updated 3/18/2009 9:49:06 AM ET 2009-03-18T13:49:06

Guest: Jon Tester, Gary Peters, David Corn, Ed Schultz, Tucker Bounds

High:

Spec: AIG; Congress; Taxes; Karl Rove

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HOST (voice-over):  Tonight, St. Patrick‘s Day, and the president tries to move on. 

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  Not more politically tactics, we need more good ideas.  We don‘t need more point-scoring, we need more problem-solving. 

SHUSTER:  But the public anger at AIG‘s bonus money boils over. 

UNIDENTIFIED MALE:  They shouldn‘t be roaming the streets.  They shouldn‘t be allowed to get another dime from any of us. 

SEN. CHARLES SCHUMER (D), NEW YORK:  If you don‘t return it on your own, we‘ll do it for you. 

SHUSTER:  The latest on the legislation and on Senator Grassley‘s controversial language. 

SEN. CHARLES GRASSLEY ®, IOWA:  Do one of two things, resign or go commit suicide. 

UNIDENTIFIED MALE:  You ought to be able to tell rhetoric when you hear it. 

SHUSTER:  Meanwhile, the administration‘s zigzag approach to AIG puts the Obama team in ‘”Hypocrisy Watch.”

Plus, Karl Rove often lands in “Hypocrisy Watch.”  Now he has responded.  I‘ll respond back. 

And the things I thought you should know—Irish eyes are smiling from the White House to the Capitol. 

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  Dance as if no one is watching. 

SHUSTER:  And Twitter time.

All tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA:  All right.  I‘ve got that.  Yes, we can. 

(END VIDEOTAPE)

SHUSTER:  Damage control at the White House. 

Hello, everybody.  I‘m David Shuster. 

Day 57 of the Obama administration, and this was a rough one for the president and his economic team.  The outrage over executive bonuses at AIG is putting new scrutiny on the corporate giant‘s use of taxpayer dollars and on what the Obama administration knew and when about the bonus payments to the part of the company that helped trigger the economic meltdown. 

Today we learned that these bonus payments have been in the works for more than a year and did not come as a surprise to anyone watching AIG.  “The Washington Post” reported today that AIG disclosed the plan to offer retention rewards to the financial products unit in early 2008, when the unit‘s executives successfully negotiated more than $400 million for the workers to be paid this month and again next year. 

The bonus payments had been on the calendar for more than a year, but the Obama administration did not take action until days before they were tributed. 

On Wednesday, Treasury Secretary Tim Geithner called AIG CEO Edward Liddy demanding he renegotiate the bonus structure.  On Friday, AIG started distributing $165 million in bonus payments.  On Saturday, Liddy sent a letter to Geithner defending the bonuses, saying he‘s disappointed but, nonetheless, “I am committed to working within the existing arrangements.  Honoring contractual commitments is the heart of what we do.”

By Sunday, the news was out, and President Obama‘s economic team started getting hammered about the bonuses on the Sunday shows.  The Obama officials insisted their hands were tied. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  There are questions of contracts and what we were able to do with contracts that have been signed. 

LARRY SUMMERS, DIRECTOR, NATIONAL ECONOMIC COUNCIL:  We are a country of law.  There are contracts.  The government cannot just abrogate contracts. 

(END VIDEO CLIP)

SHUSTER:  But by Monday, it was a starkly different message, this time from the president himself. 

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

SHUSTER:  And that brings us to today.  National Economic Council Director Larry Summers talked up the administration‘s efforts today to get the money back. 

Here he is on CNBC. 

(BEGIN VIDEO CLIP)

SUMMERS:  The payments of these bonuses, acceptance of these bonuses without shame, it was outrageous.  What the president has made clear, what our administration is doing, is being as creative as we can with a group of lawyers working on this problem, using recoupment authority, exploring other means to do everything we can within the law to address this situation. 

(END VIDEO CLIP)

SHUSTER:  AIG has been boosted by taxpayer money four separate times.  To date, AIG has received $170 billion, with the most recent installment coming this month.  American taxpayers now own 80 percent of the company.  It‘s a staggering amount of money, and the $165 million AIG paid out in bonuses this week constitutes only one-tenth of one percent of the total taxpayer money AIG has received. 

Joining us now, live from 1600, is NBC News Chief White House Correspondent Chuck Todd.  He‘s also NBC News‘ political director. 

Chuck, did the White House get blindsided by this? 

CHUCK TODD, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  I think they would dispute the notion that they were blindsided.  I think that they knew, as you.  Your timeline is exactly right. 

You know, they knew maybe as early as Tuesday night that this was a ticking time bomb.  They didn‘t know it before.  And that‘s—you know, at this point, they would argue it wouldn‘t have mattered if they knew three weeks ago, because if they knew three weeks ago, we would have the outrage three weeks ago, we would have had all this hemming and hawing three weeks ago, but it would be the same result, which is there‘s nothing legally they could do about these bonuses. 

Now, the story that Treasury is telling is, hey, the minute the secretary found out about it, he worked with Liddy, the CEO of AIG, and did get some of this bonus structure, this bonus money that was going to come due even down the road for other parts of the compensation for the company, restructured and renegotiated, or this numbers, the $168 million, would have been a much bigger money.  So that‘s the story they‘re telling at the White House.  That‘s the story they‘re telling at Treasury. 

