updated 12/29/2004 12:18:49 PM ET 2004-12-29T17:18:49

Guest: Robin Wright, Tom Goldstein, Charles Babington, Katrina Vanden Heuvel, Tony Blankley

PETE WILLIAMS, GUEST HOST:  The leader of the insurgents in Iraq now says they were behind that assassination attempt on Iraq‘s largest majority party leader, an admission coming the day after Osama bin Laden called for a boycott of the coming elections.  Will terrorism throw the elections into turmoil? 

Plus, a look at the new year, a new cabinet, a new Congress.  Will ‘05 bring a vacancy on the U.S. Supreme Court?  I‘m Pete Williams in for Chris Matthews.  Let‘s play HARDBALL.

Good evening.  Chris Matthews will be back next week. 

A day after Osama bin Laden praised Abu Musab al-Zarqawi as the leader of al Qaeda in Iraq, Zarqawi‘s group claimed credit for the attempted assassination of the leading Shiite candidate in Iraq, and insurgents killed 12 Iraqi police officers in execution style killings.  In Saddam Hussein‘s home town of Tikrit, NBC‘s Tom Aspell now has all of this and more in Baghdad.

(BEGIN VIDEOTAPE)

TOM ASPELL, NBC CORRESPONDENT (on camera):  Today up and down the country, violence in Tikrit, the northern edge of the Sunni triangle, Saddam Hussein‘s home town.  Twelve policemen were taken from their station early this morning by gunmen, knelt down in a courtyard and executed.  Five other policemen were killed on attacks on checkpoints around the town.  And in Baquba, a car bomb exploded, killing six people and wounding more than a dozen.  It was the second blast in that town.  People had gathered around the scene of an earlier detonation when a suicide car bomber drove his vehicle into the crowd and detonated his explosives. 

And down here in Baghdad, there was an assassination attempt against the head of the Iraqi National Guard early this morning.  He leaving his house in the south of the capital, heading for his office, when a car, a parked car exploded.  He escaped without injury, but one Iraqi was killed and several other passersby were injured in the blast.  Back to you.

(END VIDEOTAPE)

WILLIAMS:  Tom Aspell in Baghdad, thank you.

Robin Wright is the diplomatic correspondent for “The Washington Post.”  She recently visited the region.  She joins us now.  And Roger Cressey served as the director for transnational threats on the National Security Council.  He‘s now an MSNBC counterterrorism analyst.

Thank you both.  Let me ask you, first of all, what does this latest tape from bin Laden mean?  Roger, starting with you, about al Qaeda?  What does it signal about al Qaeda?  What does it tell us about Iraq? 

ROGER CRESSEY, MSNBC ANALYST:  Well, it‘s two things.  One, Iraq is a central battlefield right now, Pete.  What bin Laden is acknowledging is that Zarqawi and his people have been incredibly successful over the past several months, and bin Laden wants to associate himself with that, because you are killing Americans there, you are undercutting American leadership and prestige, and you‘re throwing a real monkey wrench into the whole concept of an Iraqi democracy.  So all that supports bin Laden‘s broader agenda, and if he has to associate himself with Zarqawi, you know, all the better for him.

WILLIAMS:  But it sounds like you‘re sort of saying, he‘s saying me too. 

CRESSEY:  Oh, absolutely.  I think people shouldn‘t lose sight of the fact that al Qaeda, the core al Qaeda, bin Laden and his immediate leadership, still want to attack the United States inside the United States.  But right now, today, and for the foreseeable future, there‘s a real opportunity for al Qaeda to advance its vision, its view, through the scuttling of the elections in Iraq, and they will do everything they can to associate themselves with that. 

WILLIAMS:  One former intelligence official told us today that there‘s an interesting change in tone here, that right after September 11th, bin Laden was saying, al Qaeda will do this, we‘ll do that.  Now he just is reduced to sort of egging other groups on.  Is that a fair analysis, do you think? 

CRESSEY:  Well, that‘s partly true.  I mean, we have had a lot of success against the old al Qaeda.  They have been seriously attrited.  They do not have their sanctuary.  Much more difficult for them to plan and conduct operations against the United States. 

That said, you know, Iraq is now this wonderful opportunity for them and the jihadists, and they are doing their best to take advantage of that opportunity.  Hundreds have been killed in recent months.  Certainly that is now a battlefield that supports al Qaeda‘s objectives, and, of course, is one that bin Laden is going to associate himself with. 

WILLIAMS:  Robin Wright, in this tape, Osama bin Laden calls on the Iraqi people not to take part in the elections.  Will that have any effect at all? 

ROBIN WRIGHT, WASHINGTON POST:  It will probably have some impact.  We are now in the final months of the countdown, and clearly there‘s a definite strategy to try to engage in the kind of really atrocious confrontations and deaths of Iraqis involved in the transition, involved with the U.S.-supported Iraqi government, as a means of intimidation, to try to convince the Sunnis not to vote.  That is a very important 20 percent of the population.  So that even if the entire Shiite population and the entire Kurdish population turns out, there‘s still a very important element of society, and that will undermine the credibility of the outcome of this election.  So that‘s the strategy for this final, crucial month. 

WILLIAMS:  But let me ask you a question about that today, because I was interested in a comment—and I‘m sure you read it since it was in your paper—the Iraqi representative to the U.N. wrote an opposite—the editorial page, op-ed piece in today‘s “Washington Post,” in which he said, let‘s go ahead with the elections, but if everybody doesn‘t vote, we‘ll sort of grade them as incomplete.  We won‘t have a full national assembly, and we‘ll have follow-on elections to fill in the gaps.  Do you think that is a good idea? 

