1600 PENNSLYVANIA AVENUE
November 21, 2008
Guest: Dr. Zbigniew Brzezinski, Steven Pearlstein, Steve Liesman, Joan Walsh, Pat Buchanan, Lawrence O'Donnell, Steve McMahon; Mike Murphy
DAVID GREGORY, HOST: Tonight, help is on the way. With an economy in shambles, President-elect Obama has settled on the leader of his economic team. And Wall Street liked the news. But does the new team have time to wait, or will the economic crisis get worse before Obama takes office and settles in at 1600 PENNSYLVANIA AVENUE? Sixty days until the inauguration of President-elect Obama. Welcome to the program. I'm David Gregory. It turned out to be an important day in the forming of the Obama cabinet. The headline tonight, "Financial Fix."As we await official word that Hillary Clinton will be called to serve on the world stage as secretary of state in this new administration, the president-elect is taking care of business on the home front. NBC News has learned that Obama is preparing to personally roll out his economic team on Monday. Barring any last-minute change, here's what we expect. Obama to tap New York Fed president Tim Geithner to serve as treasury secretary. Geithner has been a key player throughout the current economic crisis, helping Treasury Secretary Hank Paulson manage the bailout of Wall Street. Before heading up the New York Fed, Geithner was a career treasury official, having served the department in three administrations under five different treasury secretaries. Also expected in that announcement Monday, that the president-elect will name New Mexico Governor and early supporter Bill Richardson as commerce secretary. Richardson has been a sport of Obama since abandoning his own presidential ambitions. He previously served in the Clinton administration, you might remember, as energy secretary, as well as U.N. ambassador. Also word tonight that former Clinton treasury secretary Larry Summers-he was on the short list for treasury secretary here as well-will serve as an economic adviser and could eventually join the Fed board. He might even be a replacement for Ben Bernanke or a successor to Bernanke down the road. Wall Street is watching all of this, and stocks rallied following our reporting on all of this. The Dow had been trading in the red before the news and later soared nearly 500 points, finally closing up about 6.5 percent for the day. Joining me now, two great guests to talk about all of this-Steven Pearlstein, columnist of "The Washington Post"-about the economy. Also, Steve Liesman, CNBC senior economics reporter. Welcome to both of you. Steve Pearlstein, let me start with you. Why did Wall Street like the news about Tim Geithner?
STEVEN PEARLSTEIN, "THE WASHINGTON POST": Well, first of all, I don't know whether we know anything about Wall Street. The last hour of trading goes up and down, and we try to ascribe meaning to it, and it's not clear that we are right all the time. Obviously, they like the idea of certainty. So they know something they didn't know before, they feel more comfortable, even though they really haven't learned a whole lot more. It was either going to be Larry Summers or Mr. Geithner to begin with.
PEARLSTEIN: And they're great friends and they work together, and I don't know whether you see much distance between them in terms of policy.
GREGORY: Steve Liesman, is this a case where if the market wants certainty, the economic world wants any reason to feel confident about the future?
STEVE LIESMAN, CNBC: Yes. You know, I disagree with my colleague there, Steve Pearlstein, a little bit. I think they like Geithner for a couple reasons. This is sort of symbolic, David, in my mind. Who do you pick Tim Geithner for? Not for the American public. He's not out there-he's not Brett Favre or some terrific quarterback that the public knows that they're going to cheer. You pick Tim Geithner, in the first order, for Wall Street. And I wondered if Wall Street today-and I know, Steve, you're probably right, I shouldn't make too much out of this. Who knows what the crazy market thinks every minute now? But Wall Street wants a guy who knows how it works and how it operates. Geithner has been involved from day one. And David, if you look at what has bothered Wall Street the last week, why we've been experiencing another round of the credit crisis willies, it's been because the government has said it's going to do less. And Geithner is a guy who has shown he is willing to do more when it's needed.
GREGORY: Steve Pearlstein, what is it that, if it's not just Wall Street, but those in the economy generally are expecting from a new economic team?
PEARLSTEIN: Well, for one thing, they're expecting that the government will go ahead with a plan like Sheila Bair's to have the government be involved in preventing, or preventing as much as possible, foreclosures and renegotiating mortgages. So that's number one. They expect a big stimulus. It's not so much Mr. Geithner as Mr. Summer, who has been beating the drum for a big stimulus package. We can look forward to that. And there will be something on the autos one way or the other, some bankruptcy-like reorganization and restructuring, sometime perhaps in December, but surely in January.
