updated 3/24/2009 9:54:49 AM ET 2009-03-24T13:54:49

Guest: John Barrasso, Kent Conrad, Lanny Davis, A.B. Stoddard, John Feehery, Ryan Lizza, Don Haney

High: The treasury secretary now has a new plan to get banks out from under toxic assets.  Will that be enough to keep the wolves away from Geithner‘s back yard?

Spec: Timothy Geithner; Treasury Department; Economy; Barack Obama; AIG; Labor

(BEGIN VIDEOTAPE)

ED SCHULTZ, HOST (voice-over):  Tonight, the treasury secretary, under fire, now has a new plan to get banks out from under toxic assets.  Will that be enough to keep the wolves away from Geithner‘s back yard? 

Hey, Geithner, watch your back. 

SEN. RICHARD SHELBY ®, ALABAMA:  I‘ll tell you what, if he keeps going down this road, I think that he won‘t last long. 

SCHULTZ:  The president says the treasury secretary is still his go-to guy. 

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  If he were to come to me, I‘d say, “Sorry, buddy, you‘ve still got the job.”

SCHULTZ:  Is there a new deal in the works between big labor and big business?  We‘ll ask former Clinton special counsel, Lanny Davis, who is now the man behind the plan. 

And what should be cut from the Obama budget?  We‘ll get the latest from Senate Budget Chairman Kent Conrad. 

There is another flood on the northern tier.  Fargo could be New Orleans.  No kidding. 

The NCAA tournament—my pick, Memphis, is in the Sweet 136. 

Unfortunately, so is Duke. 

It‘s all coming up on 1600 PENNSYLVANIA AVENUE.

(END VIDEOTAPE)

SCHULTZ:  And good evening, everybody.  I‘m Ed Schultz, in for David Shuster. 

Tonight, it‘s Monday madness.  I mean, look at the market, up almost 500.  Home sales are up. 

And it‘s just in now that some of the AIG executives are going to give back the money.  Fifteen out of the top 20, nine out of 10.  I mean, this is almost like a financial tournament.  We‘re all keeping score.  The bottom line is, there‘s a lot of good news out there tonight. 

Does America like this deal?  The president and the treasury secretary announced their plan to fix this financial mess.  A top priority, help the banks get rid of their bad assets. 

Here is the plan. 

The banks will start lending again if they can get the bad debt off their books.  It‘s that simple.  The plan will encourage private investors to buy as much as $1 trillion in bad loan debt known as toxic or legacy assets.  Also, the Treasury is banking that people will invest because the government is putting up the money and sharing in the risk. 

Here‘s Geithner, the treasury secretary, in his own words today on the deal. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Explain to America, what kind of return are they going to get?  What‘s your hope? 

TIMOTHY GEITHNER, TREASURY SECRETARY:  They‘re going to get a return that private investors get alongside the market in this case.  You know, this is the best way, in our view, to protect the taxpayer.  The alternative approach, which would have the government buying all this stuff, taking on all the risks on their balance sheet, would be much more expensive to the taxpayer.  The alternative of letting it just sit there, let these assets just sit on the balance sheets of banks, would risk creating a much longer, deeper recession. 

(END VIDEO CLIP)

SCHULTZ:  So, is it a good deal?  Well, look at the market.  The Dow up almost 500 today, closing at 7,775. 

Folks, this is the biggest one-day gain since October.  I mean, is this the beginning of the turnaround?  It might be. 

A lot of negative news out there as of late.  I‘ll tell you, the righty (ph) talkers, they‘re out of material tomorrow there‘s so much good news out there. 

Now, top Republicans are crying foul about this plan.  House Minority Whip Eric Cantor called it a shell game and said that the taxpayers still don‘t know how much risk the government is taking with your money. 

And for more on this, let‘s go to Senator John Barrasso, who is a Republican from Wyoming. 

Senator, good to have you with us tonight on 1600.

I want to get your quick reaction, if I can, sir, to the news that the AIG executives, nine out of the top 10 and 15 out of 20, are going to return the bonus money.  Let‘s get to that first.

What do you think? 

SEN. JOHN BARRASSO ®, WYOMING:  Well, it‘s exactly what I said on MSNBC the other morning.  I said this is the time where it‘s really going to tell the character of the people.  And if they would come out forward and do that, that would speak to them wanting to be part of the solution, not part of the problem.  And I‘m delighted to see that they are showing their character, which is not greed on Wall Street, but a commitment to help America and the American people. 

SCHULTZ:  Senator, let‘s get to today‘s news as well when it comes to the plan that the president and his treasury secretary put out.  On the surface, are you OK with this, or do you think that this is too much of a gamble with taxpayer dollars? 

BARRASSO:  Well, I want to make sure there is risk, as well as a reward, and it‘s really not an even Steven putting up money.  It seems like what we‘re asking the partners to put up is small, and what the government is going to put up is large. 

You know, it‘s $1 trillion.  I want to know where that money is coming from.  Even the president‘s budget director, Ms. Romer, said that it‘s only 7 or 8 percent of the money is going to be from a private put-up of money, whereas the rest is going to come from the government.  So it‘s sure not an even partnership. 