WRIGHT:  Well, there are a number of different strategies being considered to include the Sunni population if the majority of that part of the society doesn‘t turn out, giving them a disproportionate number of seats in cabinet, for example, to make sure they are part of the executive body that will be selected by this National Assembly.  And possibly to give them some seats if they are not represented proportionately in the outcome of the election.  So there are a number of possible considerations to make sure that this is an inclusive outcome.

WILLIAMS:  Well, what‘s your sense about how hungry the Sunni minority population in Iraq is to have elections and to vote? 

WRIGHT:  I think that the majority probably are interested in having some kind of election, even though they are deeply fearful of what the outcome may be.  Absolutely, we are going to see a change in the balance of power in Iraq, with repercussions throughout the region, now that the Shiite majority will probably be the dominant factor in a new government. 

You have to remember that there are 107 groups that have registered to participate, and so far only one group has backed out.  And there will be enormous pressure on this group to participate.  What is really going to decide...

WILLIAMS:  Let me stop you right there -- 107 groups—so there will be 107 slates of candidates? 

WRIGHT:  Well, there are 107 entities that are participating in this election.  Many, many slates.  It is going to be a very complicated election, frankly.  But there is only one group that has pulled out, and I think that we will know a lot more if there are others that pull out.  This is the Iraqi Islamic Party, and this is one that reflects a kind of tendency that may be more sympathetic to an Islamic ideology than some of the secular groups.  So it may not reflect all of the Sunni parties.  We need to be careful not to overread what‘s happened.

WILLIAMS:  And it may not be permanent, either.  They may being saying for now they are going to back out, but they may come back in toward the end.  Right? 

WRIGHT:  They may come back.  After all, there are many groups that said they were going to boycott the elections, and they are participating. 

WILLIAMS:  But tell me about this 107 groups taking part.  That would seem to suggest that there‘s a great deal of enthusiasm for these elections, wouldn‘t it? 

WRIGHT:  I think there probably is.  This is an opportunity, and just like we saw in Afghanistan, everyone doubted whether there would be a strong turnout because of the fact that the president of Afghanistan controlled only the capital and not the rest of the country.  I think that we could well be surprised.  But so much is going to depend on what happens in this final 30-day or 32-day period.  How much violence there is, particularly against those who will be protecting the polling stations, like the police, like the National Guard, and of course by the Americans. 

The more the Americans have to get involved in protecting the polling stations, the more it will be seen by many Iraqis as being, you know, a function of the American desire rather than something that is purely Iraqi. 

WILLIAMS:  Roger, let me ask you this question.  The head of the insurgency said today that it was his people who were behind the attempted assassination yesterday of the leader of the largest Shiite party.  Does that surprise you?  Was there much doubt about that? 

CRESSEY:  No, not at all, because Zarqawi has conducted a number of attacks against Shia targets in recent months, and you will have to go back to his letter of several months ago, where he says to bin Laden, look, we need to energize the Sunni base, and the way we can do that is if we start to attack the Shia.  The Shia then turn on the Sunnis.  Finally, that will awaken the Sunnis out of their slumber.  So one part of his overall strategy for some time now has been to kill as many Shia as possible. 

WILLIAMS:  How—what incentive is there?  What incentive can be provided to the insurgents to stop if they think that the Shia are going to run the country and they are out of luck?  What—how do you get them to stop? 

CRESSEY:  That‘s a very good question.  I think if you see a percentage, whatever percentage of the Sunni population that doesn‘t vote, after the elections are held how does the new government with the United States and others persuade them to participate?  While at the same time trying to take some of the steam and momentum out of the insurgency?  A lot of members of the insurgency, according to the intelligence community, are people who believe they have no future in a new Iraq, be it a Shia-led Iraq or even a Sunni-led Iraq.  So they have cast their ballots, if you will, with the insurgency, and are committed to playing this out to the bitter end.  It is going to be quite a mess for some time, unfortunately. 

WILLIAMS:  All right.  More with Robin Wright and Roger Cressey on the future of Iraq, and we‘ll also ask whether the United States is giving enough money to help with victims of the tsunami. 

And still ahead, the latest on confirmation hearings for Alberto Gonzales, the man who would be attorney general.  Plus, the potential battle over Supreme Court vacancies.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

WILLIAMS:  Coming up, what happens in Iraq after the coming elections?  And how long should U.S. troops stay?  More with Robin Wright and Roger Cressey when HARDBALL returns. 

(COMMERCIAL BREAK)

WILLIAMS:  Welcome back to HARDBALL, and with Robin Wright of The Washington Post and MSNBC counterterrorism analyst Roger Cressey.  Robin Wright, do you think the U.S. should set a definite timetable for withdrawing troops from Iraq?  And what have you heard in your visits in the region about that? 

WRIGHT:  I think probably over the next year there is going to be growing pressure on the United States to set an exit date.  The longer we stay the more likely we are to be—become a target or the talking point.  I have lived in Beirut during the time the U.S. Marines were there and the turning point for the Marines and their exit was when they went from being peacekeepers to being defensive, protecting themselves. 

And we are beginning to get to this point in Iraq.  It is more and more dangerous for American forces.  And I think there‘s a growing call among a lot of people who are involved in the foreign policy community for consideration that we can‘t make this an open-ended process. 

WILLIAMS:  The concern being what, that we will be branded as occupiers? 

WRIGHT:  Well, it is increasingly seen as an ongoing occupation, that we didn‘t really hand over power, that we are the force in play and that any government that is elected will still be seen to be a puppet even if it is democratically elected by the majority of Iraqis. 

