updated 3/25/2009 9:43:14 AM ET 2009-03-25T13:43:14

Guest: Scott Garrett, John Harwood, Ken Gardner, Sam Waterston, Chris Kofinis, Brad Blakeman High: President Obama gets ready to hold a prime-time news conference.

Spec: Congress; Hearings; Timothy Geithner; Barack Obama; AIG; Goldman Sachs; Newt Gingrich

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HOST (voice-over): Tonight, President Obama promises new economic oversight.

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: We are already hard at work in putting forward a detailed proposal.

SHUSTER: But his treasury secretary gets grilled over those AIG bonuses.

REP. BRAD SHERMAN (D), CALIFORNIA: Are you going to give us the chart or are you going to hide the ball?

TIMOTHY GEITHNER, TREASURY SECRETARY: I‘m not going to hide the ball.

SHERMAN: Are you going to give us the chart?

GEITHNER: I will reflect on the suggestion you made and see if that‘s a reasonable...

SHERMAN: In other words, you won‘t commit to telling the American people...

SHUSTER: Hammered on a host of issues, Geithner lashes out.

GEITHNER: We were spending every minute, every molecule of oxygen, working to contain this fire.

SHUSTER: Later, the values war. Newt Gingrich calls the president‘s policies anti-Catholic. Gingrich lands in “Hypocrisy Watch.”

Plus, the outrageous bungling of Ground Zero in New York just got even worse.

And things I thought you should know.

SAM WATERSTON, ACTOR, “LAW & ORDER”: Arrest them. Then if he gives you what you need, let them go.

SHUSTER: We will talk politics with Law & Order‘s Sam Waterston, a musical tribute to economist Paul Krugman, and Twitter time.

All tonight on 1600 PENNSYLVANIA AVENUE.

OBAMA: Hello, everybody. It is good to see you.

(END VIDEOTAPE)

SHUSTER: Grilling Tim Geithner. Day 64 of the Obama administration.

Welcome to the show, everyone. I‘m David Shuster.

President Obama‘s getting ready to face reporters at a second prime-time news conference tonight at 8:00 p.m. Eastern, but he got a preview of some of the questions he could face on the economy today on Capitol Hill. His treasury secretary, along with Federal Reserve Chairman Ben Bernanke, faced tough questions about another possible bailout, the plan to repay taxpayers and, of course, who knew what, when about those AIG bonuses.

(BEGIN VIDEO CLIP)

GEITHNER: I should have had it, but I did not have detailed knowledge of these particularly legally contracted retention bonuses for AIG FP until, as I said, I was briefed by my staff on March 10th.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: I was not informed about the specific payments to AIG FP.

GEITHNER: The question is, is whether we had better options than the ones we were confronted with on March 10th. And I do not believe we did.

UNIDENTIFIED MALE: Have you understood yet that the American people‘s reaction last week, to a large extent, was due to the fact that they feel that they‘re boxed out of knowing what‘s really going on in this economic crisis and they‘re not well informed?

GEITHNER: I think that the American people are deeply frustrated and concerned and angry and skeptical, frankly, that they understand what is happening and whether taxpayers‘ money is being used wisely to deal with this.

I completely understand. We‘re going to need to ask them—we will ask for broader authority to deal with future AIGs.

To solve this crisis adequately, we may need to come back to the Congress and ask for additional resources.

UNIDENTIFIED MALE: You (ph) estimated the total exposure to the taxpayer was $2.875 trillion. And do you expect—can we expect that the taxpayers will be fully repaid?

GEITHNER: Nobody in my position could stand before you and say there is no risk of loss to the taxpayer here. But we‘re going to do our best to minimize that risk of loss.

UNIDENTIFIED MALE: There is a clear and present danger here that, just like we‘re finding that there are many Madoffs, there are many AIGs out there.

GEITHNER: The reform effort we‘re going to have to work with the Congress on is going to have to address the moral hazard created by these extraordinary interventions. You‘re absolutely right to be worried about it. And we need to dial back this assistance when we get through the crisis, and we have to put in place much stronger constraints on future risk-taking.

SHERMAN: We are doing a kabuki theater in three acts. The first act, Washington tells the American people, we understand your anger at Wall Street. In the second act, we nit-pick to death any proposal that actually adversely effects Wall Street. And then in the third act, we bestow another $1 trillion on Wall Street under extremely favorable terms.

UNIDENTIFIED MALE: Which is the $64 million question, or I guess maybe I should say the $64 trillion question, is what‘s the backup plan? I mean, if everything fails, what do we do? Where do we go from here, Mr. Geithner?

GEITHNER: Congressman, this plan will work. This plan, because of the authority provided by the Congress, not just to the Treasury, but the Fed, gives us broad ability to do what you need to get through a financial crisis like this. It just requires will. It‘s not about ability, and we just need to keep at it.

(END VIDEO CLIP)

SHUSTER: For more now, let‘s bring in a key player at today‘s hearing, Congressman Scott Garrett, a Republican from New Jersey, member of the Financial Services Committee.

And Congressman, what did you make of that answer from Tim Geithner that it‘s about will, not ability?