GREGORY: Steve Liesman, Paul Krugman, writing on "The New York Times" op-ed page today, talked about this period of crisis and indecisiveness and a sense of, do we have time to wait? This is how he framed it: "How much should we worry about what looks like two months of policy drift? At minimum, the next two months will inflict serious pain on hundreds of thousands of Americans who will lose their jobs, their homes, or both." "What's really troubling, however, is the possibility that some of the damage being done right now will be irreversible. I'm concerned, in particular, about the two Ds, deflation and Detroit." The latter, of course, talking about the automakers. How important is it in your mind, this period now of transition where we have got a bailout package of $700 billion, much closer to a trillion dollars of money available, and the current treasury secretary, Paulson, saying, no, and about half that we're going to let the next administration deal with, whereas the economy coming up on a retail season that looks so bleak is suffering with inaction?
LIESMAN: Yes. You know, David, I've had great concern over what this transition would mean. I thought that Obama should have named the treasury secretary last week, and should have been ready to do it almost immediately. The trouble of that $350 billion, which you remember was obtained by Paulson and basically Bernanke from the Fed as being an absolute emergency -- we needed this money now, and all of a sudden, the Treasury is coming forward and saying, you know what? We can wait and not deploy this $350 billion-well, I think that's a contradiction. And I think the market saw that as well. And when Paulson backed off and said they weren't going to buy troubled assets, well, a lot of stuff really deteriorated very sharply. So those concerns expressed by Krugman I think are legitimate. And if I'm not mistaken, I heard something about the 20th Amendment being passed because of the transition between Hoover and Roosevelt to begin with, trying to speed it up. Well, this transition can't come too early. I'll just say one more thing, David, which is that I think that appointing Geithner, who I know to have been or to be intimately involved with what's going on at Treasury right now, creates the possibility of doing more, more quickly now.
GREGORY: Will he come under criticism, Steve Pearlstein, for having been so intimately involved in this? You wrote a column today in which you said some of the criticism of the current treasury secretary is unfair. Does Geithner get good marks for his level of involvement to date?
PEARLSTEIN: He does get good marks, particularly from those who I think unfairly are criticizing Hank Paulson. They work very well together. But the thing to know about Tim is that long before many other people at the Federal Reserve and many economists were acknowledging that there was a credit bubble, he said so, he was working on what to do when it burst. He was concerned about systemic risk, talking about it in very technical ways and terms. But he was on the case here long before most people.
LIESMAN: While, David-David, that's while the market-the whole ideas out there were, let the market do its thing, it will self-regulate. And you can go back to 2005 and find a speech where he was saying these credit defaults needed to be regulated. He's been pushing uphill against that for three years now.
GREGORY: Let's listen to Hank Paulson speaking at the Reagan Library this week about these conditions that the country is now facing.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: The most significant discussion of financial system reform in the last 60 years has begun. This debate offers great opportunities and great peril. The events of the last year have exposed excesses and flaws that are, to put it mildly, humbling. If we do not correctly diagnose the causes and instead act in haste to implement more, rather than better regulations, we can do long-term harm.
(END VIDEO CLIP)
GREGORY: Steve Pearlstein, do these who were involved intimately in the economy-and I mean the financial system and more broadly, in corporate America-is there a feeling now that they understand the depth of the economic problem? And if the answer is yes, does that get us closer to a path toward a solution?
PEARLSTEIN: Yes, they do understand, and they're backing off very quickly on the idea that markets regulate themselves and we don't need regulation, that government is always the problem and never the solution. You don't hear that matter very much there. They're very much in retreat. And you know, this is the opportunity that Secretary Paulson, who has indicated just in that clip-but remember, he's made 180-degree turn here. He came to Washington basically saying, we don't need more regulation, we need less, because the regulation that we already had was making us uncompetitive relative to other markets like London. Financial markets I'm referring to.
And Steve Liesman, just finally on this point again, there is a sense that people are looking, waiting for the grownups to come home and provide some kind of solution. Are we getting any closer to that as we look toward a new economic team being put in place?
LIESMAN: You know, I wouldn't criticize the current economic team in place right now. I know the guys at Treasury are working around the clock on a variety of plans, whether or not a new look at things by a new team will be different. But I have to think that they have pretty good professionals right now in the Treasury in the Bush administration, and that even some of those guys might even stay on because they're so net deep in the minutia of the stuff that is really the substance of these bailout plans. So it's going to be good to get a fresh face and they'll bring in new folks. But I don't think anybody is arguing that the kids were in charge of the candy store over the last several months, David.
GREGORY: Right. No, that's not my suggestion, that the adults were not involved. But there's just a sense that nothing seems to be working. That's what I'm getting at.
PEARLSTEIN: Well, that's not fair. Look, that's not fair.
You don't know what would have happened if nothing had been done, if all the things that had been done having to do with AIG and Fannie Mae and Freddie...
LIESMAN: And not only that.
PEARLSTEIN: ... and money put in the bank. So that's not fair. This situation has not...