WILLIAMS:  And yet, Roger Cressey, it‘s not an easy thing to know when that it is the right time, is it, because clearly once the U.S. walks out, the security situation immediately deteriorates, won‘t it?

CRESSEY:  Well, absolutely.  And certainly Central Command and our coalition partners are doing everything they can to create a new Iraqi police force, a new Iraqi military to prevent that.  But the central mistake we made after Saddam fell was an inability to provide safety, security and stability. 

And we are still paying for that today.  So even after a new government is elected, even after we begin the drawdown of U.S. forces, which I think will begin shortly after the election, we are still going to have a fundamental security problem on our hands.  And I‘m not sure we have a good exit strategy to try and fix that. 

WRIGHT:  Pete, Pete, can I just interject that the fact is that the U.N. gave a mandate to the United States to be in Iraq, that expires in the middle of the year.  There is the option of going—for the new Iraqi government, democratically elected, to go back to the United Nations and say, we are going to let this mandate expire and form a new international security force. 

So it is not as if the U.S. walks out and there‘s nothing there.  This allows other nations that were not involved in waging war to become more involved in a variety of different capacities.  So it is not as if there‘s an abandonment of Iraq. 

WILLIAMS:  Well, might other nations step up then?  They were reluctant to join the U.S. now, but you think under that sort of framework they might be willing to send troops to Iraq? 

WRIGHT:  I think there‘s a possibility that there will be more interest by a variety of nations in playing different roles, yes. 

WILLIAMS:  Roger, what about that, would that ease the burden on the

U.S.? 

CRESSEY:  I think countries that have not participated in the peacekeeping phase, if you will, so far are going to analyze the situation on the ground.  If there is not some semblance of security and stability in Iraq, I can‘t believe certain governments that have not participated are going to say, you know what, now that we no longer have quote-unquote “an occupation,” let‘s put or peacekeepers there. 

And if the danger is as high then as it is now, I just don‘t see people agreeing to that.  I don‘t see governments taking that type of risk.  So you have got to have security and stability on the ground in order to get to that next phase, which I agree with Robin, is certainly a possibility.  But without that security, though, it‘s a real problem, Pete. 

WRIGHT:  But the fundamental truth is that everybody in the region, everyone in the world has a real interest in stability in one of the most important oil-rich countries anywhere in the world.  And no one can afford to let this place crumble and everyone recognizes that the U.S. presence is increasingly controversial. 

WILLIAMS:  And you don‘t worry that if, under this framework you have just suggested, that other countries would say, well, the Iraqis are calling it but this the Iraqi government that the U.S. propped up and it is still like a request from the U.S.?

WRIGHT:  Well, I think it will be very controversial.  There‘s no perfect solution here.  But another year, let‘s say, of a U.S.-run security operation in Iraq allows for that much more time to build up an alternative local security force. 

The United States can‘t stay there indefinitely.  There must be clearly an intensification both of training of Iraqi security forces and, frankly, of providing an alternative, using U.S. resources, which we have done in only infinitesimally small ways so far of creating—jump-starting the economy, creating jobs.  This is an alternative for insurgents.  This shows that there is a future, be it in Fallujah or the southern cities where the Shia dominate, that there needs to be a sense throughout the country that there has been real reconstruction and that Iraq does have a tangible future, not just a dream. 

WILLIAMS:  Let me ask you both about something on an entirely different subject.  And this is aid to the countries that are suffering from this massive tsunami.  Yesterday the head of the U.N. Emergency Relief Operation, Jan Egeland, made statement about how much money was being given.  And he said it is beyond me why we are so stingy, really.  And said that the foreign assistance that come from major countries, including the U.S., was extremely small, a tiny percentage of their gross domestic product, their gross national income. 

Robin Wright, does he make a fair point here?  Are industrial countries—is the U.S. stingy in its aid in crises like this? 

WRIGHT:  Well, I think his remark actually has resonated because within the past 24 hours the United States has more than doubled its commitment.  Originally it was $15 million and today the State Department announced another $20 million with promises of more as assessments are made of what the needs are.  So I suspect that that remark has had an impact. 

WILLIAMS:  Well, of course, and he has also backed off a little bit today.  He now says that Washington is the greatest contributor to international relief efforts in the world and his remarks were misinterpreted.  Roger, did he make a fair point? 

CRESSEY:  To a certain degree, but I think you can find statistics to support any perspective on how much aid we should give.  The bottom line is the sheer enormity of this disaster, Pete, is going to require a fair amount of time to determine how much the United States should ultimately give.  I think regardless of what we are giving now, we are going to give a whole lot more money before this is over.  And rest assured, the United States will be one of the strongest and largest donators. 

WILLIAMS:  And the U.S. is providing military assets right now, isn‘t it? 

CRESSEY:  Oh, sure, we are deploying our Naval units throughout the Indian Ocean.  We will be heavily involved in search and rescue, and we‘re sure to be involved in some of the reconstruction.  So some of the aid that we‘re going to give can‘t just be measured in pure cash donations.  It‘s all going to  have a positive effect. 

WILLIAMS:  Robin, let me ask you one other question here as we exit on this, and that is the U.S. will undoubtedly end up being very generous here.  Will it get—and of course, there are many reasons, but it‘s giving the money for all the right reasons.  But when all of that is said and done, will it, so to speak, get credit for its generosity in other parts of the world where perhaps the image of the U.S. isn‘t so favorable? 

