updated 3/20/2009 10:16:41 AM ET 2009-03-20T14:16:41

Guest: Paul Hodes, Dennis Moore, John Harwood, Roy Bennett, John Yang

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DAVID SHUSTER, MSNBC ANCHOR (voice-over):  Tonight, President Obama in California is optimistic and upbeat. 

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  We‘ve faced tough challenges before. 

SHUSTER:  But the protests over AIG are intensifying. 

UNIDENTIFIED MALE:  (INAUDIBLE)!

CROWD:  A-I-G!

SHUSTER:  And as Congress moves to tax those outrageous bonuses.

UNIDENTIFIED FEMALE:  The game is finished.  The casino is closed. 

SHUSTER:  The effort to blame somebody in Washington ratchets up. 

UNIDENTIFIED MALE:  It‘s a tightening of sphincters on both ends of Pennsylvania Avenue, who put into the stimulus bill this provision of law?

SHUSTER:  Later, “Hypocrisy Watch.” 

SEN. JON KYL (R-AZ), MINORITY WHIP:  Everybody is upset about these AIG bonuses, everybody. 

SHUSTER:  We will bring you the senators who argued last month the government should butt out.  Plus the growing outrage over Citigroup.  Their CEO appeared to mislead Congress. 

All of us, however, have the power to right injustices around the world.  We will talk live with Joe Trippi.  And the “Things I Thought You Should Know.”  President Obama sits down with Jay Leno.  Coach K takes issue with the president‘s basketball brackets. 

OBAMA:  Going with UNC. 

SHUSTER:  And Twitter time.  All tonight on 1600 PENNSYLVANIA

AVENUE.

OBAMA:  Nothing like California weather. 

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SHUSTER:  Taxation for AIG.  Hello everybody.  I‘m David Shuster.  This was day 59 of the Obama administration and the bonus fury is growing.  And today could mark a turning point for President Obama, for Democrats, and potentially for Treasury Secretary Tim Geithner. 

This afternoon Congress took an unprecedented first step to get back $165 million in bonuses that AIG paid out last week.  House lawmakers voted overwhelmingly to impose a 90 percent tax on those bonuses.  The action came on the heels of an incredibly fiery debate. 

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UNIDENTIFIED MALE:  They‘re saying get it back.  Get it back now. 

UNIDENTIFIED MALE:  These people are getting away with murder. 

UNIDENTIFIED MALE:  And here we are today taking care of the very scandals that got us into this mess. 

UNIDENTIFIED MALE:  These Wall Street geniuses who were so smart they figured out how to wreck a company so completely to almost wreck a national economy. 

UNIDENTIFIED MALE:  Did you vote to recover my money or did you vote to allow them to get away with my money?  That‘s what this is about, Mr. Speaker.  The American people have had it. 

UNIDENTIFIED MALE:  We are going to sit idle and allow them to receive these bonuses?  This is wrong.  And if we expect to govern as an institution, we have to do the extraordinary and set it right. 

(END VIDEO CLIP)

SHUSTER:  So who voted against taxing the bonuses?  Republican leaders and members of the conservative caucus.  They focused their ire on the stimulus bill after it was revealed that Democratic leaders removed the provision preventing taxpayer funds from being used for executive bonuses. 

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UNIDENTIFIED MALE:  The bill before us today really is a diversion and attempt to shift the blame from Democrats who at the last moment got approval for these bonuses snuck into the stimulus bill. 

UNIDENTIFIED MALE:  These bonuses were not blocked as a result of this paragraph in the stimulus bill. 

UNIDENTIFIED MALE:  My question, Mr. Chairman, how did this get in the bill?

REP. NANCY PELOSI (D-CA), SPEAKER:  Our record is clear on this subject.  If you want to talk about what happened on the Senate, go on the Senate side. 

SEN. CHRIS DODD (D-CT), CHMN., BANKING COMMITTEE  In retrospect, if we had known—if I had known then we were dealing with AIG bonuses of this nature, then obviously we wouldn‘t have made any changes at all. 

(END VIDEO CLIP)

SHUSTER:  Republicans are not limiting their criticism to congressional Democrats.  They‘re now demanding an investigation into what the Obama White House knew and when about these bonuses after yesterday‘s bombshell admission from AIG CEO Edward Liddy that the Federal Reserve approved the bonus contracts. 

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UNIDENTIFIED MALE:  Mr. Geithner apparently indicated that he was informed I guess late last week and then informed the president, and yet we heard from Mr. Liddy at AIG that the Federal Reserve was involved with this from the beginning and knew about it from the beginning and he assumed probably shared that information with Treasury. 

Either way, you‘re talking about the administration.  Individuals either did know or should have known. 

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SHUSTER:  And at least one Republican wants the treasury secretary‘s head to roll for this, demanding that he resign.  But President Obama is standing strongly behind Secretary Geithner. 

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OBAMA:  I have complete confidence in Tim Geithner and my entire economic team. 

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SHUSTER:  For more on all of this, let‘s go right to Congressman Paul Hodes, he‘s a Democrat from New Hampshire and member of the Financial Services Committee as well as the Oversight and Government Reform Committee. 