GREGORY: Well, but Steve, wait a minute. I don't have the level of expertise that you do, but I can certainly follow as a reporter the news, and success and failure, and experimentation and failure. We have not seen an investor class return to the markets. We have not seen retail confidence. We don't see consumer confidence. We see the opposite of all of that, while we have a treasury secretary telling us that everything is stabilized. Where is that stabilization? That's unfair to people who are concerned about this economy who don't believe that there is actually something improving here.
PEARLSTEIN: David, I have some bad news for you. It was going to be very bad anyway. What we're dealing with here is unwinding, imbalances in the economy that were huge. And it was going to be bad, and no one was going to fix it. No one was going to make it be all right. No one was going to make sure the stock market didn't go down or that retail sale didn't go down. That was not possible. You have to understand that we are in a bad fix. This is going to be painful. No one is going to save those auto jobs. There's going to be 40,000 or 50,000 of them cut even once they do a restructuring. The problem here-what everyone has to understand is, we were living beyond our means for a long time. We now have to adjust to that. The painful-the adjustments will be painful. And to say that, oh, he didn't stop it, what you're saying essentially, David, is why didn't he reflate the bubble? Well, that would not have been a good idea, David. Trust me on that.
GREGORY: All right. We're going to leave it there.
LIESMAN: I feel your pain, David.
GREGORY: Steve Pearlstein, Steve Liesman, thanks to both of you. I just want to ask some provocative questions. A lot of people are hurting and we're trying to find our way through it. And you guys have been great. Thanks for being here.
GREGORY: OK. Coming next, President-elect Obama is expected to announce Hillary Clinton as his secretary of state after Thanksgiving. Is it a done deal, or is Senator Clinton considering other options?
Our panel joins me right after this. 1600 returns after a break.
GREGORY: Back now on the program. Time to bring in the panel. AS President-elect Obama prepares to roll out his economic team, NBC News has also confirmed that Obama is "on track" to nominate Hillary Clinton as secretary of state sometime after the Thanksgiving holiday. Tonight, "The New York Times" reports that several Clinton associates say she has decided to accept the job, but a Clinton spokesman would not confirm that, saying, "We are still in discussions which are very much on track. Any reports beyond that are premature." Joining me now, the panel tonight: Joan Walsh, editor-in-chief of salon.com; Pat Buchanan, former Reagan White House communications director, Nixon speechwriter, and a former presidential candidate himself; and Lawrence O'Donnell, former chief of staff to the Senate Finance Committee. Pat and Lawrence are also MSNBC political analysts. Joan Walsh, I want to start with something that you wrote on the Web site where you're talking about Obama and Clinton together. This is what you said: "The differences between them were exaggerated for political reasons during the primary season. He had a political stake in portraying her as a hawk, she had one in portraying him as naive and unready. He was right about Iraq from the get-go and she was wrong, but their positions on how to get out were virtually identical. Despite their debates about how and when to sit down with dictators, I think they'd take much the same approach to dealing with both our friends and our enemies." Is that why he is making this selection in your judgment?
JOAN WALSH, EDITOR-IN-CHIEF, SALON.COM: It is why, David. I think that they have a lot in common, and I think, you know, this is proven, if there were any doubts, that he is an extraordinarily self-confident person. He stood up. If he indeed does this-and it's not fully confirmed, but it looks good for both of them-if he does it, he stood up to a media mob that has been howling about, how could he? How could he bring this circus inside his tent? I trust that he could stand up to Ahmadinejad or al Qaeda after standing up to the media on this. But I think, you know, they also, I believe, developed a kind of rapport as she campaigned her heart out for him. I believe that there is a sense of trust between them at this point. And I think it's a great move. He looks like a very confident, powerful person who is empowering someone who will be great for this country.
GREGORY: Lawrence, I have made the observation that there is an effort here, both politically and substantively, to make her part of this team in a way, to make both of them part of the age of Obama politically. That he would want and count on her advice, but he also wants a relationship with the former president as well, and it's important to have them part of the team for however much drama that entails, and whatever ethics difficulties would be required in terms of vetting what the former president does around the world.
LAWRENCE O'DONNELL, MSNBC POLITICAL ANALYST: That does make sense. And there are two political front that's she is helpful on. One is she was obviously his sharpest critic within the Democratic Party about this notion of initiating talks with Iran, Cuba, places like that. He is now going to order her to do that. She is going to be the person who has to do that, and get her bureaucracy to start doing that. That certainly contains whatever political fallout there might be from that within the Democratic Party. It absolutely eliminates it. The other front she is very, very politically helpful on, as is Bill Clinton, but especially the senator from New York, is Obama's slight problem he had with supporters of Israel who questioned just how much does he lean toward the Palestinians or not. There was some question and some doubt about that with him. There is none with Hillary Clinton. There never is with New York senators. They have to know how to navigate that situation very carefully. So she completely eliminates all questions about that going forward. Those are two very helpful places that he needed a little political help in international affairs, and Hillary Clinton provides it.