WRIGHT:  It‘s probably very important right now for the U.S. to be seen to be doing as much as possible, far more than others, in part because of our poor relations with other countries.  That‘s one of the reasons I think there is increasing pressure on the White House to have President Bush emerge and say something in public.  He has not come out so far.  And I think that‘s going to be a talking point over the next couple of days. 

WILLIAMS:  Well, but why—I guess what I‘m wondering is why isn‘t the U.S. generosity in something like this—why doesn‘t it pay more dividends?  I mean, I don‘t mean to imply that‘s the reason we give the money, we give the money because it‘s desperately needed.  But do we get the dividends from it? 

WRIGHT:  So far probably not.  I think it will take a lot more for people to pay attention.  A lot of countries give far more per capita than the United States does.  In fact, of the 24 richest nations in the world, we give the smallest amount per capita in aid internationally, and that‘s been true for many years. 

WILLIAMS:  All right.  Thank you both.  Robin Wright and Roger Cressey.

WRIGHT:  Thank you.

WILLIAMS:  Up next, how heated will the fight get in Congress over President Bush‘s nominee for attorney general, Alberto Gonzales?  We‘ll take a look at that when we come back.  You are watching HARDBALL on MSNBC. 

(BEGIN VIDEO CLIP)

MERYL STREEP, ACTRESS:  Hey, everybody, hang in there, boys and gals.  Can‘t wait to have you home safe.  You have to know everybody is thinking about you this year.  Everybody.  Everybody is thinking about you, and sending you love.  Love is all there is. 

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIAMS:  Just one week from tomorrow, the U.S. Senate begins its first confirmation hearings for President Bush‘s new cabinet.  And the first up is Alberto Gonzales for attorney general.  He will face a more conservative Judiciary Committee, one that appears to have been retooled in anticipation of an even bigger battle, if there‘s a vacancy on the U.S> Supreme Court.  HARDBALL correspondent David Shuster reports. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  Seven weeks after Alberto Gonzales was nominated to be attorney general...

ALBERTO GONZALES, ATTORNEY GENERAL DESIGNATE:  Thank you, Mr.

President, for this extraordinary opportunity.

SHUSTER:  ... senators in both parties now say the Gonzales confirmation hearing early next year may not be as easy as the White House had hoped.  Democrats have questions about memos regarding detainees held at Guantanamo Bay.  Gonzales wrote that the Geneva Conventions did not apply.  Democrats also want to know if the White House counsel helped create an environment for military officials that led to allegations of torture and abuse. 

Gonzales may also get tough questions from the right.  Conservative senators are troubled by Gonzales‘ tenure on the Texas Supreme Court, when he seemed to express a moderate view of abortion. 

But lawmakers say the skirmish over Gonzales, if there is one, will be nothing compared to the battle lines already being drawn over the Supreme Court.  It has been 10 years since the court last had a vacancy.  But the continuing health problems of Chief Justice William Rehnquist have fueled speculation about opportunities for President Bush during the next four years. 

As it stands, Rehnquist is 80 years old.  John Paul Stevens, the most liberal member of the court, is 84.  And when you look at all of the justices, everybody, except for Clarence Thomas, is already old enough to qualify for Social Security.  Any vacancy and confirmation hearing would likely renew a fierce debate over abortion. 

But this time around, not only will the nominees‘ views be under the spotlight, but the tactics of the Senate Judiciary Committee may be as well. 

SEN.-ELECT TOM COBURN ®, OKLAHOMA:  I will not be ashamed of my faith.  I will stand for my faith, and that will influence my ability to work in the U.S. Senate. 

SHUSTER:  Oklahoma Republican Tom Coburn is the newest member of the Senate panel.  He‘s an obstetrician who had stated that doctors who perform abortions should receive the death penalty. 

Kansas Republican Sam Brownback is also now on the Judiciary Committee.  Last year he tried to pass a bill that would require a woman seeking an abortion to be told the fetus might feel pain. 

(on camera):  On the other side, Democrats on the committee have vowed to fight just as hard to protect abortion rights.  It all means that President Bush, as he seeks to reshape the judiciary, may also reignites the explosiveness of domestic politics. 

I‘m David Shuster for HARDBALL, in Washington. 

(END VIDEOTAPE)

WILLIAMS:  Coming up, a closer look at what possible vacancies would mean to the make-up of the Supreme Court.  We‘ll talk about that when we come back.  You are watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

WILLIAMS:  This half hour on HARDBALL, what will President Bush‘s second term mean for the makeup of the Supreme Court?  A look at who may be coming and going, and how hard the fight will be over judicial nominees.  But first, let‘s check in with the MSNBC News Desk for the latest.

(NEWSBREAK)

WILLIAMS:  Welcome back to HARDBALL. 

I‘m Pete Williams, in for Chris Matthews.  He will be back next week. 

Given the age and health of some members of the U.S. Supreme Court, President Bush could have the opportunity to name new justices.  Already, battle lines are being drawn, including in the Senate itself, especially on the Judiciary Committee, which has the power to derail or move forward potential nominees. 

“Washington Post” congressional reporter Charles Babington was the first to report these changes and what they might mean.  And Tom Goldstein heads an unusual law firm here in Washington, one which focuses exclusively on preparing and presenting cases before the Supreme Court.  He himself is getting ready to argue his 13th and 14th cases there, remarkable for someone of his young age.  And he will be teaching next year at both Stanford and Harvard law schools. 

So, thank you both for being with us.

Tom, let me ask you, first of all, what is your best guess about whether there will be any vacancies on the Supreme Court in the coming few months? 

TOM GOLDSTEIN, ATTORNEY:  It seems very likely that, towards the end of the term, that the chief justice, if the information we have about his health is accurate, is going to retire.  Now, it doesn‘t look like it is going to happen any day now.