I think what we‘re finding out is the entire Treasury Department, the Federal Reserve, there‘s a little bit—they might be a little bit overwhelmed by just how big and how massive this restructuring just of AIG is, let alone the entire economic crisis that they‘re dealing with. 

SHUSTER:  Chuck, the press briefing that you were part of today was contentious.  I want to play part of the exchange about the White House learning about this only last week, whereas the Treasury, at least some officials may have known months ago. 

Watch. 

(BEGIN VIDEO CLIP)

QUESTION:  Why didn‘t you know about it until last week? 

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  Well, I—again, I will check on some exact tick-tock, but understand, there‘s a contract, there are existing contracts.  The secretary of Treasury did each and every—did everything that we know of humanly possible to change the structure of what AIG ultimately was required to pay out. 

(END VIDEO CLIP)

SHUSTER:  Chuck, you followed up on that with a question about when the president learned about the bonuses.  Gibbs didn‘t have an answer.  Did they ever get back to you with an answer today on that? 

TODD:  They‘re still working on it.  They are—and I don‘t mean that rhetorically.  They are trying to get their timeline in order. 

This is what I know—the secretary of Treasury alerted to the White House of this bonus situation last Tuesday night, a week ago Tuesday night.  Now, the secretary didn‘t end up having a conversation with the CEO of AIG until Wednesday afternoon.  They attempted both Tuesday night and Wednesday morning before they connected.  It wasn‘t until Wednesday afternoon. 

The question is, and the place that I think even the White House privately would admit that they‘re open for criticism is, OK, if they knew about this Thursday or Friday, why didn‘t they come out and be outraged about it on Thursday or Friday, rather than waiting until Monday to be outraged about it?  And the answer you get from Treasury, David, is that they were still working on trying to stop this. 

They thought that there was an effort, that there was some legal maneuvering they could do before the bonuses were handed out.  Because as you pointed out, they were handed out last Friday, and they thought they still had time to try to stop the bonus payments from happening. 

SHUSTER:  NBC News White House Correspondent Chuck Todd. 

Chuck, thanks, as always.  We appreciate it. 

TODD:  You got it, David.

SHUSTER:  And for more, let‘s turn now to Senator Jon Tester, Democrat from Montana, member of the Senate Banking Committee. 

Senator Tester, what do you make of all of this? 

SEN. JON TESTER (D), MONTANA:  Well, I think it‘s unfortunate, and that‘s an understatement.  I think that, you know, the problems we‘re facing in this country are enormous, and I can go down the list, but you know what they are, David.  And the fact is that we had a Wall Street bailout bill that was presented last October and passed to help these companies get solvent again and get the economy back in the right direction.  And what happens?  The money goes out for bonuses, making some 73 people millionaires with taxpayer dollars. 

I know there‘s contracts out there, and I understand that contracts mean a lot in this country.  But this is just a sense of fair play and common sense.  And the fact that these contracts were negotiated over a year ago, money went out the door to AIG for the first time, if my memory serves me correct, back in September.  And there‘s been other tranches of money going to them since then. 

And now they‘re using the money for trips to California, for employees‘ workshops, or whatever you want to call them.  And then—and now we‘ve got bonus—none of it makes sense. 

And I will tell you that I think that the people out here are outraged.  The waiter and the truck driver and the waitress in Montana are outraged with all this stuff too.  And I think that we need to impose upon these people whatever way we can to get this money back, because it‘s—even though it is only one-tenth of one percent of the total money AIG got, it‘s still a lot of money.  And it‘s a lot of money to me, and it‘s a lot of money to Montanans. 

SHUSTER:  Senator Tester, I know that a lot of your colleagues were talking about Senator Grassley and his remarks that he made about all of this and what the executives should do at AIG.  I want to play that and then play my asking him about it, and then get your reaction. 

Watch. 

(BEGIN VIDEO CLIP)

GRASSLEY:  The first thing that would make me feel a little better towards them, if they had followed the Japanese example and come before the American people and take that deep bow, and say I‘m sorry.  And then either do one or two things, resign or go commit suicide. 

SHUSTER:  Senator, it‘s a pretty harsh statement.  Do you stand by it? 

GRASSLEY: I hope you recognize rhetoric.  And I shouldn‘t even have to answer that question. 

(END VIDEO CLIP)

SHUSTER:  Senator Tester, was Senator Grassley out of line there? 

TESTER:  I like Chuck Grassley.  He‘s my fellow farmer in the U.S.

Senate, and he‘s a good guy.  And I will tell you what I think he said. 

And that was, is give the money back.  That‘s the right thing to do. 

And I‘m not—you know, people make mistakes and they say things they don‘t mean all the time.  The fact is, is this was flat wrong.  These people who received the money need to let their moral compass lead them in the right direction.  And the morally right thing to do here is give the money back to the taxpayers. 

This company would not even be in business if it wasn‘t for the taxpayers of this country.  And if they weren‘t in business, they certainly wouldn‘t have gotten any bonuses, because they would have been broke, gone, out of business.  There would have been no money to get.