SCHULTZ:  Well, Senator, when you take a look at the numbers that are out there, the president seems to be playing pretty loose with a lot of tax dollars.  But what‘s the Republican plan for fixing this?  If we don‘t do this private and public partnership, if we don‘t invest to get these toxic assets off the books for the banks, what other plan could there be? 

BARRASSO:  Well, you want to have accountability, you want to have oversight, you want to have transparency.  That‘s what was lacking in that first $700 billion bailout last year.  But I‘m concerned about the entire budget, which is what the president was talking about Saturday in his radio message. 

I say, focus on the economy.  It‘s the economy, Mr. President.  It‘s not all of these other things of rebuilding and redoing health care and education and energy and the environment. 

You have two jobs, Mr. President.  One is the economy, the other is to keep us safe at home.  And I say focus all your attention on the economy.  Don‘t deal with this big budget which we‘re debating this week in the Senate, which to me spends too much, taxes too much and borrows too much. 

SCHULTZ:  Senator, one of your colleagues, Alabama Senator Richard Shelby, had harsh words for Mr. Geithner yesterday.  Here‘s what he had to say. 

(BEGIN VIDEO CLIP)

SHELBY:  Nobody wanted to claim responsibility for the language in the stimulus bill that grandfathered the bonuses in to AIG.  Now we know it came from Treasury.  There‘s a lot of questions to be asked. 

I‘m not feeling real good about Treasury‘s role or the specific role of Tim Geithner at the moment.  And I‘ll tell you what, if he keeps going down this road, I think that he won‘t last long.  I think he‘s probably on shaky grounds now, at least with the Congress and a lot of the American people. 

(END VIDEO CLIP)

SCHULTZ:  Senator Barrasso, do you think that Tim Geithner is on shaky ground?  Should he be on shaky ground?  Where do you stand on the treasury secretary? 

BARRASSO:  You know, I voted against his nomination because of the tax issues.  We were told in the Senate that he was the only person in America to do this job, the only one prepared to save the day. 

On a scale of one to 10, with one being the worst and 10 being the best, to me he‘s still less than a 5.  I have great concerns and I‘m not sure he‘s the only one that can solve the problems.  And I think we need more confidence on the behalf of the American people and what‘s going on now at Treasury. 

SCHULTZ:  Senator, good to have you on with us tonight.  I appreciate your time on 1600.

BARRASSO:  Thanks, Ed.

SCHULTZ:  You bet.

Joining me now is Senator Kent Conrad, Democrat from North Dakota and chairman of the Senate Budget Committee. 

And I can tell you that this man has the ear of the president when it comes to the budget and economic policy. 

Senator Conrad, good to have you on tonight. 

I want to ask you, Kent, right off the top, if I may, the news that AIG executives are giving the money back, 15 out of the top 20 and 9 out of the top 10. 

Your thoughts on that, Senator? 

SEN. KENT CONRAD (D), NORTH DAKOTA:  That‘s very good news.  You know, I said earlier today and over the weekend that I believe the head of AIG ought to call them in and say, look, give it back or you‘ll be fired, and that the Treasury ought to say to them, either you give it back, or in 10 days we‘re going to release the names of who‘s taking the money.  I thought that would be a good incentive to encourage people to act in a way that I think reflects real character. 

So I‘m delighted that 9 of the top 10, 15 of the top 20 have decided to give their bonuses back.  I hope the others will follow suit. 

SCHULTZ:  Senator, the numbers that have come in now from the Congressional Budget Office are a heck of a lot different from the ones just 60 days ago.  How could the Obama administration be this far off on the numbers?  Is the economy that bad? 

CONRAD:  Well, in fairness to them, the economy has fallen away far more rapidly than most people thought, including the blue chip forecasters.  So at the time the administration issued their forecast, it was pretty much in line with the blue chip forecast.  But, you know, you think of things—new information that‘s come to light.

The contraction far more severe.  The loss of jobs far more severe. 

So that has enormous impact in a 10-year forecast. 

Part of the problem is a 10-year forecast.  You know, they are notoriously unreliable.  And that‘s why we will do a five-year budget rather than a 10-year. 

SCHULTZ:  Senator, these are big numbers.  This is a huge budget.  And you have been critical of it at times. 

Do you have the knife out on this budget?  I mean, where would you cut right away, and how much are you going to cut if you‘re going to propose that? 

CONRAD:  Over the first five years, I will take $600 billion of the assumptions the president made out of this budget in order to get the deficit reduced by more than two-thirds over the first five years and get down to less than 3 percent of GDP and deficit, because that‘s what the economists tell us is the key goal the first five years.  So I have had to take $600 billion out that the president assumed was in. 

SCHULTZ:  Is he going to work with you on that?  I mean, do you think that the president will go along with these cuts, or do you think he‘s going to push hard for his number? 