He did announce that he was going to administer the oath of office at the inauguration.  And, whereas in November, he had participated in fewer cases, he has become more active, not less active.  So, those are good signs for his health.  But, still, his condition seems to be very serious, which suggests that, at his age, he probably will move on to retirement. 

WILLIAMS:  And we didn‘t say, but we are talking here, of course, about—is about his thyroid cancer. 

GOLDSTEIN:  Yes.  Yes.   

WILLIAMS:  And we are basing this guess based on what they have told us and there‘s a great deal that we don‘t know about the chief justice‘s health.  But does it appear to you that perhaps he is getting better?  He says he is going to vote on the cases that were argued in December.  He‘s going to do the inauguration.  Does that appear to be a good sign?

GOLDSTEIN:  Those really do seem to be very, very good signs, particularly the inauguration, which is a very public event.  Of course, the entire nation, in some sense, the entire world is watching when the president of the United States is inaugurated.  It‘s a huge deal.

His condition, any cancer of course is very serious, but he has had a variety of radiation and chemotherapy, we have been told.  And so, for him to be in a position to come out and do something so public must mean that he‘s doing much better than everyone had anticipated. 

WILLIAMS:  OK, now, suppose there‘s a vacancy.  Suppose he does step down.  Which do you think is more likely, that the president will elevate some current member of the Supreme Court to be chief and then nominate someone to fill that vacancy or will he just bring somebody in from outside and nominate them to be the chief justice? 

GOLDSTEIN:  I think we are going to look at a situation where the president picks one person. 

The president I think is unlikely to want to go through two tough confirmation fights.  If, for example, the president were to say, look, Justice Scalia, Justice Thomas, the justices that I think are the real models, I want to make them the chief justice, well, then, the Democrats could have a fight about them.  And then the president would have also a fight about the new nominee.

And so I think this is a situation in which simpler is better.  He is likely to pick one person that he wants to put on to the Supreme Court and go for that. 

WILLIAMS:  And, if he does that, he would be following historical precedent, because, as you know so well, William Rehnquist is the 16th chief justice.  And 11 of the past 16 times, it was an outsider brought in to chief, not someone elevated, which of course is the way Rehnquist got the job.  He was promoted from within the court.  So, that is the exception, isn‘t it?

GOLDSTEIN:  It is.  It absolutely is.

For example, we have had the governor of California or a judge from the Court of Appeals here in the District of Columbia.  Usually, it‘s somebody else who is brought in to lead the Supreme Court.  And, in fact, you are the chief justice not just of the Supreme Court, but of all the federal judiciary.  So it‘s a big job, but generally they do bring in somebody from the outside.

WILLIAMS:  All right, you are allowed to speculate here now.  You are given leave, as they say in your business, to speculate. 

(LAUGHTER)

WILLIAMS:  So, who do you think—and you have no clue whatsoever.  I want to make that clear.  But who do you think might the likely nominees be?

GOLDSTEIN:  Right. 

Without any insider information, but I think that there are two political battles that are going to go one.  One is the one you have already talked about.  That‘s in the Senate.  The other one is the broader one in the country.  What kind of message is the president going to send with this appointment?

And I think there that the president is likely to go and reach out to the Hispanic community, much the way that he has with the attorney general nomination that you just talked about.  And so, my bet is that Judge Garza, who is a judge from the Fifth Circuit Court of Appeals, located around Texas and Louisiana, who is in his 50s, not a terribly young, but not an old judge by any means, has taken a hard line against abortion, but is well known in conservative circles.

And to make the first Hispanic justice and in fact the first Hispanic chief justice is probably the most likely route.  There are a variety of other candidates.  There are some judges, for example, from the Fourth Circuit, which is around Virginia, North Carolina. 

Their former chief judge, J. Harvie Wilkinson, is a very well known judge who has reached 60.  And that is an age which in the history of the Supreme Court, that is actually pretty young.  But these days, the presidents really want to get somebody who is really, really young, so they will be on there for 30 or 40 years.  So that might be the thing that would derail Judge Wilkinson. 

Another person on that same court, Michael Luttig, is a judge on the Fourth Circuit, very well known in conservative circles, one of the leading lights of conservative legal thought.  And he probably has a great shot at it, too.

WILLIAMS:  All right, so that brings us to Charles Babington‘s jurisdiction.  He covers the Congress.  That‘s where these nomination hearings would be. 

Mr. Babington, you were the first to write about these two new members, Sam Brownback and Tom Coburn of Oklahoma, both of whom  are strongly pro-life.  Is it an accident that they‘re on this committee, do you think?

CHARLES BABINGTON, CONGRESSIONAL CORRESPONDENT, “THE WASHINGTON POST”: 

I don‘t think it‘s an accident, Pete. 

Brownback had been on the Judiciary Committee before, went off for a while, is coming back on.  So, maybe that didn‘t raise quite as many eyebrows as Tom Coburn, who is the senator-elect from Oklahoma, very conservative, extremely pro-life, if you will.  One of his campaign platforms was, he called for the death penalty for doctors who perform abortions.

So—and he is also very outspoken.  He spent six years in the House of Representatives and he didn‘t hesitate to take on not just the Democrats, but the Republican leadership on all kinds of issues.  So I think he can be a very forceful voice on that committee. 

WILLIAMS:  Well, would this have happened anyway when the Senate—when the Republicans gained or is this an expression of concern still by the conservatives about the chairman, Arlen Specter? 