REP. SCOTT GARRETT ®, NEW JERSEY: Well, as I was listening to that answer for a second time, what I‘m thinking about is we‘ve heard the story before under the prior secretary of Treasury, where he said he had a plan, it is the only plan, and that plan will work. And that, of course, was the basic one where the government would be unilaterally going out there and buying up toxic assets.

Now we have a new treasury secretary who says he has a plan. And in either case, I guess he‘s suggesting that it‘s something to do with will that has to get it done. No. I think it really has to get down to what‘s in the weeds of the plan and whether the plans are actually good ideas from day one.

SHUSTER: There‘s been a lot of criticism recently about Secretary Geithner, a lot of people think that he was not confident enough, that he had sort of a deer in the headlights look. He certainly seemed much more animated, confident today.

Has your perception of him changed? Do you think that he gets it?

GARRETT: The question—it‘s hard to tell whether anybody gets it. I mean, President Obama said here in the Capitol about a month ago that he got it, but you would sure sense that maybe the president doesn‘t get it when this all came—occurred during his watch. And the questions that were asked of this committee, who knew what, when? The American public is asking whether the president knew certain things at a certain time.

Whether the treasury secretary gets it, I think he performs very well under pressure. I mean, he was before my committee in budget about a week or so ago. He‘s very articulate, he has answers. They may be not always responsive answers, but he‘s always doing a good job of answering questions.

SHUSTER: Obviously the trigger for a lot of this were these AIG bonuses. The House passed a measure that would tax back some executive compensation at a rate of 90 percent.

You said you wanted clarify from Secretary Geithner on this proposal.

Did you get it? What‘ their position, as far as you know?

GARRETT: Well, we‘re getting probably more clarity than we want. You know, just before I came on the program, I was on the phone talking with some folks up in New York and Wall Street and what have you, and the message is clear there. That message is that Washington, Congress, the House, especially, has sent a message saying, it doesn‘t matter what sort of plan you‘re involved in. If we don‘t like the terms of the reimbursement, bonuses, and what have you, retention bonuses, we may come in and take it back from you.

So it‘s almost regardless now what secretary comes out with. And with regard if they‘re going to say the government‘s coming in here, who wants to be a partner with the government anymore when Congress passes these bills of attainder, if you will, saying we may come back and reach back in and take some of your bonuses back? That‘s one of the biggest hurdles going forward, I think.

SHUSTER: Well, another hurdle, though, is that the U.S. Senate is not going to act on this in a couple of weeks. And it‘s not clear if the Obama administration is going to support it.

What do you make of it all?

GARRETT: Well, it goes back to the saying I‘ve been saying for months now—what are the markets looking for? They‘re looking for confidence and consistency.

We have not gotten that out of this administration for the three months that they‘ve been in. They‘ve been coming out with plans or saying they‘re going to come out with plans. And they come out with plans and there‘s no details to them. And now, as you point out, it‘s going to be weeks before it comes out.

We‘re still looking for that consistency. Maybe we‘ll get it this afternoon when the president speaks, but I don‘t think so.

And that‘s really—it‘s not so much will, it‘s a confidence from the administration that they‘re going to give us one plan, that that‘s what we‘re going to work with and run through. We just haven‘t seen it.

SHUSTER: Well, Congressman, I can guarantee that the president is going to be asked pretty specifically tonight whether he supports what the House did or not. But in any case, Congressman Scott Garrett, Republican from New Jersey, thanks so much for coming on. We appreciate it.

GARRETT: Appreciate the chance. Thanks so much.

SHUSTER: You‘re welcome.

With so much attention on the AIG bailout and the bonuses for AIG executives, today the Obama White House tried to put the focus on a new plan they are rolling out to prevent future AIG-like debacles. The plan involves giving the Treasury Department new authority to step in and manage insurance giants facing a crisis, as opposed to just pouring in bailout money.

(BEGIN VIDEO CLIP)

OBAMA: We are already hard at work in putting forward a detailed proposal. We will work in consultation with members of Congress. That will be just one phase of a broader regulatory framework that we‘re going to have to put in place to prevent these kinds of cries from happening again.

(END VIDEO CLIP)

SHUSTER: For more, let‘s bring in NBC‘s Savannah Guthrie. She joins us live from 1600.

And Savannah, obviously everybody would like to prevent these AIGs from happening again, and happening before they get worse. But Republicans are now calling the White House plan a power grab.

What‘s the White House reaction?

SAVANNAH GUTHRIE, NBC NEWS WHITE HOUSE CORRESPONDENT: Well, the White House would say this is a power that was badly needed in the case of AIG, and they want to prevent this from happening again. They point out that, in the cases of banks, the FDIC would have the power to go in a situation like the one AIG found itself in and to close up the bank, and get rid of its assets, and do it in an orderly way, as opposed to these bailouts.

And so they say, look, there are a lot of institutions that are going around these days acting like banks. And yet, our financial regulations have not caught up with that. And so they don‘t look at this as a power grab. They look at this as a needed way to really update the regulations so that the situation that‘s enraged so many people at AIG won‘t happen in the future.

