updated 3/17/2009 9:59:32 AM ET 2009-03-17T13:59:32

Guest: Jared Bernstein, Robert Menendez, Michael Isikoff, Brad Blakeman, Chris Kofinis, Peter Fenn

High: President Obama tries to stop the bonuses to AIG.

Spec: Politics; Barack Obama; Economy; AIG; Dick Cheney; Iraq; Eric Cantor

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HOST (voice-over):  Tonight, President Obama tries to stop the bonuses to AIG.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  It‘s hard to understand how derivative traders at AIG warranted any bonuses.

SHUSTER:  “Follow the Money.”  What can the Treasury Department do? 

We will take a closer look.

Plus...

REP. ERIC CANTOR ®, VIRGINIA:  As a minority party, I think part of our job is to be the honest opposition. 

SHUSTER:  ... Republican House Whip Eric Cantor lands in “Hypocrisy Watch.”

Later, the conservative fear mongering over President Obama. 

RICHARD CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES:  He‘s making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack. 

GLENN BECK, FOX NEWS:  We are a country that‘s headed toward socialism, totalitarianism, beyond your wildest imagination. 

UNIDENTIFIED MALE:  Madoff‘s scam is about $20 billion.  Barack Obama‘s Ponzi scheme is $2 trillion. 

SHUSTER:  The inflammatory rhetoric from the wing nuts, is it merely entertaining or seriously dangerous? 

And the things I thought you should know.  The president plans for a return visit to Leno, Joe Biden‘s open microphone, and Twitter time, all tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA:  And this is not just a matter of dollars and cents.  It‘s about our fundamental values. 

(END VIDEOTAPE)

SHUSTER:  I‘m David Shuster. 

This was day 56 of the Obama administration.  And today, the White House tried to align itself with the public anger over the $165 million of executive bonuses given out at AIG. 

The insurance giant lost $60 billion in the last quarter of last year and has received taxpayer bailout money on four different occasions.  Today, President Obama appeared visibly angry about the bonuses while talking to small business owners and community lenders at the White House. 

(BEGIN VIDEO CLIP)

OBAMA:  ... defines itself in financial distress due to recklessness and greed.  Under these circumstances, it‘s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. 

And I‘ve asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayer healthy. 

(END VIDEO CLIP)

SHUSTER:  Joining us now live from 1600 is Jared Bernstein, chief economist for Vice President Joe Biden and executive director of the White House Task Force on Middle Class Working Families. 

Mr. Bernstein, I know that all of you share the public‘s outrage, but it seems like the solution seems fairly simple, at least to me.  The U.S.  government owns 80 percent of AIG, so why not split off the derivatives unit, put it into bankruptcy, terminate all its obligations, including the bonuses to that unit? 

JARED BERNSTEIN, CHIEF ECONOMIST FOR VICE PRESIDENT BIDEN:  Well, first of all, it‘s not that simple.  These are contracts that were signed back in 2008.  They remain binding contracts.  However, as your comment suggests, David, we‘re looking at every legal avenue to unwind these contracts and those—I‘m not a lawyer, I can‘t tell you what they are, but perhaps other folks investigating this are thinking about those types of ideas like you mentioned. 

SHUSTER:  Well, I‘m little confused about Secretary Geithner‘s role in all of this.  Isn‘t it true that Secretary Geithner knew about these bonuses and contracts, and therefore struck a deal with AIG?  I mean, he knew $286 million was due in bonuses to AIG yesterday. 

He pressured AIG to cut $9.6 million to the top employees, essentially cut it in half.  In other words, cutting out only $4.8 million. 

If the president didn‘t like the deal Geithner struck, then why didn‘t the White House stop it beforehand? 

BERNSTEIN:  I think that‘s losing sight of the bigger picture.  I mean, first of all, I don‘t know that anyone beyond—fighting harder than Tim Geithner right now to unwind these contracts and find a way to prevent these traders from getting $165 million in bonuses.  I mean, he is working extremely hard on fixing that problem. 

That said, the target of Geithner and our interventions on the financial stability plan, vis-a-vis AIG, takes—starts from the fact that this is a deeply interconnected financial firm.  And were AIG to fail at this point in time, the fallout in financial markets—and we‘re not talking about big banks, we‘re talking about mainstream...

SHUSTER:  But Jared, that‘s a different question...

BERNSTEIN:  No. 

SHUSTER:  ... then when Tim Geithner knew.  If Tim Geithner knew over the weekend, and then suddenly he strikes a deal, and then because of the public outrage, the president says that deal‘s not acceptable, somebody was leaving the president out of this, right? 

BERNSTEIN:  Well, no.  I think that you‘re not being fair to Geithner in the following sense.  He has a couple of different mandates here. 

By far, his most important mandate is to maintain stability of financial markets and to get credit flowing again.  We‘re talking small business investors, we‘re talking folks who can‘t get college loans, we‘re talking about creditworthy people who want to buy a car.  That‘s key to getting this economy functioning again. 

At the same time, he has to make sure he implements fairness in these interventions and block the contracts that are blatantly unfair.  That‘s what he‘s working on right now.  But you‘re not going to stop the big deal, getting the markets flowing again, based on the contracts. 

SHUSTER:  Well, here‘s—you mentioned contracts.  Here‘s Larry Summers, one of the top economic advisers, yesterday.  I‘ll ask you a question on the other side.

Watch.

BERNSTEIN: Sure.

(BEGIN VIDEO CLIP)

LARRY SUMMERS, OBAMA TOP ECONOMIC ADVISER:  We are a country of law.  There are contracts.  The government cannot just abrogate contracts.  Every legal step possible to limit those bonuses is being taken by Secretary Geithner and by the Federal Reserve system. 