So I think that they need to understand that the only reason they‘re not part of the 600,000 that were unemployed last month is because of the taxpayers of the country.  And they need to give the bonuses back. 

SHUSTER:  And finally, real quickly, where are you on the idea that some people suggest that the AIG executives that are there now are the only ones who can clean up AIG?  Do you agree? 

TESTER:  You know, I think there‘s good people all over this country.  And I think AIG obviously needs to clean up their act.  And I think everybody can be replaced. 

So I don‘t think any single person has a monopoly on their ability to clean up any company.  The people there may be able to do it.  But I will tell you that there‘s got to be different actions coming out of the company than what I‘ve seen, especially over the last few days. 

SHUSTER:  Senator Jon Tester, Democrat from Montana, member of the Senate Banking Committee. 

And Senator, thanks, as always, for coming on.  We appreciate it. 

TESTER:  Thank you, David.  It‘s always a pleasure. 

SHUSTER:  You‘re welcome.

The problems with the AIG bonuses are clear.  But what about the solution?  One of the leading remedies in Congress has come from a freshman Democrat from Michigan.  The plan by Congressman Gary Peters involves a 100 percent tax on the bonuses or nearly 100 percent.  We will talk with Congressman Peters next. 

Later, at the half-hour, the front-page story in today‘s “Washington Post” examined how the AIG debacle is depleting President Obama‘s political capital.  How severe is the damage, and what‘s the impact on the president‘s agenda? 

We will debate that with our panel, again, at the half-hour. 

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)

REP. STEVE ISRAEL (D), NEW YORK:  We saved you from bankruptcy, and now we‘re going to stop you from incompetence.  If we can‘t kill the big bonuses, we are going to tax the big bonuses bag. 

REP. CAROLYN MCCARTHY (D), NEW YORK:  A hundred percent, as far as I‘m concerned, is not even enough.  If I could tax them 1,000 percent, I would tax them 1,000 percent. 

REP. CAROLYN MALONEY (D), NEW YORK:  What I find so offensive is that most of these bonuses are going to the exact division that brought down AIG.  Why are we giving them bonuses?  They should be fired. 

(END VIDEO CLIP)

SHUSTER:  Taxing AIG bonuses, it‘s a proposal that is gaining steam on Capitol Hill. 

Michigan Congressman Gary Peters introduced an intriguing bill in the House yesterday.  His measure would impose a 60 percent surtax on bonuses over $10,000 at any company in which the United States government has a 79 percent or great equity stake.  Currently, AIG is the only company that meets that test. 

If you then factor in the 35 percent income tax top AIG executives are already paying, the bonuses would be taxed at 95 percent.  And if you add in state and local taxes, Peters estimate taxpayers would essentially get all of the money back. 

Joining us now with more on this legislation is the freshman congressman from Michigan‘s 9th Congressional District, Representative Gary Peters. 

Congressman Peters, what‘s been the response to your proposal? 

REP. GARY PETERS (D), MICHIGAN:  Well, it‘s been a great response.  We‘re picking up co-sponsors along the way.  I think it is definitely gaining traction. 

Certainly, there is outrage everywhere with these bonuses, and bonuses that went to people who are directly responsible for what happened at AIG and have contributed to this incredible mess that we have in the economy.  It is outrageous. 

We need to take action, and I‘ve certainly been frustrated.  People in Congress say we can‘t do anything.  I believe we can do something.  We can return that money back to the taxpayers and do it through the tax code, but we should act very quickly. 

SHUSTER:  We want to show our viewers some of the information that came out today because of subpoenas.  Some information was provided about the bonuses to AIG. 

The biggest bonus that was awarded, $6.4 million.  Top seven performers, although I don‘t know if you can call them top performers, they got $4 million each.  Twenty-two people received $2 million each.  Seventy-three people received more than $1 million each. 

Congressman, what‘s your reaction to this? 

PETERS:  Well, I am absolutely outraged, especially being a congressman from Michigan.  When Michigan—we‘ve got the auto industry, as you know, is going through a challenging time right now.  People are renegotiating contracts, the UAW is giving substantial concessions, working people in Michigan and people throughout that industry as a result of what‘s happening in the credit crisis.  And yet, you‘ve got these financial executives—and again, the financial executives who are directly responsible for the problems at AIG—who believe that their contracts can‘t be touched, they should get these bonuses. 

It is absolutely outrageous.  In fact, I don‘t know how you can possibly even award a bonus to someone who was involved in activities that led to multibillion dollars in losses and also destabilized the entire economy.  It‘s mind-blowing to think they would deserve these bonuses.  It is even more outrageous, given the fact that the taxpayers have invested $170 billion into these companies. 

Taxpayers need to be paid back first before any bonuses are paid.  So we‘ve got to get those bonuses and get them back to the taxpayers, where they belong. 

SHUSTER:  Congressman, you make such a terrific point.  If the government can essentially hold a gun to the head of the automakers and say, you know what?  Those union workers, you‘ve got to renegotiate your contracts, or else your jobs are gone, because we‘re declaring bankruptcy, then certainly we can make the same threat to AIG. 