CONRAD:  What I‘ve told the president is I will do everything I can to preserve his key priorities because he‘s got the right priorities for the country—reducing our dependence on foreign energy, excellence in education, fundamental health care reform.  Those are the right priorities for the country, and cutting the deficit by more than half over the five years, as I said, the budget that I‘ll submit cuts it by two-thirds by the fifth year.  So I‘m going to do everything I can to preserve his fundamental priorities, because that‘s important for the economy going forward.

But look, we‘ve got to make a lot of adjustments, a lot of changes. 

And I hope the president will support them.

SCHULTZ:  Senator, this is what your counterpart on the Budget Committee had to say.  This is Senator Judd Gregg on the budget and how we are facing some pretty tough times in America.  I want to know if you agree with this.

(BEGIN VIDEO CLIP)

SEN. JUDD GREGG ®, NEW HAMPSHIRE:  If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt.  People will not buy our debt.  Our dollar will become devalued. 

It is a very severe situation.  And I find it almost unconscionable that this administration is essentially saying, well, we‘re just going to blankly (ph) go along on this course of action after they‘re getting these numbers which show that they‘re not sustainable.  And they know they‘re not sustainable. 

(END VIDEO CLIP)

SCHULTZ:  Do you agree with that, Senator Conrad?  I mean, are we going to go into bankruptcy?  What do you think? 

CONRAD:  I don‘t think anybody knows.  I mean, it would be unusual for a country to go bankrupt, because we can print money. 

But look, are there very adverse consequences from not being on a more sustainable fiscal course?  Absolutely.  And the great risk is that those who are financing our debt, which are increasingly foreign entities, would decide to go elsewhere, would decide to keep their money for their own development. 

That would put us in a very difficult position of having to dramatically raise interest rates to attract the capital necessary to float the boat.  So Senator Gregg and I are completely in agreement that the long-term fiscal situation of the country is completely unsustainable.  The president has said it, his budget director has said it.  So that‘s one place we‘ve got agreement. 

SCHULTZ:  Senator, great to have you on with us tonight.  We‘ll visit again, Senator.  Appreciate your time on 1600.

CONRAD:  Always good. 

SCHULTZ:  You bet. 

SCHULTZ:  You know, while we‘re talking about bailouts and while we‘re talking about interest rates and such stuff as that, I have a personal request for the treasury secretary. 

Now, this is the only credit card my wife and I have.  And I would like to know, how is it that the rates can go from 9 percent to 29 percent overnight if some average Americans out there trying to make their payments maybe miss a day or a couple of days late or whatever? 

Mr. Geithner, I‘m on your team.  I hope this works.  But this is what average Americans are talking about.  They don‘t get these credit card rates, and we need a break in the middle class. 

Up next, big labor in big business.  Is there a deal in the works?  We‘ll talk one-on-one with former White House counsel Lanny Davis, straight ahead. 

Plus, it‘s day 63 of the Obama administration.  And the Treasury Department is what?  Barely staffed? 

We‘re in the middle of an economic crisis, we need all the help we can get.  Why can‘t Tim Geithner find a staff? 

It‘s all coming up on 1600.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to 1600.

On the labor front, three of the nation‘s biggest retailers are banding together to offer a compromise on the Employee Free Choice Act.  Starbucks, Costco, and Whole Foods have started what they call the Level Playing Field Committee.  OK. 

The group has six principles they want included in the Employee Free Choice Act, including a secret ballot and date-certain elections.  The coalition‘s proposal can be broken down into six parts.  So here they are. 

First, the retailers want to guarantee the right to management and unions to require a secret ballot under the circumstances. 

Second, union certification and decertification are treated equally.  This one essentially gives management the option to initiate a decertification campaign through a secret ballot election. 

And third, to address labor‘s concern that business intimidate workers.  It would set a fixed period in which an election must be held.  That‘s a key point. 

Fourth, equal access to employers for campaign purposes.

And the fifth one is expedient law (sic) enforcement—expedited enforcement and stricter penalties for companies that retaliate against workers before union elections. 

And number six is to preserve private collective bargaining, which means there would not be mandatory arbitration that dictates contract terms. 

Now, joining us, the man who is pushing all of this on Capitol Hill, this alternative measure, is guy who I have sparred with a few times, former White House counsel to Bill Clinton, Lanny Davis. 

Lanny, great to have you with us tonight. 

LANNY DAVIS, FMR. WHITE HOUSE COUNSEL TO BILL CLINTON:  Thank you.

SCHULTZ:  Now, Lanny, you‘re a good Democrat, Lanny.  Now, you‘re not getting too close to labor on this thing.  What do you like about this proposal, and how close do you think we are to getting this done? 

DAVIS:  Well, I call myself a pro-labor, liberal Democrat.  And there are several very significant advantages in these principles that would help labor get equal access to make their pitch, get a fixed date for elections, which they presently don‘t have, and get strict and expedited enforcement of penalties. 

Those are the grievances that they say are the reasons they need Card Check, which would not guarantee a secret ballot.  So what we‘ve done, these three progressive companies, is say, look, we want to level the playing field so you don‘t give up the secret ballot, which is the bedrock of democracy, you don‘t give up collective bargaining.  Rather than having a federal mediator mandate wages maybe too low, or mandate working conditions maybe bad, but rather, you fix the grievances. 