(END VIDEO CLIP)

SHUSTER:  Mr. Bernstein, I keep hearing a lot of people talking about a double standard, because if you‘re going to enforce contracts, then why not—why didn‘t you honor the United Auto Workers contract, the union contract they had?  They were forced to rip up their contracts so that the big three could remain solvent. 

BERNSTEIN:  I actually think that‘s a great point, David, and I think it‘s one that should perhaps guide our thinking moving forward. 

Nobody ripped up any contracts with the UAW.  Those contracts were renegotiated.  And I think what Larry Summers said is exactly right.  We‘re not in the business of abrogating contracts. 

We may well be in the business of renegotiating contracts.  And if there are any AIG traders within the sound of my voice who are supposed to get these millions of dollars of contracts, and they know the part that they played into getting us to where we are today, I‘d like them to think very deeply about this concept of renegotiation. 

SHUSTER:  Does the White House believe that the AIG leadership, though, needs to go?  I mean, Barney Frank and others have suggested that AIG needs to clean house, it needs new leadership.  Would the White House support that? 

BERNSTEIN:  Well, first of all, we‘ve already supported that.  The CEO of AIG...

(CROSSTALK)

SHUSTER:  Right, but the president said that Treasury Secretary Geithner is working with Liddy.  If Liddy is part of the problem, then why should people trust Geithner working with Liddy to come up with a solution? 

BERNSTEIN:  I think Geithner is working with Liddy, and I think the proof will be in weeks forward, whether Liddy works, as I believe he will, to help implement the solution.  Remember, Liddy came into the scene after those contracts had been signed.  And also remember that there are many top executives, AIG, who are working for $1 a year.  So there are folks who are getting this message. 

SHUSTER:  Jared Bernstein, chief economist for Vice President Biden. 

Jared, thanks for coming on.  I promise we will talk about small business.  It‘s an important issue.  We will get to that another time.  I promise you.  But thanks for coming on. 

BERNSTEIN:  Love to.  Sure.

SHUSTER:  For more on the AIG bonus outrage and what lawmakers plan to do about it, let‘s bring in Senator Robert Menendez, Democrat from New Jersey.  He‘s a member of the Banking and Finance Committees. 

And Senator Menendez, when you hear those responses from the White House, what do you make of it?  Are you satisfied? 

SEN. ROBERT MENENDEZ (D), NEW JERSEY:  Well, look, I‘m not satisfied.  As I‘m sure—as I heard the president today, it‘s outrageous that when families are struggling to survive every day, that AIG operates in this way, particularly with taxpayer dollars.  And I think the point that you made, David, is the point that I‘ve made. 

If we can tell labor—United Auto Workers only one example—that they have to renegotiate their contracts, there is no reason why when the federal government is poised to do another $30 billion that, in fact, we can‘t insist that those contracts get renegotiated, and renegotiated in such a way in which those bonuses simply don‘t take place. 

SHUSTER:  Some of your colleagues have suggested it was already a mistake, essentially, to rescue AIG.  I want to play for you Senator Sessions earlier today talking about bankruptcy. 

Watch. 

(BEGIN VIDEO CLIP)

SEN. JEFF SESSIONS ®, ALABAMA:  If your government, our government, had acted properly, we would have allowed this company to go forward in a controlled, orderly process through reorganization under Chapter 11, and we wouldn‘t have this bonus embarrassment.  Those folks would have been ordered to tell the truth in a well-equipped federal court process, and there would have been no reason for the healthy part parts of AIG to fail at all. 

(END VIDEO CLIP)

SHUSTER:  Senator, how about it?  How about whether it‘s not the entire company in bankruptcy?  What about the derivatives unit, as we suggested at the top?  Put them in bankruptcy, and then you‘re not under any obligation to pay bonuses? 

MENENDEZ:  Well, it may come to that.  The one thing I disagree with Senator Sessions, what we should have done, and what Senator Sessions and others were silent about with those of us who were calling for the regulatory enforcement that should have taken place so that we wouldn‘t find ourselves with a company that pose systemic risk to our economy, beyond their own issues, systemic risk to our economy.  And so it just seems to me that in terms of taking over AIG, that it was necessary as it related to our overall economy.  But I agree, maybe the derivative sections of this needs to be ultimately jettisoned out. 

The bottom line is, if people cannot understand that there is shared sacrifice to be called for in this country, that families across the landscape of the country are facing enormous challenges in their personal lives and those of their families, and to have taxpayer moneys go to these companies and not change the culture in the way of which they do business, they‘re going to find themselves in very sad shape here. 

SHUSTER:  Well, Senator Menendez, I think everybody agrees with you, but there still seems to be some questions about what did the White House knew and when?  And clearly, Secretary Geithner, he knew that these contracts, that the deal had to be satisfied by yesterday.  He reached a deal with AIG.  It spills out, and now that deal is inappropriate, according to the president.

Do you have trust in Secretary Geithner on all of this? 

MENENDEZ:  Well, I trust Secretary Geithner.  He‘s facing the biggest array of challenges that any treasury secretary could face at one time without even an assistant secretary confirmed underneath him.  So he‘s taking it all on at one time. 

The bottom line is, I understand about not abrogating contracts, not breaking contracts, but, look, this is about telling them you just cannot live this way.  You have to renegotiate, and they need to ultimately be renegotiated in a way in which they‘re nullified. 