Congressman Hodes, it appeared a large number of Republicans came to your side at the end of this vote.  Give us the mood on the House floor today. 

REP. PAUL HODES (D), NEW HAMPSHIRE:  Well, I think everybody understands that Main Street and the public in general as well as many members on Capitol Hill are simply outraged at the idea that taxpayers have invested $180 billion in AIG and AIG used the money to pay bonuses. 

You know, there are a lot of fingers being pointed and a lot of accusations flying, but really if we go back to the beginning of this, my concern when the TARP financial bailout was passed was that there was insufficient accountability and oversight. 

And I‘m sorry to say that I think this mess with AIG is the logical conclusion of a failure to have accountability and oversight way back when Secretary Paulson first presented the bill to us. 

It‘s a mess.  Nobody is covered with glory.  But one thing is for sure, companies that receive taxpayer money, which are failed companies, should not be giving bonuses to executives for bad performance. 

SHUSTER:  There does seem to be mounting evidence, though, that somebody on the Democratic side removed language from the stimulus bill that would have blocked this compensation.  I mean, who‘s responsible and doesn‘t that need to be resolved?

HODES:  Well, I certainly think there are—questions have been raised about Chris Dodd in the Senate and who knew what when, but the bottom line and the point is that Congress has now acted and acted as quickly as we found out that there was a problem to do what we could to claw back these bonuses, to get them back for the American people. 

There‘s $160 million that was paid.  We invested the $180 billion.  The numbers are astronomical but these bonuses are a symbol of the arrogance, incompetence, and greed of companies like AIG and we took action to get them back for the American taxpayer. 

SHUSTER:  What about the symbol, though, of the leadership over at the U.S. Treasury Department?  Timothy Geithner said late this afternoon that he takes responsibility for Treasury urging Senator Dodd to remove the language but already a few house Republicans are calling for Geithner‘s resignation.  What‘s your view?

HODES:  Well, we are in unprecedented financial circumstances.  We are only 59 days into the Obama administration.  And let‘s face it, we inherited a mess from the last administration, a $1.3 trillion deficit and a collapsed global financial system.  I think that Tim Geithner, the president, and the folks who are working on this are working as hard and fast as they can to come up with solutions making sure that we are stabilizing the financial system. 

In any situation like this, are there going to be some mistakes made?  Probably.  Folks are human.  But I think it‘s really premature to come down that hard on Tim Geithner and start calling for his head. 

It‘s time to get past partisan bickering and I‘m disappointed to hear my Republican colleagues pointing the kinds of fingers.  They seem to forget who got us into this mess and I think we need to concentrate on getting accountability and oversight and finding solutions to stabilize our financial system. 

SHUSTER:  Congressman Paul Hodes, Congressman, thank you very much.  And by the way, a little bit of breaking news right now.  Attorney General of New York Andrew Cuomo had threatened to subpoena information from AIG related to who got the bonuses, the names, how much they got. 

AIG has announced that it is now cooperating and is providing this information to the attorney general of New York so at least the attorney general of New York and presumably Congress then will have more information as far as who the executives are at AIG, how much money they got, what divisions they worked in. 

President Obama was in Southern California today talking up his recovery plan for the economy.  He just wrapped up a town hall with Governor Arnold Schwarzenegger late this afternoon.  But The White House remains under fire over a provision that was removed from the stimulus bill, one that would have blocked the AIG bonuses in the first place. 

And as we mentioned a short time ago, Treasury Secretary Timothy Geithner told CNN he didn‘t know the details until last week but he takes full responsibility.  NBC White House Correspondent John Yang joins us live now from 1600. 

And, John, Secretary Geithner says he wasn‘t involved but takes full responsibility.  President Obama didn‘t know until last week, but he takes full responsibility.  What‘s the strategy here?

JOHN YANG, NBC WHITE HOUSE CORRESPONDENT:  Well, I think that they are trying to get through this difficult time.  They‘re trying to focus as much attention as they can to what they‘re trying to do to fix the problem in the future to try to make sure that this doesn‘t happen again, this idea of a regulatory structure similar to the FDIC does to banks that would take care of companies like AIG.

And also looking to the past, talking about the excessive—the culture of excessive compensation, of excessive greed and excessive risk-taking that they say created this situation. 

You know, it‘s a very interesting answer that Treasury Secretary Geithner gave in that interview.  It was a very sort of almost sort of legalistic answer.  He said that he learned on Tuesday the full scale of these specific things. 

At one time he says the—“on Tuesday I was informed about the full scale and scope of the specific bonus problems.” It sort of leaves open the question of what he—of what he knew before if he didn‘t know the full scale and about the specific bonuses, was he aware that bonuses were coming down the pike in any case?

And the other headline in that interview, as you‘ve been talking about, is that he does acknowledge that Treasury told Chairman Dodd, chairman of the Banking Committee, that there were legal—that they were concerned about legal challenges.  They were concerned about the legal standing of the provision that would have blocked the AIG bonuses. 

They were worried about having legislation that would undo legally binding contracts, and that Treasury did talk to Dodd about that point. 

SHUSTER:  NBC‘s John Yang at the White House.  John, thank you very much. 