In any case, Congressman Gary Peters, he represents Michigan‘s 9th Congressional District.

Great proposal, Congressman.  Keep us posted on how it goes. 

PETERS:  Will do.  Thank you so much. 

SHUSTER:  You‘re welcome.

Several veteran lawmakers believe the Obama administration is losing a lot of political capital because of the AIG debacle.  And that‘s significant when you consider the ambitious agenda the Obama team is pushing. 

How much damage has the AIG bailout done to the administration? 

That‘s our debate at the half-hour.

But up next, key members of the Obama administration knew about the AIG bonuses last week.  So why did administration officials wait until yesterday to express their outrage?  “Hypocrisy Watch” is ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.

Over the last 48 hours, the Obama administration has been expressing outrage over the bonuses at AIG.  But the timing of the outrage takes us to tonight‘s “Hypocrisy Watch.”

First, the background.

Yesterday, President Obama condemned the AIG executive bonuses. 

(BEGIN VIDEO CLIP)

OBAMA:  It‘s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay.  I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat? 

(END VIDEO CLIP)

SHUSTER:  It‘s a great question.  The problem is the Obama economic team had an opportunity to probe and act on that question well before yesterday. 

Officials of the Treasury Department and the Federal Reserve told “The New York Times” they knew about the bonus program as far back as last fall.  Treasury Secretary Geithner was made aware a week ago that another round of AIG bonuses were coming March 15th, last Friday.  So Geithner called AIG, insisted the bonus plan was unacceptable, and tried to negotiate some changes. 

The changes, however, still left AIG executives with over $160 million in bonuses.  And when news of the bonus money broke over the weekend, here was the White House economic team response.... 

(BEGIN VIDEO CLIP)

SUMMERS:  We are a country of law.  There are contracts.  The government cannot just abrogate contracts. 

(END VIDEO CLIP)

SHUSTER:  That, of course, did not go over so well.  So the president and many of his top aides flooded the airwaves yesterday saying they understood the outrage. 

Actually, the White House economic team was reacting to the outrage.  When you claim to be as upset as the public is, but you only take action once the public takes notice, that‘s hypocrisy, and it‘s wrong. 

Coming up, one of our most frequent targets in “Hypocrisy Watch” has been Karl Rove.  I‘ve always invited him to come on the show and defend himself.  Over the weekend, Karl sent me a response.  Later this hour I will share it with you. 

But up next, we‘ll look at the rage against AIG.  Is it depleting President Obama‘s political capital?  And how could that affect what else he wants to accomplish? 

We will debate it with our panel. 

But first, some late-night laughs about the public anger towards AIG courtesy of “The Colbert Report.” 

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, “THE COLBERT REPORT”:  We must become a torch and pitchfork-wielding mob, empty of all thoughts.  An injured, vengeful animal lashing out blindly at shapes and colors!  Let‘s go get AIG!

(END VIDEO CLIP)

SHUSTER:  Welcome back to 1600.

Is bailout fatigue draining President Obama‘s political capital?  Republicans seeking to tap AIG outrage today made the case that the AIG mess is symptomatic of bigger problems at 1600 Pennsylvania Avenue. 

Here‘s Minority Whip Eric Cantor. 

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR ®, MINORITY WHIP:  This latest flap on AIG I just think is something extremely troubling.  What‘s going on in this administration?  It seems like they‘re an administration in disarray, and that‘s why we‘ve always had a real concern, whether it‘s the stimulus bill, whether it was the spending bills, or the omnibus, or the bailout.

(END VIDEO CLIP)

SHUSTER:  In a post-Madoff world, with Americans feeling the pain of double-digit unemployment in some states, will this story line take hold?  Will Americans fed up with yet another tale of financial fraud and Wall Street greed continue to support Obama‘s agenda if it means spending more money to support struggling financial institutions? 

Joining us now, nationally syndicated radio host Ed Schultz, and Republican strategist Tucker Bounds, former chief spokesman for John McCain.  Tucker, I‘m not sure Eric Cantor is Mr. Credibility.  However, it is hard to understand how our government, when it owns 80 percent of something like AIG, cannot prevent bonus money like this. 

TUCKER BOUNDS, REPUBLICAN STRATEGIST:  Well, I think what you just mentioned is exactly the point, which is whether or not the Republicans are credible now—and I think it puts Republicans in a place where they‘re going to be very credible.  They‘ve been saying for a long time now, opposing the stimulus bills, opposing the budget, the Democrats are loosey-goosey with the cash and tax payer dollars need to be protected.

Right now, if it‘s a question of credibility, Republicans look very credible.  Democrats are on the defensive, particularly down at the Obama White House.  I think it‘s made for some interesting theater.  But we‘re going to have to see how all this plays out.  I think the Republicans are in a very good position this week. 

SHUSTER:  Ed?

ED SCHULTZ, RADIO TALK SHOW HOST:  No theater, all comedy.  That sound bite by Mr. Cantor belongs on “Saturday Night Live.”  Does he have amnesia?  This started in the Bush administration, back in September, when George W.  Bush was the president.  He‘s the man who defended executive pay.  He‘s the man that said leave the boys in the front office alone.  And now 50 some days into the Obama administration, Mr. Cantor thinks that it‘s Obama‘s problem. 

