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'Hardball with Chris Matthews' for Tuesday November 25, 2008

Read the transcript to the Tuesday show

Guest: Mark Green, Chrystia Freeland, Perry Bacon, Howard Dean, Jonathan Martin

DAVID SHUSTER, GUEST HOST: There are only two presidents at a time. Let's play HARDBALL. Good evening, everybody. I'm David Shuster, in for Chris Matthews tonight. And welcome to HARDBALL. Leading off tonight, a crisis of historic proportions. That's what President-elect Obama says the country is facing right now. Mr. Obama said he's fully in favor of deficit reduction eventually, but that first the economy needs a stimulus.


SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: We are going to have to jump-start the economy, and there's consensus that that requires a bold plan to make the investments in the future. But we have to make sure that those investments are wise. We have to make sure that we're not wasting money in every area.


SHUSTER: How big a deficit can the United States run? Can we spend our way out of this crisis? MSNBC's Pat Buchanan and Air America's Mark Green have very different answers to those questions, and we'll talk to them in a moment. Also, speaking of spending, the federal government today announced-ready for this? -- $800 billion in new spending to help loosen up credit markets and make borrowing easier. So let me get this straight -- $700 billion for Wall Street, another $700 billion or so to jump start the economy, $300-plus billion more for CitiGroup, and now this? For those of us who are getting our first crash course in economics, here's a question. Where does all this money come from? We'll try to sort that out for you. Plus, Howard Dean. He's leaving as head of the Democratic National Committee, but under him, the Democrats have not only regained control of both the House and the Senate, they've captured large majorities on both sides of the Capitol. So did Dean's much-criticized "50-state strategy" work, or was he just lucky? And what does he do for an encore? Howard Dean will join us later. Also, is it just me, or doesn't it seem as though the people who are being named to get us out of this economic mess are some of the very ones who got us into it? We'll look at that in tonight's "Politics Fix." And we can understand how Sarah Palin was named one of "Field & Stream" magazine's heroes of the year, but Senator Chuck Schumer of New York? Exactly how much moose hunting can you do in Brooklyn? We'll figure that one out for you in the HARDBALL "Sideshow." But we begin with the economy. MSNBC political analyst Pat Buchanan is here with me in Washington, and Mark Green, the president of Air America, is in New York. He is the co-editor of "Change for America." Mark, let's start with you. CitiGroup gets $300 billion in aid, but the auto makers, when they were just here, they were told, Oh, you got to come back with a more detailed plan just to get $25 billion? How is that fair?

MARK GREEN, AIR AMERICA RADIO: It probably isn't. Hank Paulson whiffed on his first two attempts by emphasizing corporate welfare over consumer welfare. Now, CitiBank didn't get $300 billion. There's a loan against assets that the government has access to. What they got was $20 billion, which is not chump change. Obama understands that the greatest risk now is an economy that's seized up and if consumers won't spend, government has to. And China and all the western European countries now facing or are in a recession have agreed with, to quote Pat's mentor, We're all Keynesians now. If consumers won't spend money, government has to step up. The greatest risk now, David, is not that we may spend a little too much and pass debt on to the future, for example, by borrowing. The greatest risk is a depression where a third were unemployed in 1933.


PAT BUCHANAN, MSNBC POLITICAL ANALYST: Well, I mean, let's talk about CitiBank. I think CitiBank had to be saved with the $20 billion. I agree with Mark on that. But the problem with this is, the head of the executive committee up there is Robert Rubin. His deputy, of course, was Lawrence Summers, and Geithner is right in the thick of this. They get bailed out, but General Motors does not. I think there's a hostility to smokestack industries. And secondly, I do believe this, you can't let CitiBank go under because of who it would draw down if it went under. I think they have $2 trillion in assets, connections with every bank in the world. But the same is true of General Motors and its suppliers and salesmen and everything. If they go belly up and they go bankrupt, companies go bankrupt all over America. I think you've got to save both of them. But I would like to have the Congress investigate these characters, Paulson among them, Summers, Geithner and all of them. What are the standards by which you bail out Bear Stearns but you don't bail out Lehman Brothers? And so I think that would be a fair investigation.

SHUSTER: And Mark, wasn't Geithner part of this mess? I mean, Geithner was the one who was working hand in glove with Paulson. And then Larry Summers, he's the same guy who-for God's sake, Larry Summers supported the law that allowed the deregulation of derivatives that contributed to this mess, right?

GREEN: Look, if the standard is who knew about this or who had some say or sway over decisions that led to this, then only Chris Matthews and Paul Krugman could be appointed to something because neither is to blame and Krugman, of course, had predicted this. The issue is not what's the element of blame, but A, are they competent and smart, and B, will they follow-of course they will- Obama's mandate, which is-he said we have to act anew and think anew. He's been compared to Lincoln, which is always risky for a president-elect, but Lincoln used those exact words and then went on to say, Let's disenthrall ourselves. So Hoover economics and Bush economics has hit this reef called reality and have sunk.

BUCHANAN: All right, let me...