And again, the news from Geithner that he takes responsibility but did not know the full measure of what was going on until last week and that will certainly raise even more questions and perhaps cause an even greater onslaught in terms of congressional demands that the White House cough up more answers. 

But up next, Citigroup, the company that received $45 billion of your money, is now planning to spend $10 million on new offices for the CEO in an effort to save money.  Confused?  Congress is.  But lawmakers are downright steamed over CEO‘s testimony last month that now appears misleading.  We will take a closer look. 

In “Hypocrisy Watch” tonight, the Senate Republicans who say the government should have stopped the AIG bonuses but argued last month the government should mind its own business.  At the half hour we will examine the Washington connection that may have enabled much of the Wall Street greed.

And as always, we are taking your questions and video suggestions over Twitter.  Just go to twitter.com/shuster1600, or click on the link at shuster.msnbc.com.

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SHUSTER:  Welcome back to 1600.  AIG is not the only financial institution that appears tone deaf these days.  Remember Citigroup?  Citigroup has asked for and received bailout money on three separate occasions.  Today we learned that Citigroup is now planning to spend about $10 million on new offices for its CEO and other top executives. 

The company says that‘s spending the money will save money in the long term.  But if you are suspicious, you are not alone.  Earlier this year Citibank claimed it would help the company to spend nearly $500 million for a new corporate jet.  The order was canceled. 

And when CEO Vikram Pandit testified to Congress, he stated, quote:

“I get the new reality and I‘ll make sure Citi gets it as well.  At that hearing, Pandit was also asked about his compensation for 2008. 

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REP. DENNIS MOORE (D), KANSAS:  I have a series of questions I‘d like to ask.  How much taxpayer money did your company receive in the past five months?  Number two is, how much salary did you receive in 2008?  And how much, if any, bonus or other financial consideration did you receive?

VIKRAM PANDIT, CEO, CITIGROUP:  Congressman, we received $45 million of TARP money.  My compensation for the year 2008 was my salary, which is a million dollars.  I received no bonus and as I stated earlier, I plan to take a dollar a year in salary and no bonus until we return to profitability. 

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SHUSTER:  Pretty clear answer there except it‘s not true.  While Pandit‘s salary may have been just under a million dollars, on Monday an SEC filing revealed he actually took home a hefty $10.8 million in 2008, thanks to stock options and awards. 

That information did not please Congressman Dennis Moore, who you just saw there asking Pandit about his compensation.  And joining me now is Congressman Moore, he is the chairman of the House Financial Services Subcommittee on Oversight and Investigation. 

Congressman, welcome. 

MOORE:  Glad to be with you, David.  Thank you. 

SHUSTER:  Congressman, you sent a letter to Mr. Pandit on Tuesday.  I want to read part of that for our viewers.  You wrote: “I am deeply troubled by this latest news.  I ask that you promptly explain the disparity between your testimony and the recent news of what your 2008 compensation package actually was.” 

Congressman, have you received an explanation?

MOORE:  I have not received an explanation.  That was, I understand, e-mailed and faxed to his office on March 17th.  We‘re now two days later.  I expect to receive some response in the very near future.  I hope and believe that‘s going to happen.  If not, we will take appropriate action.  We‘ll determine what that‘s going to be. 

But I hope and believe that he‘ll respond as he promised he would. 

SHUSTER:  Well, I mean, what would be next?  Baseball players lied to Congress and got indicted.  Is that the possible road you‘re going to travel, perhaps, with CEO Pandit?

MOORE:  Well, we‘ll take a look at options right now.  I was a district attorney back in my home district for 12 years from ‘77 to ‘89.  I prosecuted everything from homicides down to misdemeanor offenses, put people in jail for those. 

There are a lot of people hurting in this country right now and some of what has happened as a result of this situation, this economic meltdown, frankly, has hurt a lot of taxpayers and people who have lost jobs in this country. 

And our Oversight and Investigations Committee and the full Financial Services Committee will take whatever action is necessary to protect taxpayers.  This is not—this is just not to be tolerated, frankly. 

SHUSTER:  What do you make of Citigroup‘s effort to essentially redecorate some of its offices?  They say that the $10 million in office renovations will save some money over the long run.  Do you believe it?

MOORE:  I think the American taxpayers are angry about this.  I am angry about this.  And I think members of Congress are as well.  In a time where the American taxpayers are putting up money to try to keep some of these financial institutions going so we don‘t slide from a recession into something worse, our country, I expect people to act responsibly and not take advantage of the money they received from American taxpayers. 

This is simply unacceptable. 

SHUSTER:  Congressman Moore, thanks for coming on tonight.  We hope you‘ll keep us posted on whether Vikram Pandit actually does respond to your request.  It certainly appears that he misled you, but maybe there is a reasonable explanation.  We hope that if there is that he will share it with you and that we can share it with our viewers.  Thanks again. 

MOORE:  We‘ll find out.  Thank you.

SHUSTER:  Up next, a group of top Republicans today in the U.S.  Senate blasted the AIG bonuses and complained the government should have stepped in to stop it all.  Last month in the midst of a debate over executive compensation limits, some of the same senators urged the government to mind its own business. “Hypocrisy Watch” is next on 1600.

