHUSTER:  Congressman, I‘m wondering if you and other members of the committee can pledge to follow through?  I mean, because, you know, this just can‘t be an outrage of the week.  This is $3 trillion in bailouts.  And obviously, if they‘re misleading you, then that‘s a big problem, right? 

CUMMINGS:  That‘s a major problem.  And you have to keep in mind that we‘re the same committee that referred some baseball players to the Justice Department for indictments.  And so—and we‘re the same committee that addressed the Blackwater issue, and folks are now on trial there. 

And I just want to send a message to all of those that might want to abuse this program, that we will do everything in our power to bring justice to you, because our country has to work together now to get past this economic crisis that we found ourselves in.  And by the way, we will get past it. 

SHUSTER:  And then finally, as far as AIG and Northern Trust and all the rest who have been throwing parties and they got TARP money, where does that stand?  I mean, I know there‘s legislation to try to end that, but where does that stand these days? 

CUMMINGS:  Well, the IG told us today—and Mr. Kashkari also—that they would be trying to—with the president‘s new rules, we may not be able to get money back that came under that first $350 billion.  From here on out, we should be able to stop them from doing those things. 

Keep in mind, the president also is demanding that they let us know exactly what they‘ll be using these funds for.  And hopefully they‘ll be going in the direction that we want them going in, and that is so that our people can get loans. 

SHUSTER:  Congressman Elijah Cummings.

Congressman, great work, as always.  And keep us posted.  And thanks for coming on. 

CUMMINGS:  Thank you very much. 

SHUSTER:  You‘re welcome. 

Just ahead, an update on our “Call for Change” and the fight for democracy in Africa. 

Plus, Louisiana Senator David Vitter, ,like many other senators, stuffed earmarks into the most recent spends bill.  But unlike his colleagues, today Vitter held a news conference and spoke about the need to save taxpayer money. 

“Hypocrisy Watch” is ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Tonight, in our “Call for Change,” we have a dramatic update on a foreign policy challenge facing the Obama administration in Africa. 

As we have been reporting for weeks, the regime of President Robert Mugabe has been literally starving millions of its citizens to death.  And last month, as we reported, Mugabe‘s thugs arrested this man, Roy Bennett, an opposition party leader.

As part of a power sharing agreement, Bennett was supposed to serve in the cabinet, not be thrown in jail, but Mugabe‘s promises to share power have been something of a sham.  Nonetheless, we are happy to report that today, after nearly a month in a prison known for torture, Roy Bennett was released.  He is said to be suffering some medical challenges, but we hope to talk with him soon. 

To all of you who followed this story, care about democracy in Africa, and kept Robert Bennett in your thoughts and prayers, thank you.  A Bennett friend told us today that all of you made a big difference. 

Earlier in this hour we identified 28 senators who stuffed earmarks in the government‘s spending bill and then voted against the bill because it had wasteful spending.  One senator in particular though stands out, and that takes us to tonight‘s “Hypocrisy Watch.”

First, the background.

This afternoon, Louisiana Republican Senator David Vitter quickly moved on from the debate over the spending bill by introducing a new energy plan.  There‘s nothing wrong with that effort.  But when Vitter stepped before the cameras, listen to how he justified his plan. 

(BEGIN VIDEO CLIP)

VITTER:  This is an energy plan, both traditional and renewable energy, that can create significant jobs, significant economic growth, without costing the U.S. taxpayer one cent. 

(END VIDEO CLIP)

SHUSTER:  In other words, Senator Vitter is concerned about saving taxpayer money.  That‘s interesting, because in the bill that passed the Senate last night, Senator Vitter stuffed in more pork and pet projects than most of his Senate colleagues.

According to the nonpartisan Taxpayers for Common Sense, Vitter was the fifth worst.  The Louisiana Republican had 16 solo earmarks worth more than $4 million, he had 142 earmarks shared with others senators worth nearly $250 million.  That‘s a total of $254 million in spending that bypassed the usual review. 

One of the senator‘s projects included $6.6 million for termite research.  I‘m sure there‘s a good argument for termite research.  And to be clear, some earmarks, perhaps including Vitter‘s termite research, are important and help our economy. 