GREEN: And trickle-down economics and financial deregulation and tax cuts for the risk and laissez-faire economics have, in part...


GREEN: ... gotten us into this situation. Last point, Pat. And so Obama wins by triple the margin of Bush in 2004. You bet he has a mandate to try something new and big.

BUCHANAN: All right, well, look, George Bush got in trouble because he ran last year $455 billion deficit, between 3 and 4 percent of GDP. The numbers you just gave, $800 billion, $700 billion for the stimulus, $700 billion for the bail-out, that's $2 trillion. That's 14 percent of the entire gross national product of the United States. And Obama says today, Gee, we've got to take a look at the states and the cities and the municipalities, all of which, of course, have workers in there who are his buddies, belonging to unions that endorsed him. You've got-what you've got is an enormous power grab, the largest deficit this country's ever seen. Probably if you add state, local and federal spending, we're going to 40 percent of GDP. That is euro-socialism! Now, I hope somebody will ask some questions about-I think Obama is trying to do the right thing. I don't think he understands economics, but I know a lot of guys around there are seizing this, and Emanuel is one of them, as a crisis that means an opportunity to enlarge the power of government everywhere!

SHUSTER: And Mark, where does it end? At what point do you say, No, you cannot have a bail-out? I mean, the mayor of Philadelphia is asking for $20 billion in loan guarantees to rebuild bridges in his city. I mean, where do you start saying no?

GREEN: Well, let me just-Pat really has a good point, which is you have to establish criteria when you rescue or have a bail-out and not. So a lot of conservatives have said, OK, we had to bail out Wall Street because they're the-finances are the oil that makes the car go, but not GM because that's unions. The issue isn't unions, it's workers. And if the oil-if Detroit and all the associated indirect jobs with it went under, I agree with Pat, it would be a calamity. So that's a non-financial industry that really has to be rescued. So now every other company that comes along and says, What about me? Paulson drew the line at Lehman Brothers but not AIG, which was rescued. So there's a fair issue. What are the standards? Right now, however, Barack Obama is inheriting a mess. He's not throwing money at problems, if he doesn't figure out a stimulus package that's enough to replace lost consumer spending, then we won't have nearly 7 percent unemployment, we could have 12 percent unemployment. Pat is right, we have to watch out for socialism. There's been corporate socialism since Reagan and George W. Bush shifted trillions upward to the top 1 percent. It's now time to try demand-side economics, where you give money, in a sense, through tax benefits or infrastructure or unemployment compensation to people who will spend it. And to give money to the wealthy again, who won't spend it but will either keep it, save it or use it on yachts, won't stimulate the economy. You've got to give it to consumers who will spend it. And that will generate investment in jobs and more spending.

GREEN: Look, when-but what you're talking about is taking government at all levels, which has about one third of GDP, and running it up over 40 to 45 percent of GDP. Now, that's what they do in Europe. Government is not the engine of progress in this country, and handing out money-if that were the solution, Bush's deficit would have solved the problem. But Bush's deficit, you say, is the problem, so we're going to triple federal spending or triple these bail-outs and that's the solution. I mean, it is illogical. But I'll tell you this. At the end of it, you're going to have a situation here-there's one of two ways you can get that money. You can run the printing press, which means inflation down the road and destruction of the dollar, or you can borrow it from the Chinese and borrow it from the Chinese and give it to American consumers who go out and buy Chinese goods at the mall.

GREEN: Pat, the problem...

BUCHANAN: So I mean, I don't think this thing has been thought through.

GREEN: Pat, the problem today is not inflation, as you know. It's deflation.

BUCHANAN: It's the problem tomorrow.

GREEN: And let me just quote Richard Nixon. Government doesn't create wealth, but if the private sector is immobilized or seized up, then we're all Keynesians, which simply means you have the government replacing consumers, or else we'll have a depression...


BUCHANAN: I'll remind you that Nixon's Keynesianism resulted in the greatest economic recession this country has seen since the Depression, 1979, 1980. You ought to know that because with 13 percent interest rates, 21 percent-I mean, 21 interest rates, 13 percent inflation, and it killed Jimmy Carter's administration. That's what Obama better watch out for.

SHUSTER: Pat, where is President Bush in all of this? I mean, where is he?

BUCHANAN: Paulson is running the show. There's no question about that. And I mean, Paulson's a bright guy, but he made a terrible blunder. He admits it now. And he demanded $700 billion for the toxic assets, and a month later or two months later, he comes out and says, That's not what we're going to use it for, but thanks for the money. So I think they're doing this ad hoc. They have to do it ad hoc. But I'll tell you, we've got a legitimate right to question some of these decisions, who's involved in them, what their connections are with Wall Street, because as you know-look, they're dumping all over the guys out there in Detroit. Maybe they should. But these Wall Street guys don't get the same treatment.

SHUSTER: Well, and Mark, speaking of Wall Street guys, one of the top investors in CitiGroup is a Saudi sheikh. I mean, he's been on the air all today. Is this the sort of person that the United States really needs to be bailing out, somebody from Saudi Arabia, just because the Saudis happen to own a large chunk of CitiGroup? Isn't that a problem?