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SHUSTER:  Welcome back to 1600.  In the midst of all of the outrage over the bonuses being paid at AIG, Senate Republicans are now criticizing the bonus money and are wondering how this all could have happened.  And that takes us to tonight‘s “Hypocrisy Watch.”

First the background.  Today four of the five Republicans who comprise the GOP Senate leadership team held a news conference on Capitol Hill.  They blasted the executive bonus money and insisted it was unacceptable. 

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KYL:  Everybody is upset about these AIG bonuses, everybody.  I suggest that what we ought to focus on, however, right now is how it was possible that these bonuses were paid. 

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SHUSTER:  Senator Kyl, that‘s a great question.  Why don‘t you ask this senator, Mitch McConnell, a fellow member of the GOP leadership team, who was conspicuously absent from today‘s news conference?  A month ago leader McConnell said, quote: “I really don‘t want the government to take over these businesses and start telling them everything about what they can do.” 

This week Missouri Republican Senator Kit Bond took to the Senate floor and said the government should tell AIG what it can and cannot do. 

(BEGIN VIDEO CLIP)

SEN. KIT BOND ®, MISSOURI:  It‘s unacceptable to pay bonuses after the American taxpayer was forced to bail out an institution without reforming it. 

(END VIDEO CLIP)

SHUSTER:  But six weeks ago when Congress debated reforming the executive pay of firms receiving taxpayer help, Senator Bond said, quote: “The worst thing we can do is tell businesses how to run themselves.” 

The Senate Republican hypocrisy club also includes the Oklahoma

Senator James Inhofe.  This week on his Web site he thundered, quote:

“The AIG situation is clear evidence of what happens when you shovel money out the door with no strings attached and no transparency.” 

But back to that debate in February when Congress was considering attaching some strings to executive pay, back then Senator Inhofe said, quote: “I thought, is this still America?  Do we really tell people how to run a business and who to pay and how much to pay?” 

Senate Republicans, we know it‘s unsettling to have so many of your constituents outraged and infuriated over something like AIG, but when you claim the government should stop these executive bonuses a month after saying the government should butt out, that‘s hypocrisy and it‘s wrong. 

Still ahead, the power of online activism.  Many of you helped free Zimbabwe opposition leader Roy Bennett.  We will talk with him live about his ordeal, and look at the power of the Internet army preparing to join the fight here in Washington over President Obama‘s budget. 

But up next, a tangled web of connections between Washington and Wall Street.  Lawmakers are trying to blame everything on AIG.  However, the evidence strongly suggests that powerful politicians in both parties enabled the greed.  An eye-opening report you need to see.  That‘s next.

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REP. BRAD SHERMAN (D), CALIFORNIA:  It is said that AIG was too big to fail, then it was explained, no, AIG is too interconnected to fail.  I would put forward that AIG is too well-connected to fail. 

(END VIDEO CLIP)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  In the back-and-forth blame game over who in Washington allowed $165 million in bonuses to go to executives at tanking AIG, the connections between Wall Street and Washington, between financial firms and decision-makers, Democrat and Republican, sometimes feel difficult to unravel. 

The watchdog group Wall Street Watch, seeking to untangle the ball of string of connections, influence, and money, found that Wall Street firms, commercial banks, hedge funds, insurance conglomerates, and real estate companies gave over $1.7 billion in campaign contributions in the last decade, and spent over $3.4 billion in direct government lobbying.

When decisions at the Fed went down and the first 85 billion in bailout money was doled out to AIG, Henry Paulson, Bush‘s treasury secretary, was at Treasury.  Paulson came straight to Washington from financial firm Goldman Sachs, where he was CEO and chairman.  In 2005, he was the highest paid chief executive officer on Wall Street, bringing in 38.3 million dollars in salary, stock, and options. 

While Paulson was leading Goldman Sachs, who was on the corporate board?  AIG CEO Edward Liddy, who you saw before Congress yesterday.  Liddy resigned the Goldman board to lead AIG.  It turns out that 12.8 billion dollars in that AIG bailout money went to Goldman Sachs, but Goldman connections go further. 

Neil Kashkari, who administers the bailout money for the Treasury Department, also spent years at Goldman.  President Obama has talked about moving away from a culture of excess, but it was his treasury secretary, Tim Geithner, who led the New York Fed at the time when speculative credit default swaps on Wall Street imploded.  Could Geithner have done more to prevent the bubble from blowing up? 

And then there‘s the Fed chair, who the AIG CEO implicated yesterday in his testimony, saying the Federal Reserve had known about these bonuses all along.  Well, he‘s not new to the job.  In Congress, members of course depend on political contributions from Wall Street.  Senate Banking Chair Chris Dodd got over 570,000 dollars from commercial banks in 2008, more than any member of Congress outside of the top three presidential candidates. 

He is accused of weakening a provision that would have limited executive bonuses like the ones at AIG.  And Republicans may be out of power, but they‘re still bringing in money from Wall Street.  The top Republican on the House Financial Services Committee brought in 193,000 dollars from commercial banks in 2008. 

Can Washington dispassionately regulate an industry with which it has such close connections?  Joining me now is John Harwood, cNBC‘s chief Washington correspondent and a political writer for the “New York Times.”

John, is it possible for Washington to separate all of this? 