SHUSTER: And Savannah, speaking of that rage, the congressman just said that the only clarity that he‘s getting is from his constituents, who hate these executive bonuses and want the government to essentially claw them back. The House last week did pass a measure to tax at 90 percent some types of executive bonuses at firms getting bailout money. Again, it‘s an issue that will likely, I would say, almost certainly come up tonight.

What exactly is the White House position on this?

GUTHRIE: I think you‘d call it a wait-and-see position. I think early on, it seemed like the White House was ready to approve of what the House did with this taxing of 90 percent of the bonuses, but over the weekend they walked that back a bit.

And frankly, I think they have some questions about whether such a provision would be constitutional. They want to see what comes out of the Senate. So they don‘t really want to weigh in directly on whether or not they agree with what the House did because they say that‘s just too early. Why should they make a call on that when there‘s going to be something debated in the Senate?

What comes out will then go to conference committee, and they want to judge what ultimately comes to the president‘s desk. But there‘s no question that the president has made it clear he may not support what the House did. He may feel like there‘s constitutional problems and maybe some practical problems about using the tax code in a punitive way.

SHUSTER: NBC News White House Correspondent Savannah Guthrie.

Savannah, great reporting, as always. And thanks for joining us. We appreciate it.

GUTHRIE: You bet.

SHUSTER: Up next, investment bank Goldman Sachs brags that it is weathering this economic crisis better than others, but it‘s now clear Goldman Sachs received bailout money given to AIG. And there‘s a lot to tell you about Goldman‘s influence on government officials who made the AIG bailout decision.

At the half-hour, we will bring you the latest outrage over Ground Zero New York. 9/11 families and most taxpayers hate the current Freedom Tower plan, but government officials are thinking about pouring in another $4 billion of taxpayer money to keep the plan going. That‘s at the half-hour.

Later, a musical tribute to Nobel Prize-winning economist Paul Krugman.

And 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.

(COMMERCIAL BREAK)

SHUSTER: Welcome back to 1600.

A growing number of banks have been talking about returning their government bailout money. And today the attention focused on the venerable investment bank Goldman Sachs.

“The New York Times” reported Goldman is trying to find a way to pay back its $10 billion in TARP money as soon as next month. Goldman‘s urgency, according to The Times, was prompted by the uproar over the AIG bonuses and the fears of a spotlight on Goldman‘s executive compensation.

Furthermore, the bailout to AIG, itself, was controversial, in part because AIG then used the funds to bail out other institutions, including Goldman Sachs. Goldman was the largest recipient of the AIG bailout funds, getting $13 billion.

Today, Congresswoman Maxine Waters grilled Treasury Secretary Timothy Geithner about Goldman‘s connections to the key players who decided the government should bail out AIG in the first place.

(BEGIN VIDEO CLIP)

REP. MAXINE WATERS (D), CALIFORNIA: And Goldman Sachs is where Mr.

Paulson really spent some time of his career. Is that right?

GEITHNER: Absolutely.

WATERS: Is your chief of staff from Goldman Sachs?

GEITHNER: My chief of staff, who is a...

WATERS: Just tell me. I don‘t have much time.

GEITHNER: But Congresswoman, my chief of staff did spend some time...

WATERS: He worked for Goldman Sachs?

GEITHNER: ... a brief period of time working in the past for Goldman Sachs.

WATERS: OK. That‘s all I want to know.

(END VIDEO CLIP)

SHUSTER: Joining us now from the White House is CNBC‘s Chief Washington Correspondent and political writer for “The New York Times” John Harwood.

And John, here are some of the Goldman TLMs that we heard Congressman Waters referring to. Former Treasury Secretary Hank Paulson and the treasury official in charge of the $700 billion economic rescue, Neel Kashkari, the argument that they endorsed, the AIG bailout, because they knew the money would flow back into Goldman Sachs.

Is that fair?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT: I don‘t buy it. I think it was clear that we had a financial system on the verge of meltdown last fall.

Ben Bernanke made that point very forcefully with members of the Bush administration and with lawmakers. Ben Bernanke wasn‘t doing this at the behest of Goldman Sachs.

Yes, it‘s true that Goldman Sachs, as a major player on Wall Street, has produced a lot of the people who have then gone into government. No question about it. Bob Rubin is another example from the Clinton administration. But I don‘t think that was the motivation for the efforts that the government made.

SHUSTER: How big a credibility problem, though, does it pose for administration figures when there are these Goldman Sachs connections and there‘s the public trying to figure out, OK, why did Goldman Sachs get help from AIG? Why did AIG get help from the federal government? They put this together and they think, oh, these are simply people protecting their friends and former business colleagues.

HARWOOD: You know, it‘s like so much of this bailout, David. The issue of public appearances is sometimes much more difficult to explain than people in Washington believe really exists behind the scenes.

So you saw this backlash over the AIG bonuses. Washington thought it had managed that problem. It became a much bigger problem once it got, in effect, beyond the beltway. And I think that‘s one reason why you see Lloyd Blankfein and Goldman scrambling to give back that money, to try to fight that perception battle and not make the American people begin to vilify Goldman Sachs the way some people at AIG feel like they‘ve been vilified.