GREEN: No, it's not. Look, a Saudi sheikh may have an investment in CitiGroup and an American tycoon may have an investment in Dubai. We're an international global economy. We're not bailing him out. No one would say, Increase his dividends. The issue is...

SHUSTER: Look at that guy! But look...


SHUSTER: No, wait a second. There's no-there's no-there's no free global trade, there's all sorts of...


BUCHANAN: ... doubled the value of his stock in 24 hours!


GREEN: Before Pat raises...

BUCHANAN: He made a killing! He made a killing!

GREEN: Before Pat raises his voice to the level that would with shatter a glass, he earlier in this segment said that CitiBank, CitiGroup, has to be saved because if it collapsed, it would be calamitous. So let's get where we at least agree. One last thing. The conservative rhetoric about, We don't want to spend too much and the deficit, is real. It's politically real. And Senator and President-elect Obama responded today when he said we have to eventually balance the budget. And Franklin Roosevelt, as a candidate, said in Pittsburgh, We're going to cut spending by 25 percent. When he got into office, he realized it was the exact wrong solution. So the rhetoric of balanced budgeting is part of America. And when Roosevelt said to an aide, My God, I said I'd balance the budget. How could I spend more to get out of the Depression? The aide famously said, Deny you were in Pittsburgh.

SHUSTER: Well, at a certain point, though, I think we do get in some trouble either with the Saudis or the Chinese when they decide they've had enough. In any case, Pat Buchanan and Mark Green, thank you both very much.

GREEN: Thank you.

SHUSTER: And up next, the politics of the bail-out, the Fed's plan to buy up the $600 billion in mortgage-backed assets. So where is all this money coming from? You're watching HARDBALL, only on MSNBC.


SHUSTER: Welcome back to HARDBALL. In case you're keeping score, today's bail-out is $20 billion from the U.S. Treasury to support consumer and small business loans and $600 billion from the Fed to buy back debt issued by government-charted housing finance companies like Fannie Mae and Freddie Mac. For more on the economic and political implications of these moves, we turn to Perry Bacon of "The Washington Post" and Chrystia Freeland of "The Financial Times." And Chrystia, with all this money that the Fed is essentially spending and that the Treasury's spending, where does it all come from?

CHRYSTIA FREELAND, "FINANCIAL TIMES": Well, actually, David, just on the money, it's even more than you said because that $20 billion from the TARP is actually going to be used to back $200 billion that the Treasury is going to deploy. So we're seeing the Treasury use the leverage that the Fed can put on that money. So really, today's price tag is $800 billion. So far, you know, what we're seeing is that the U.S. government is borrowing a lot of money in order to lend a lot of money. But eventually - and I do think we're starting to see this expectation built into the markets-people are wondering whether in 2010, 2011, we'll see an upsurge in inflation as the government is forced to print some money to pay for the really big expenditures we're seeing in 2008 and 2009.

SHUSTER: Perry, $1 out of every $10 of U.S. public debt is now owned by the Chinese. That's more, of course, than the Japanese, the Saudis. Is there a political concern when China essentially now has such a visible stake in the U.S. economy?

PERRY BACON, "WASHINGTON POST": I think, as you said, Senator Obama talked about it-President Obama talked about it. I think there is some concern about the deficit going up and the country owing so much money to other nations. But right now, I think most voters and most people are more focused on how do they get-how do we get the economy moving, how do we keep unemployment from getting too high, rather than the deficit itself.

FREELAND: One point if I could, David?

SHUSTER: Go ahead, Chrystia.

FREELAND: One sort of perverse consequence of the current economic crisis is actually, even though this crisis is essentially made in America and exported by America to the rest of the world, America's cost of borrowing has gone down. It's really cheap for the U.S. government to borrow money right now, which is one of the things that is creating a little bit of room for the government to maneuver, at least this year and probably next year.

SHUSTER: But how much leverage over our economy does China and Saudi Arabia and all the rest really have when they're so much invested in the U.S. debt? I mean, is there a certain point, Chrystia, where China can say, You know what? Now is a good time to bankrupt the U.S. economy by selling all the debt that we've been purchasing for these last several decades?

FREELAND: Well, I think that does have to be a political concern, and the fact that the Chinese government is a centrally controlled authoritarian regime, you know, which could take that kind of central politically motivated decision, has to be a concern. Having said that, right now, the overall market support for the purchase of American Treasurys is very, very strong. The dollar is perceived as a safe haven currency, and the U.S. government is perceived as a pretty good credit risk in an uncertain market. So it's not an immediate financial problem, but it could be a medium-term political one.

SHUSTER: Perry, we heard Barack Obama today talking about fiscal responsibility, that the United States needs to be more responsible, that he wants to go through the budget line by line. Ironically, that was the same sort of thing that John McCain was talking about, the idea that you need to go after the earmarks and rein in spending. And here's Barack Obama from a debate during the campaign trying to put John McCain's argument in context. Watch.