JOHN HARWOOD, “THE NEW YORK TIMES”:  Well, the only conclusion you can draw right now is the one from the actual record we have, which is an abject failure.  Tremendous failure of regulation over the last generation of Wall Street. 

Now, why is that?  There are a couple things going on, I think, David.  First of all, with all regulated industries, you have to strike a balance between having somebody in office who knows what they‘re talking about without being a captive of those industries.  That‘s a balance we don‘t always get right, whether it‘s agriculture, whether it‘s mining, whether it‘s Wall Street. 

The other thing is that when you have the absence of scandal, when times are good, when the stock market‘s up, people don‘t pay such close attention to that web of connections.  And a lot of stuff gets done that wouldn‘t get done in the light of day, in the light of scandal.  When you do have a crisis, when the public is paying attention like they are right now, then you see the political processing the other direction. 

Doesn‘t matter how much money AIG gave politicians, they still are going to pass that House bill today, 90 percent tax rate on those bonuses.  So it oscillates. 

SHUSTER:  But again, the connections do underscore that at a time when we‘re trying to unravel and figure out how all this of happened, so many of the key players were right in the middle of this even when this started to implode. 

HARWOOD:  Absolutely true.  Look, it‘s a very complex financial system and Tim Geithner—take Geithner for example, president of the New York Fed.  He has been saying for the last couple days he didn‘t know until Tuesday about these AIG bonus payments.  He gave an interview this evening with CNN in which he said that I didn‘t know the full scope of those bonus payments until Tuesday. 

There‘s a lot of knowledge out there sloshing around the system.  You had a member of Congress, Elijah Cummings, raising protests against this system of retention bonuses late last year.  The point is tremendous amount of information going on.  People who were part of the old system, who are trying to change it in a crisis atmosphere, it‘s not easy. 

SHUSTER:  Is it therefore important, politically, to keep in mind that when you see Democrats and Republicans seeming to blame everything on AIG, that perhaps it might be an effort to take away attention from this very sort of tangled web of connections, the atmosphere that Washington created that enabled this behavior in the first place? 

HARWOOD:  Absolutely.  Members of Congress have to look in the mirror and take some responsibility for this.  So do members of administrations, Democrat and Republican.  And, frankly, so do consumers and average Americans, who benefited from this go-go real estate system which became a substitute way for people to have higher living standards than they would otherwise in the economy. 

SHUSTER:  Let‘s bring in our panel now to talk about all this.  We have Democratic strategist Joe Trippi who is with us and we also, of course, have Ron Christie, Republican strategist and former special assistant to President Bush.  Welcome to you both. 

Ron, you first.  What do you make of all of this? 

CHRISTIE:  I actually agree with a lot of what John just said a few moments ago.  I think the accountability issue is one that is very clear is really upsetting the American people.  The American people want accountability.  They‘re tired of people in Washington putting the blame.  It‘s always somebody else.  The Republicans did it.  George Bush did it.  It‘s never us. 

What I find is going to be most probably problematic for these members of Congress is someone like Chris Dodd, someone like the banking chair in the House, Barney Frank.  Were they involved?  Were they complicit in allowing this web to unravel?  And if so, why are they not holding themselves to account? 

I think the American people with these bonuses are looking and saying, enough is enough. 

TRIPPI:  The system is broken, busted.  It has been broken and busted for years.  We‘re all seeing what is produced.  I mean, both parties, it‘s everybody.  It‘s not chairs of different committees.  They‘re all tied to having to chase campaign contributions.  Both parties got a ton of it from Wall Street and weren‘t looking. 

And, frankly, most of America wasn‘t looking. 

HARWOOD:  How about political consultants?

TRIPPI:  That‘s what I‘m saying, it‘s about the chase for money.  I‘ve been wanting campaign finance reform for years.  I‘ve founded something called Change Congress because we have to get rid of all this stuff.  That‘s what‘s happened.  You can‘t point at er party anymore.  It‘s the whole mess.  It‘s Wall Street and Washington, and Main Street is getting screwed in the process. 

SHUSTER:  Here are some of the views from Congressman Spencer Bachus and Representative Barney Frank, who are talking about some of these same issues earlier.  Watch. 

(BEGIN VIDEO CLIP)

REP. SPENCER BACHUS ®, ALABAMA:  There‘s not a single member of Congress who can say with certainty that the president has done everything in his power in connection with these bonuses.  Do you really want to vote to say that what the president did in enabling these bonuses was appropriate?  I think not. 

REP. BARNEY FRANK (D), MASSACHUSETTS:  I learn a lot in this job.  Now, I learned about a theory called creationism, which in some cases holds that the world was created 4,000 years ago.  But I now am astounded to see a new and more compressed theory of when the world was created.  It apparently was created at noon on January 20th, 2009. 

In September of 2008, George Bush‘s two top economic appointees came and Mr. Bernanke informed us that he was going to lend 85 billion dollars to AIG. 

(END VIDEO CLIP)

SHUSTER:  John Harwood, fair to say that they‘re both right, that, yes, you could make an argument the president hasn‘t done everything to get to the bottom of how these bonuses were allowed to get through and who pulled the restriction out of the stimulus bill?  But also fair to say that Republicans are putting a lot of blame on the Obama administration without recognizing the culture that existed before? 