This is a dysfunctional system, Ed.  The NLRB is dysfunctional in enforcing the law.  That‘s what labor says, and that‘s what the Level Playing Field Committee would try to get Congress to do as an alternative to this very polarized situation we face now on Card Check. 

SCHULTZ:  Lanny, you‘ve got some pretty strong Democrats who are against this.  You can see the comment here by Senator Tom Harkin, also backed up by George Miller, saying that “This proposal is unacceptable.  It was written by CEOs for CEOs.  It is nothing more than a classic Washington lobbying campaign intended to confuse the issues and disguise the real agenda of maintaining the status quo.”

It doesn‘t sound like Democrats are going to go along with this. 

DAVIS:  Well, first of all, it‘s pretty disappointing.  Two men that I greatly respect—Tom Harkin, I worked for when he ran for president, a fellow liberal Democrat, that attacked motives rather than addressing the specific six principles and the issues I just raised.  When somebody attacks motives rather than deals in substance, that‘s disappointing, especially from my good friend Tom Harkin. 

I would like to have all Democrats and Republicans, management and labor, address the substance of what we‘re saying.  This is a third way to bring people together to reform the National Labor relations Act, rather than having labor running over management, management running over labor. 

Costco, Starbucks, and Whole Foods are looking at a third way to bring people together.  And I hope and believe that this is what President Obama would prefer than having this polarized debate that‘s going on right now. 

SCHULTZ:  Well, Howard Schultz of Starbucks, and also James Sinegal of Costco and John Mackey of Whole Foods, Lanny, these folks have not been pro-wage workers in their career.  In fact, they have said some pretty tough things about unions. 

You know, how do you come to terms with these people?  How do you vote and support people who have been union busters their entire career? 

DAVIS:  Well, you just made, if I may respectfully suggest, a merger

of two different things.  One is whether there‘s a union—and I‘m a

believer in unions, my father raised me in a household to believe in unions

versus what‘s good for workers. 

Whole Foods, Costco and Starbucks give their workers fully-paid health insurance, are very well treated, and they‘re proud of the fact that they would allow and encourage an election.  And if their workers choose unions, that‘s fine.  That‘s what the level playing field proposals are about. 

They‘re not anti-union.  They do believe in a secret ballot and in private collective bargaining.  That doesn‘t make them anti-union, it makes them pro-workers. 

SCHULTZ:  Lanny, good to see you.

DAVIS:  Thank you, Ed.

SCHULTZ:  Good to have you on the program tonight.  We‘ll do it again. 

Thanks so much.

DAVIS:  Thanks for having me, Ed.  Thank you.

SCHULTZ:  You bet.

Former White House counsel Lanny Davis with us here on 1600 tonight. 

Can you believe it?  Several senior positions in the Treasury Department are still open.  Secretary Tim Geithner is doing all of this on his own during an economic crisis.  What gives? 

I‘ll give you my take, next on 1600. 

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to 1600.  I‘m Ed Schultz, in for David Shuster tonight. 

You know, we‘re all suffering from AIG burnout.  I mean, it‘s been all over the news.  But there is one aspect of this story that I just find hard to believe. 

Treasury Secretary Tim Geithner can‘t find enough qualified people to work in his department?  What?  Did I hear that? 

This is Tom Brokaw from “Meet the Press” yesterday. 

(BEGIN VIDEO CLIP)

TOM BROKAW, “MEET THE PRESS”:  Tim Geithner needs help.  They‘ve not been able to fill a lot of senior positions at the Treasury Department.  He‘s working the phone a lot during the week, talking to people who have sterling reputations in New York. 

They don‘t want to come to Washington in what they see as a toxic environment for Wall Street people.  You know, they‘ve made a lot of money, they‘ve got a few houses.  They‘re going to see that displayed on screens.  They‘re going to have people they never heard of before examining their every motive.

So a lot of them are saying, no thanks, I‘m going to stay at home at the moment.  So he needs help.  And again, he may need the president‘s help in getting the right people down here. 

(END VIDEO CLIP)

SCHULTZ:  You mean to tell me no one in this country with financial experience and a high level of achievement is willing to step up and help the country at a crucial time?  Nobody wants the scrutiny?  Everybody in the financial sector in this country is just so selfish and we can‘t pay them enough to take the job? 

Folks, let‘s do a little check here. 

You know, we‘re in a financial crisis right now.  Now, if the president were to call you up and say, look, you know, I need some help, would you help him?  Would you accept the challenge if the president were to ask you? 

I mean, there‘s got to be some Americans out there that love this country enough that will just step up to the plate.  Now, how about volunteers?  Now, when this country needs volunteers in the military, when we‘ve got to have personnel, we have a thing called a draft. 

Mr. Geithner, will you call me?  I mean, I can find some people.  I know some people in the financial sector who would step up to the plate for this country. 

Stop asking the people on Wall Street to fix Wall Street.  We need some real new blood.  Whether it be from Washington or New York, there‘s got to be new people in the Treasury Department that are going to work with you. 