SHUSTER: Now, could there be some unintended consequences as far as when banks rush to return the TARP money perhaps sooner than expected? Is there a danger there, that perhaps essentially the credit does not get unfrozen because the banks hoard their money and there‘s essentially a problem because they‘re not getting the help to their balance sheets that maybe they really do need?

HARWOOD: Absolutely. And in fact, the government does not want Goldman to return this money.

Remember, David, last fall, some of these institutions—JPMorgan Chase is an example—were asked very forcefully by the treasury secretary to accept this money when they felt that they didn‘t need it. Why? Because they thought an all-in approach would encourage others who did need the assistance to get into the program without being tarred with the notion that they‘re weak.

Similarly, right now, if Goldman was to give back this money, then questions would arise, well, what about the other firms that have gotten TARP money? Are they not strong enough to give the money back? And that could accelerate the erosion of confidence which has been one of the underlying problems all along.

SHUSTER: Talk about a catch 22.

CNBC‘s John Harwood, also with “The New York Times.”

And John, thanks, as always. We appreciate it.

HARWOOD: You bet.

SHUSTER: Up next, Newt Gingrich says Notre Dame should not have invited President Obama to give the school‘s commencement address this spring. Gingrich argues the president‘s policies are anti-Catholic. Gingrich has been married three times and divorced twice. I wonder how that would go over at Notre Dame?

Wake up the echoes cheering her name. “Hypocrisy Watch” is next.

(COMMERCIAL BREAK)

Welcome back to 1600.

Former Republican House Speaker Newt Gingrich is now criticizing President Obama‘s social policies. Gingrich calls them anti-Catholic.

And that takes us to tonight‘s “Hypocrisy Watch.”

First, the background.

Last Friday, White House spokesman Robert Gibbs announced that President Obama is planning to give three graduation speeches this spring.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: In terms of commencements, on May the 13th, the president will give the commencement address at Arizona State University. On May 17th, the president will give the commencement address at Notre Dame. And on May 22nd, he will speak to graduates of the U.S. and Naval Academy.

(END VIDEO CLIP)

SHUSTER: Early this morning, on his Twitter page, Fox News contributor Newt Gingrich criticized President Obama‘s policies and said Notre Dame had made a mistake. Here‘s the Gingrich Twitter.

“It is sad to see Notre Dame invite President Obama to give the commencement address since his policies are so anti-Catholic values.”

Anti-Catholic values? Well, that‘s interesting, because Newt Gingrich has been divorced twice. There was Jackie, his former high school math teacher. Gingrich divorced her as she was in a hospital recovering from surgery.

Then there was Marianne. Gingrich married her soon after divorcing Jackie.

Years later, while still married to Marianne, Gingrich had an affair with a third woman named Callista. Gingrich divorced Marianne and is now married to Callista, wife number three.

We‘ve learned today that Gingrich is converting to Catholicism in the weeks ahead. Amazing. He isn‘t even Catholic yet and he‘s already telling Notre Dame what to do.

Mr. former Speaker, given the way you‘ve led your life, when you lecture anybody about upholding Catholic values, that‘s hypocrisy, and it‘s wrong.

Up next, in New York City, the government is already spend spending billions of dollars to build the Freedom Tower over the objections of 9/11 families who say the plan is insulting. Now a private developer involved in the project has found that the real estate market hates it as well.

So what‘s the government thinking of doing? Picking up the additional cost and spending even more money to keep it going. An update ahead.

Plus, you may know him as District Attorney Jack McCoy on TV‘s “Law & Order,” but Sam Waterston is taking on another role, pushing for campaign finance reform.

We‘ll talk to him ahead on 1600.

(COMMERCIAL BREAK)

SHUSTER: Welcome back to 1600.

Imagine the most hallowed ground in your city or town, such as a cemetery or war memorial. Now imagine somebody wants to build commercial office towers there, ugly office towers that nearly everybody in your community hates. Now imagine your taxpayer dollars are used to pay for the whole thing.

That is a situation that just emerged at Ground Zero in New York, where eight years after the 9/11 attacks, the rebuilding effort on those hallowed grounds just reached a new level of outrage and insanity.

This weekend, Larry Silverstein, the private developer in charge of three office towers proposed for Ground Zero, said he has been unable to get private tenant commitments and funds. So he‘s asking the government for a bailout, $4 billion, so the project can move forward anyway. That‘s in addition to the billions of dollars the government has already promised to spend for the main office tower, the Freedom Tower, which is now only a few stories above ground.

Many 9/11 families, firefighters and police unions hate the Freedom Tower Plan and everything connected to it. These groups have long argued that the only sure-fire way to rebuild, recover and reclaim America‘s spirit is to rebuild the Twin Towers the terrorists knocked down, and build those twin towers taller, stronger and safer.

In fact, this sophisticated plan you‘re looking at now, with blueprints, models, and a financing plan, is ready to go. Ken Gardner, the building engineer behind the Twin Tower plan the 9/11 families are urging the government to consider joins us now. Ken, first of all, on the Freedom Tower issue, what‘s your reaction to the request that the government now kick in four billion dollars to keep this thing going?