BABINGTON:  Right.  Some people do see it as maybe a desire on the part of the leadership, Bill Frist, to make sure that there are some watchful eyes on Arlen Specter.  I‘m not sure that‘s really the case. 

Specter, as you know, right after the election, right after he got reelected, caused a bit of a stir in conservative circles by seeming to suggest that very conservative judges might have a hard time.  He caught a lot of grief for that.  He had to back away from that some.  And I think a lot of conservatives feel like that that warning did get through to him and that he understands that he has been put on notice. 

WILLIAMS:  Now, we don‘t actually have a vacancy on the Supreme Court.  We may not.  Who knows.  But there are vacancies in the federal courts and the president has just renominated a slate of candidates that didn‘t make it through the first time.  What do we learn from that?  Is he standing his ground? 

BABINGTON:  Yes, Pete, I think he is standing his ground.

Several of these—there‘s 20 in all—nominees were actually stopped by the Democrats using the filibuster on the Senate floor, and this is what we have heard so much about.  The Republicans call it obstructionism.  The Democrats and their supporters say they are simply using the tools that are there in the way that they are meant to be used, to stop nominees that they think are out of the mainstream. 

WILLIAMS:  Let me ask you both about that filibuster, both you and Mr.

Goldstein. 

If there is a vacancy on the Supreme Court and the Democrats aren‘t thrilled with the president‘s nominee, do you think that they would use the filibuster to try to prevent his nomination to the Supreme Court?  One thing to use the filibuster for a federal judge in Arkansas, but might they use it for the U.S. Supreme Court? 

What do you both think?

BABINGTON:  Well, I‘ll go first.

I think they are certainly holding out that option and have signaled that they may.  You have got to remember that the Democrats—it is not just the members of the Senate, but the many, many support groups that support Democrats in general.  Many of these are pro-choice groups.  And this so very important to them, so there will be tremendous pressure on the Democrats to do whatever they can. 

They have already shown that they are willing to do it on appellate court nominees, so a lot of people feel like they would do it at the Supreme Court level.

WILLIAMS:  Is it different, though, Tom, when it comes to a Supreme Court nominee?  Would the Democrats be seen as stopping the motion of justice? 

GOLDSTEIN:  Well, I think you are absolutely right to say that the public is going to pay a lot more attention. 

Supreme Court nominations, when you have the hearings, they make it on TV a lot more.  The public is just a lot more aware of what‘s going on.  And so my bet is that, unless you have a nominee who has an extraordinary track record and you can really, really sink your teeth into a Democratic explanation of why it is this person is way, way outside the mainstream, that a replacement for Chief Justice Rehnquist may well not get filibustered, because the public may not have the stomach for it. 

But we have later justices who may be retiring who are in their 70s and 80s who are much more liberal and are much more fundamental to maintaining, for example, Roe v. Wade or affirmative action, so that the Democrats in the case of a later appointment could have something more to say. 

Look, if you put this person on the Supreme Court, you are going to change the direction of American law outside the mainstream for decades.  That would be how they would explain it.  So maybe a filibuster in a later nomination is more likely.

WILLIAMS:  All right, two of the experts, Tom Goldstein and Charles Babington, thank you both very much.  Happy new year to you.

(CROSSTALK)

WILLIAMS:  Coming up, Tony Blankley and Katrina Vanden Heuvel on President Bush‘s agenda for his second term and the direction the Democrats may take to strengthen their party.

And don‘t forget, sign up for HARDBALL‘s daily e-mail briefing.  Just log on to our Web site, HARDBALL.MSNBC.com.

(COMMERCIAL BREAK)

WILLIAMS:  Coming up, two very shy people, Tony Blankley and Katrina Vanden Heuvel, on President Bush‘s plans for his second term and whether they‘re realistic—when HARDBALL returns.

(COMMERCIAL BREAK)

WILLIAMS:  Welcome back to HARDBALL. 

This morning, “The Washington Post” reported that the major overhaul in taxes promised by a second Bush administration would be postponed for at least another year, so the president can concentrate on changing the Social Security system and balancing the federal budget.  But later in the day, a White House spokesman denied the story and says tax reform is still a top priority. 

For more on President Bush‘s second term, we turn to Tony Blankley, editorial page editor of “The Washington Times,” and Katrina Vanden Heuvel, editor of “The Nation” magazine. 

Thank you both very much.

TONY BLANKLEY, EDITORIAL PAGE EDITOR, “THE WASHINGTON TIMES”:  Thank you. 

WILLIAMS:  Would it be a good idea, Tony, to delay tax reform for a year? 

BLANKLEY:  Well, what I find odd about this is, this is what was always planned.  I have been saying this on the tube for about a month now, that they were going to do it in sequence. 

The practical matter is, you can‘t do Social Security and tax change, which both go through the Ways and Means Committee in the House and the Finance Committee in the Senate, simultaneously.  Clearly, Social Security has always been the primary big issue that was going to be handled this year.  And I think they are playing games.  The White House is saying they are going to have a proposal by the end of 2005, which is the same as saying it will be handled in the second session, which is 2006. 

I think that is wise.  I think even carrying Social Security over the next 10 months is going to be a big, big challenge.  And to try to deal with taxes as well—because the problem for the Republicans or anyone trying to change tax law is that you break up your natural coalition, because somebody is going to benefit and someone is going to get hurt, so you don‘t want to start making your coalition uncomfortable until you have held them together for the other things.  So I think this is obviously the right way to go.

WILLIAMS:  Well, could this be just a little setup, that, don‘t expect much of a change, that this will be tinkering around the edges when it happens? 

BLANKLEY:  I think it is going to be more than tinkering.