And listen, there‘s a lot of people in this country looking for work, including on the Street.  It just seems to me the suggestion that otherwise we‘ll lose talented people is rather false at this point in time. 

SHUSTER:  Senator Robert Menendez, Democrat from New Jersey. 

And Senator, good of you to join us tonight.  We appreciate it.

MENENDEZ:  Good to be with you.

SHUSTER:  Coming up, former vice president Dick Cheney says President Obama‘s decisions are making America vulnerable to another terrorist attack.  And that was one of the softer criticisms of Obama this weekend.  A conservative on Fox News called President Obama worse than Bernie Madoff. 

Shouldn‘t there be some restraint?  We will take a closer look. 

Plus, Vice President Joe Biden didn‘t realize the microphone was open when he teased and old friend with some salty language.  Oops. 

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHENEY:  I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11. 

(END VIDEO CLIP)

SHUSTER:  That was Dick Cheney insisting the enhanced interrogation techniques he helped put in place during the Bush administration were “absolutely essential” to their success in thwarting another 9/11.  Speaking to CNN on Sunday, the former vice president went on to say it was all done legally and in “accordance with our constitutional practices and principles.”  But was it? 

A report by the International Committee of the Red Cross is now using the word “torture” when referring to the Bush administration interrogation techniques. 

Joining us now to help go through Dick Cheney‘s latest is Michael Isikoff, “Newsweek” investigative correspondent and MSNBC contributor. 

Mike, when Dick Cheney talks about success, I want to compare and contrast that with something that Khalid Sheikh Mohammed said.  And then you can give it some context. 

Khalid Sheikh Mohammed, who was subject to some of these techniques, said, “I gave a lot of false information in order to satisfy what I believed the interrogators wished to hear in order to make the ill-treatment stop.  I‘m sure that the false information I was forced to invent wasted a lot of their time and led to several false red-alerts being placed in the U.S.”

MICHAEL ISIKOFF, MSNBC CONTRIBUTOR:  Yes, I think a lot of people who lived through those orange alerts and the fear that sort of was palpable throughout Washington and a lot of other major American cities, will be pretty distressed to learn that Khalid Sheikh Mohammed, at least according to this account, was just making this stuff up because he was being so brutally treated with these enhanced interrogation techniques that had been approved at the White House. 

It really underscores how little we yet know about what actually was done under this program that the vice president was touting yesterday, about exactly how these people were treated, about what was known at every step of the way.  We sort of—generally, we know these words, “waterboarding,” and “enhanced interrogation.”  But when you read that ICRC report as it was republished in the New York Review of Books, obtained by Mark Tanner (ph), and you read the very detailed account about the beatings that went on, about the—being locked in small boxes analogous to mock burials, about the hand shackled in really grotesque positions, I mean, it becomes quite ugly.  And we have not had a full and complete accounting of exactly what was done. 

SHUSTER:  We also don‘t know what Vice President Cheney is talking about when he says successes because he won‘t release any information.  There has been no indication there have been those successes. 

ISIKOFF:  Right.

SHUSTER:  In any case, you caught part of another section of the interview yesterday that was intriguing.  And we want to play that for you. 

Watch.

(BEGIN VIDEO CLIP)

JOHN KING, CNN:  Are the feelings about this war based on the fact that the American people think they didn‘t get what they were sold? 

CHENEY:  Well, a lot of what we said in terms of the elements you had on the program were in response to questions and reporting we received.  I would be asked questions by your colleagues and respond to the best of our ability. 

(END VIDEO CLIP)

SHUSTER:  Now, he‘s talking about the nuclear case for war with Iraq.  I don‘t seem to recall him answering your questions or anybody else‘s questions in August of 2002 when he gave this speech. 

Watch. 

(BEGIN VIDEO CLIP)

CHENEY:  We now know that Saddam has resumed his efforts to acquire nuclear weapons.  Simply stated, there is no doubt that Saddam Hussein now has weapons of mass destruction.  There is no doubt that he is amassing them to use against our friends, against our allies, and against us. 

(END VIDEO CLIP)

SHUSTER:  Was that because of pressure from you, Michael Isikoff? 

ISIKOFF:  Exactly.  Yes, he was responding to my questions there. 

No, that was the speech that launched the Bush administration‘s campaign for war in August of 2002.  It was the speech that first made the claim that Saddam was resuming his nuclear weapons program, that played up the WMD. 

And to paraphrase the vice president, we now know that Saddam was not resuming his nuclear weapons program at that point.  Simply stated, there were no Iraqi weapons of mass destruction. 

We also now know that there was plenty of dissent within the intelligence community, advising that much of what the vice president was saying in that speech was wrong, that there was not solid evidence to back it up.  The Energy Department said that, the State Department said that, the people who were the experts on nuclear weapons were saying we don‘t just see it.  And yet, the vice president went out and made that claim publicly, not prompted by questions, but because he had an agenda to prepare the case for war. 

SHUSTER:  Finally, in his interview yesterday, he said that regarding Scooter Libby, his chief of staff who was convicted, “I believe firmly that Scooter was unjustly accused and prosecuted.”

What do you make of that? 

ISIKOFF:  Well, of course Scooter Libby was also convicted on all counts and sentenced by a federal judge.  But the one thing the vice president doesn‘t talk about when he talks about the injustice that was done to Scooter Libby is that in almost every particular, if you sat through the trial, as I know you did, David, as did I, the lies that Scooter Libby was convicted of telling a grand jury were, in all cases, designed to predict the vice president, himself. 