GREGORY: Pat Buchanan, let's talk about her, Senator Clinton, potentially Secretary of State Clinton, in a broader national security team that could include Jim Jones, General Jim Jones, inside the White House, could include Robert Gates staying on as secretary of defense, and oh, by the way, a vice president in Joe Biden who wants a big seat at the table and wants his voice to be heard on foreign policy. Who is in charge of this foreign policy team with all those players involved, Pat?
PAT BUCHANAN, MSNBC POLITICAL ANALYST: Well, I would include Rahm Emanuel in that, sitting at the National Security Council meeting. And the one in charge is the president of the United States. I can see him saying, look, we all agree we've got to get out of Iraq, and none of us wants to see a major defeat there. And what is the best way to go about it? Each of them making a contribution. He says OK. He make a decision. Hillary Clinton then becomes, if she is secretary of state, the voice of the administration on foreign policy. She becomes the implementer on foreign policy. And she is the principle adviser on foreign policy. But he makes it. He decides it. Just like Ronald Reagan. He brought in Al Haig from Nixon, Weinberger from Nixon, Shultz from Nixon, and his rival, George H. W. Bush. There was no doubt whose foreign policy it was. Those folks implemented Reagan's foreign policy. I think Obama is using that as his model.
GREGORY: Is Joe Biden in charge, Joan Walsh? Is he ultimately in charge? Can he call up Secretary of State Clinton and say, look, this is what we want you to do?
WALSH: You know, it depends on the situation. But I'm with Pat. I think that President-elect Obama will be in charge. And I don't really think there is any doubt about that. I think Joe Biden will have a voice. I'm not saying that there won't ever be any disagreements, but I think in the end, it's very clear that this man, this president-elect, has assembled a team of people that he trusts to disagree, that he trusts to give him different points of view. But in the end, he will be the decision-maker. And I think it will be great for the country.
GREGORY: What about this idea, Lawrence, is this really change you can believe in? I mean, is there a prospect here of government in exile over at Foggy Bottom led by Senator Clinton?
O'DONNELL: Well, we've seen that before. The Colin Powell State Department was, in effect, in exile from the rest of the Bush administration. And he, by the way-remember this Colin Powell model where everyone thought at the outset, well, gee, you know, Bush is taking someone into his cabinet who he cannot fire. Powell is the most popular guy in the country, far more popular than Bush will ever be. In fact, he did fire him immediately after Bush's reelection. And that's, of course, a cautionary model for Hillary Clinton, who is also getting this label of "unfireable." There is a day on which she is absolutely fireable, and that is right after that reelection. So we don't know how this will play out long term, but what is beyond question is Barack Obama is her boss. And he is the boss of everyone, as Pat put it, in the National Security Council meeting, which does include chief of staff, vice president, defense secretary, national security adviser. He's going to be the boss in that room.
GREGORY: Go, Pat.
BUCHANAN: And she knows-listen, she knows exactly what her situation is. Let's take the Joe Biden situation. If Joe Biden calls her up and says we want you to do this, she will say, well, I tend to disagree with that, let's take it to the president. Or is this the president's direct order? If the president has got a direct order, it will come through the national security adviser, not through Joe Biden. I think Hillary Clinton sees herself correctly as a figure who can now make history, the capstone of her career. Secretary of state is not just one of 100 senators. You can be a John Foster Dulles, a Henry Kissinger, and I think she sees that. I also think she is smart and a team player, and she is not someone who's going to go off the reservation and risk the kind of thing that happened to my old friend Al Haig. I think it can work. I think it speaks well of Hillary Clinton. I think it speaks extremely well of Obama, and it says he's going to run a centrist foreign policy.
GREGORY: All right. Got to leave it there. Thanks to the panel. Coming next, she celebrated in Grant Park on election night. So what is Oprah planning for the inauguration?
All that and more, our "Daily Briefing," on 1600.
GREGORY: Back now with a look at what's going on inside "The Briefing Room" tonight.First up, Oprah Winfrey goes to Washington. "The Washington Post" reports that Oprah is hoping to broadcast three shows from D.C. during the week of President-elect Obama's inauguration, and that she's even reached out to the Kennedy Center about possibly hosting one of the shows there. The Post also reports that the queen of talk is also shopping around for a site to host an inaugural ball. A short block here. Up next, Iran, two wars, and a global financial crisis, just a few of the things on the foreign policy to-do list. How would President Obama and Secretary of State Clinton meet those challenges? I'll talk to Zbigniew Brzezinski, former national security adviser to President Carter, when 1600 returns right after this.