But again, Senator Vitter stuffed a lot of earmarks in the bill and then joined colleagues in voting against it because he said it was bloated.  Furthermore, Senator Vitter then had the audacity today to hold a news conference and talk with a straight face about the importance of saving government funds. 

Senator, you are in a league of your own.  When you highlight the importance of saving taxpayer money while stuffing a spending bill with more earmarks than most of your colleagues, that‘s hypocrisy, and it‘s wrong. 

Up next, conservatives and their allies in Congress claim that President Obama is waging war on the rich.  Is that true?  “Myth Buster” Dan Gross will dive into the details and separate fact from fiction. 

Plus, the battle between “The Daily Show” and CNBC continues.  We will have the latest on John Stewart versus “Mad Money‘s” Jim Cramer. 

(BEGIN VIDEO CLIP)

JON STEWART, “THE DAILY SHOW”:  Here‘s what I didn‘t know.  If I picked on CNBC, Cramer would take it personally and get the whole NBC family involved.  Don‘t mess with the peacocks! 

He goes on NBC.  He goes on MSNBC, NBCSI, NBCSI Miami, NBCBGB, their downtown music club.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  It is Myth Buster Wednesday.  Today, we tackle a big one.  Does President Obama‘s budget essentially declare war on the rich?  Since the president delivered his budget and tax plan to Congress, there has been a lot of criticism that the plan hurts the economy and punishes the wealthy.  CNBC anchor Larry Kudlow recently wrote this on his blog: “let me be very clear on the economics of Obama‘s State of the Union speech and his budget, he is declaring war on investors, entrepreneurs, small businesses, large corporations, and private equity and venture capital funds.”

We will bust that myth and a few others as well, as we all debate the president‘s handling of the economy with tonight‘s panel, Harold Ford Jr., Jeanne Cummings and John Feehery.  But first, our myth buster, Dan Gross, senior editor at “Newsweek” and author of “Dumb Money, How our Greatest Financial Minds Bankrupted the Nation.”  It is available in paperback next month.  Dan, welcome. 

DAN GROSS, “NEWSWEEK”:  Good to be here, David. 

SHUSTER:  Dan, you say the idea that President Obama‘s waging war on the rich is bogus.  Let‘s examine a few of the issues related to this.  First, let‘s start with the issue of raising taxes.  A conservative chorus says that President Obama is raising taxes on the rich. 

GROSS:  Well, it‘s war, I tell you, war.  Look, the Bush tax cuts that were passed in 2001 and 2003 were designed to expire in 2010, because they didn‘t want to account for the long-term costs of them.  In the last six or seven years, the Republicans who controlled the White House and Congress had the time to manage our fiscal affairs so that those tax cuts could be extended without creating massive deficits.  On that measure, they failed pretty miserably. 

So the tax cuts were designed to go away in 2010.  It‘s not Obama that‘s letting them lapse.  He is letting them lapse, but they were designed to go away. 

SHUSTER:  All right.  Myth number two, the chorus says that marginal tax rates of 36 and 39 percent are wealth killers.  You say false, because Clinton raised taxes in the 90s and the economy expanded, the stock market boomed and the wealth were winners.  Explain.

GROSS:  Absolutely.  Look, in 1993, the top marginal rate went from 31 to 39 percent.  The same crowd that‘s warning about tax cuts killing the economy today warned us in ‘93, when not a single Republican voted for that budget, that it would kill the economy, kill the stock market.  Well, in the ‘90s, the stock market tripled, 22 million jobs created, longest peacetime expansion in American history, and the wealthy did really well. 

So they‘re saying that just by going back to where things were in the ‘90s and 2001 is somehow like going back to some socialist era.  Even in the ‘80s, the golden years, when Reagan was running things, the top marginal rate for most of the ‘80s was 50 percent. 

So we‘re not going back up to really high levels by comparison. 

SHUSTER:  Finally, the chorus say President Obama‘s budget plan punishes the rich.  You say if there‘s a war on the rich, it‘s being conducted by the rich.  Explain what you mean. 