It was Vice President Cheney who first told him about the identity of Joe Wilson‘s wife at the CIA.  It was Vice President Cheney who authorized him to talk to Judy Miller at “The New York Times” when he first spilled the beans.  It was Vice President Cheney, who, as Fitzgerald said in his summation, there is a cloud over the vice president‘s office.  That was his summation at the Scooter Libby trial. 

SHUSTER:  And it was Scooter Libby who went to the grand jury.  And according to the tapes that we listened, could not remember the key conversations he had with Vice President Cheney. 

ISIKOFF:  Right.

SHUSTER:  It was almost eerie, the conversations he could not remember.

ISIKOFF:  Right.

SHUSTER:  So maybe this is part of to try to make sure Scoot Libby never remembers the conversations. 

In any case, Mike Isikoff.

Thanks, as always, Mike.  We appreciate it.  Good to see you.

ISIKOFF:  Thank you.

SHUSTER:  House Whip Eric Cantor argues the job of his party is to be the honest opposition to Democrats, but in the same interview he made that declaration, Cantor was making a string of dishonest statements. 

“Hypocrisy Watch” is next on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.

House Republican leaders, in their opposition to President Obama, are talking about the importance of conducting an honest debate.  And that takes us to tonight‘s “Hypocrisy Watch.”

First, here‘s the background. 

Virginia Republican Eric Cantor is the Republican House whip.  He appeared yesterday on NBC‘s “Meet the Press.”

(BEGIN VIDEO CLIP)

CANTOR:  I mean, listen, as a minority party, I think part of our job is to be the honest opposition. 

(END VIDEO CLIP)

SHUSTER:  Be part of the honest opposition.  Well, that‘s interesting, because in the same interview, watch how Cantor criticizes the administration‘s priorities. 

(BEGIN VIDEO CLIP)

CANTOR:  It is striking to see the lack of change in that bill, the type of waste and pork barrel spending, the earmarks that exist in that bill.  You‘ve got the train from Disneyland to Las Vegas. 

(END VIDEO CLIP)

SHUSTER:  Congressman, as you know, there is nothing in any bill about a train from Disneyland to Las Vegas.  The stimulus bill does contain $8 billion for high-speed rail projects, but the entire pot of money goes to the Department of Transportation.

The secretary, Ray LaHood, a Republican, will decide how to spend the money.  But there is nothing in the bill or any other referring to any particular train project or idea. 

Congressman Cantor produced another apparent whopper while criticizing the budget.  He said Republicans will offer an alternative. 

(BEGIN VIDEO CLIP)

CANTOR:  Republicans will have a plan.  We had a stimulus plan.  You know, part of the problem with being in the minority is, David, that sometimes your colleagues in the press don‘t want to cover the ideas that the minority has. 

(END VIDEO CLIP)

SHUSTER:  Wow.  The Republicans are going to produce their own budget proposal, except watch Republican Mitch McConnell on ABC‘s “This Week.”

(BEGIN VIDEO CLIP)

GEORGE STEPHANOPOULOS, ABC:  So will you have a budget and are you worried about that attack? 

SEN. MITCH MCCONNELL ®, MINORITY LEADER:  No, we are going to offer a number of amendments to the Democratic proposal. 

STEPHANOPOULOS:  But no comprehensive budget? 

MCCONNELL:  Well, it will reframe what the Democrats recommend for America over the next five and 10 years. 

STEPHANOPOULOS:  If you just have rifle shot amendments, you don‘t have to make all the tradeoffs that you have to make in an overall budget. 

MCCONNELL:  Well, we‘re just sort of getting down in the weeds here over procedure. 

(END VIDEO CLIP)

SHUSTER:  Oh, those silly little procedures like producing an alternative budget. 

Clearly, Senate Republicans are not interested in producing an alternative budget, despite Congressman Cantor‘s claim.

Congressman Cantor, when you highlight honesty and are dishonest in the very same interview, that‘s hypocrisy, and it‘s wrong. 

Up next, when you compare President Obama to Bernie Madoff, or claim the White House will soon establish concentration camps, doesn‘t that go too far?  Not for conservative pundits.  The right wing fear machine is spewing out all kinds of stuff these days. 

And later, when language is merely amusing.  Joe Biden‘s latest episode involving an open microphone.  We will bring you the PG-rated version. 

You‘re watching 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  President Obama‘s approval ratings stands at a healthy 61 percent, according to the latest Gallup Poll.  But some conservatives have decided to ratchet up their personal attacks on the president, and the rhetoric is increasingly harsh.  Here‘s Vice President Cheney yesterday. 

(BEGIN VIDEO CLIP)

JOHN KING, CNN ANCHOR:  Do you believe the president of the United States has made Americans less safe? 

DICK CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES:  I do.  He‘s making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack. 

(END VIDEO CLIP)

SHUSTER:  As controversial as Cheney‘s statement was, that rhetoric was soft and cuddly compared to what was spewed out over the weekend on Fox News.  On that network, President Obama was compared to Bernie Madoff, Wall Street‘s most hated criminal. 

(BEGIN VIDEO CLIP

UNIDENTIFIED MALE:  Madoff scam is about 20 billion.  Barack Obama‘s Ponzi scheme is two trillion.  If you look at how they work the schemes, they‘re very similar.  Both falsify their returns.  And to pay for that, he‘s got to bring in a lot of other scamsters, Obama does, which in this case really are taxpayers. 

(END VIDEO CLIP)

SHUSTER:  So how far is too far?  Isn‘t there a danger when the rhetoric goes off the charts?  Joining us now, Democratic strategist Chris Kofinis, former communications director for John Edwards, and Republican strategist Brad Blakeman, former deputy assistant to President Bush.  Welcome to you both.