But remember that Bush‘s first experience at tax change when, he was a freshman governor, he came out saying he was going to have a huge reform and he kind of didn‘t—couldn‘t carry it off and backed down to some property tax relief, I think.  I would be amazed, frankly, if anybody in this country could change from the tax code we have to a sales tax or a VAT tax.  Even a flat tax is extraordinarily hard to do, because you start going into home interest deductions and charitable deductions.

And I just, from my years working for Newt up on the Hill, I can‘t conceive of getting to a majority on things like that.  Maybe I‘m just not being imaginative enough. 

WILLIAMS:  Katrina, you have some criticisms of the Bush administration.  We‘ll get to those in a moment.  But just about everybody is in favor of changing the tax system somehow.  Do you think the president is on the right track? 

KATRINA VANDEN HEUVEL, EDITOR, “THE NATION”:  Well, I mean, there‘s reform and then there‘s destruction of any fair taxation system in this country. 

And there‘s a reform where you favor the very wealthy and corporations, or you, as President Bush has done, you shift the burden of taxation from work to—from wealth to work, which I think it is a travesty of the American dream and what this country stands for.  Let‘s look at the fiscal debacle we are in.  Between the open-ended cost of a failed war and reconstruction, falling tax revenues ramrodded through tax cuts for the wealthy and corporations, we are facing a deficit explosion the likes of which this country has never seen.

And the victims of those deficits will be those very people, for example, veteran benefits—college costs are rising.  Health care costs are rising.  School lunches are being cut.  Medicaid and Medicare may be on the table.  And now we are looking at what Tony referred to as a kind of Social Security reform, again, a manufactured crisis, as economists, Nobel-winning and others, will tell you, Pete.

WILLIAMS:  Well, the president is talking about trying to make this change in the tax system, as they say, revenue neutral.  That is to say, you would end taking the same bite out of the country as a whole, but you would change who gets munched on the most.

(CROSSTALK)

WILLIAMS:  Is that a noble goal?

VANDEN HEUVEL:  Pete, could I sell you a bridge down the street, the Brooklyn Bridge?

(LAUGHTER)

VANDEN HEUVEL:  I mean, this is fantasy land. 

And we have an administration which thrives on fantasy and ideological blindness, as opposed to common sense and fairness.  And I think that is a real danger.  He has—President Bush has surrounded himself, both in economic terms and foreign policy terms, with people who say yes.  That economic summit last week was not a discussion or debate.  It was basically, tell me what President Bush is right about everything, people.  Come and visit with me and tell me why I‘m right about everything. 

That is not discussion and debate in terms of what this country needs at this moment.

WILLIAMS:  Tony, who will end up paying more under the tax changes the president wants? 

BLANKLEY:  Well, since we don‘t know what the tax changes are, it is obviously impossible to predict who is going to be paying more or less. 

If he sticks with supply-side concepts—and we don‘t know that he will, but a lot of his advisers and he are broadly supply-siders—you would expect to see taxes on the marginal revenues going—income going down.  You would expect to see taxes on productive assets going down.  But, on the other hand, if you are going to keep it tax neutral, it is hard to really accomplish a lot unless you go to fundamental reform, which, of course, is what the president says he is going to do.

And I‘ll tell you one thing.  I have done pretty well over the last four years predicting what Bush is going to do by listening to what he says he is going to do.  And a lot of people in this town can‘t believe he is actually going to do what he says.  So, I take fairly seriously the proposition that he is going to try to make some major changes.  I just have to wait and hear what the proposal is. 

And, as far as Katrina‘s critique, we don‘t have time to go through everything she said, but I do find it a little odd that making the socialist argument, as she basically does...

(CROSSTALK)

VANDEN HEUVEL:  It‘s not.  Tony, don‘t try—the red baiting—the red baiting doesn‘t look.  Look at the Congressional Budget Office.

(CROSSTALK)

VANDEN HEUVEL:  Has the Congressional Budget Office gone socialist, Tony?  Last I heard, it was part of this government. 

BLANKLEY:  Katrina...

(CROSSTALK)

VANDEN HEUVEL:  The middle class has gotten the shaft in this administration.

(CROSSTALK)

BLANKLEY:  Why don‘t you start by not interrupting...

(CROSSTALK)

VANDEN HEUVEL:  I refuse to be red-baited by the likes of Tony Blankley, OK?  Happy new year, Tony.

(CROSSTALK)

WILLIAMS:  Go ahead, Tony.  Quick answer.  And then we‘ll come back.

BLANKLEY:  No, let me make a point. 

Her fundamental critique is that low taxes are never going to pay for government.  And the fundamental argument of supply-siders is that lower taxes creates a bigger economy and more revenue.  So, it is a longstanding debate.  And for her to dismiss what has been successful tax policy for a generation as fantasy is her own form of reddish thinking. 

VANDEN HEUVEL:  Could I say...

(CROSSTALK)

WILLIAMS:  All right.  More of this in just a moment, because we have to look at what the Democrats are up to, too.  Are there any Democrats tough enough to take on the president in the coming term?

And more with Tony and Katrina. 

And don‘t forget to check out Hardblogger, our political blog Web site.  Just go to HARDBALL.MSNBC.com.

(BEGIN VIDEO CLIP)

JON VOIGHT, ACTOR:  Hey, guys, gals.  We are all so proud of you.  We love you so much and we‘re in awe of you, really.  We know you are protecting our freedoms over there and we send you much, much love for this Christmas season.  God bless you.  God bless your families.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

WILLIAMS:  We‘re back with Tony Blankley and Katrina Vanden Heuvel. 