Where was the transition team?  Why didn‘t the Bush people tell the Obama people, hey, I‘ve got to tell you about this AIG thing going on.  Come on, there was no full disclosure here.  This was on Bush‘s watch. 

BOUNDS:  We‘re talking about two weeks ago that the Obama administration sent 30 billion dollars to AIG.  And right now, we‘re trying to figure out if they knew they were actually sending 165 million—

SCHULTZ:  Most of the money, Tucker—

(CROSS TALK)

SHUSTER:  -- we just focused on in hypocrisy watch, and that is for the president to express outrage, or to only find out in the last couple days, when the Treasury Department, some officials knew for months that this was coming.  It was only last week when Geithner tried to put the brakes on this.  Now, I suppose you can make an argument that the story was going to come at out whenever they put the brakes on it.  But it does seems like somebody is either not communicating with President Obama or the White House is now having to react to the news, instead of controlling, which is not something you ever want to be in a position. 

SCHULTZ:  David, I think the Obama administration wants this public outrage.  I think it‘s an issue of timing right now.  They couldn‘t have stopped the money to AIG.  That was a done deal back in the Bush administration.  So all this money that‘s been dished out, really, I think the guy that‘s got to answer a lot of questions is Ben Bernanke.  He‘s the one that brought the financial heads in the Congress together, the Senate majority leader, and also the House majority leader, and this crew and said, look, this is what we‘re going to do for AIG. 

They should have been telling the Congress exactly what was going to happen with these bonuses.  It‘s a lack of passing on of information.  I‘d like to know if George W. Bush knew about these bonuses. 

SHUSTER:  Let me show you some numbers that I think are crucial to all of this.  If you look at the CBS News poll, approval, disapproval of bailout.  Back in December of 2008, 46 percent approved of bailout money, 44 percent disapproved.  The number now is 37 percent approve.  The disapproval up to 53 percent. 

When the numbers flip like that, doesn‘t it make more difficult to spend money, whether it‘s bailing out the financial institutions or spending money to change health care? 

SCHULTZ:  Bailout and infrastructure investment are two different things.  I think the American people have got that figured out.  They want health care.  They‘re willing to pay for it.  They want the stimulus package.  The majority of Americans now are still where they were several weeks ago.  They‘re with this president.  There‘s a few-point difference there. 

But this bailout of AIG, I think this is going to benefit the Obama administration, because now it‘s going to be easy for them to make decisions to clean this thing up. 

SHUSTER:  Tucker? 

BOUNDS:  I don‘t know what planet Ed is on right now.  I thought you were a guy that had a finger on the pulse of the American people and kind of had a connection—

SCHULTZ:  I‘ll tell you what they‘re fed up with—

BOUNDS:  You‘ve got to be an a different planet if you believe the Obama administration—do you believe that the Obama administration wants this on the front headlines right now?  You are not living on this planet.  If you‘re looking at Gibbs stammering, clambering while he‘s answering questions—you‘re talking about Ben Bernanke having to answer questions.  The Obama administration is having to answer real questions right now, tough questions they don‘t have answers for. 

SCHULTZ:  You don‘t want to go back and find out what Bush knew? 

BOUNDS:  We are hundreds of billions of dollars, trillions of dollars past that point.  People want accountability.  In fact, Barack Obama ran on accountability.  It‘s not wrong for the Republicans to request a little bit of that. 

SCHULTZ:  Now, we have had hearings on Capitol Hill about waste, fraud and abuse in Iraq.  We lost nine billion dollars, nine billion dollars.  No one on the Republican side said anything about it.  All of a sudden, Obama gets into the White House.  Now, all of a sudden, you‘re fiscal hawks.  The American people want an investment in health care.  The American people want an investment in infrastructure.  This was on Bush‘s watch.  He did nothing to stop executive compensation.  He did nothing to get the benchmarks in to make sure that these bonuses weren‘t in check. 

Now, this is supreme mop-up by a president who is giving accountability. 

SHUSTER:  Tucker? 

BOUNDS:  I mean, I don‘t really know how to respond to some of this, Ed. 

SCHULTZ:  That‘s because I‘m right. 

BOUNDS:  Because you‘re trying to move away from the situation or predicament we‘re not even facing.  What we‘re talking about now is an administration that has been very loosey-goosey with taxpayer dollars.  And they‘re having to pay their penance.  The guy at the podium has questions he can‘t answer.  Tomorrow‘s headlines are going to be very disturbing, not only for people on Main Street, not only for people that are wondering how they‘re having to cut down their budgets, at the same time the federal government is blowing out their budgets, and seemingly mishandling taxpayer dollars. 

But the administration, itself, cannot answer tough questions. 

SHUSTER:  Here‘s the issue.  Secretary Geithner next week is going to be rolling out the plan to try to fix the banks.  In this atmosphere, when the public does not trust the banks—they don‘t trust AIG.  They don‘t trust anybody else.  How can the administration essentially introduce this plan and say, oh, we have a way to fix it?  It involves spending a little more money. 