GROSS:  Look, the big news today, Bernard Madoff is going to plead guilty.  He stole literally 15 billion dollars from really rich people.  You look at the damage that‘s been inflicted on people of means, private equity funds and hedge funds blowing up money, all the people who worked at Bear Stearns, Lehman Brothers, Citigroup for decades, building up wealth that has been destroyed by the actions of their superiors and many of their colleagues. 

The overwhelming amount of damage that has been done to people‘s net worth was done last year.  The number of millionaires fell by 27 percent.  So the notion that somehow now Obama is coming in and really taking it to them, again, the data just doesn‘t seem to support that. 

SHUSTER:  There, of course, we see the graphic; 9.2 million dollars in 2007, down to 6.7 million, down 27 percent.  A strong argument to be made by Daniel Gross and others that, in fact, it‘s the wealthy doing it to each other.  Daniel Gross, senior editor from “Newsweek.”  If it‘s Wednesday, it‘s Myth Buster Wednesday with Dan.  Dan, thanks for coming on.  We appreciate it. 

GROSS:  Thanks for having me, David.

SHUSTER:  You‘re welcome.  More on the politics of President Obama‘s budget plan and his handling of the economy, let‘s turn now to our panel, Harold Ford Jr., NBC News analyst and chairman of the Democratic Leadership Counsel, Jeanne Cummings, “Politico‘s” chief money correspondent and senior political correspondent, and veteran Republican strategist, John Feehery. 

John, I caught you shaking your head when Dan was talking about the Bush tax cuts.  If the Republicans wanted the Bush tax cuts to be permanent, why didn‘t they make them permanent? 

JOHN FEEHERY, REPUBLICAN STRATEGIST:  It had to do with getting the votes.  They did it during a reconciliation bill.  They could only get 51 votes.  That‘s why—under reconciliation, you only could do it under a ten-year window.  It wasn‘t because they didn‘t want to make them permanent, because they did want to make them permanent.  It was merely because of a procedural move.  I think they thought they were going to be able to make it permanent, and they couldn‘t. 

SHUSTER:  Harold Ford, you were in Congress back then.  What‘s your recollection?

FORD:  I don‘t remember it quite the way John remembers it.  I do remember. 

SHUSTER:  Come on, Harold.

FORD:  I do remember there were grave concerns expressed by a lot Democrats and even some Republicans, in fairness, to what this explosion in federal spending would mean.  Remember, when all this was happening, the country shortly thereafter found itself in a much larger defense posture.  So our defense spending went up. 

I would add two other facts to what Dan Gross, who I thought was excellent.  In 1950, the top .1 percent of earners, the wealthiest of the country, controlled about 3.2 percent of the nation‘s total economic pie.  In 2005, that number had swelled to just under 11 percent.  In 1950, the top one percent of earners in the country controlled right at about eight percent of the nation‘s economic pie.  In 2006, that number had swelled to almost 24.5 percent, almost a quarter of the nation‘s economic pie. 

So in reality, when we talk about what this president is doing, he is saying quite simply, the message from ‘93, if you raise taxes on the wealthiest earners to make investments in the country to help expand our productivity, which will translate into greater profitability and prosperity for all, the wealthiest in the country will naturally win as well. 

The president has made that clear.  There‘s a divide in this Congress.  We tried this before ‘93.  We saw what happened.  I believe this president believes the same result will ensue with the approach he‘s taking now. 

SHUSTER:  Jeanne, the politics are important, because if Republicans can make the argument that, yes, Obama is waging a war on the rich, then it makes it perhaps a little easier for them to argue, don‘t tax the rich.  Is that working with Republicans now?

JEANNE CUMMINGS, “POLITICO”:  I think there are enough statistics out there that they can make the argument.  If you look, for instance, at the business taxes, two-thirds of them are aimed at three groups.  One of them are the hedge fund operators. 

The rich are going to pay more.  The problem for the Republicans is that most voters aren‘t rich.  How persuasive is that going to be when it comes to election time, at the moment that really matters in the political cycle?  Because most voters feel like the rich ought to pay more when we‘re in a time of crisis, in particular. 