HARWOOD:  I do think they‘re both right.  It sort of depends on everything you could.  Does that mean trying to abrogate legal contracts?  That‘s where the administration said our hands are tied.  You could take actions as the president of the United States or as the Treasury Department to try to nullify those contracts, I guess.  But they weren‘t willing to do that.  So to that extent Spencer Bachus was right. 

SHUSTER:  Joe Trippi, does Secretary Geithner survive this?  There are already some Republicans calling for his head.  He admitted today, I take responsibility.  A lot of people didn‘t like Geithner.  That was before he seemed to have the sort of deer in the headlights look when he introduced the banking plan a few weeks ago.  It seems like it‘s death by a thousand cuts for him. 

TRIPPI:  I think only if he stops thinking like a Wall Street guy.  He‘s there because of his skill and his experience on Wall Street.  But he‘s got to sort of look at how this stuff looks and act like and look like he‘s fighting for Main Street.  That‘s where this has all gone wrong. 

Actually, I think it‘s fine that he‘s a lightning rod right now, because look, as long as people‘s anger is focused at AIG or even focused at the Treasury and Geithner, it‘s not as focused on Obama and the White House.  So he‘s got to fight this off.  If he can‘t fight off, he‘s going to end up walking the plank.  That‘s the way it‘s going to be.  It‘s a fact. 

SHUSTER:  Ron Christie, in terms of political strategy, the president keeps saying I‘ve got full confidence in Geithner.  I‘m the one who takes responsibility.  The buck stops with me.  Clearly, the president is trying to deflect some of the anger going toward Geithner and saying, bring it on to me.  Is that a wise strategy? 

CHRISTIE:  Well, I think it is.  But I would also counter and say, anytime you hear someone say in Washington I have full confidence in the secretary, that, to me., means, well, for right now and that that confidence could erode at any moment and that license to serve at the pleasure of the president could be revoked. 

The other thing I would have to say, what we learned from all this, this is what happens when government acts too quickly.  We were told the stimulus package was needed immediately.  We had to rush it through.  We need to pass this.  Nobody in Congress read that bill.  Nobody in Congress recognized that the provision dealing with bonuses was in there or that Chris Dodd apparently had weakened it.  And this was the result.  This is what happens when Congress moves too quickly in such a big, big piece of legislation. 

SHUSTER:  By the way, we mentioned that a couple of Republicans are calling for Secretary Geithner‘s head.  Here is Representative Connie Mack doing just that. 

(BEGIN VIDEO CLIP)

REP. CONNIE MACK ®, FLORIDA:  There‘s been mistake after mistake after mistake.  And This is the time when we need economic certainty. 

Well, certainly Geithner has done his best to erode all confidence that the American people have in him.  And they should put someone else in that position. 

(END VIDEO CLIP)

SHUSTER:  Joe Trippi, your reaction? 

TRIPPI:  Look, it‘s just piling on right now.  A lot of this also is the quick—want of quick fix.  There is not going to be a quick fix.  This guy is sitting there trying to fix it as fast as he can.  No one‘s going to be happy with him.  And then AIG happened.  So jump all over him.  You know, this is going to play out over the long haul.  And whether he can survive it or not, I think has nothing to do with whether Republicans start to go after him, but whether you see some cracks in the Democratic caucus, whether you start to see Democrats start calling for his head.  That‘ll be the big problem. 

HARWOOD:  David, we‘ll see how long he survives.  But I got to tell you, I talked to a bunch of White House officials today.  All of them were unanimous in saying we‘re solid behind him.  He‘s not going anywhere. 

SHUSTER:  John Harwood from cNBC, thank you very much.  Joe Trippi and Ron Christie are sticking around because we‘ve got a lot more coming up.  Up next, all us have the power to right injustices around the world.  Online pressure helped released Roy Bennett, a courageous political prisoner in Zimbabwe.  We‘ll talk to Mr. Bennett live on the phone from Zimbabwe in just a minute, and chat with Joe Trippi about what Bennett‘s example means for online activism here in Washington. 

And your Twitter questions are coming up at the end of the hour. 

Go to Twitter.com/Shuster1600 or use the link at Shuster.MSNBC.com.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to 1600 PENNSYLVANIA AVENUE.  This morning, millions of Obama supporters received this e-mail from former campaign manager David Plouffe.  The e-mail included a video message from President Obama and instructions on how to pressure Congress to approve the president‘s budget. 

Joining us to talk about the power of online communities is Democratic strategist Joe Trippi.  Joe, first on the Obama effort, how is this supposed to work? 

TRIPPI:  It works because you have 13, 14 million people out there that are willing to get active.  And the power of these social networks now and the one Obama built is one that‘s going to give him a lot of clout getting his budget passed. 

SHUSTER:  One of the most striking success stories recently in online activism came in regards to a foreign policy challenge we‘ve been talking about facing the Obama administration.  Many of our viewers are familiar with the situation in Zimbabwe.  President Robert Mugabe is literally starving seven million citizens to death and seems determined to undermine a power sharing agreement with an opposition party that actually won last year‘s elections. 