SCHULTZ:  You have to do it.  We can‘t have our financial structure just completely fall apart.  I believe the president is strong enough with the American people that he‘s going to be able to go out and sell them that we can‘t let the banks fail.  We‘re going to have to have accountability.  The majority of Americans now are OK with the government getting involved in the banks for some oversight, but eventually making sure that they‘re back on their own and solidified. 

Who else is going to do it?  What are we going to do, let them fail?  The foreign countries across the seas are looking at us saying, you going to let AIG go?  It‘s going to affect our economy too.  We have a world responsibility right now to make sure we get this fixed. 

BOUNDS:  The families on Main Street are just looking for the accountability you discussed.  You have to have accountability in order to have credibility when you try and ask for more money, try and spend more money.  That‘s what‘s at play here.  This is the political issue at play.  Are they going to be—

(CROSS TALK)

SHUSTER:  We‘re about to blow through a break and there‘s very bad.  Tucker Bounds and Ed Schultz, a great panel, as you can see.  They will be back with us in just a couple minutes. 

Up next, Karl Rove has been a frequent figure in our hypocrisy watch. 

Every time we put him there, I ask Karl for an interview or a response.  Over the weekend, Bush‘s Brain finally did respond via Twitter.  I‘ll show it to you and talk about the news in Rove‘s response.  That‘s next. 

Speaking of Twitter, we‘ve got your Twitter questions coming up at the end of the hour.  If the guy President Bush affectionately nick named Turd Blossom can Twitter, so can you.  Go to Twitter.com/Shuster1600.  Or use the link at Shuster.MSNBC.com.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  Every night on this show, as we did earlier in this one, we feature a segment called Hypocrisy Watch.  Our most frequent focus has been former Bush adviser Karl Rove.  For example, Rove recently criticized the Obama administration for increasing the size of the federal debt, even though Rove and his Bush team colleagues turned record surpluses into record deficits. 

Anyway, before each segment, I sent Karl a Twitter message, asking him to come on and defend himself.  This weekend, I received the following Twitter direct response: “Re 1600.  Wait until the book.  You‘re in there.  Signed Karl Rove.” 

So Karl Rove is writing a book.  It sounds like Rove may try and settle some scores with people who followed the CIA leak case or tracked Rove‘s damage to the Bush administration or the country.  Joining us now is another veteran of the CIA leak case, David Corn, Washington bureau chief for “Mother Jones Magazine.”

So he is writing a book?  Do we have anything to fear? 

DAVID CORN, “MOTHER JONES”:  I don‘t think you and I do.  Maybe the president or the former vice president Dick Cheney, Donald Rumsfeld, Condi Rice.  That‘s only if he tells the truth.  They have nothing to fear either.  There‘s a lot that Karl Rove can actually tell us that would illuminate some of the past eight years, about the run-up to the war, what really happened with Katrina, the intersection between politics and policy within the George W. Bush White House. 

The question is, you know, how far will he go in telling us what happened and, of course, in explaining his role in the CIA leak case? 

SHUSTER:  I have a feeling that the reason myself, you, Chris Matthews, some others may get mentioned in the book has to do with the CIA leak case, and maybe Rove is not so happy about the attention that was paid on that.  In broad terms, if Karl was going to write a book, in broad terms, about his eight years in the Bush administration, give us some ideas, David, give Karl some ideas on what the title of his book should be. 

CORN:  Because you asked me to do so, I‘ve been thinking to it, not too much, mind you.  One title I thought he could use was “To Kill a Presidency,” “How to Also Ruin a Political Party, Two Wars and the Global Economy.”

Another title that might suit a book he‘s writing “Low Expectations:

Why The Bush Presidency Was Really, Really, Really Better Than Everyone Says.”  Those are just beginning, starters. 

If he was writing a book that focused on the leak case, itself, I think this would sell.  I actually think—I‘m giving him a big favor here.  He would call it “The Guilt Free White House Diet: Telling Fibs to Lose Weight and To Protect Your Abs.”  

SHUSTER:  If he is completely honest about the CIA leak case, wouldn‘t the key information be obviously the conversation with Bob Novak?  What role exactly did you play, Karl, in the effort to smear Joe Wilson and his wife?  Joe Wilson being a key administration critic of how the war was sold. 

CORN:  The important thing about that case, Scott McClellan came out, as he‘s written about in his book, and talked about on this show and others, and he said Karl Rove told me directly that he was not involved in leaking Valerie Plame Wilson‘s name to Bob Novak.  McClellan at the time said that publicly, came out there.  Then, when it turned out that Karl Rove was involved, neither McClellan nor Rove would explain it.  Of course, we know he was the second source for Bob Novak for that particular column. 

To this date, Karl Rove has never really explained what his role was, but also why he allowed Scott McClellan to come out and say something he knew, Karl Rove, wasn‘t true, and whether he had also lied or, you know, spoken falsely to George W. Bush about his role in this.  So none of that has ever been explained. 

SHUSTER:  My theory all along has been that Karl was motivated by the 2004 election.  If you look at the sequence of events, summer of 2003, they figured, you know what, let‘s put this out there, try to put it out.  If the reporters ever have to testify, by the time that happens, it will be 2005, beyond the election.  But, in any case, there is a lot of other stuff that could be intriguing in a Karl Rove book. 