You can‘t find anybody?  You mean to tell me that you can‘t find anybody who wants the job? 

Let‘s call the Chinese.  Maybe they want the job. 

You know what I find so ironic about all of this?  I have the utmost respect for Mr. Tom Brokaw, who has worked in this town for 40 years.  A true journalist. 

This is a man who sees it.  This is a man who did the book on the greatest generation, and then followed up with a response from the greatest generation.  He talked about an age of sacrifice. 

You mean we have nobody in this country?  There‘s no retired admiral that worked over at the Pentagon?  There‘s no retired general that worked over at the Pentagon that has the discipline and the character to step up and take a job for the country to help Mr. Geithner out?  Is it really all about the money? 

We‘re not the greatest generation if this is the way it is.  This country needs some character right now in the front office. 

Next up, the economy sure has seen some better days.  And maybe President Obama has, too.  During his “60 Minute” interview with Steve Kroft, he asked the commander in chief why is he chuckling so much?  What‘s he laughing about when the economy is tanking? 

Is the president overconfident?  Analysis ahead on 1600.

(COMMERCIAL BREAK)  

(BEGIN VIDEO CLIP)

OBAMA:  This morning, Secretary Geithner announced the latest element in this multi-pronged approach.  And that is a mechanism that he, in close consultation with the Federal Reserve and FDIC, has initiated in order to allow banks to take some of their bad assets off their books.  We believe that this is one more element that is going to be absolutely critical in getting credit flowing again. 

(END VIDEO CLIP)

SCHULTZ:  Welcome back to 1600.  That was President Obama today outlining what he says is going to get our economy back on track.  You know what, he might be right.  Look at the markets.  Check this out, up 497 points today.  We got to be all about it.  It‘s the biggest one-day gain since October.  You‘ve got to love it. 

Joining us tonight, our political panel, Ryan Lizza, “New Yorker‘s” Washington correspondent, A.B. Stoddard, associate editor for “The Hill,” and John Feehery, Republican strategist.  John, I want to start with you tonight.  what a great day at the office.  This must be the plan, huh?  Are you behind it now? 

JOHN FEEHERY, REPUBLICAN STRATEGIST:  Well, you know, it‘s interesting because I think a lot of Americans are still kind of skeptical about this plan, especially in the context of AIG.  Wall Street loves it because basically it‘s a bailout for a lot of the Wall Street traders.  We‘ll see how this works out.  I think Congress, if you look at some members of Congress, they‘re going to be a little bit skeptical, because people are still not sure where this money is going and where it‘s coming from. 

I remember, I worked in the Congress during the S&L crisis.  It took a lot of political doing to get that fixed through.  It‘s going to take a lot of doing to get this fixed through. 

SCHULTZ:  Lots of news today, not only the market up.  A.B. Stoddard, what about this news the AIG executives are giving the money back?  Nine out of the top 10, and 15 out of the top 20? 

A.B. STODDARD, “THE HILL”:  I think it sound like a good move.  I don‘t know that it‘s going to change everybody‘s mind about the AIG brand.  I think the fact that they made plans for a bonus program and then moved to keep those bonuses in the first place, the damage is pretty much done.  Obviously, people will be satisfied that the Obama administration has prevailed on our federally-owned AIG to give them money back.  And it should smooth some feelings. 

SCHULTZ:  The president last night on “60 Minutes” had a pretty interesting comment, Wall Street versus Main Street.  This was his take on that subject. 

(BEGIN VIDEO CLIP)

OBAMA:  If you go to North Dakota or you go to Iowa or you go to Arkansas, where folks would be thrilled to be making 75,000 dollars a year, without a bonus, then I think they‘d get a sense of why people are frustrated.  I don‘t think it‘s me being anti-Wall Street just to point out that the best and the brightest didn‘t do too well on that front and that, you know, maybe the incentive structures that have been set up have not produced the kinds of long-term growth that I think everybody‘s looking for. 

(END VIDEO CLIP)

SCHULTZ:  Ryan, is this just what the president was looking for?  I mean, making a sound bite like that, recognizing the middle class and some states in the middle of the country, getting the AIG executives to take a step forward, which he asked for last week.  This has got to be good news for him. 

RYAN LIZZA, “THE NEW YORKER”:  It‘s good news.  He‘s walking a tight

rope on this issue, because there‘s a debate in the administration between

folks who want to go after these guys, want a sort of populist message to -

go after the guys that are getting the AIG bailout money.  There are folks like Geithner and folks at the Treasury Department who are saying, wait a second.  We need these firms.  We need Wall Street to participate in these programs. 

One reason this plan today might fail is because folks on Wall Street are scared to do business with the government.  The whole thing is supposed to be a joint partnership between the Feds and Wall Street.  Well, these guys at these hedge funds may say, well, what if you‘re going to come—you are saying I can make money by buying these toxic assets.  What if six months from now, my firm does something wrong or I get penalized, and up there on the Hill, they decide to take 90 percent of the profits? 

That‘s the sort of tight rope he has to walk in figuring this out. 