SHUSTER:  John, here‘s the other issue I see for Republican, and that is one of credibility.  When they say, oh, this is an unfair burden paid by the rich, it‘s not going to start for two years. 

FEEHERY:  Actually, I agree with Jeanne to a certain extent.  I would say the fact of the matter is it‘s effectiveness.  Does it work?  Does it actually create jobs?  Does raising taxes on the rich actually create jobs?  Our argument would be it‘s not going to be effective.  It‘s not just about the argument, it‘s about the end results.  Bill Clinton was successful largely because Republicans were in control of the Congress, and were able to cut spending, and they were able to get a balanced budget, which actually inspired the markets, inspired housing, inspired the—

SHUSTER:  They finally got a balanced budget without a single Republican vote, without a single Republican vote in 1993. 

FEEHERY:  No, 1993 that budget was not balanced.  It was only a five -

No, the balanced budget came under the Republicans in Congress.  Bill Clinton had nothing to do with it. 

SHUSTER:  Harold Ford, nothing to do with it? 

FORD:  John—I like John a lot and respect John, but the reality is that just doesn‘t measure up to the normal test we conduct down in Memphis and Nashville.  The Congress played a role in this.  The president signed it.  The president offered these initiatives.  I would give John this credit, Republicans in the House and the senate and President Clinton were forced to work together.  President Clinton had to lead Democrats to a place and Republicans had to lead their members to a place. 

But to suggest that that 1993 bill, which if I recall correctly, there were many who said it would doom the economy, it would cause many to not invest in America, it would cause small business owners to go out of business—these arguments are eerily similar to the ones today. 

President Obama is making a decisively different choice than President Bush did about how to grow the economy.  We have a record of this happening before and we grew the economy.  John, you‘re absolutely right.  Republicans were there as time went on.  The questions going forward politically is will Republicans join Democrats and Democrats even join Republicans at times to help this president craft a new course that will lead to prosperity? 

SHUSTER:  John, hold your fire.  You‘re going to get an opportunity in the next segment, I promise.  Harold, John, Jeanne are staying with us. 

Coming up, who‘s to blame for so many investors losing their shirts?  If you believe Jon Stewart, cNBC‘s Jim Cramer and the rest of the financial media were wrong in a big way last year.  Is that fair?  The fight between cNBC and “The Daily Show” continues. 

And your Twitter questions are coming up at the end of the hour.  Go to Twitter.com/Shuster1600 or use the link at Shuster.MSNBC.com.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JON STEWART, “THE DAILY SHOW”:  Jim Cramer, I apologize.  That was out of context.  Technically, you were correct.  You weren‘t suggesting to buy Bear Stearns.  That was something that you did five days earlier in your Buy or Sell Segment. 

JIM CRAMER, CNBC ANCHOR:  I believe in the Bear franchise.  You know what, at 69 bucks, I‘m not giving up on this thing. 

STEWART:  He‘s not saying literally, I‘m asking you to buy Bear Stearns.  For that, he‘d have to go back a full seven weeks before the stock completely collapsed. 

CRAMER:  I‘m asking people who are watching this video to buy Bear Stearns. 

UNIDENTIFIED FEMALE:  Did you make a mistake? 

CRAMER:  Did I make a mistake?  First of all, any time you recommend a stock and it goes down, you have made a mistake.  Warren Buffett, I could run tapes for him.  He would look like a complete fool.  This is a terrible market, which is why I told people to sell everything.  But do you think he‘s going to run that tape?  No, because he‘s got a comedy show.

(END VIDEO CLIP) 

SHUSTER:  We are back with 1600.  The fight between cNBC‘s Jim Cramer and the “Daily Show‘s” Jon Stewart keeps rolling along, and it continued on the “Daily Show” last night. 

(BEGIN VIDEO CLIP)

STEWART:  “The Today Show” forced me to watch him watching me. 

Did I mean to say that? 

It would be like him having to watch me as his Bear Stearns advice wiped out my parent‘s 401(k). 

(END VIDEO CLIP)

SHUSTER:  Last night, Stewart brought in back up, bilingual Tom boy with a backpack Dora the explorer. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Doesn‘t Jim Cramer understand it‘s not about individual mistakes he‘s made, it‘s about him creating a false sense of insurgency that helped hyperinflate the bubble? 