OBAMA: Senator McCain is absolutely right that the earmarks process has been abused, which is why I suspended any requests for my home state, whether it was for senior centers or what have you, until we cleaned it up. And he's also right that oftentimes, lobbyists and special interests are the ones that are introducing these kinds of requests, although that wasn't the case with me. But let's be clear, earmarks account for $18 billion in last year's budget.


SHUSTER: So Perry, don't we have a situation where Barack Obama now is arguing essentially against the Barack Obama from September?

BACON: I think he-I don't really agree with that. I think today now-I mean, today and in September, he was saying that earmarks can be wasteful spending, they're not a big part of the budget. I think that's a I think that's a-I think that's a fair point. Solving the earmark problem will not fix-we're talking about, you know, a huge amount of money today, and earmarks are not-you know, are not a big problem in terms of sort of the-compared to the sums of money we're talking about in this context right now.

SHUSTER: So, when he's talking about fiscal responsibility, as he was today, he's not talking about earmarks; he's talking about being responsible in terms of oversight for the money for Citigroup, the $700 billion for the TARP, for the $25 billion for the automakers? Is that where he is going?

BACON: I suspect he's talking about all those things, yes.

FREELAND: I think, David, he's actually talking about something a little bit longer-team. You know, I think, if you look at what he said yesterday and what he said today, it was really a sophisticated one-two message to the markets. What he said yesterday was: When I come into office, on day one, there will be a massive, monster fiscal stimulus. It's going to be all, you know, guns blazing, because I know that's what the economy is going to need right away. And what he said today was: But don't worry, because we understand, in the medium term, we have to return to fiscal discipline. Now, it's going to be-it's easier to say than to pull it off, but I think it was really important to say those two things.

SHUSTER: Well, maybe I'm confused, but how can you suggest you're going to return to fiscal discipline when you're proposing essentially a budget that might have a trillion-dollar deficit? I mean, we're at $400 billion now. If you add up all of what he wants to do, and the economic stimulus, and all the infrastructure improvements, I mean, we could have a trillion-dollar deficit next year. How is that fiscally responsible?

FREELAND: Because fiscal stimulus can be temporary. And I think what he was signaling is, we're going to use all the ammunition that we need to prevent the economy from sinking into depression, but, medium term, our goal is to return to a policy of fiscal prudence. Those things are not necessarily inconsistent. You can't do them at the same time, but you can announce that you plan to do both. The other thing that I think was really interesting today is confirming that Peter Orszag will be his budget director. Peter has a long record of being interested in what I think is the single biggest structural problem with the U.S. budget, and that is the huge problem of entitlements. I think giving him that job suggests that, again, not immediately next year, but when the economy moves into recovery, you're going to see the Obama administration trying to tackle that huge economic and political issue.

SHUSTER: And, Perry, as far as all the actions that we're hearing from the Obama transition now, how much of that is due to this sort of leadership vacuum that the Obama team sees here in Washington, with the-with the president essentially being not involved?

BACON: I think he has to speak to these issues. I mean, with the amount of money we're spending the last few days, and particularly in picking his Cabinet, Americans want to know who he's picking, what kinds of people, what kind of experience they have. So, I think he has to speak to these issues and he has appear and then show-and show some sense of competence in what's going on and some sort of command of the issues. I think he almost has to be involved in the next few weeks.

SHUSTER: Perry Bacon from "The Washington Post" and Chrystia Freeland from "The Financial Times," thank you both. We appreciate it.

FREELAND: Pleasure, David.

SHUSTER: And up next: One pardon President Bush did not grant, that's coming up on the HARDBALL "Sideshow." You're watching HARDBALL, only on MSNBC.


SHUSTER: And welcome back to HARDBALL. It's time for the "Sideshow." First up: President Bush may have issued 14 pardons yesterday, but there was one big name missing from the list, former Cheney Chief of Staff Scooter Libby. So, what's the president waiting for? Well, parody news network The Onion has come up with a more stealthy scenario for Scooter's pardon.


UNIDENTIFIED ACTRESS: At the White House this morning, President Bush took part in a beloved Thanksgiving tradition, the officially pardoning of the national Thanksgiving turkey. The lucky gobbler that received the pardon this year was former White House aide Scooter Libby, dressed head to toe in a turkey costume.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I appreciate you coming to watch me give this bird a presidential pardon.

UNIDENTIFIED ACTRESS: Mr. Libby's federal prison sentence was commuted by President Bush last year. The Thanksgiving pardon will officially save him from all charges of perjury and from being cooked for dinner.