A key member of that opposition party is Roy Bennett, widely viewed as one of the most courageous advocates of democracy in Africa.  Last month, on the very day Bennett was supposed to be sworn in as a member of the power-sharing cabinet, he was arrested by Mugabe‘s thugs and thrown in a prison notorious for torture. 

Joe Trippi brought this injustice to us and many of you online around the world.  The pressure on Zimbabwe‘s government helped.  Mr.  Bennett was finally released a week ago.  Roy Bennett joins us now on the phone from Zimbabwe.  Mr. Bennett, first of all, how are you doing? 

ROY BENNETT, MOVEMENT FOR DEMOCRATIC CHANGE:  Very good, thank you.  And thanks very, very much to everybody that has had a part in putting pressure to get me released from the terrible circumstances I was in. 

SHUSTER:  Mr. Bennett, tell us about the conditions in the prison.  I understand there were some prisoners who died.  They were left essentially in your cell as a way of intimidating you.  Tell us what it was like. 

BENNETT:  Absolutely horrific.  And very, basically indescribable.  It‘s the result of a failed state and a dictatorship that has resorted to absolute levels of total human rights abuses, by having jails where people are incarcerated with absolutely no means of feeding them or giving them any form of support whatsoever. 

SHUSTER:  Were you aware of the efforts on your behalf by people around the world, like Joe Trippi, people who believed very much in the possibility of democracy in Zimbabwe, and wanted to make sure that justice is served there?  Were you aware of what was going on to try to help you? 

BENNETT:  Not while I was in prison, because obviously the communications are kept to the very minimum with anybody outside the prison.  But once I was released from the prison, I became aware and understood the tremendous effort that—and the people of America that had been able to put pressure on this regime to be able to facilitate my release. 

SHUSTER:  We have Joe Trippi here on the set with us.  Anything you‘d like to say to him.  And, Joe, you‘re available to respond back, Mr. Bennett. 

BENNETT:  Just to say, Joe, you know, I—no words can describe the thanks that, you know, you brought about in highlighting my plight and basically the plight of fellow Zimbabweans under this dictatorial regime.  And I‘m sure it‘s gone a long way to help us achieve democracy and a better life for all here in Zimbabwe. 

TRIPPI:  I‘m just happy to have you out, my friend. 

BENNETT:  Thank you, Joe.  Thank you very much. 

TRIPPI:  Thank you for everything you‘re doing out there. 

BENNETT:  Not at all. 

SHUSTER:  Mr. Bennett, what is the future for Zimbabwe?  As long as Mugabe is in power, is there much of a future?  Is there something that you think the Obama administration, your supporters should be trying to do to try to pressure the Obama administration in terms of our policy towards Zimbabwe? 

BENNETT:  Most definitely.  You have the end of a dictator who has destroyed a country through Draconian laws and total repression.  And basically that‘s the end of the road.  But at its most dangerous stage, where they realize they have lost the support of the people in Zimbabwe by losing an election on the 29th of March.  They have managed to stay in power, because when the people of Zimbabwe voted and the Movement for Democratic Change won that election, they were unable to transfer power, because the dictatorship held all the reins of power through the security of the regime. 

But now we see a total shift taking place and very isolated members within the regime, the hard liners, who have human rights abuses that they are facing, as well as total corruption, still holding on, but holding on and lashing out at every angle to try and remain in power.  And basically any assistance that can come from President Obama and his caucus and supporters, it will definitely go a long way in helping remove this balance of desperate people. 

TRIPPI:  Roy, this is Joe.  Can you tell us how many others are still in prison?  I know you‘re out, but are there others now still in that prison being held as political prisoners? 

BENNETT:  I know of 14 that are still in prison.  I know of eight that are missing that were abducted at the same time as the others.  But their plight is not known or their whereabouts is not known.  So we‘re looking at basically 22 people, Joe. 

TRIPPI:  We‘ll keep up the fight for them. 

BENNETT:  Thank you very much. 

SHUSTER:  Mr. Bennett, thank you so much for joining us.  And our thoughts and prayers continue to be with you and your family and, of course, all the political prisoners in Zimbabwe.  Thank you so much.  And Joe Trippi, also, heart felt thanks from all of us to you, who brought this story to our attention and inspired so many people online. 

TRIPPI:  You kept it alive on this show and got the word out, too, so there‘s a lot of hope and promise to go around.  But keep up the fight for those other prisoners. 

SHUSTER:  Thank you. 

Joe‘s going to stick around.  And up next we‘re going to change topics, of course.  President Obama makes history tonight as he appears on “The Tonight Show” with Jay Leno.  A closer look at the strategy behind that appearance when 1600 continues. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RONALD REAGAN, FMR. PRESIDENT OF THE UNITED STATES:  This is your tenth year. 

UNIDENTIFIED MALE:  Yes.  We just finished ten years.  We are starting our 11. 

UNIDENTIFIED MALE:  You‘re not going to lend me your makeup man are you? 

RICHARD NIXON, FMR. PRESIDENT OF THE UNITED STATES:  No I‘ll lend him to Lyndon Johnson. 

Sock it to me? 

JOHN F. KENNEDY, FMR. PRESIDENT OF THE UNITED STATES:  The United States is the only guardian at the gate against the communist advance. 