Tony, let me ask you this.  You recently wrote—quote—“God bless Hillary Clinton.”  What caused you to say that and did it cause you pain? 

BLANKLEY:  It was quite a lot of fun.  I wanted to get some attention for the point I was making, and I managed to get some attention.

I was talking about the immigration issue.  And she has been speaking, rhetorically, at least, to the right of President Bush on immigration, hiring illegal aliens, securing our borders.  And the point of my column was that I think that one of the great issues next year is going to be immigration, but it‘s not going to be the president‘s guest worker program.  It‘s going to be a security-related issue.

And if Republicans don‘t watch out, Hillary will take them on the right flank for 2008.  And I‘m hoping that Bush will not let that happen. 

WILLIAMS:  Katrina, do the Democrats need to rethink their position on immigration? 

VANDEN HEUVEL:  I think there‘s going to be a big fight.  I think Tony is right about immigration.  I think within the Republican Party there are strong divisions, as Tony I think would acknowledge. 

BLANKLEY:  Yes. 

VANDEN HEUVEL:  But I think you‘re going to see a grand compromise of some sort, somewhere between what Bush is proposing and what people like Hillary Clinton are proposing, a kind of grand compromise, meaning earned legalization combined with some form of an identity card. 

And I think it‘s very difficult at this moment to understand the contours of what that fight is going to look like, but there will be a compromise. 

BLANKLEY:  This is shocking.  This is shocking, because I agree with Katrina. 

(CROSSTALK)

VANDEN HEUVEL:  It‘s a tough issue.  It‘s a tough issue. 

And I think—but that balance between security and civil liberties is one that will be fought out around the immigration issue, as it has been fought out around, you know, national security, international politics, civil liberties.  But this will be one of the big fights. 

(CROSSTALK)

WILLIAMS:  And, Tony, is this one of those things where things break down not so much party, but by region?  For example, members of Congress in agricultural states need those folks, right? 

WILLIAMS:  like they break down by region, but they break down by philosophy, by cultural attitudes.  There are a lot of breakdowns.

It‘s not party.  The Republican Party is clearly split on the issue, as, I think, is the Democratic Party to some extent.  No, the area—and it‘s fascinating that Katrina would make the point that I have believed, which is I think there is a possible grand compromise, which is, first, you secure the borders and enforce illegal immigration laws within the country, which does require a biometric I.D. card.

But we‘ve lost privacy.  The truth is, through credit cards, corporate America knows all about us already.  But that is going to be the compromise.  And then, if you have those secure borders, then you can get to the guest worker program, because then it‘s possible to implement it, because only those people who we admit through the guest worker program can get in the country. 

Under the current law, the current situation where the borders are effectively open, there‘s no point in having any regulations, because the regulations can be got around.  And that‘s the shortcoming I think of the Bush proposal. 

(CROSSTALK)

VANDEN HEUVEL:  I mean, Arnold Schwarzenegger has had to back down—

I think this is right, Tony—in California, where he campaigned vigorously against driver‘s license for immigrant—immigrants.  And now he‘s backing down, with some possible new form of a driver‘s license. 

But the whole economics of immigration is something that I think will play a part in all kinds of debates next year. 

WILLIAMS:  All right, one other thing here in the time that we have. 

The Democrats are about to choose a new chairman.

Does it matter, Katrina, who it is? 

VANDEN HEUVEL:  It matters to a certain extent. 

What is important, I think, is to remember that this election was not a mandate for President Bush‘s policies.  There is ambivalence about radical Social Security change, tax change.  The majority believe going to war in Iraq was a mistake, that the country is heading in the wrong direction.  My point is that the party, whoever it is, needs to reconnect with its base, listen to people around the country.

There have been victories in Montana, in other state legislatures this

season for Democrats.  It needs to rebuild the politics of conviction, of

compassion, less of four-point policy proposals, more of a narrative about

where this country is going, and connect with the morality issue, not in

terms of what is too often treated as morality, sex or religion, but about

where this country is heading.  Why do 40 million children have—why do -

·         40 million citizens don‘t have health care? 

What is going on in a rich country, where 12 percent of its children live in poverty?  Those kinds of issues are ones this party is going to need to grapple with and be common sense and, finally, a strong security policy, including, I would argue—and you‘re going to see this soon from some key Democrats—a responsible and sane exit strategy from a bungled, bloody occupation in Iraq. 

WILLIAMS:  In 10 seconds, Tony, will the choice matter? 

BLANKLEY:  Yes, it will matter. 

The challenge for the Democratic Party is that all the activist energy is on the left, and yet I think the elected Democrats don‘t want to go down the path that Katrina just pointed out.  And, therefore, that‘s why I think Pelosi and Reid both suggested Tim Roemer.

WILLIAMS:  All right. 

BLANKLEY:  A pro-abortion Indiana former congressman. 

WILLIAMS:  Tony, thank you very much—Tony Blankley and Katrina Vanden Heuvel.

VANDEN HEUVEL:  Thank you. 

BLANKLEY:  Thank you. 

WILLIAMS:  Join us again tomorrow night at 7:00 Eastern for more HARDBALL.  My colleague Andrea Mitchell‘s guests will include 9/11 Commission co-chairs Tom Kean and Lee Hamilton. 

And be sure and tune in Friday for a special HARDBALL, “A Soldier‘s Journey Home.”  Chris Matthews visits Walter Reed Hospital to meet with soldiers wounded in Iraq now recovering at the hospital.  That‘s Friday, December 31, at 7:00 Eastern.

Right now, time for “COUNTDOWN WITH KEITH OLBERMANN.”

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

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