SHUSTER: Next up: proof that politics makes for strange bedfellows. Senator Chuck Schumer and Governor Sarah Palin have been named heroes of the year in the upcoming edition of the outdoorsy "Field & Stream" magazine.The editors cite Schumer's efforts to open land to hunters and provide resources to farmers. Sarah Palin, meanwhile, is considered the first true hunter to run for executive office since Teddy Roosevelt. Sarah Palin and Teddy Roosevelt in the same sentence, you will never hear that again-ever. Next: While people for a long time will try to figure out exactly how we fell into this economic crisis, "The New Yorker" has unearthed an interesting and perhaps telling tidbit from current Fed Chair Ben Bernanke's first White House economic briefing back in 2005 -- quote-"President Bush noticed that Bernanke was wearing light-tan socks under his dark suit. 'Where did you get those socks, Ben?' he asked. 'They don't match.' Bernanke didn't falter. 'I bought them at the Gap, three pairs for seven dollars,' he replied. During the briefing, which lasted about forty-five minutes, the President mentioned the socks several times." There you go. During Bernanke's first economic briefing, the president was apparently more obsessed over mismatched socks than mismatched fiscal policy. And that brings us to today's edition of "Final Daze," a daily look at what Mr. Bush is doing about the financial crisis in the waning days of his presidency. While Treasury Secretary Hank Paulson made a major announcement today, and president-elect Obama, for the second day in a row, held a press conference, trying to reassure the country about the collapse in the economy, the president, the sitting president, had just one event on his White House schedule, a speech and lunch with soldiers in Fort Campbell, Kentucky. No question that is a presidential duty and one that this president does well, but, in the midst of an economic meltdown, with 56 days left on the job, this could be a time for the president to multitask? Is that too much to ask for? Time now for the "Big Number." Statistician and political blogger Nate Silver has been dead on this year with his election projections, nailing the popular vote percentage spread. And he correctly predicted that the outstanding votes in that Alaska Senate race would produce a post-Election Day victory for Mark Begich. So, this guy is the real deal. And what does he have to say about the ongoing recount between Minnesota Senator Norm Coleman and Democratic challenger Franken? Well, even though Franken was behind by 172 votes last night the recount, Silver's economic models show Franken winning by 48 to 136 votes. Keep in mind, the margin of error here is plus or minus some 200 votes. So, this is far from a prediction. The point here is that Franken has still got a feasible, if not probable, chance to win when this race is all said and done. Franken's projected 48-136 vote winning margin-tonight's "Big Number" from a very big and very accurate political oracle. Up next: Did the 50-state strategy help Barack Obama win the presidential election? We will ask Howard Dean, the chairman of the Democratic National Committee. You're watching HARDBALL, only on MSNBC.


JULIA BOORSTIN, CNBC CORRESPONDENT: I'm Julia Boorstin with your CNBC "Market Wrap." Stocks closing mixed-the Dow Jones industrials gained 36 points, the first time the Dow has put together a three-day up winning streak since late August. The S&P 500 picked up five points, while the Nasdaq lost seven. Treasury Secretary Hank Paulson unveiled new government programs, committing $800 billion to make it easier for Americans to borrow money for homes, cars, and tuition, and also help small businesses get loans. The program seems to be working. Mortgage rates have already dropped. Revised figures show the economy shrank five-tenths of a percent in the third quarter. That's worse than the three-tenths-of-a-percent rate first estimated a month ago. And oil prices tumbled again, after rising yesterday. Crude fell $3.73, closing at $50.77 a barrel. That's it from CNBC, first in business worldwide-now back to HARDBALL.

SHUSTER: Welcome back to HARDBALL. Four years ago, Democrats lost the White House and were the minority party in Congress. What a difference four years makes. Former Vermont Governor Howard Dean is the chairman of the Democratic Party. And he joins us now. And, first of all, Governor, thanks for being with us.


SHUSTER: I'm going to ask you first about President Bush and what's going on with the economy. In your-in your view, is President Bush doing the right thing, essentially letting Barack Obama fill up this vacuum, keeping a very low profile in the midst of a very troubled economy? Is that appropriate?

DEAN: Well, I think, as-as president-elect Obama has said, there's only one president at a time. And I-I think what's happening here is, people are looking to the president-elect to make sure that he's got some policies in mind and some people in mind who are going to steer us out of this as soon as he becomes president, starting January 20. And that's what he's doing. So, I-I think both sides are acting very well. And I think president-elect Obama is doing the right thing by not seizing control, which he's being very careful not to do, but by making it really clear to the American people what his plan is starting January 20.

SHUSTER: It was pretty clear a couple of years ago here in Washington there was a big fight between you and some of your Democratic colleagues over how money should be spent in the Democratic Party. I want to put up a graphic. This is what Washington looked like for Democrats in 2005: 22 gubernatorial offices, 45 U.S. senators, 203 members of the House. And, now, 2009, you have got 29 governor offices, 58, possibly 60, seats in the U.S. Senate, 259 seats in the House. Are you vindicated, Governor?

DEAN: Well, of course, being a good Washington denizen, I should take all the credit I can, but the truth is, nothing-nothing anybody does is all one person. We had great efforts on the part of the DCCC and the DSCC to move money into key races. We had-happened to have an extraordinary presidential campaign run by two guys from Chicago, David Plouffe and David Axelrod, who I-I think ran a campaign that I have never seen anything like before, in terms of its discipline. And we obviously had an unbelievable candidate for president. So, but the core message here being, though, is, for Democrats, is that, if you want to be a national party, you have got to be a national party. You have got to compete everywhere. One of the little footnotes of this campaign which everybody is, of course, talking about, because we're so excited to win, is that Barack Obama had an office in Utah. Now, we knew we weren't going to win Utah, but he was determined to make sure that people in Utah knew that he cared about them, because he wanted to be the president of all Americans, even those who didn't agree with him. That is what it takes to be a national party.