So let‘s bring in our panel now, Ed Schultz, Tucker Bounds.  Tucker, I know you‘re dying from David Corn‘s titles.  First of all, one of the other key questions in all of this is the relationship between President Bush and Vice President Cheney.  Karl Rove would be the best witness there is, so wouldn‘t that be the key that everybody wants to—

BOUNDS:  It‘s hard to say if you would be the best witness there is.  But what he would be the best witness is politics.  This is a larger question, which is a title of the book I could see is “The Cloning of Karl Rove, the David Axelrod Story.”  The truth of the matter is these guys work in politics.  Politics provides access to everyday Americans for the issues and the government that goes on here in Washington, D.C.

People get a little bit weak in the stomach when they see guys that are very good with political maneuvers, political tactics, that are very good at performing and bringing on public opinion and the electorate to win elections.  David Axelrod did a genius job of it this last election. 

SHUSTER:  Tucker, there‘s a big difference between David Axelrod and Karl Rove.  Just the other day—

BOUNDS:  I could argue against—

CORN:  Wait a second.  That‘s an interesting point you raise.  But the thing is, Karl Rove then after doing that politically, moved into the White House.  So the question I have is—with David Axelrod, with all these guys, the question becomes, what happens with the intersection of politics and policy?  When you look at something like the run-up to the war in Iraq, were there political concerns?  Was there political attempt to exploit 9/11?  All these things which we have seen evidence of, and which you and I probably disagree on, but those are things that Karl Rove could illuminate greatly, were he to write a truthful book. 

SHUSTER:  The other thing is, if Karl Rove were sitting where Ed Schultz were right now, I would want to say, you know what, Karl, you decry the Axelrod/Emanuel tactics as dirty old politics we all grew to dislike in the 1990s.  But in the 1990s, there was Karl Rove, the ultimate practitioner of dirty politics, who helped George W. Bush get elected governor of Texas, who essentially put out some really nasty stuff in an Alabama supreme court election in the 1990s. 

So for him to now say, we didn‘t like that stuff, when we all know he did it, that‘s hypocrisy, which is why we focus on Karl so much. 

SCHULTZ:  I think you can go to your old buddy John McCain there, Tucker, and find out a few things about the Bush tactics and Karl Rove.  Go back to South Carolina in 2000.  Here‘s what Karl Rove is going to be remembered for by the American people: the American people are used to dirty politics and underhanded tricks and such stuff.  When Bush was re-elected in ‘04, the first thing he did was go out on the road and try to privatize Social Security.  That was a hood wink.

All along, he was attacking the judiciary.  It was Karl Rove, with his underhanded tactics, that went after the firing of those eight U.S.  attorneys.  The judiciary is sacred territory to all Americans.  I believe that‘s what he‘s going to be remembered for.  I guarantee you the American people do want to see prosecution. 

BOUNDS:  Power of the president of the United States to dismiss U.S.  attorneys, in fact, guarded by the Constitution.  So it‘s a political appointment, for it to be a political fire.  I mean, the U.S. attorney thing is beyond—

CORN:  Tucker‘s right.  It is a political appointment.  The president has full discretion.  But, yes, if they don‘t tell the truth about why they‘re firing people or they give BS reasons, then it‘s a political issue they can be held accountable for. 

SCHULTZ:  You‘re not endorsing—

(CROSS TALK)

SHUSTER:  Here‘s the bottom line.  Here‘s the bottom line, Karl Rove, if you don‘t want to wait for the book to come out, if you want to respond to Hypocrisy Watch every time we find it, whenever you say it or broadcast it, you‘re always welcome to have a seat right there where Ed is on this show.  Even if you want to wait until the book comes out and you want to review whatever you want to write in there about the CIA leak case, we‘d be happy to have you. 

David Corn, thanks as always.  Ed Schultz and Tucker Bounds are sticking around for Twitter time. 

Up next, President Obama embraces his Irish heritage, green tie and all, and celebrates St. Patrick‘s Day at the White House. 

Plus, a special Twitter time for those politically inclined Def Leppard fans. 

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600.  Don‘t adjust your television.  I‘ve gone green for ST. Patrick‘s day.  So has the White House.  The water fountains on the north and south lawns have been died green to mark the national holiday of Ireland.  Apparently, Michelle Obama came up with the idea, inspired by the celebrations in her home town of Chicago, where they dye the entire river down town green.

Next up, if you were watching live TV coverage of the White House this morning, you saw this, the annual shamrock ceremony.  President Obama and the Irish prime minister posing for photographs, while holding what looks like a revealed and holy chopped spinach salad.  It‘s not.  It‘s actually a Waterford crystal bowl that was filled with four leaf clovers.  The ceremony symbolized the friendship between Ireland and the United States. 

After the ceremony, President Obama and the Irish prime minister went to Capitol Hill for the annual Speakers‘ St. Patrick‘s Day Luncheon, where, according to the president, Democrats and Republicans put aside partisanship and united around one debate only, who‘s more Irish? 

House Speaker Nancy Pelosi is not Irish.  But three of her grandchildren are.  She kicked off the luncheon with an Irish blessing she learned from them. 