(END VIDEO CLIP)

SHUSTER:  Sometimes serious, sometimes light hearted.  Either way, politicians have used the power of late night television to their political advantage for many years.  But tonight, President Obama makes history.  He will become the first sitting president ever to appear on a late night TV talk show. 

Hundreds of people camped out in Burbank around the clock for a ticket vigil just to get a seat for “The Tonight Show” with Jay Leno.  Those crowds didn‘t go away.  People lined up on the streets outside the Leno studios just to catch a glimpse and wave to the presidential motorcade. 

The president‘s appearance tonight will give him a high profile stage to explain his economic proposals. 

Back with us, Joe Trippi and Ron Christie.  Ron, what are the risks and rewards when a politician goes on late night? 

CHRISTIE:  I think the risks, particularly when we are dealing with the economic situation, is people are going to say, is he serious?  Why is he not in Washington?  He should be dealing with the matters of state.  It makes him look a little less presidential. 

Obviously, the plus side for him going out there and being on “The Tonight Show” is that Jay Leno has a remarkably large audience.  A lot of people like the show.  A lot of people follow what he does.  And I think that Obama will get a different platform and perhaps a different set of listeners and viewers who are hearing his economic message. 

SHUSTER:  Joe Trippi? 

TRIPPI:  I agree with both the down sides and up side.  Down side,

yes, he may look like—sort of step off the presidential podium a

little bit.  But on the other hand, that‘s a different way into people‘s

into what people are thinking, taking it from a different level and light hearted.  And I think the other thing with him is his personality leads him to do really well in these kinds of situations.  I think it‘s going to be a net plus when it‘s all over. 

SHUSTER:  It feels like it‘s part of a thread, that the thread maybe started yesterday.  There he was with ESPN selecting his basketball picks, saying that UNC is going to win it all, and joking about Tar Heels don‘t embarrass me again like you did last year.  It‘s “The Tonight Show” tonight.  It‘s mixing With Arnold Schwarzenegger.  There‘s a theme here. 

CHRISTIE:  There is a theme here.  My wife would love the Tar Heel angle for having been there.  But seriously, I think it just takes a little bit off the polish of being the president of the United States to be sitting up there doing a presidential pool when we have so much at stake with the economy.  For goodness sake, you‘re the most powerful executive in the world.  We‘re dealing with one of the most difficult crises facing this country.  He has party night on Wednesdays in the White House.  I think he needs to be a little more serious. 

TRIPPI:  I think the guy has been handling the crisis.  We‘re in a

new media age where authenticity matters, and who you really are.  If

you really do play March Madness, and do the brackets, and that‘s what -

and he does it, you know, I think America is—I do that, too.  You know, he‘s their president, but he‘s also one of them. 

And I think, you know, for him to do Leno is a risk, but we‘ll see.  I think in the end it‘ll be a net plus for him.  I think people—we‘re entering a time when being authentic and being who you really are, that‘s what matters most. 

SHUSTER:  You can all be sure to watch President Obama on “The Tonight Show” with Jay Leno.  That‘s tonight at 11:35 Eastern, 10:35.  And that‘s of course only on MSNBC. 

I asked all of you on Twitter about your reaction to President Obama on “The Tonight Show” and some of you said you can‘t wait.  But here are the particular Twitter questions we have for our panel.  Joe Trippi, who can be reached at Twitter.com/JoeTrippi, one word.  A number of questions about the whole Twitter phenomenon, online social media.  A lot of people have gotten involved in Twitter because of Roy Bennett. 

How did you first sort of get involved in Twitter is one of the questions? 

TRIPPI:  I just—you know, I was on Facebook.  I was on the other social networks.  And all of a sudden my phone lit up with you should join Twitter.  I don‘t even remember which one of my friends told me to do it.  Frankly, I didn‘t get it at first.  I‘ll be honest.  That‘s most people‘s reactions.  You get on it and you start telling people, I got up this morning and had coffee.  And why would anybody be interested in that? 

But over time, it‘s an amazing thing in terms of being able to communicate quickly to lots of people, and them being able to give you ideas or give you interesting things to read, or find out things like amazingly you can make a difference, like Roy Bennett, putting out the word to keep his story alive, you doing that.  And three weeks later, he‘s out of jail.  It‘s pretty amazing. 

CHRISTIE:  Ron, someone wants to know when is Ron going to start Twittering?  You just told us the answer. 

CHRISTIE:  I‘m going to follow you and Trippi for the next couple days. 

SHUSTER:  Ron Christie!  National television commitment.  Way to go.  Ron Christie coming soon to a Twitter near you.  We‘ll have his address as soon as we get him set up.  That is the view from 1600 PENNSYLVANIA AVENUE.  Thanks to Ron Christie and Joe Trippi. 

I‘m David Shuster.  Remember, you can get the latest political news and a sneak peek at what‘s coming up on the show sent straight to your inbox with the 1600 daily briefing.  Sign up at Shuster.MSNBC.com or text Penn to 622639 if get text.  If you want to Twitter, you can Twitter me at Twitter.com/Shuster1600 or Twitter.com/JoeTrippi.  He‘s always there.

I‘m David Shuster.  “HARDBALL” starts right now.

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