SHUSTER: Well, and speaking of competing everywhere, back in 1992, the president-elect, Bill Clinton, went down to Georgia because there was a Georgia runoff involving Wyche Fowler. A lot of people told him, don't go. It looks like Fowler is going to lose, and this will be a problem for you. Bill Clinton went anyway. Fowler lost. But Democrats were so thrilled, because they said it showed that Bill Clinton was willing to fight for Senate Democrats. How come Barack Obama is not planning to go to Georgia and try to do the same thing for Jim Martin?

DEAN: Well, first of all, Barack has cut radio ads. He kept all his offices open in Georgia, his campaign offices, and converted them to offices that would help Jim Martin become the next senator from Georgia. I know Jim Martin. He is a really fine human being. But, you know, unlike what was happening in '92, we are in the midst of the worst financial crisis since the Great Depression. And, so, I don't see how anybody can fault the president-elect for focusing here on the economy and not getting involved in politics. We're-we're thrilled that he did cut the radio ad. We're thrilled that he has kept his offices open for Jim Martin. That's our job, along with the DSCC and others, to get Jim Martin elected. And-but it-Barack Obama has got to focus on the economy here. That's job one for-for the next president.

SHUSTER: I know that the DNC is focused right now on trying to get rid of this debt. David Plouffe sent out an e-mail to all the Obama supporters, saying that they should give money. Did that make any difference? And, secondly, is there still something of a fight between the DNC and the Obama campaign over Obama's donor lists? Have they provided the donor lists to you?

DEAN: There was never a fight between the Obama campaign and the DNC list. I don't know where that got started.

SHUSTER: Well, you-you would like to have the donor list, wouldn't you?

DEAN: That is totally up to the Obama campaign.

Look, once the-once we...


DEAN: It is. Once we have a president, the president decides what is going to happen at the DNC, period. So, we have had almost no-we have had no substantive fights of any kind since June 13, which is the day that Hillary Clinton conceded and that Barack Obama became the nominee of the president. We have merged the two organizations. It hasn't been easy all the time, but it's been easier this year than most years. So, you know, there isn't any fight about this, and there isn't any question about who is going to control the Democratic National Committee. And that's the president of our party.

SHUSTER: Well, is the DNC, though, still carrying a debt? Is there still a debt at the DNC?

DEAN: Yes, no, the letter that David sent out raised about $6.5 million, and we're-we haven't quite paid the debt off, but we will have by the beginning of the year. And, look, that debt was incurred not just to help the Obama campaign. It was also incurred to help elect additional Democratic senators and Democratic member of the House. That's where that money went. So, I think it was money worth-spent. You want to-don't want to leave anything on the table in a political race.

SHUSTER: Governor Dean, what are you going to do next?

DEAN: That's a very good question. I don't know that answer yet. I will stay active...


SHUSTER: Have you had a conversation with the Obama transition team about possibly working in the Obama administration?

DEAN: One of the things I never discuss is any conversations with the transition team. I have-I have learned from others in Washington that that never-that's a topic I don't comment on in any way.

But I will say that, whether it's...


SHUSTER: Well, a lot of your colleagues in Washington have been very quick to say that they have had conversations with the Obama transition. But, anyway, go ahead. Go ahead.

DEAN: Well, I-I-you know, my rule in Washington is, those who know say, and those who say don't know. I don't know and I don't say, so I think I'm in doubly good shape here.

SHUSTER: Would you like to work for the Obama administration?

DEAN: Again, I'm not discussing transition. I will be involved in public policy in some way, whether inside or outside. We just simply don't know the answer to that. I'm not going to be commenting on it.

SHUSTER: Governor dean, a lot of people look at you and say this is such an intriguing man, an intriguing character, in part because of your presidential campaign four years ago. Now that you've seen a successful presidential campaign, a successful president-elect, as he's moving into office, think about your own ambitions four years ago. Do you think you would have made a good president?

DEAN: Obviously, I wouldn't have run if I didn't think I would. But, look, what Barack Obama did was run the campaign that would have been great for us to run. The organization-the big differences between his campaign and our campaign is, one, his organization is just extraordinary, just extraordinary. And secondly, the honest to god truth is this is the guy that we need at this time. He is a level-headed, thoughtful guy who has taken his time and put together an incredibly talented cabinet. You know, my skills are a little different. My skills are maybe more in terms of stirring people up, getting things-people to start questioning assumptions that they haven't questioned for a long time. That's a different skill set from what Barack's got. Frankly, I think we need Barack Obama now. I don't regret my not winning and I don't regret his winning at all, because I think he's the right guy for the times. Lord knows, we really need somebody like him right now.

SHUSTER: Governor Dean, congratulations on the victories this fall. Thanks for coming on. And good luck to you, no matter what you decide to do.

DEAN: Thanks very much. Appreciate being on.