DAVID GREGORY, MSNBC NEWS ANCHOR: Tonight, change comes to the Treasury. President-elect Obama decides against tapping a Clinton veteran to lead the country out of this financial mess. Is it a response to putting so many Clintonites in the administration? And Hillary Clinton has decided to accept the offer to be secretary of state, so the reporting goes, thought it's not final. The challenge is she and President Obama will face in the Middle East and around the world as 1600 PENNSYLVANIA AVENUE continues. We're back on the program, good to have you here. I'm David Gregory. Tonight Senator Hillary Clinton remains "on track" for a job as secretary of state. Whoever assumes the top job at state will face daunting challenges abroad, a global economic crisis, two intractable wars, growing tensions with Russia, the task of rebuilding U.S. alliances and institutions in a changing world. Joining me to talk about all of that, foreign policy challenges and opportunities of the incoming administration, Dr. Zbigniew Brzezinski, national security adviser to President Jimmy Carter, and the author of "America and the World: Conversations on the Future of American Foreign Policy"-an important book, an important discussion at a very important time.
Dr. Brzezinski welcome.
DR. ZBIGNIEW BRZEZINSKI, PRES CARTER NAT'L SECURITY ADVISOR: It's good to be with you.
GREGORY: Very good to have you here.
BRZEZINSKI: Let me just say right away.
BRZEZINSKI: That book is co-authored with Brent Scowcroft.
BRZEZINSKI: So, he shouldn't be dropped.
GREGORY: Absolutely not. And he has been on the program. Good to have you here. Let's talk about the economy, because we are in the middle of an international global meltdown. And as economic policy is about to be recast by a new administration with the new team that Obama will roll out on Monday, this in some ways, does it not, becomes a center piece of his foreign policy as well, his economic policy? In what way do you think?
BRZEZINSKI: Well, it certainly becomes the central and most immediate preoccupation. He'll have to deal with that program because he knows at stake is the vitality and the place of America in the world. So, that's going to be a major preoccupation. But, what is particularly troubling are two further factors. He'll be dealing with it in the context of an unprecedented crisis of confidence in American global leadership. Now to be sure, his election has generated an enormous worldwide sense of enthusiasm, but in the elites, in the governments, in the vested interests, there's still a sense of uneasiness as to what U.S. policy will be. And secondly, for the next 60 days, there's going to be, in effect, a kind of interregnum. He rightly says we have only one president, so he cannot inject himself. On the other hand, the outgoing team and the outgoing president is not capable of setting a course that the rest of the world is prepared to follow. So, we're in a very, very deep cris right now.
GREGORY: How much impact is this global financial meltdown having in countries where could it manifest itself negatively down the road, become a major part of policy? For instance, I think about Pakistan as one area where the financial collapse has put in it such dire straits.
BRZEZINSKI: That's true, but in the case of Pakistan other factors have been contributing to the dire straits and they were persistent and they're enduring and we have to be very careful not to make them worse. There are some countries which, in fact, because of the crisis are likely to become more constructive and helpful. I rather expect that over time, China will play that critical role. And their role at the meeting in Washington, just a few days ago, was constructive. There are some other countries which for a little while, were attempted to engage in a bit of schadenfreude, satisfaction of our difficulties and snickering and then all of a sudden, learned that they're even in the deeper crisis themself. That's for example, Russia. I think Russia probably will have to ask itself whether a policy of self-assertion, of pushiness, of even threatening makes much sense when the Russian economy is in fact in greater straits than ours.
GREGORY: And Vladimir Putin, Prime Minister Putin, talking about stimulus for the economy, there, and an effort not to have some of the backsliding that went on in the '90s just within the last couple of days.
BRZEZINSKI: Well, their stock market went down twice as badly as ours. There was a massive capital flight from Russia and the ruble has gone down where as the dollar, in fact, is strengthening. And Russian plans for its own internal development have all been premised on a very, very high priced per barrel of oil.
GREGORY: Let's talk about this emerging national security team for President-elect Obama. We're all following the news and what looks to be the certain news that Hillary Clinton will be secretary of state. You said this on a near and dear program to both our hearts, MORNING JOE, the prospect of Hillary Clinton being considered for the vice presidency. This is what you said about it back then.
(BEGIN VIDEO CLIP)
BRZEZINSKI: If she was vice president, there is at least a high risk that it will be a dysfunctional presidency, because in the executive office of the president, across the street from the White House, there will be a government in exile and a government in waiting. And that wouldn't create a very good atmosphere.
(END VIDEO CLIP)
GREGORY: Is there now the prospect of a government in exile, government in waiting in Foggy Bottom if she is secretary of state?