KEN GARDNER, TWIN TOWERS II DESIGNER: Well, I think the problems just continue. You have a situation where the people have categorically rejected this. The market has rejected it. Now the people are being ask to pay for something that they‘ve rejected. I think it‘s really time to actually ask the people what they would like to see there.

SHUSTER: Should there be public hearings? You would think that if the government was going to decide to spend this money, they would open up their plan for public hearings, and let the public weigh in on the idea of spending another four billion dollars. Right?

GARDNER: Absolutely. Absolutely.

SHUSTER: Do you believe that the Twin Towers are the way to reclaim America‘s spirit? President Obama, we are told, sometimes likes to watch this show. Explain it to him and others watching. Also, what about the cost issue? Money has already been spent to build the base of the Freedom Tower.

SHUSTER: Basically, the Twin Towers are the answer because of the healing and the inspiration it would bring to this country in an unparalleled measure. Osama bin Laden, after the attacks, said that we have destroyed those awesome towers symbolic of humanity, western civilization, which America leads. For that reason alone, putting these iconic symbols back into the skyline is of utmost importance.

It‘s not about what‘s there now, about the money that‘s spent, but it‘s about what‘s missing. And what‘s missing is that symbolic icon of American civilization and leadership around the world.

SHUSTER: A lot of New York officials, though, do say the Freedom Tower‘s too far along to stop it, even it requires more taxpayer dollars, and even if the public hates the project. Your thoughts and explain, under your plan, could you build up based on what‘s already been done?

GARDNER: Yes. There‘s a lot of construction mitigation and retrofitting that could be done with the site. It would, indeed, take more to do as they progress. But this undertaking is well worth it. The great Austin Tobin (ph), who built the original World Trade Center, one of the greatest leaders of the Port Authority, used to say dream no small dream, for they have no power to stir the blood.

I say when the blood of Americans is stirred, there‘s nothing that we cannot achieve. We have put a man on the moon. Therefore, let the people speak and it shall come to be. Once again, this great country can move the world.

SHUSTER: Well, Ken, you know my position. My argument is, if the terrorists decided that the buildings were important enough to knock down the towers, simply as a response to them, we ought to build them up stronger, taller and safer. Clearly, there is a way to do it and make it safer, incorporating the existing plan. We‘ve have asked several New York politicians to come on this show and explain their continued support of the Freedom Tower. Some of the key senators and city officials, even the governor have refused.

Ken, we‘ll keep on it. Thank you so much for coming on. We appreciate it.

GARDNER: Thank you, David.

SHUSTER: A key dynamic that is hard to avoid in the controversy over Ground Zero is the influence of money. New York politicians who want to keep the Freedom Tower project going have gotten a lot of money from developers, builders, and assorted other people with a vested financial interest in the specific Freedom Tower plan.

Influence peddling, of course, is not new. Here is Washington, for example, there‘s a harsh spotlight being put on the banks and how their contributions to key politicians have influenced bank bailout policy. In the midst of all of this, a very high-profile actor is saying enough and is adding his voice for calls for campaign finance reform.

You probably know Sam Waterston from NBC‘s “Law & Order,” where he‘s been targeting the bad guys for years.

(BEGIN VIDEO CLIP)

SAM WATERSTON, “LAW & ORDER”: It‘s out of the question. Mattson (ph) didn‘t just steal from drug lords. He stole from middle class citizens, charities. There‘s an orphanage in Staten Island that has to shut down. If we make any kind of deal with Mattson, outraged citizens will tear this building down, brick by brick. Just forget it.

UNIDENTIFIED MALE: And a gangster gets away with two murders?

WATERSTON: Find another way.

(END VIDEO CLIP)

SHUSTER: Joining us now is the actor Sam Waterston. Sam, so good to have you. I want to first—I want to talk about the importance of campaign finance reform in a minute. But first, you spent a lot of time in New York. What‘s your reaction to the latest problems at Ground Zero?

WATERSTON: My feeling is that I hope that the time that it‘s taking to do this is all going to turn out to be a way of getting it done right. And beyond that, I really don‘t know how to choose between the different solutions that are being offered.

SHUSTER: Explain why you believe that campaign finance reform is such an important issue, regardless of whether it‘s New York or Washington or the bail outs? Talk about that.

WATERSTON: Well, I think we‘ve all understood for a very long time—

I certainly have—that the things that I care about that are touched on by politics are hugely affected, either in perception or in fact, by the way people have to raise money in order to run for office.

I was just in Washington, D.C. I met a representative of the freshman class who explained to me that she, before she even was sworn in, was getting her instructions about how much money she needed to raise. And it amounted to about 90,000 dollars a month, 80,000 or 90,000 dollars a month, for the two years before the election campaign, the re-election campaign.

This translates into an awful lot of time that is lost to work, and is also lost to a thing that‘s dear to my heart, which is the building of understanding between representatives across party lines, because they don‘t have any time to talk to each other, much less even to talk to members of their own party, because they have to go and raise money, all the darn time.