Brad, comparing President Obama to Bernie Madoff, you don‘t support that, do you? 

BRAD BLAKEMAN, REPUBLICAN STRATEGIST:  I do not, no.  I think some of these attacks have gone too far on the president.  You‘re right.  These are personal attacks.  These are not attacks on his policy and principles.  That‘s what we should be attacking, and we should be offering alternatives and not just attacks. 

SHUSTER:  Chris Kofinis? 

CHRIS KOFINIS, DEMOCRATIC STRATEGIST:  These Republican attacks by some in the party, folks like Rush Limbaugh, Michael Steele, and others, I mean, this is just a recipe to further dig a deeper hole for this party.  Listen, their ideas, their policies, their positions on the issues are not selling to the American people.  The only thing they have left is to go on the attack and make it personal. 

What they don‘t understand, that is the worst strategy.  It‘s going to make things worse for the party.  It‘s going to further alienate the very voters they need to win over. 

SHUSTER:  But it‘s good for them?  I mean, Rush Limbaugh, it appears his ratings are up.  Glenn Beck‘s ratings are through the roof.  Glenn Beck was suggesting that the Obama administration is heading toward concentration camps, with those FEMA camps, and he accuses the Obama administration of embracing totalitarianism.  Watch this. 

(BEGIN VIDEO CLIP)

GLENN BECK, FOX NEWS ANCHOR:  We are a country that is headed toward socialism, totalitarianism, beyond your wildest imagination.  I wanted to debunk these FEMA camps.  I‘m tired of hearing about them.  You know about them.  I‘m tired of hearing about them.  I wanted to debunk them. 

We‘ve now for several days done research on them.  I can‘t debunk them. 

(END VIDEO CLIP)

SHUSTER:  I mean, it‘s crazy, isn‘t it? 

BLAKEMAN:  It is.  It‘s crazy as Jon Stewart is crazy or Bill Maher is crazy on the left. 

KOFINIS:  No, no. 

BLAKEMAN:  These guys—you have a massive deception because you want to take people away from your horrid policy.  Jon Stewart started attacking Rush Limbaugh.  Jon Stewart is a comedian, and so is Rush Limbaugh.  He‘s an entertainer. 

KOFINIS:  No.  Rush Limbaugh got invited to CPAC to speak in front of conservative and Republican leaders.  Mr. Beck is another—

BLAKEMAN:  He calls the show. 

KOFINIS:  Mr. Beck is another voice in the Republican party. 

BLAKEMAN:  Glenn beck is not a member of the Republican party, nor is Rush Limbaugh. 

KOFINIS:  He is a voice in the Republican party.  Why Republicans do not come out and condemn these individuals.  Aside from you, no one else is willing to do it, because they‘re all terrified they‘re going to be on the next morning show. 

BLAKEMAN:  Why aren‘t you out there condemning Bill Maher—

KOFINIS:  For what?  For being funny?  

BLAKEMAN:  Well, he‘s not funny.  He‘s not funny when he attacked President Bush personally.  You guys didn‘t do that.  When Jon Stewart goes on television every night and attacked—

(CROSS TALK)

KOFINIS:  You have had Democrats come out and speak out against MoveOn and other groups. 

BLAKEMAN:  You guys are joined at the hip with MoveOn. 

KOFINIS:  No, that‘s not true.  You‘ve had Democrats come at and criticize when they felt -- 

BLAKEMAN:  Very few.

KOFINIS:  No.  You had leaders in the Democratic party come out and willingly say this went too far.  There is no one in the Republican party at a leadership role who is willing to do that.  Not Michael Steele, not Representative Cantor, not Senator Boehner—I‘m sorry, Senator McConnell, not Representative Boehner, no one.  They‘re not willing to do it.  The reason why—

BLAKEMAN:  Give the guys the type of credibility that you‘re trying to give them? 

KOFINIS:  It‘s not giving them credibility, it‘s speaking the truth.

SHUSTER:  Brad, why is it so difficult for people to say, as you just did, that this is wrong?  When Glenn Beck is out there suggesting that there‘s going to be totalitarianism and concentration camps, when others are make these crazy claims, why is it so difficult for Republicans to say, let‘s not make it personal?  Let‘s keep it on the policy? 

BLAKEMAN:  Because these people are not members of our party.  They‘re not the leaders of our party.  What, are we going to spend every day trying to apologize for entertainers? 

SHUSTER:  Shouldn‘t there be some standards at some of these other networks?  That‘s a problem, isn‘t it?  There‘s no standards. 

BLAKEMAN:  There should be standards at all networks.  That‘s not for Mitch McConnell or Boehner to be out there policing everything that entertainers say. 

KOFINIS:  It‘s disputing, it‘s disagreeing.  The reality is Rush Limbaugh is—

BLAKEMAN:  Actions speak louder than words. 

KOFINIS:  Rush Limbaugh is a powerful voice in your party.  The leaders of the Republican party are unwilling to condemn the vitriolic things they say every single day. 

(CROSS TALK)

SHUSTER:  Let‘s talk about Dick Cheney for a second.  Dick Cheney said that America is less safe.  Is that fair game or not? 

BLAKEMAN:  Absolutely.  He believes, based on what he knew at the time he was governing, and what he knows today, he‘s criticizing the president‘s policies as making us less safe.  I think that‘s absolutely fair game. 

KOFINIS:  What do you say about this?  This is like living—Dick Cheney has lived in an alternative universe if he thinks that the policies they followed made this country safe. 

BLAKEMAN:  We haven‘t been attacked since 9/11.  Is that a coincidence?