(END VIDEO CLIP)

SHUSTER:  For all the laughs, did financial networks mislead the public or was the economic down turn impossible to anticipate?  Let‘s bring back our panel, Harold Ford Jr., Jeanne Cummings and John Feehery.  Jeanne, what‘s your view?  Should the media have done a better job?  Should Jim Cramer and all the rest have been able to predict some of what happened? 

CUMMINGS:  First, I should fully disclose, I love this fight.  It is so amusing.  And it is so unequal.  There‘s no way—Cramer has been out there and he has said everything.  He‘s on cNBC way often.  He has said everything.  Stewart has plenty of material to go back and pick through. 

Should the pundits have seen all of this?  The U.S. treasury didn‘t see it coming.  I‘m not sure we should expect cNBC to have seen it coming.  The problem, of course, is the credibility issue, because they put themselves out as the experts and then they have to take their hits when they‘re wrong. 

SHUSTER:  John, if the Treasury didn‘t see it coming, is it fair for Jon Stewart to go after Jim Cramer? 

FEEHERY:  The great thing about Jon Stewart is he doesn‘t have to be

fair.  He‘s a comedy guy.  It‘s absolutely hilarious.  Jim Cramer deserves

to be lampooned, because he‘s almost self-lampooning when he gets on and

says buy this, buy that, and he‘s wrong about half the time.  To trust him

if you trust him on all your investment advice, you‘re a doofus. 

SHUSTER:  Harold Ford, you want to weigh in?  I know we‘re sort of putting you between a rock and a hard place, having to choose between NBC Universal and the “Daily Show with Jon Stewart.”

FORD:  I think the back and forth is helping both their shows, number one.  And number two, more rich people lost money watching this than anything.  I‘m sure those wealthy, savvy investors in the Madoff fund are wondering how on Earth did they miss what they missed over the last few years?  I think it‘s amusing to watch it.

I do think what the country is waiting on is a clear, decisive and consistent set of messages out of Washington.  And hopefully we will continue, as they conduct these stress tests, we‘ll get that here in these next several days or next few weeks. 

SHUSTER:  That takes us right to the point that certainly this whole debate has touched a serve.  People—everyone‘s paying attention to this.  Even people at the White House, who are trying to grapple with whether or not to manage the expectations day-to-day of the market.  Here‘s Press Secretary Robert Gibbs dealing with some of that.  Watch. 

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  I would say in the beginning that that strategy seems vindicated.  Yesterday with the market up 200 some odd points off the education speech.  I was very much joking when I mentioned what the market was doing today.  I think slowly but surely we‘re going to make progress in this, understanding, as I‘ve said, that it‘s going to take quite some time to get out of here. 

(END VIDEO CLIP)

SHUSTER:  John Feehery, what is the proper White House role?  If the Treasury, if Jim Cramer, if all these people can‘t predict this thing coming, why should the White House get involved in trying to ride the stock markets up and down every day? 

FEEHERY:  They shouldn‘t.  They should come up with a focused plan that actually helps us get out of this mess.  I don‘t see a focused plan.  That‘s part of the thing about Robert Gibbs.  He‘s talking about education one day, talking about health care the other day, talking about this, that, and the other.  He‘s not talking about a focused plan on banks and housing that actually will get us out of that mess.  That will be the best thing for the White House. 

SHUSTER:  Harold Ford Jr., Ben Bernanke, the Fed chair, did testify to Congress.  He said until we stabilize the financial system, a sustainable economic recovery will remain out of reach.  He‘s referring to the banks?  Until there‘s a clear plan for the banks, an economic recovery is going to be difficult? 

FORD:  Two things.  One, in Bernanke‘s comments, he predicted that the economy could begin a rebound if we stabilize, if the banking system is stabilized.  Two, the Obama stimulus program—Remember, we‘re about 49 days into this administration.  In fairness to John‘s point, in fairness to this administration and to Secretary Geithner, who has gotten a bit of a bum wrap, they‘re working on a series of initiatives here.  I know there are many who wish they would move faster.  At times, I‘m in that crowd of people.