SHUSTER: What specifically are you asking Congress to do? What has the reception been for you?

WATERSTON: Well, first of all, I should say that I am—I‘m the guy who‘s pointing. I am not the—I‘m not even the messenger. I‘m pointing at the messenger. I hope people will pay attention to the eight organizations that are backing this bill.

And it‘s a bill. It‘s not an idea. It‘s not pie in the sky. It‘s being introduced this week by important members of the Senate and the House, Senator Durbin in the House (sic) and Senator Larson in the Congress. And these are—and with bipartisan support.

And it will be—it‘s a rare thing for the House and the Senate to introduce a bill together. It‘s a rare thing for it to be backed by the leadership like this. So we‘re talking about a real possibility. And what it would do is it would—for a citizen such as myself, it would remove the question which you were talking about on your segment about AIG, about why Goldman Sachs is getting this and why AIG is getting that, and what—who knew whom, and who was in touch with whom, and whose votes were influenced.

You might think that a senator or a representative had a good idea or a bad idea about resolving these questions. But you wouldn‘t have to wonder whether they were on the take.

SHUSTER: Sam, I know that celebrities often get ridiculed for taking on certain causes. I hope that‘s not the case with you. You‘re a good guy and we really appreciate you coming on the program tonight. Good luck with everything.

WATERSTON: Thank you very much.

SHUSTER: You‘re welcome.

Up next, the president in prime time. Mr. Obama holds his second prime time news conference in less than two hours. The debate is intensifying over his handling of the economy. We‘ll get into that debate with our political analyst next.

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, where in about 75 minutes, President Obama will make a prime time appeal for his economic agenda at his second formal press conference since taking office. Today‘s media blitz started this morning, with an op-ed written by the president, and printed in 30 international papers. From Germany to the Gulf States, and Argentina, to Australia, President Obama urged—argued the urgent need for global economic cooperation.

What should we expect from the president tonight? Here‘s White House Press Secretary Robert Gibbs.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I think what the president will do tonight is update the American people on the steps this administration is taking to get the economy moving again, to create jobs, to put money directly back into their pockets.

(END VIDEO CLIP)

SHUSTER: Meanwhile, Republicans tried desperately today to make the most of the ready cameras at the Capitol, holding five news conferences, and counting, to argue that Obama‘s agenda will empty American pockets.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, MINORITY LEADER: Over the next six years, President Obama will create more debt than his 43 predecessors have in the last 220 years.

SEN. MITCH MCCONNELL ®, MINORITY LEADER: This creates for us a higher deficit than Cuba‘s.

SEN. JUDD GREGG ®, NEW HAMPSHIRE: He‘s firing real bullets this time. And unfortunately those bullets are going to put a lot of holes in the American economy, rather than improve them.

(END VIDEO CLIP)

SHUSTER: Joining us now to tell us what the president needs to do in prime time tonight‘s is Chris Kofinis, Democratic strategist, former communications director for John Edwards, and Brad Blakeman, Republican strategist and former deputy assistant to President Bush.

I want to start with a poll, a CBS poll on President Obama‘s handling of the AIG situation; 41 percent approve, 42 percent disapprove. Chris, is this a problem for the president?

CHRIS KOFINIS, DEMOCRATIC STRATEGIST: I don‘t think it‘s a problem any time soon. The reality is people are, I think, frustrated. They‘re angry about these bonuses. But I think the president coming out and saying we shouldn‘t govern from anger, I think that‘s the right position. I think a lot of us, including myself, are very angry about it. And I think that‘s understandable.

At the same time, you want to take a measured approach to it. I think in terms of what ends up happening next, I think it depends on what comes out of the Senate. But clearly what the president is trying to do is not only respond to that anger, but also channel it, so we‘re focusing on the problems that are really going to change this economy moving forward.

SHUSTER: Brad, isn‘t it the job of the president to stay above the populist anger and not jump into it, but keep in mind the good of the country in the long-term picture?

BRAD BLAKEMAN, REPUBLICAN STRATEGIST: Absolutely. But I think one thing this administration needs to get into their minds is governing, instead of campaigning, and reacting to these things and being suckered into it. His approval ratings still remain high overall. This is a kink in the armor, when you see a poll down at 41 percent with regard to an issue that is burning in America. This could deteriorate quickly if the president doesn‘t get his hands around the budget, which is his next challenge.

SHUSTER: When you say that they are campaigning instead of governing, what do you mean? Give us an example.

BLAKEMAN: Look, in a campaign mode, you‘re constantly reacting. What the White House needs to do is let some of it to go and understand that there are battles to be won up on the hill. There‘s battles to be won with the American people. But it‘s not—you‘re in office for four years. They‘re trying to do too much too soon, and they‘re ruled by the news cycles.

SHUSTER: Here we go. Chris?

KOFINIS: I mean, that‘s ridiculous on multiple fronts. It is. One, communicating your ideas and visions for the country is not campaigning. That‘s governing. I know there‘s a big difference between what the Republicans did when Bush was in office and what President Obama‘s doing.

BLAKEMAN: You guys have a war-room and President Obama—President Obama takes everything personally.