SHUSTER: You're welcome. Up next, she's back. Alaska Governor Sarah Palin is back on the campaign trail. Wonder why? We'll tell you when we come back on the politics fix. This is HARDBALL, only on MSNBC.


SHUSTER: Welcome back to HARDBALL and the politics fix. Tonight, we're joined by Richard Wolffe of "Newsweek" and Jonathan Martin of "Politico." I want to start by talking about Obama's economic team, Tim Geithner, Lawrence Summers. Lawrence Summers supported the deregulation of derivatives back in 2000 that contributed to this mess. Isn't that a problem, Jonathan?

JONATHAN MARTIN, "POLITICO": I think it's a small problem and it should be included in any discussion about him. But I'm a little sympathetic here to the Obama folks. When you're picking for these top cabinet posts, it's not that big of a pool. You're going to obviously tap into some folks that, yes, worked for the Clinton administration or perhaps were tied to some of these policies. It's absolutely fair game. At the same time, there's nobody that will be perfect when it comes to these issues.

SHUSTER: Would it provide some confidence if, say, Timothy Geithner, who worked hand in glove with Paulson, who was part of the zigzag nature over the last eight weeks in trying to figure out, yes, you bail out AIG, but no, they didn't bail out Lehman. There is some confusion about the original intention of the TARP, the 700 billion dollar program-would it be helpful to his own credibility if Geithner said, look, sure there were some things that, in hindsight, I wish we would have done differently?

RICHARD WOLFFE, "NEWSWEEK": Yes. It's not just hindsight. This program is still working its way through, and they're still spending billion of dollars on it. They need to at least fess up to the fact that they should have said banks should not pay out dividends while they're taking tax payer money, which is something Gordon Brown did in the UK. They have basically transferred money from tax payers to share holders here. It has been a waste. They should look seriously at whether the share prices would have collapsed if they didn't pay out dividends, whether they could have saved some tax payer money in the process, because this process isn't ending any time soon. The crisis is still with us. Citibank may have survived. It may not. So unless you account for what's happening in recent history, how on Earth are you going to move forward through the next six months to a year.

SHUSTER: Richard, you covered the Obama campaign for a year and a half. Obama today was talking about fiscal responsibility. We ran the clip earlier of how John McCain was talking about fiscal responsibility during the campaign and Obama said, wait a second; if you're talking about the earmarks and the pork, that's only 20 billion dollars. What was Obama talking about today?

WOLFFE: Well, he was doing just that, of course. Here's the thing, it makes a great headline. There's a problem here. Number one, the Bush administration also talked about this. They said they would go through everything and zero out all these useless programs. It turns out the members of Congress really like these old programs. You can never really zero them out. So can he take members of Congress with him and is it worth the political price? So you save 20 million here and 40 million there. Yes, it's real money, but is it worth the political cost? And the answer is most White Houses end up looking at this and saying, give the Congressman what he wants. Let's go for something bigger. That's how the budget gets bigger and bigger. If he really wants to do something bigger about the budget, deal with Social Security, especially the long-term growth in entitlements, something like the retirement age. Does he have the guts to deal with that? Does he have the guts to push out the retirement age? We'll see.

MARTIN: Especially when he's dealing with so much else. It's obviously a huge task he has in front of him right now, talking about issue related to the economy, the stimulus package, health care, energy. Then you add an issue like entitlements that politically is so dicey, it's a question of political will. It's tough to see how he adds that to his plate right now.

WOLFFE: It is tough. But if he's going to deal with the budget moving forward-he has an immediate crisis. So that might get him through the next couple of years. But long term, if he wants to fix the federal budget, everyone knows it comes down to entitlements.

SHUSTER: Did the Obama transition get blind sided by this to a certain extent? Did they see this coming three or four weeks ago? Obviously, they were focused on the end of the election. But did they anticipate they were going to have to put this economic transition team in place and deal with the mess that had not been fixed by the TARP program?

WOLFFE: Yes, they did. They got elected because ever the economy. They knew they had to roll out their economic team first. Maybe they tried to give themselves more time. I don't know that they understood the effect of going quiet for a week or two, because the attention span is just not that long. We need the information. The markets want leadership. I think they've accelerated the pace here, but they knew they had to talk about the economy here and now.

SHUSTER: And one of the tricky tasks for Obama is this whole issue of is there one president at a time, as he keeps suggesting, or are there really two? There's the president and there's the president-elect, who a lot of the markets are turning to for confidence. Barack Obama addressed that at his news conference today. Let's listen. Watch.


OBAMA: We don't intend to stumble into the next administration. We are going to hit the ground running. We're going to have clear plans of action. We intend to have the kind of economic recovery plan that is going to put 2.5 million people into jobs. We are going to make sure that we start focussing on energy, on health care, on revamping our education system, so that it is competitive in the 21st century. And as I'm talking about today, we are not going back to business as usual when it come to our budget.


SHUSTER: As far as stumbling into office, is that a reference to the idea that all these bail outs certainly look like the current administration is sort of stumbling around looking for some sort of fix?