Remember, this stimulus package cuts taxes for 95 percent of Americans.  Those of us sitting around the table and me here in New York, we‘re part of—I imagine most if not all of us are part of the top five percent.  They view what they‘re doing as a gradual way to get towards this. 

We debate the speed of the platform they put us on.  They certainly have us on a trajectory to get us out of this.  As President Obama clearly knows, he will bear full responsibility for the plans he puts forward.  And naturally, Democrats will bear that responsibility in a good or bad way come next year. 

SHUSTER:  Jeanne, as it starts to seep into pop culture and shows like the “Daily Show” and late night comedy, how complex are the politics? 

CUMMINGS:  Well, I think for now, he‘s OK in terms of the politics and the American people.  If you look at public opinion polls, he‘s all right there.  He‘s not being overly aggressive.  They want an aggressive plan.  Where he may be miscalculating is the ability to Congress to move all of the agenda that he is presenting to them, because the truth is—and sorry, John, but Congress isn‘t really very brave.  There aren‘t very many brave people over there. 

FEEHERY:  Watch it, Jeanne.  Watch it. 

CUMMINGS:  Sorry.  Sorry. 

FEEHERY:  I agree with you. 

CUMMINGS:  He‘s asking them to do a lot of major things all at once.  That‘s a big risk for members who then have to go right out and meet the voters again in a year and a half.  He may be over-estimating what Congress can do. 

FEEHERY:  That‘s another problem here.  That is the American people simply don‘t trust the Congress.  They trust the president.  But they don‘t trust the Congress.  They don‘t trust all these bail outs.  They don‘t know what to make of the bail outs.  They‘re worried that their taxpayer money is being wasted. 

SHUSTER:  John, Harold, Jeanne sticking around. 

Up next, the celebrity sightings just keep coming on Capitol Hill. 

Plus, President Obama has embraced his Kenyan heritage.  What about his Irish roots?  No joke, Barack Obama‘s really Irish.  That‘s ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  There‘s a lot going on today.  Here are a few things I thought you should know.  First, the air on Capitol Hill was thick again today with anticipation over another celebrity sighting.  Once again, the root cause was House Speaker Nancy Pelosi.  Today, she met with singer Paul Simon to discuss health insurance and access for poor children.  Remember that Paul Simon song, “I‘m Going to Graceland?”  Well, Speaker Pelosi is going ga-ga over the Hollywood types. 

Last week, she met with Brad Pitt and allowed Congressman James Clyburn to tag along as Pitt spoke about hurricane relief efforts in Louisiana.  On Monday, Pelosi met with Richard Gere and helped him draw attention to the Dalai Lama.  The speaker has already met the Dalai Lama, of course, but he never starred in such DVD classics as “Nights in Rodance.”

Up next, remember during President Obama‘s campaign a few t-shirts and stickers popped up playing off the letter O at the beginning of his name.  Well, these actually weren‘t so far off.  The president has Irish roots in his lineage.  The president‘s great, great, great grandfather, yes that‘s three greats, was an Irish immigrant who came to America in 1850.  According to “Politico,” some Irish Americans want President Obama to acknowledge this part of his heritage before St. Patrick‘s day. 

In fact, a band called the Corrigan Brothers (ph) has written a song about it. 

(SINGING)

SHUSTER:  You may be wondering how come we‘re only hearing about the Irish connection now.  Well, this part of the Obama family tree was only discovered last year. 

Up next, an odd couple of sorts.  A monster who loves cookies is teaming up with the U.S. Agriculture secretary.  Yes, that‘s right, Agriculture Secretary Tom Vilsack and “Sesame Street‘s” Cookie Monster.  The two met in Washington, D.C. this week to announce a partnership and PR campaign aimed at helping children and their families make healthier food choices. 

A journalist from Politico.com was there and captured some of the fun. 

(BEGIN VIDEO CLIP)

TOM VILSACK, AGRICULTURE SECRETARY:  Cookie Monster, what are you doing here in Washington? 

UNIDENTIFIED MALE:  Cookies for all kids.  What do you think I‘m looking for, cabinet positions? 