KOFINIS:  Wait.  The number of terrorist incidents over the Bush tenure since 9/11 actually went up.  We were not safer.  We fought a war.  We fought a war that we didn‘t need to fight. 

BLAKEMAN:  Don‘t go from talking points. 

KOFINIS:  It‘s reality. 

BLAKEMAN:  Here‘s the reality, America has not been significantly attacked—

SHUSTER:  We have lost another 4,000 citizens, 4,000 soldiers in Iraq for a war that had nothing to do with 9/11. 

BLAKEMAN:  We didn‘t go into Iraq because of 9/11. 

SHUSTER:  We didn‘t? 

BLAKEMAN:  We did not. 

(CROSS TALK)

BLAKEMAN:  We did not go into Iraq for 9/11. 

KOFINIS:  Wait a second.  You have the vice president and the president that tried to use every opportunity to tie 9/11 and the terrorists of 9/11 with Iraq and Saddam Hussein.  You had Ari Fleischer on MSNBC last week trying to rationalize the Bush administration. 

BLAKEMAN:  No, he was trying to rationalize and did rationalize the purpose—

(CROSS TALK)

KOFINIS:  Eight years of failure. 

BLAKEMAN:  You guys agreed with our decision to go to war, the Democrats and the Republicans, based on the same intelligence. 

SHUSTER:  Brad, isn‘t it a strategic though problem for Republicans, given how popular the president is, when this stuff does comes across as so personal, whether it‘s the vice president saying that Barack Obama himself is making America less safe, or whether it‘s some of this crazy stuff about comparing Barack Obama to Bernie Madoff?  Doesn‘t the Republican party sort of go down a road it doesn‘t want to go? 

BLAKEMAN:  It‘s not the party, again, that‘s doing this.  These are individuals who are not connected to the party.  What you‘re talking about with Dick Cheney is fair game.  It‘s policy.  It‘s his feeling that, knowing what he knew as vice president, knowing what he now knows, that the president is making policy decisions that are not right for the country.  That‘s fair game. 

What these other entertainers are doing, whether it‘s on the left or the right, we shouldn‘t be policing them.  We should—

KOFINIS:  Then don‘t embrace them.  Here‘s the part—

(CROSS TALK)

KOFINIS:  Republicans are embracing them every single day.  Michael Steele is terrified that every day he‘s going to wake up, Rush Limbaugh is going to criticize him. 

Look at the economic statistics, for example.  You had Dick Cheney and others and Ari Fleischer talking about the great economic record of the Bush administration.  GDP growth was the slowest in decades.  Job growth was the slowest in decades.  A trillion surplus that was blown and made into a trillion dollar deficit.  A financial series of crises that we have not seen since the Great Depression. 

(CROSS TALK)

KOFINIS:  And they‘re saying, but it wasn‘t our fault.  We had nothing to do with it. 

BLAKEMAN:  No, you guys say you have nothing to do with it.  You controlled Congress for two years. 

KOFINIS:  Bush was in power. 

SHUSTER:  The biggest issue that we have right now today on the economy is AIG.  And we‘re keeping you guys around too talk about that ahead. 

BLAKEMAN:  That we‘ll agree on.

KOFINIS:  Probably.

SHUSTER:  Brad Blakeman, Chris Kofinis, great stuff as always.

The folks who run AIG just don‘t seem to get it.  If your company is getting a bail out, taxpayers don‘t want to see you using that money for what appears to be frivolous stuff.  The bail out rage up next. 

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D), ILLINOIS:  I‘m trying to contain my rage at the thought that we would send 180 million to AIG because the company is failing.  And in the midst of its failure, we are saving them from bankruptcy and they are declaring bonuses for their employees? 

(END VIDEO CLIP)

SHUSTER:  Welcome back to 1600.  That was Majority Whip Dick Durbin on the Senate—outside the Senate today, one of many lawmakers lashing out after learning that ailing insurance giant AIG doled at 165 million dollars in executive bonuses, despite the fact that it‘s existing on taxpayer life support right now.  But hefty executive bonuses are just one way the company is showing that it is not getting the message. 

For more on that, let me bring in Democratic strategist Peter Fenn, president of Fenn Communications.  Peter, I got an e-mail from you.  You were telling me about something you received in the mail.  Explain what it is. 

PETER FENN, DEMOCRATIC STRATEGIST:  I tell you, David, if there was a definition for clueless, this would be it.  I got this in the mail just before the holidays.  Your viewers I think can see it.  It‘s got a picture of a diver on it.  It says “what does your insurance company do for you? 

AIG.” 

You turn it over—this is honest to god true.  You turn it over, this is a diamond bracelet.  And it says that the woman—a woman lost it off her yacht in the harbor and they sent a diver down to get it.  Now this costs a lot of money to send this little sucker out.  I tell you, they had already received 150 billion dollars when I got this little missive in the mail. 

I looked at it and said, I‘m putting this in my briefcase and carrying it with me forever.  So when the latest came up, I couldn‘t resist shooting you a copy of it. 

SHUSTER:  They‘re also still supporting sports teams, like Manchester United in London.  On a tone deaf scale, where is AIG? 

FENN:  If the scale is 1 to 100, they‘re at about 1,000 right now.  At the same time this came out, I was in Detroit, Michigan.  I have 133 pages of foreclosures.  This is what people are facing in this country.  They‘re sending this out to zip codes in Washington, D.C., and around the country?  They ought to be fired, these guys.  Or at the very least if—someone should take out an ad in a paper like this, instead of foreclosures, listing the names of these guys that got us into this mess, and how much of a bonus they‘re supposed to get.  They shouldn‘t be getting any of these bonuses. 