KOFINIS: Please, you guys lived and died by the polls. But let‘s put that aside for a second. Look at what this president is having to deal with. You had eight years of President Bush that basically put this country backwards. Backwards in terms of education, health care, energy independence and the economy.

Now you have President Obama having to deal with all the crises at once. What he‘s going to be doing tonight, also what he‘s going to be focusing on in the coming weeks, in terms of this entire budget debate, is laying out how we move this country forward, how we make this country stronger for the 21st century, especially given the mess, disaster Republicans put us in.

BLAKEMAN: Enough of President Bush. He‘s no longer here.

KOFINIS: Here‘s what‘s funny about this.

BLAKEMAN: Tell me.

KOFINIS: You guys are in power for eight years. President Obama has been in power for less than three months. You would think—we gave you guys eight years to destroy the country. Give us at least eight months to fix it.

BLAKEMAN: You guys were in power for two years while this crisis was festering. Barney Frank was in charge—

KOFINIS: Who was president?

BLAKEMAN: You think we had a dictatorship?

(CROSS TALK)

SHUSTER: Here‘s one of the issues where I think President Obama faces a very difficult challenge—we got into that at the top of the show tonight. That is, the other week, the House passed this effort to sort of claw back, through taxes, the AIG executive bonuses, which would now essentially tax at 90 percent executive compensation a lot of different places that received Tarp money. The White House has not clarified what the president‘s position is on the bill. Do you know what his position is and what should it be?

KOFINIS: Listen, I think in terms of what he‘s going to end up doing, I think it depends on what comes out of the Senate. We saw a very strong measure come out of the House. My guess is you‘re going to see probably a softer measure come out of the Senate. Then whatever ends up being the resolution in the House. My preference is for the—

BLAKEMAN: A hundred percent.

KOFINIS: That would be my preference. My preference would be for these executives to actually do the patriotic thing, you‘ve seen some of them do it, and realize we should give this money back.

BLAKEMAN: They didn‘t do the patriotic thing. They were forced—

(CROSS TALK)

SHUSTER: What‘s the Republican plan for dealing with these bonuses?

BLAKEMAN: We should deal with them. We should do things like Andrew Cuomo did, and have a come to Jesus meeting with these guys and say, look, we can do this nice or we can do it rough. We have contract of law on our side. We also have perhaps criminal law.

I think the president was wrong on Jay Leno. Remember that appearance, where the president said although what these executives did was wrong, it was legal. Not so. The president should have never conceded that point. He should tell the American people, I‘ve instructed the attorney general to look at this both criminally and civilly and put a little fire under them.

They‘re not doing this out of patriotism. They‘re doing it out of fear.

KOFINIS: That may be true. It may be true strong on my terms to say what‘s patriotic. Nonetheless, whether they were forced or not, some of them did give it up. Those who are smart would do the same, because the last thing I think you want is to be basically forced into this in the future. If you‘re going to have situations like this again and again—

BLAKEMAN: You guys face it from the wrong perspective. If you can‘t tax it and spend it and borrow it, you guys aren‘t interested in it.

(CROSS TALK)

SHUSTER: Brad, do the Republicans have a budget, a counter-proposal, while they criticize the Obama budget? Is there a Republican plan yet?

BLAKEMAN: Yes, there is a Republican plan.

SHUSTER: Where is it? You have it. Nobody else does.

(CROSS TALK)

BLAKEMAN: I have part of it. I have part of it. I‘ll give it to you. I‘ll give you a copy of it.

KOFINIS: Does it involve more than a single page?

BLAKEMAN: Multiple pages.

(CROSS TALK)

KOFINIS: This is a perfect example of the hypocrisy in the Republican party. They go up there and they criticize, the wax poetically on the Hill today, about the president and his spending, you know, desires on these different issues. What they don‘t tell you—what they don‘t tell you is they don‘t have a single new idea how to deal with this—

SHUSTER: We‘re going to go down an alley—we don‘t want to go to. We‘re going to talk a little bit more with Brad and Chris. And we‘re also taking Twitter questions coming up. We will ask about Ground Zero, since so many people are fired up about that.

Coming up, what would you ask the president tonight You can tell NBC political director Chuck Todd by logging on to ChuckTodd.Newsvine.com. He may just use your question during the prime time news conference. You can watch President Obama‘s news conference tonight on MSNBC at 8:00 p.m. Eastern. Our live coverage is anchored by “COUNTDOWN” host Keith Olbermann.

After, of course, you can stay tuned for the best prime time lineup in cable news. Keith will be back with a special episode of “COUNTDOWN” at 9:00 p.m. Eastern, followed by “THE RACHEL MADDOW SHOW” at 10:00 and a special “HARDBALL” with my buddy Chris Matthews at 11:00.

Up next here at 1600, what happens after the astronauts in the Shuttle Discovery finished their final space walk? A call from the president, of course.

Plus, your Twitter Time video suggestions, including the best we‘ve ever received.

(COMMERCIAL BREAK)

SHUSTER: Welcome back to 1600. There‘s a lot going on today. Here are a few things I thought you should know. President Obama made an unusual phone call today to outer space. The president talked to astronauts on the International Space Station and the Shuttle Discovery, congratulating the crew on their mission.