(END VIDEO CLIP)

SHUSTER:  After the announcement, Cookie Monster and the secretary taped a public service announcement together.  Those are just a few things I thought you should know. 

It is Twitter time, when we throw your questions to our panel.  First, a Twitter time shout-out to my colleague Norah O‘Donnell and to the senior senator from Iowa, who has embraced social media.  Watch. 

(BEGIN VIDEO CLIP)

NORAH O‘DONNELL, MSNBC ANCHOR:  Are you Twittering now?  Is that what I hear? 

SEN. CHARLES GRASSLEY ®, IOWA:  Well, you Tweet when you Twitter.  And the answer is, you can be one of my followers and you can follow it on my Facebook.  And I‘m going to meet with a bunch of Twitters in Iowa during the Easter recess as well.  We‘re going to have a—I guess you call it a Tweet in, would you? 

(END VIDEO CLIP)

SHUSTER:  Let‘s welcome back our political panel, Harold Ford Jr., Jeanne Cummings and John Feehery.  Twitter time.  This is how it works.  We play a video that our Twitterers have suggested we look out.  You score them, one being bad, ten being good.  Here is Lex Luther asking for a bailout.  Watch this. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Hello, Mr. President.  Lex Luther here.  As you may or may not know, my once prosperous multi-national corporation, Lex Corp, has recently, like so many others, suffered from the current economic downturn.  I come to you a humbled man and I ask that you grant Lex Corp a 100 billion dollar bailout. 

(END VIDEO CLIP)

SHUSTER:  My score is that probably about a four.  Harold? 

FORD:  I give him a seven, maybe an eight.  I think a lot of Americans are—they‘re not asking for 100 billion, but they‘re asking for something. 

SHUSTER:  John Feehery?

FEEHERY:  That‘s the guy from “Mad Men.”  I give him a three. 

CUMMINGS:  I‘ll give him a five. 

SHUSTER:  All right, a five.  Not so bad.  Here are some of the Twitter questions we have collected.  John, Republicans have been criticizing the president for trying to do too much too soon.  One Twitter wants to know, they‘re also saying you need to do more to stop the earmarks.  How can he do both? 

FEEHERY:  You know, I think he‘s got to focus first on the economy.  For him, that‘s the most important thing.  Earmarks is a Republican thing right now.  It‘s a Republican political thing.  The president has got to focus much more on getting the banks solvent for his own political future. 

SHUSTER:  Harold Ford Jr., a Twitter question for you.  Was Secretary Paulson‘s idea of using the Tarp bailout money to give the banks more capital, was that wise? 

FORD:  I think so.  Tarp—I‘m one of the people who defended the original Tarp for three reasons.  Tarp did three things, it prevented a complete meltdown of the banking system.  To put it in perspective, in the last 18 months, we‘ve only seen less than 50 banks fail.  To put it in comparison, between ‘86 and ‘91, there were 2,000 banks failed.  If the American taxpayer, if the things go as well as some of these banks are suggesting, the American taxpayer will get back almost 13 billion dollars this year in dividend payments.  It won‘t solve the problem.  But it certainly prevented the meltdown. 

SHUSTER:  Jeanne?  Finally, Twitter question to you, somebody wants to know what is the next big fight in Congress? 

CUMMINGS:  The next big fight is going to be over the union‘s effort to try to get new tools to organize.  This is something that President Obama has not really talked about.  It‘s not high on his priority list.  He‘ll sign it if it comes.  It‘s not necessarily a fight I think they‘re real happy about having at this particular moment.  The unions, basically, it‘s payday for them and they want the Democrats to push the legislation through.  It‘s going to be a huge, huge fight. 

SHUSTER:  Jeanne Cummings, John Feehery, Harold Ford Jr., a great panel.  As always, thank you so much.  We appreciate it.  That is the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m David Shuster. 

Remember, get the latest political news and a sneak peek of what‘s coming up in the show.  Go to Shuster.MSNBC.com.  We‘re going to be Twittering online after the show.  Twitter.com/Shuster1600.  I‘m David Shuster.  “HARDBALL” with Chris Matthews starts right now. 

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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