BRZEZINSKI: No, because there is a very, very big difference between two posts. You cannot fire THE vice president. You can, may be politically costly, but you can certainly fire the secretary of state. Now so, the analogy no longer applies. I think there's a different problem, however. Hillary Clinton is an extremely attractive, able person, she has a real political gifts. She'll be politically, a very effective secretary of state internationally. But she is really not a person deeply, deeply versed in geopolitical issues, in strategic issues, in arcana of diplomacy. So, the question arises, at least in my mind, who is going to be shaping foreign policy? Who is going to be setting the strategic course? And I don't think we yet who know that will be, because we don't yet know who the national security adviser will be. But if the rumors are accurate, that it will be General Jones, Jim Jones, then combination of Biden and Jones under the president and in the immediate proximity of the president, will ensure the White House is a strategic center and that the president is in charge of foreign policy and the State Department and the secretary of state are the executors of that policy set in the White House. And that, I think, that would work.
GREGORY: We know that this president-elect wants to tend war in Iraq. We know that he would like to put more troops into Afghanistan. Those are specific policies. What are we learning about what his strategic thrust will be in terms of global leadership, led by America?
BRZEZINSKI: That's a very good question, very good question and I have been thinking about that. And it is relevant to what I was saying a few minutes ago. I don't think in the present crisis the whole world can wait 60 days to get some sense of direction from Washington. Because right now, quite literally, let me repeat, there is a crisis of confidence in American leadership. Now, president-elect cannot take order from the president. But he hasn't in the course of the campaign, really given an overall, overarching speech in American foreign policy. In Berlin, he spoke very lofty tones, but it was essentially an uplifting inspirational speech. I really do think that it would not be improper and it could be quite constructive if the president-elect, once he has his entire team, foreign affairs team, in place, were to get, for example, a very serious interview to a major newspaper or to some leading world newspapers, in which he would address several key issues, such as: what is he prepared to do to reunify the West, our relationship with Europe, and what should it entail? What does he have in mind when he thinks about enlarging the circle of decision maker in the world? Increasing the size of the G-8 and how to organizing it? What does he think about engaging others, particularly those who haven't been central yet in world affairs and need to be included, particularly China and then perhaps also Russia and so forth? And last but not least, the issue that you've raised. What is he prepared to do to pacify that volatile area in which we run the risk of becoming bogged down, namely from east of Egypt to west of India? If he had some overarching statements like that, it would not interfere with the current president, but would give the world a sense of confidence that he is in charge, that it will be his foreign policy, not anyone else's and that he knows where he wishes to head.
GREGORY: What is the subject of his most important foreign policy decision in the first hundred days or say, first six months of the administration?
BRZEZINSKI: Well, I think those decisions would pertain particularly to the area of crisis. Is he prepared to be seriously engaged or not, in the Israeli-Palestinian peace process and give it a helpful push.
GREGORY: You think that's where it starts. It is not Iran.
BRZEZINSKI: I didn't say this is the only one.
GREGORY: No. OK. In the Middle East.
BRZEZINSKI: Another one would be precisely, Iran. Because I think we can where we're headed in Iraq. And basically we can that in addition put toing some troops in Afghanistan; we have to activate the political process. But, are we prepared seriously to give true negotiations with Iran a chance? Are we prepared capitalize on the enormous global standing right now, to give the Israeli-Palestinian peace process a shot? And help the Israelis and the Palestinians to reach an agreement which, at the present moment, their elites are incapable of doing?
GREGORY: My reports indicates that a senior leader in the Middle East told, then Senator Obama, wait, don't act too quickly about getting involved in the Israeli-Palestinian dispute. There is not that much room right now for positive movement. Do you disagree with that advice?
BRZEZINSKI: Totally. That advice is in effect a device, the effect of which would be to perpetuate what has become increasingly a worse and worse mess, in which has lasted now for 40 years. And it brings us closer and closer to that indefinable moment in history which, is getting near, in which a two-state solution will no longer be feasible, because of the settlements, because of demographic changes, because of growing frustration and despaibir.
No, the president has maximum moment of opportunity with his popularity and global standing at its highest. And it will never be higher than in the days following the inaugural speech.
GREGORY: Dr. Brzenzinki, a pleasure to have you on. Thank you for your views.
BRZEZINSKI: Good to talk to you. All the best.
Appreciate it very much. Coming up next, Obama picks his Treasury secretary, he'll announce it on Monday, and what role Bill Richardson will also play. He's also talking about that in the new administration. Top strategists Mike Murphy and Steve McMahon weigh in when 1600 continues right after this break.
GREGORY: Back now. Again, the news today as we learn who will head up the economic team. Andrea Mitchell and Chuck Todd broke the news today this afternoon that Tim Geithner, who currently runs the New York Federal Reserve, will succeed Henry Paulson as Treasury secretary. Geithner has worked closely with Secretary Paulson during the past few months dealing with the Wall Street crisis. NBC NEWS has confirmed that Mexico Governor Bill Richardson will be commerce secretary. He was in line for that secretary of state job. President-elect Obama is also expected to officially roll out this economic team on Monday. It might include Larry Summers, as well as an adviser. Joining me now, Democratic strategist, Steve McMahon and Mike Murphy, Republican strategist and NBC news analyst. I'm hearing my voice back at me at me...