MARTIN: I think it could be. Look, this raises an important point. He doesn't want to be burdened with responsibility for what is happening right now without the authority. The fact is, if he is to insert himself in what is happening, but not have the power to do much about it, it is all the hurt but none of the gain. So I think he is politically wise to be holding back and not totally diving in and making the statement about there being one president at a time.

SHUSTER: Jonathan Martin and Richard Wolffe are staying with us. We'll be right back for more of the politics fix. You're watching HARDBALL, only on MSNBC.


SHUSTER: We're back with "Newsweek's" Richard Wolffe and "Politico's" Jonathan Martin for more of the politics. I want to talk about a very intriguing John McCain news conference in just a sec. But NBC News has confirmed that Robert Gates is going to remain on the job as defense secretary for at least a year. Richard, your reaction?

WOLFFE: Totally expected. Gates has been trying to maneuver for this one for a long time. He got a lot of support on the Hill. He convinced the incoming administration. You know, it makes some sense. There are still two wars out there. Gates also wants to run through a complete cycle at Pentagon. He inherited Rumsfeld's budget. Here he's got a chance to reshape it before handing it on. The question is when and who does he hand it over to?

SHUSTER: Doesn't it also suggest, Jonathan, though, that Obama's campaign pledge of getting the troops out of Iraq within 16 months after taking office, that is going to get pushed back?

MARTIN: It might be. But this does, in fact, ratify his pledge during the campaign to have a bipartisan cabinet. You obviously have a Republican there at the Pentagon, even as a custodian. You still fulfill it.

SHUSTER: Let's talk about John McCain. He had a news conference today, the first time he's come out and spoken about the election. He talked a little about why he lost and he said, essentially, Republicans dropped the ball on the economy. Watch.


SEN. JOHN MCCAIN ®, ARIZONA: The people want us to be fiscal conservatives. I think if you asked our rank and file Republicans and independents if we let spending get completely out of control, that we just basically became a party that had no fiscal discipline, and ear marking and pork barrel spending and passing legislation that laid debt burdens on future generations of Americans. Republicans have to show the American people that we have the solutions to the economic challenges that face this nation.


SHUSTER: Was the issue for Republicans all this fiscal lack of discipline, or the fact that it didn't help keep the economy going?

MARTIN: I think it was economy. But John McCain, because of-this is his passion, ear marks and spending, sort of tailors it to that. I think it was the much broader issue about their stewardship of the economy and what has happened during the past few months, taking place on the watch of the Republican president. John McCain is very passionate about ear marks. But I think that wasn't exactly what was on the minds of most Americans going to the polls on election day.

SHUSTER: Didn't John McCain just telegraph what we're going to be seeing from Republicans here on? Already, there was House Republican Leader John Boehner saying, the problem with Democrats is they think that government spending is the answer, and that seems to be what John McCain was saying right there.

WOLFFE: Yes. Well, they are going to raise concerns about spending levels and they are also going to howl if there any hint of tax hikes coming through this new White House. But it is small bore stuff when people want the bigger stuff dealt with, which is job security, getting any kind of growth out of the economy, keeping the banks moving. That's the problem here. Just because they have dollar signs attached to them doesn't mean to say, it is dealing with the economy or it's economic policy. Yes, pork barrel spending, everybody agrees, is wrong. But it's not going to fix an economy in recession.

MARTIN: I think there were some folk in the base of the GOP who were disillusioned because spending had gotten out of control in Washington. But most of the broad swathe of voters who went to the polls weren't thinking about excessive ear marks. They're worried about their jobs and the health care, obviously, of their families. I think this plays into the sort of Republican critique of what went wrong. It is reassuring to them that it is not their principles; it's the fact that their principles weren't followed.

SHUSTER: As far as Sarah Palin, if John McCain had thrown Sarah Palin under the bus, we would play that sound bite for you right now. But he didn't. He basically again said, you know, the reason I picked her was for her reform agenda, that she was well-qualified, that she energized Republicans. Will there ever come a point, Richard, where John McCain will say, yes, maybe Sarah Palin didn't help.

MARTIN: Maybe in "Newsweek."

WOLFFE: Maybe when Mark Salter writes the book of that campaign, we'll hear it. Everyone knows that there were enormous tensions. It doesn't even come close. There was a chasm. There was a Grand Canyon between the McCain and the Palin side. Look, McCain is obviously still a team player in that sense. And he deserves some credit for it. But I'm not sure he is getting returned on the other side. Palin seems to be more than ready to drive the bus over.

SHUSTER: John McCain was also known as the man who would offer straight talk. There's a lot of straight talk from Republicans about Sarah Palin.

MARTIN: We're still waiting for it from John McCain. I think he is being a good team player here. He is being loyal to her. We'll see what he is saying five years from now or in that book that hasn't been penned yet.

SHUSTER: Jonathan Martin from "Politico," Richard Wolffe from "Newsweek," thank you both very much. We appreciate it. Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Right now, it is time for "1600 PENNSYLVANIA AVENUE" with David Gregory. I'm David Shuster, in for Chris Matthews. David Gregory starts right now.



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