SCHULTZ:  A.B., if this doesn‘t work, what‘s the answer?  Could this really scar his first term? 

STODDARD:  Absolutely, because he‘s basically said we had three—

Geithner said today, we have three bad choices.  One, do nothing and endure a depression.  Two, enter into a public/private partnership, where we subsidize the private purchase of these bad assets.  Three, we just bail it out and government owns everything. 

That will be the plan C.  If this doesn‘t work, they will have to come on their skin and knees to Congress to ask for more bailout money, which they won‘t get. 

SCHULTZ:  I was taken somewhat by the president‘s demeanor last night in his exchange on a very important subject.  Here‘s what I‘m talking about.  Here it is. 

(BEGIN VIDEO CLIP)

OBAMA:  Folks in Congress as well as the American people would love to fix the banks without spending any money.  The only thing less popular than putting money in the banks is putting money in the auto industry. 

STEVE KROFT, “60 MINUTES”:  You‘re sitting here and you are laughing at these problems.  Are people going to look at this and say, they‘re just making jokes—how do you deal with it?  Explain the mood in your laughter.  Are you punch drunk?

OBAMA:  No, no, there‘s got to be a little gallows humor to get you through the day. 

(END VIDEO CLIP)

SCHULTZ:  John, what do you make of the president‘s demeanor in such a crucial situation right now, to get the economy going?  Is he a little over-confident?  What do you think? 

FEEHERY:  In one sense, I think it‘s good that he‘s got this confidence that things are going to get better and that he can laugh about it.  In the other sense, I‘m not sure if he‘s over-confident.  I think he‘s over-exposed.  He‘s all over the place.  He‘s picking out his ESPN pool.  He‘s on Jay Leno.  He‘s on “60 Minutes.”  All kinds of different messages, all kinds of different things. 

People want seriousness from the president.  They want to know that he‘s working hard for them, and they want to know that he‘s serious about fixing these problems.  He doesn‘t want him to pick out his ESPN pool and then go on Jay Leno and then kind of joke with Steve Kroft. 

I think people like the president.  They like his smile.  They think he‘s a good guy.  But they want him to be serious and they want him to get to work. 

SCHULTZ:  Ryan, what‘s his next hurdle? 

LIZZA:  His next hurdle is his budget this week.  Convincing Kent Conrad and Sprat over on the house Side to pass his budget relatively intact. 

SCHULTZ:  Conrad‘s going to cut a lot of it. 

LIZZA:  Conrad‘s going to cut a lot.  Look, they picked a fight with Conrad off the bat because they went after farm subsidies.  Anyone from a farm state is not going to like the budget, right off the bat. 

SCHULTZ:  But the president told me last week he thinks that the Democratic caucus is going to be with him. 

LIZZA:  The House is going to be fine, I think.  It‘s all going to be in the Senate.  And just like the stimulus bill, it‘s going to come down probably to a few moderate senators, unless they go for what might be the nuclear option. 

SCHULTZ:  A.B., is it going to be party lines on this budget? 

STODDARD:  It‘s absolutely going to be party lines.  But the budget is not going to resemble what Obama has sent down there.  I‘m sorry.  There are 65 very nervous Democrats, 50 in the House and 50 in the Senate, that are—he can run around with a campaign, Unity ‘09, Organizing for America, and spend millions with his interest group allies on campaigning to get people in Ohio, who just lost their job, to call their Congressman.  But they‘re right down the street.  There‘s 50 in the Senate, and 50 on the House side, and they will not back these deficit and growth projections.  They say they‘re not realistic and not sustainable.  They‘re going to change the budget. He‘s not going to like it. 

SCHULTZ:  But the country wants health care.  We‘ll continue the discussion.  Stay with us.  Our panel will remain. 

Up next, Obama versus Cheney.  The president goes on the offensive responding to Dick Cheney‘s charge that the president‘s policies are making the country less safe.  This is 1600.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  Vice President Cheney has been at the head of a movement whose notion is somehow that we can‘t reconcile our core values, our Constitution, our belief that we don‘t torture, with our national security interests. 

After all these years, how many convictions actually came out of Guantanamo? 

(END VIDEO CLIP)

SCHULTZ:  Welcome back to 1600 PENNSYLVANIA AVENUE.  The president taking a swipe at Dick Cheney right there in that interview.  He hit him pretty hard last night in his interview with “60 Minutes.”  Obama I think resetting the table on the issue: is the American justice system up to the task of dealing with terrorists?  Let‘s welcome back our panel, Ryan Lizza, A.B. Stoddard, and John Feehery. 

John, we‘ll start with you on this one.  We clearly have two different philosophies on how to fight terrorism in this country.  Do you think the majority of American people are going to go with the president on this or does Cheney win? 

FEEHERY:  That‘s a great question, Ed.  I don‘t think we know until we see the future.  We don‘t know if another terrorist is going to strike or not.  I think the fact of the matter is that I think Barack Obama, President Obama actually emboldened Dick Cheney, lifted him up a little bit.  Now this sense that, if Dick Cheney is right, Barack Obama said he‘s wrong. 