STEVE MCMAHON, DEMOCRATIC STRATEGIST: I'm hearing it, too.
GREGORY: It's almost too much of me in this circumstance like this, in some cases.
MCMAHON: Could there ever really be too much of you, David?
GREGORY: No, there can't. But in some cases-hey, Mike Murphy, Hillary Clinton, if this is a done deal, is it a good deal?
MIKE MURPHY, REPUBLICAN STRATEGIST: I don't know. I have kind of a mixed view of it. On the one hand, on the merits of it, she's tough, she's competent, she knows foreign policy better than the average senator, she has more hawkish instincts than Obama-all pluses. On the minus side, the Obama world, the great strength they have is they're very drama-free and they're getting married at the highest levels with the absolute Mount Olympus queen of drama, even when sometimes she doesn't want to create it, the way the media covers here. So, it's risky and I'm not sure. It has the potential to be a home run, but I think the jury is out. We'll see how it functions.
GREGORY: We're going to talk a lot about, Steve McMahon, about-we talk about style, we talk about the politics, we talk about the process involve in building a team. But, what is really going to matter is substance. It's going to-the decision making and the leadership is going to matter. What are we learning about President Obama through the selection that's he's making so far?
MCMAHON: Well, I think that we're learning-what we're learning is that he is not a typical politician, somebody who come to town and rewards all of his friends and punishes his enemies. He is somebody who, obviously, has great confidence in his ability and great confidence in his ability to bring in rivals and to manage them and to make them mold to his views as opposed to bringing in high drama. I think Mike correctly identifies what a lot of Republicans hope happens and that's Hillary Clinton becomes a bit of a distraction. I think Hillary Clinton having been in the White House before, understands what a secretary of state has to do and I think she's not going to take job unless she's prepared to do it.
MURPHY: My I interject?
GREGORY: Yeah, go ahead.
MURPHY: Well, some Republican-I'm not rooting for that. I want the team to be successful.
MCMAHON: No, I understand, Mike.
MURPHY: The problem with this - team arrival's thing, though is they didn't have the Internet news, they didn't have Matt Grudge and linkenzerra (ph). So, the possibility for trouble is much bigger now, just the nature of our...
MCMAHON: And I wasn't trying to put words in your mouth except these. I think Mike Murphy and I would both say, where are the white Irish guys? I mean, don't we need a few more of those?
UNIDENTIFIED MALE: Screwed again.
GREGORY: Hey Mike, what about the-through crisis comes opportunity, Jerry Seib of the "Wall Street Journal" made that argument, today. You've heard Rahm Emanuel, chief of staff, talking about that, you know, a crisis is a terrible thing to waste. How much room does Obama have to do really big go things? And is the Republican Party prepared to give him a wider berth than even normal for a new president?
MURPHY: Well, I think the party will split a little. I think some will want him to succeed more than others. I think we're going to stand by our ideological principles, so it is not a blank check. There's going to be a lot of Republicans balanced in a constructive way. I think we're going to be a little distracted by our own issues about rebuilding the party so we become a little bit more competive in the future from the tough time in the Senate and the congressional races. So, you know, Obama has the power to do a lot with the numbers he has now in the Senate and in the House. The problem is, these are all real solutions, you know, we're getting beyond the rhetoric of Obama into real policy, Brzezinski kind of hinted at that. In the detail is the hard work, and we'll see. And we're seeing what kind of sacrifices, frankly, the American people want to make. It's a lot easier to clap for the speech and feel good about an Obama presidency or any presidency than it is to suffer through the sacrifice that a president in times like this may have to ask people to make.
GREGORY: Steve, it is interesting, as a politician, Bill Richardson to be commerce secretary. Where does he fit into an economic team? Commerce secretary can be a cheerleader for policies, a commerce secretary can also work on raising money for the reelection. But, it's not a totally political choice in this regard. He's somebody who's got a lot of substance and policy.
MCMAHON: He's got somebody with a lot of substance in policy, somebody who's been in an administration before, somebody who's been an executive, who's been, you know, an arms negotiator, and he's done all these things that, I think, give him enormous breadth and depth. But, if you look at what the commerce secretary does versus what, for instance, Treasury Secretary Paulson is doing. The person with the $700 billion is the Treasury secretary. The person who's making the decisions about whether the automobile industry gets bailed out and whether we come in and try to save and rescue home owners who are having trouble with their mortgages, is the Treasury secretary. So the bulk of the economic power, I think, still resides over there and I think that's where it will reside in the Obama administration as well.