SHUSTER:  Let‘s bring in our panel to get reaction to this.  Chris Kofinis, Democratic strategist, and Brad Blakeman, Republican strategist.  First, your reaction to this.  It‘s a very nice, expensive flyer that must have cost a lot of money to put together. 

KOFINIS:  Sometimes you‘re so angry at things that happen you can‘t put into words.  I think this is one of those moments.  This is a company that is clearly out of touch with reality.  What‘s worse is they are fomenting in anger out there that is real.  The American people are furious.  They‘re furious at what they see as a pandemic era of irresponsibility among certain corporate titans, that think they can do anything and get away with it, and get rewarded on top of it. 

To go out there in the midst of a serious economic crisis, when you‘ve gotten tens of billions of dollars, and on top of that say, we‘re going to give millions of dollars in bonuses to employees, because we‘re afraid we‘re going to lose the good ones?  Where were the good ones? 

FENN:  These weren‘t the good ones.  Where were the good ones?  How could they have been the good ones? 

BLAKEMAN:  I agree.  These guys learned it from Capitol Hill.  Look what the Democrats did.  A trillion dollar spending bill that nobody read, that came out at 11:00 at night, and voted on the next morning.  Not one person who voted for a trillion dollars read the bill.  And 9,000 separate earmarks in this bill.  It‘s an earmark bill.  The outrage over this fails into comparison to what the lawmakers are doing. 

KOFINIS:  That‘s a non sequitur if I‘ve ever heard one.  The difference there is—this is the great thing about democracy.  You can hold our elected officials accountable.  We‘re not holding these folks in charge of this company accountable.  We should. 

FENN:  The elements of this bill were known to everyone on that floor.  They had been through that.  They went to conference committee.  The fact that they hadn‘t gone through every word, they had staff look at—

BLAKEMAN:  How do you not vote on a bill that you haven‘t read? 

FENN:  They do that all the time up there.  You know we‘ve all worked there. 

BLAKEMAN:  On a trillion dollar bill?  Come on. 

FENN:  Listen.  Let me make this point about this, this is a non

sequitur.  We had not seen this kind of irresponsibility, this transparency

--

(CROSS TALK)  

BLAKEMAN:  -- the irresponsibility of a Democratic Congress who would not let not only their membership or the Republicans read a bill. 

FENN:  The Democrats are actually doing something about this economy that—

BLAKEMAN:  They‘re spending money like drunken sailors. 

FENN:  They‘re spending money to get people jobs and put this economy back on track.  The problem with the Republicans now is the only thing they can say is no, no, no, or complain about the process.  This is the no party.  And, you know, Brad, you‘re a good guy.  I like you.  Let me tell you, unless you guys come up with some solutions --  

BLAKEMAN:  We are coming up with solutions.  We‘re not going to go along with irresponsible spending and recklessness. 

FENN:  Let me make one point about the earmarks.  When you guys took over Congress after Newt Gingrich, there were 1,300 earmarks in that budget.  By the time we got back in, there were 13,000.  Now, thank you very much, Republicans put those earmarks in. 

SHUSTER:  Chris Kofinis, you get the last word. 

KOFINIS:  Here‘s the part that I always find humorous, when my Republican friends like to lecture Democrats about fiscal responsibility.  Apparently, that was not evident during the eight years of the Bush administration, or when they held both chambers. 

BLAKEMAN:  Let‘s talk now.  You love to talk about the bush era.  It‘s you guys.  You‘re in control. 

KOFINIS:  I understand that when you guys were in power and you blew through a multi-trillion dollar surplus, that was just an accident.  That was a fluke.  The reality is—the reality is—

BLAKEMAN:  What is reality?  you tell me. 

KOFINIS:  Here‘s the reality.  You have no—not you specifically, but maybe you sometimes.  The Republican party has no idea where they want to lead this country.  They didn‘t have it for eight years when they were in power, and they don‘t have it now.  So the only thing they have left is to criticize, criticize, criticize.  They need to come up with a real agenda.  Until they do—

BLAKEMAN:  We did. 

SHUSTER:  Right now, right now, they are benefiting because AIG is so out of touch and so tone deaf when they talk about retention and needing to honor contracts that I think even the Republicans, no matter what you think of them and their ideas, that even the Republicans look like brilliant sweethearts by comparison. 

In any case, Brad Blakeman, Chris Kofinis, Peter Fenn, thanks, as always.  Two of you are sticking around, because we have another round of fighting coming up. 

Still ahead, chock up another gaff for Vice President Biden. 

Plus, Levi Johnston, the father of Governor Sarah Palin‘s grand son, explains why he and Bristol broke up.  And why they may still some day walk down the aisle.  You‘re watching 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.  The White House says President Barack Obama will appear on “The Tonight Show” with Jay Leno Thursday.  It‘s the first time a sitting president will ever appear on a late night talk show.  The last Obama visit came three weeks before the election. 

(BEGIN VIDEO CLIP)

JAY LENO, “THE TONIGHT SHOW”:  Your strategy has changed a little bit. 

You‘re calling yourself the underdog now. 

OBAMA:  I‘ve always been the underdog.  When your name is Barack Obama, you‘re always the underdog.  That‘s a given.  That‘s a given. 

(END VIDEO CLIP)

SHUSTER:  The president will make this week‘s appearance during a trip to Los Angeles. 

Bristol Palin‘s former fiance says he and Bristol are, quote, cool with their decision to split up.  In an interview on “Good Morning America,” 19 year old Levi Johnston says he has some growing up to do before taking the plunge, but isn‘t ruling out marrying Bristol eventually. 