I think all the percentage would be with President Obama if he did not even acknowledge what Dick Cheney said.  Now Dick Cheney is part of the debate.  It rises it up.  I don‘t think it was a smart strategy on President Obama‘s perspective. 

We all know what the debate is.  I think right now, President Obama has got to focus on President Obama and not on Dick Cheney. 

SCHULTZ:  Well, I can tell you liberal Democrats in this country want him to focus on getting out of Iraq, because that would save a lot of money.  The president addressed the Iraq/Afghanistan situation last night. 

(BEGIN VIDEO CLIP)

OBAMA:  Sometimes my team talks about the fact if you had said a year ago that the least of my problems would be Iraq, which is still a pretty serious problem, I don‘t think anybody would have believed it.

KROFT:  What‘s the hardest decision you‘ve had to make in the last 60 days? 

OBAMA:  Well, I would say that the decision to send more troops into Afghanistan.  When I make a decision to send 17,000 young Americans to Afghanistan, you can understand that intellectually.  But understanding what that means for those families, for those young people—when you end up sitting at your desk signing a condolence letter to one of the family members of a fallen hero, you‘re reminded each and every day, at every moment, that the decisions you make count. 

(END VIDEO CLIP)

SCHULTZ:  Ryan, do you think the conservatives are hitting the president hard on the economy because he has been aggressive and he‘s called in a lot of air strikes and he has sent 17,000 troops to Afghanistan?  Whatever happened to cut and run? 

LIZZA:  That‘s true.  You know, you have a lot of conservative columnists making that point, though.  He‘s been fine on national security.  He‘s been responsible, more responsible than they expected on the Iraq war.  But domestically, we‘re headed toward, you know, socialism and western Europe. 

Look, you know, I noticed John, Republican strategist, didn‘t have much of a defense there of Dick Cheney.  I think a lot of Republicans do not like the idea that Dick Cheney is out there on the shows, that Dick Cheney is the face of the party right now, because there is a leadership vacuum in the Republican party. 

It‘s probably a fight like the Rush Limbaugh fight.  The White House wants to have a fight with people like Dick Cheney, whose popularity is in the single digits. 

SCHULTZ:  A.B., with Dick Cheney out there, he has nothing to lose.  The party has nothing to lose.  I mean, at least it keeps the issues visible and he can be the attack dog. 

STODDARD:  For Cheney? 

SCHULTZ:  Yes. 

STODDARD:  Also, I knew Obama wouldn‘t resist the temptation to—

Dick Cheney is the easiest target in the country.  I mean, of course he was going to go back.  And you could see Steve Kroft saying, I‘m going to ask you a question about Dick Cheney—the vice president, and Obama practically leaping out of his chair. 

Part of the left is upset with Obama right now.  Frankly, his administration has sided with the previous administration on several fronts, on government secrets, wiretapping, renditions.  The left is furious.  Any moment he can take a chance to beat up on Dick Cheney and say he‘s a head of a movement is a good moment.  You can see the ticker going up for him.  You‘re not going to find a Republican sticking up for Dick Cheney anymore. 

FEEHERY:  Can I jump in real quick? 

SCHULTZ:  Go ahead, John. 

FEEHERY:  There‘s no percentage in Barack Obama attacking Dick Cheney.  If Dick Cheney happens to be right, everybody will remember that Dick Cheney was right because of this fight.  If Dick Cheney is wrong, no one will remember it, because they will focus on something else.

I will defend Dick Cheney, if that‘s what you want me to do.  Right now, there‘s no percentage, in my mind, in Barack Obama attacking Dick Cheney.  Does him no good for the future. 

SCHULTZ:  John, I don‘t think he was attacking him last night.  He was making it very clear to the American people that he wants to make the distinction that the way the last administration was fighting terrorism and the example here at Gitmo, and where we‘re going to go now legally fighting terrorism is going to be totally different.  Does the president, Ryan, win on this? 

LIZZA:  That‘s right.  It‘s not a political attack.  I don‘t think Obama was making a, you know, political judgment here about whether to attack or not attack Cheney.  Cheney started a big argument with the president of the United States on a fundamental—

SCHULTZ:  And the president responded. 

LIZZA:  He responded in a substantive way.  Frankly, I think it‘s unprecedented the way some of the former Bush administration officials have just absolutely been cut crucifying this administration.  You notice, the former president, President George Bush has been silent and said he owes Obama a respectful silence. 

SCHULTZ:  He wants to sell a book too. 

LIZZA:  He‘s done what presidents traditionally have done, which is not go out and attack the person that comes after them.  Cheney is not obeying those rules. 

SCHULTZ:  Ryan Lizza, A.B. Stoddard, John Feehery, thanks so much for joining us tonight. 

Up next, an update on my March Madness picks. 

Plus, pay 2,000 bucks to get a car?  Nope, it‘s not used.  Folks, it‘s brand new.  Could it be the hot new trend in this terrible economy?  Details ahead on 1600.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to 1600.  Here are a few things I think you ought to know.  Several weeks ago, Sean Hannity said on his radio show that I was no longer on the air.  Well, Friday night, Hannity found my work so good that he actually used it.  The interview I had with President Obama played on Fox.  What a great way to correct yourself, Sean.  He played the president‘s sound bite about Coach K and Duke and how Duke didn‘t have the inside game to win the title. 