(BEGIN VIDEO CLIP)

OBAMA: Well, obviously, we‘re really proud about the extraordinary work that our American astronauts are doing.

You are representative of the dedication and sense of adventure and discovery that we‘re so proud of.

(END VIDEO CLIP)

SHUSTER: The president wasn‘t the only one on the phone with the astronauts. Student from area Washington, D.C. area middle schools and members of Congress also joined in on the outer space conference call.

One of the most popular Earthly pursuits here in America involves trying to determine the outcome of the NCAA basketball tournament. The president faced some pressure last week when he made his selections to ESPN. After the first round last Thursday and Friday, let‘s just say, the president wasn‘t doing so well.

But in the round of 32, Mr. Obama rallied big time. Out after the teams that made it to the sweet 16, President Obama correctly picked 14 of them. The only two teams he missed in the round of 16 were number 12 seed Arizona and four seed Xavier. In their slots, the president had picked Wake Forrest and Florida State. Oops. Mr. Obama is still alive with his national championship pick, North Carolina.

So what‘s Rod Blagojevich been doing since he was ousted as governor of Illinois? It appears he‘s going to be on the radio. Chicago radio station WLSAM says Blagojevich will fill in as a radio talk show host tomorrow. He‘ll take calls from listeners, tell stories and talk with guests. This is only a one-time deal. That‘s because the regular hosts are off this week.

In January, WLSAM offered Blagojevich his own weekend radio show if he resigned as governor. Blagojevich turned that down. Those are just a few things I thought you should know.

And it‘s Twitter time. Let‘s welcome back our political panel, Chris Kofinis and Brad Blakeman. BlakemanB for those who want to Twitter him. We always start with a video. You guys have to score it. One is bad, ten is good. Here‘s a video suggested to us by many of our Twitterers out there. Watch.

(BEGIN VIDEO CLIP)

(SINGING)

(END VIDEO CLIP)

SHUSTER: Chris Kofinis, your view of the Paul Krugman Tribute?

KOFINIS: It‘s pretty interesting. I‘m not sure you want to leave that guy alone with the “New York Times.” Nonetheless, I give it a six, maybe, a five. I‘m being generous?

SHUSTER: Brad?

BLAKEMAN: It‘s the “New York Times.” One.

SHUSTER: Come on, the kid was creative. I give him a nine. That was one of the best videos we have had.

BLAKEMAN: It was terrible.

SHUSTER: You‘re really tough. you‘re negative today, Brad.

KOFINIS: You just are. You‘re a Republican.

SHUSTER: Please. We‘ve gotten a lot of Twitter questions, a lot on Ground Zero and the outrage over Ground Zero. So Brad, Twitter question to you, what do you make of the problems at Ground Zero, the continued effort to build the Freedom Tower, now at whatever cost and also these calls to rebuild the Twin Towers?

BLAKEMAN: It‘s, in my opinion, a lack of leadership. I lost my nephew in the Twin Towers. He was first responder. My voice is no greater than anybody else‘s. But I think there are a lot of families that I have talked to who are outraged at the fact that nothing has been done.

Eight years have past. There‘s still a hole in the ground. When you look back in history, our great accomplishments, the Empire State building was built within two years; our Pentagon was built at a time of—when we were going to war. That was built in 14 months. We can‘t, in this day and age, restore the World Trade Center and have also an appropriate memorial? It‘s absolutely an outrage for the families and for Americans in general to have that hole there.

SHUSTER: Do you think the Twin Towers should be rebuilt?

BLAKEMAN: That‘s hard so say. Everybody has their own opinion. Look, they‘re building the Freedom Tower. What happens is when these things finally get built and open, people come to appreciate what it is. I just want it open. I want an appropriate memorial there, so that all Americans, people from all over the world, can go and not see a hole in the ground.

SHUSTER: Thank you. Chris Kofinis, when a president has a news conference and you‘re a strategist, what do you tell him to try to accomplish?

KOFINIS: I think you stay focused on the message, which is—you go in with the game plan. I think what you‘re going to see the president do today is talk about his budget, his priorities, why they‘re important to the American people, and how we‘re going to go about there. I think emphasize it‘s going to take time. People have to be patient. If we go through this difficult period, we‘re going to become a better and stronger country.

SHUSTER: Chris Kofinis, Democratic strategist, Brad Blakeman, Republican strategist, thank you both, the best panel we ever have. Thank you both for coming on. We appreciate.

That is the view from 1600 PENNSYLVANIA AVENUE tonight. I‘m David Shuster. Remember, get the latest political news and a sneak peek at what‘s coming up on the show sent straight to your inbox with the 1600 Daily Briefing. Sign up at Shuster.MSNBC.com. You can get text alerts; text Penn to 622639. That is the way Chris Kofinis likes to get his alerts.

Brad, of course, is also Twittering at Twitter.com/BlakemanB. I‘m at Shuster1600. The presidential news conference in an hour. “HARDBALL” with Chris Matthews starts right now.

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

END

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