(BEGIN VIDEO CLIP)

LEVI JOHNSTON, FATHER OF BRISTOL PALIN‘S CHILD:  We‘ve both had our tough times with each other.  We‘ll see what happens.  I mean, I would like to get back to together with her.  I don‘t know what she‘s thinking.  Whatever happens happens. 

(END VIDEO CLIP)

SHUSTER:  Meantime, Sarah Palin says her daughter Bristol is doing just great. 

Vice President Joe Biden‘s mother is in a Philadelphia hospital today after a fall this weekend at her Delaware home.  Jean Biden had surgery earlier today for a broken hip.  A Biden spokeswoman says mama is in good spirits.  Mrs. Biden is 92 years old. 

Vice President Biden has a well-documented history of saying things at some inopportune moments.  The end of last week produced yet another example.  On Friday, the vice president dropped the F word near an open microphone.  Mr. Biden was speaking to the media about stimulus money headed to Amtrak.  Biden noticed a friend.  The friend responded with Mr.  Vice president.  The course locker room banter got underway, with neither man aware of the microphone nearby.  Oops. 

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES:  Hey.  Mr. Chairman, how are you? 

Give me a (EXPLETIVE DELETED) break. 

(END VIDEO CLIP)

SHUSTER:  By the way, we tried to clean up all of that for you out there. 

And it is now Twitter time.  Before we throw your questions to our panel, a note to any Twitter critics still left out there.  Nielsen recently announced that social networks including Twitter and Facebook have passed up e-mail in popularity as the way Internet users spend their time.  Get on it, send us your Twitter questions and videos. 

Let‘s welcome back Chris Kofinis and Brad Blakeman for Twitter time.  We always do this by encouraging our Twitters to send us videos.  Today, we got an internal video that you guys have to judge.  This was Chuck Todd right before he was about to do a live report today.  Watch. 

(BEGIN VIDEO CLIP)

CHUCK TODD, MSNBC WHITE HOUSE CORRESPONDENT:  If they could, we‘d already know that they were doing it.  Right now, they just say words like they‘re legally trying to do everything that they can.  I have a feeling—

I have a feeling somebody‘s behind me. 

(END VIDEO CLIP)

SHUSTER:  Correction, actually that was live.  Good prank, one being bad, ten being good? 

BLAKEMAN:  It was pretty funny.  Clearly got Chuck Todd off message. 

KOFINIS:  I think his briefings are funnier. 

SHUSTER:  Oh, no, here we go.  As far as Twitter questions, Brad, a couple people have been writing in, talking about the point you were making that there was this bill that nobody read.  One person wants to know if that was the case, if none of the Republicans read it, why did they vote no against it?  Why didn‘t they vote abstain? 

BLAKEMAN:  Because they were against the fact that they didn‘t have the opportunity to read this bill.  Why vote to abstain a bill that you haven‘t read. 

SHUSTER:  How do you know what you‘re voting against if you haven‘t read it? 

BLAKEMAN:  Look, it‘s semantics by the Twitter person.  I think—

SHUSTER:  I got you.  I got you. 

BLAKEMAN:  I think we make—

SHUSTER:  Good question, Twitter person.  Good question. 

BLAKEMAN:  I think we make more of a statement by voting no than by abstaining on the bill. 

KOFINIS:  That‘s one smart Twitter person there. 

SHUSTER:  Here‘s a tough one for you, Chris Kofinis.  AIG, what are the possible dangers for the White House?  Keeping in mind there‘s every indication that Secretary Geithner tried to cut a deal with AIG.  The story leaks out in the “New York Times.”  All of a sudden there‘s outrage and now the president is telling Geithner, no, this won‘t do, when it seems like everybody knows that Geithner got the best deal he could.  Isn‘t this a bit of a problem for the White House? 

KOFINIS:  It could be.  Listen, any time you have a situation like this, you want to get in front of the populist anger.  Clearly, I think we‘re doing that today.  That‘s smart politics and it‘s smart policy.  I think it‘s the right thing to do.  The question is, what can they actually do?  I think what you‘re going to see in the coming days is those options discussed. 

But listen, there‘s no administration more than the Obama administration that I think is outraged about these things.  The question is, can you stop this from happening and, more so, make sure that this never happens again? 

SHUSTER:  My view is that I do think that Secretary Geithner is being hurt a lot by not having some key people over at the Treasury Department.  I think that‘s actually a problem with the committee, maybe the Banking Committee on Capitol Hill, which is supposed to approve this people.  We‘re going to be digging into that.  I know some other reporters who I know very well are digging into that. 

In any case, Chris Kofinis, Democratic strategist, Brad Blakeman, Republican strategist.  You guys are the best.  Great having you both here.  We appreciate it.  We‘ll see you back on 1600.

That is the view from 1600 PENNSYLVANIA AVENUE.  I‘m David Shuster.  Remember, get the latest political news and a sneak peek at what‘s coming up on the show sent straight to your inbox with the 1600 Daily Briefing.  Sign up at Shuster.MSNBC.com or do what Chris Kofinis does, text Penn to 622639 to have alerts sent to your phone.  If you Twitter, as Brad Blakeman does, I‘ll be online after the show at Twitter.com/Shuster1600.  Brad actually doesn‘t Twitter, but we‘re going to convince him to.  You do?  What‘s the address?

He doesn‘t Twitter.  I‘m David Shuster.  “HARDBALL” with Chris Matthews is up next.  Thanks, everybody.

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

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