GREGORY: Steve McMahon, Mike Murphy, I got to leave it there. Thanks to both of you very much. Going to go to a break, now. Coming up next, Obama dramatically changed the electoral map, but will he be able to keep the support of those Independents and conservative crossovers once he starts governing? "Atlantic Media's" Ron Brownstein keeping an eye on all of that, will talk to me about it as well as other transition news when 1600 returns, after this.
(BEGIN VIDEO CLIP)
SEN MITCH MCCONNELL ®, MINORITY LEADER: I think the new administration is off to a good start. Rahm Emanuel called me a couple days ago, requested an opportunity to come up and meet with the Republican leadership which we did in my office, yesterday. They're saying in my view, all the right things, both the president-elect and his chief of staff, that they want to govern in the middle and tackle big things. And that's been my advice to him.
(END VIDEO CLIP)
GREGORY: That was Mitch McConnell talking about the incoming administration and reaching out to the president-elect as he's been reached out to, before we come to the inauguration. Joining me now is Ron Brawnstein, head of the "Atlantic Media," political director for "Atlantic Media.And you know, Ron, as we've talked over time, one of the questions was, what will the campaign result tell us about the kind of governing strategy that a president Obama will have? As you continue to study all of this and digest all of this, what are you taking away?
RON BROWNSTEIN, ATLANTIC MEDIA: Well, I think the answer is that the election results give him opportunity to have a broader and more inclusive coalition than we saw under President Bush. The last two elections were 50/50 elections, fundamentally, in which virtually half the country, when Bush came into office, was pretty much aligned if not dead set against him. I think Obama begins with a broader potential pool of support which will give him leverage to potentially speak to a broader segment of Congress, as well. I mean, this is not-he won nine states that President Bush won last time, including seven that he won both times. There are people, Republican congressmen and senators in those states who are going to have to pay attention to those results.
GREGORY: And there is a Republican Party that wants to rebuild itself that will have ideological division with the administration, particularly in the area of economic remedy, but also recognizes that they're on the line as well in that rebuilding process, they need to show some results.
BROWNSTEIN: Yeah, part of the big story, I think, in the last two elections, really, 2008 is a continuation of 2006 in that what you see in both of them, a narrowing of the reach of the Republican Party, we've talked about this, both demographically and geographically. Losing Independents in badly in '06, losing Independents again in 2008, losing Hispanics and young people in '06, again in 2008, but especially geographically. If you look at the House and the Senate, the capacity of the Republicans to win in places beyond the most culturally conservative parts of the country has enormously eroded. For example, John Kerry won 180 congressional districts in 2004, to give you a sense, leaning toward the Democrats. At the end of that election, Republicans held 18 of those 180 districts. By now, after 2008, they're down to five of those 180 districts. By comparison, Democrats now hold almost one-third, about one-third of the 255 congressional districts that voted for Bush in 2004. And what that says is that Democrats are competing across a broader terrain, they're attracting a broader range of voters and ultimately Republicans to have figure out how to widen the appeal again, because simply focusing on mobilizing the base, which was the core of Bush's strategy, has left them standing on a very narrow ledge.
GREGORY: You're fond of stepping back and asking that question, what are we learning about a governing philosophy, about a leadership style, and in this case, of Barack Obama through this transition process. What is he telling us about his politics as a president, and about his leadership style through the way this transition...
BROWNSTEIN: I think the word that Steve McMahon used was right. I think there's a lot of self-confidence in this. I mean, he's making-he's picking formidable people and certainly picking Hillary Clinton is not a simple choice, it's not-there is not a Richardson-land as there is a Hillary-land. When you pick her, you're bringing a lot of people along and I think he is making a bet here that he can forge this in a direct that is positive for his administration.
The other thing is, he is picking an administration that "looks like America" without talking about talking about picking an administration that looks like America, as bill Clinton did, and tying himself up in knots. There is kind of a sublimation of process in a way here that we're seeing. A results oriented focus. Rahm Emanuel is not necessarily someone that the core liberals in the party might have been enthusiastic about. He thought he could do the job. And I think we're going to see that in a lot of ways that Obama is, so far seems to be putting results over symbols. And that's probably a good way to start a presidency.
GREGORY: And it's an indication that our conversations, as we go forward, is going to become very specific, narrowly focused on problem-solving on particular issues.
BROWNSTEIN: He has an enormously ambitious agenda and he starts with an agenda that is more conventionally liberal than Bill Clinton's. And the question is, how does he adapt that to the political circumstances in which he finds himself? Is he willing to bend? How inclusive is he willing to be? We're getting some signals from the kind of appointment he makes, but as you say, ultimately the proof is going to be in the policy, decisions that he make down the road.
GREGORY: Ron Brownstein, thank you very much. That's our program for tonight. Have a peaceful Friday night. HARDBALL with Chris Matthews, up next. Have a good weekend.
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