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  I thought it was a special blessing treasured by them and shared only with their closest friends, until I went to Shannon Airport and saw it all over the wall.  Dance as if no one is watching.  Love as if you‘ve never loved before.  Sing as if no one is listening.  Not you, governor. 

(END VIDEO CLIP)

SHUSTER:  We believe the speaker was referring to Maryland Mayor Martin O‘Malley.  He‘s so Irish—the governor, he‘s now the Maryland governor, plays in an Irish rock band from time to time, called O‘Malley‘s March. 

On this St. Patrick‘s Day, President Obama has announced his choice for ambassador to Ireland.  It‘s Pittsburgh Steelers owner Dan Rooney.  Rooney was recognized earlier today at the White House. 

(BEGIN VIDEO CLIP)

OBAMA:  Dan is a great friend.  He and his family are as gracious and thoughtful a group of people as I know.  And so I know that he is just going to do an outstanding job.  The people of Ireland I think will benefit greatly from him representing United States there. 

(END VIDEO CLIP)

SHUSTER:  Rooney was honored in Washington last night for his support for a group dedicated to peace in northern Ireland. 

On this St. Patrick‘s Day, those are just a few things I thought you should know. 

And it‘s Twitter time.  So let‘s welcome back our terrific panelist, Ed Schultz and Tucker Bounds.  The first thing we do is a video that was recommended to us via Twitter.  You guys get to score it.  One is bad, ten is good.  Here‘s Barack of Ages from Def Leppard. 

(BEGIN VIDEO CLIP)

(SINGING)

(END VIDEO CLIP)

SHUSTER:  I know that wasn‘t really Def Leppard.  I was just making sure you Def Leppard fans were watching.  It was a cover band, a knock off.  In any case, Tucker Bounds, your score, please? 

BOUNDS:  Production quality was quite good, David.  I like the content.  I think it ranks up there.  I give it an eight. 

SHUSTER:  Ed Schultz?

SCHULTZ:  I liked the beat.  Good rhythm, good drummer back there.  I give it a 9 and a half.  

SHUSTER:  I give any band who wants to go that far in imitating Def Leppard, I give them a nine and a half as well.  Here‘s the next one.  This is Jet Blue video.  Watch this. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Going to JFK.  Here is Carl, a CEO jetting with Jet Blue for the first time.  Unlike the terminals where you parked your old private jet, T-5 is filled with regular people. 

Relax, Karl.  Think of them as share holders. 

Well, it‘s a brave new world out there, executives.  Luckily, Jet Blue is the next best thing to private air travel.  As for the old jet of yours, maybe you can sell it on Craig‘s List. 

(END VIDEO CLIP)

SHUSTER:  That‘s pretty good and that‘s the real Jet Blue.  Ed Schultz?

SCHULTZ:  If you have traveled on commercial airlines in this country in the last six months, they should travel every day to get back at them if they‘re getting any bonuses.  It‘s not very good out there.  I give it a five, because it didn‘t have any coverage of the poor baggage handling that‘s taking place out there.  They lose your bag half the time, don‘t they? 

BOUNDS:  I agree with Ed.  I give it a little higher.  I like to see the idea of Richie Riches mixing up with common folks.  It‘s good.  I give it an eight. 

SCHULTZ:  Which is a new day dawning, I might add. 

SHUSTER:  I give it a seven.  Now, we also get some Twitter questions.  So one of the questions that‘s come in is for you, Tucker.  Somebody wants to know if given some of the stuff that‘s out there from the Republican right wing about the Obama administration turning these Fema camps into concentration camps and totalitarianism is coming, the latest is that this is all a socialist conspiracy.  Do you believe that? 

BOUNDS:  I mean, I can‘t believe that.  These are people—we all know people inside the Obama administration working very hard.  They‘re Americans.  They understand the Democratic values that we all share.  And I have got to tip my hat to a lot of folks inside the Obama administration. 

It‘s a tough time.  I don‘t think they‘re doing the best job they could be doing, but they‘re doing the best job that I think we can expect of people that see things from entirely the wrong perspective. 

SHUSTER:  Tucker Bounds has eliminated any possibility of going on the Glenn Beck Show.  Ed Schultz, the best plan for fixing AIG and the bonuses?  Is it bankruptcy, declare this one unit bankrupt?  What‘s the best way? 

SCHULTZ:  Ask these executives to step up and give the money back.  That‘s the first thing.  They have a chance to lead in the business community, if they do that.  If they do that, I think it could soften the blow as far as the American people are concerned when we have to go back and do some more work to fix the economy. 

These 73 people, 11 of them who are no longer with the company, so they‘re not retention bonuses, OK, they can step up and be Americans.  They can give the money back and redo the contracts, because unions have been doing it all the time, and a lot of Americans in the work place have been taking a pay cut to keep their jobs. 

SHUSTER:  Ed Schultz, Tucker Bounds, great panel.  Thank you both 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 at what‘s coming up on the show sent straight to your inbox.  Go to Shuster.MSNBC.com.  You can get text alerts, 622639.  I‘ll be Twittering after the show, Twitter.com/Shuster1600.  I‘m David Shuster.  “HARDBALL” starts right now. 

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