Sean, I promise I won‘t use any of your material.  Speaking of Duke, unfortunately, the GOP fund-raiser still has his team in the tournament.  So my pick, Memphis, is also in there.  The hot-shooting tigers ripped Maryland.  Of course, they‘re from the sacred ground of the ACC.  Of course, next up, the Tigers will beat Missouri.  Expect another double-digit win for Memphis. 

I thought you should know India‘s Tata Motors has launched what it says is the world‘s cheapest car, the Nano.  It cost about 100,000 Rupees.  That‘s about two grand in America.  Now, the Nano is about ten feet long, has one windshield wiper, a rear engine, a small trunk.  There are no air bags or anti-lock brakes.  A radio, an air-conditioning, and power steering, well folks, that‘s all going cost you extra. 

The whole idea behind the Nano is to target customers who currently use scooters in India.  Those cost about 900 dollars. 

On a serious note tonight, the Red River of the north is threatening again.  Spring flooding is happening right now.  A revised forecast late Sunday has the flood going to 41 feet.  That, folks, will destroy the city of Fargo.  We fought the flood back in 1997.  This forecast is two feet higher.  They are calling for emergency volunteers now.  It‘s a race against the clock to save the city.  I think it‘s time for another movie called Fargo.

But Don Haney, news correspondent, 790 KFGO a.m. radio in Fargo.  Don, this is a pretty tight time right now.  What is the mood of the city right now? 

DON HANEY, KFGO RADIO IN FARGO:  Ed, there is an era of uncertainty in Fargo and the surrounding areas.  Everybody is wondering what—this weather system is bringing in a lot of rain, could be a couple more inches of rain, is going to do to the flood.  Based on the forecast the National Weather Service has put out with this potential record crest here, people are nervous. 

I was at a flood briefing today.  One of the service providers that‘s doing some of the volunteer efforts, feeding people, stood up and told the group that fear is starting to set in.  That‘s something that you can almost feel in some places when you go into some of these flood zones.  There are scattered reports in our outlying areas here that some of the homes are already being lost from over-land flooding. 

Fargo is buttoning up its flood protection here.  There was a meeting last night in one of the municipalities in our immediate area.  One of the government officials stood up.  It was a packed house.  People were there to find out exactly what they were going to do to stave off the latest crest.  He asked for a show of hands, who‘s scared here?  Everybody in the meeting raised their hands. 

SCHULTZ:  Don, god bless you.  Keep up the fight.  Fargo trying to save the city.  They need volunteers. 

Thanks so much, Don.

Let‘s welcome back tonight‘s panel, Ryan Lizza, A.B. Stoddard, John Feehery.  It has just been announced—I gave a commentary earlier in this program tonight about how Americans need to step up to the Treasury Department.  There has got to be some great Americans out there, right?  Well, dog gone it, they just announced to the Obama administration that three out of the top four officials that they‘ve got people to interview for the job.  A.B., why has this been hard for Geithner to get people? 

STODDARD:  Because Geithner didn‘t pay some taxes, and there‘s other people who had some problems getting through the vetting process because of their prior tax records.  And a lot of people walking away from the vetting process, saying it is just too much for me.  Really this has had a very, very negative practical effect on Tim Geithner‘s ability to do his job.  Please remember that when he‘s running around trying to testify on Tuesday about the AIG bonuses tomorrow, and coming up with the plan.  The man is over there with just a few people and it‘s been a tremendous burden. 

LIZZA:  What happened in this administration is they did the opposite of the Clinton administration.  They concentrated on the White House, built a very strong White House with a lot of policy counsels.  And they not—they didn‘t ignore it, but they paid less attention to the cabinet and the sub cabinet.  They have a lot of folks in the West Wing, more so than the Bush administration had, more than the Clintonites had.  But they paid less attention to their cabinet.  And then they got hit by the vetting crises.  They‘ve tightened their vetting process and that‘s keeping people away. 

SCHULTZ:  John, if your phone rings and it‘s President Obama, you‘re going to step up, aren‘t you?  I know we can count on you on this, especially the Treasury Department. 

FEEHERY:  If President Obama wants me to run the Treasury Department, I‘ll serve. 

SCHULTZ:  John, good to have you with us tonight.  Also A.B. and Ryan, thanks for joining us on 1600.  That‘s the view from 1600 PENNSYLVANIA AVENUE tonight.  I‘m Ed Schultz, in for David Shuster.  He‘ll be back tomorrow night. 

Remember, get the latest political news and a sneak peek at what‘s coming up on the show sent to your inbox with the 1600 Daily Briefing.   Sign up at Shuster.com, MSNBC.com or text Penn to 622639 to have alerts sent to your phone.  Those are so cool.  You know what‘s happening. 

“HARDBALL” and Chris Matthews, the man who tells it like it is, is up next, right here on your favorite news channel, MSNBC.

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