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'Hardball with Chris Matthews' for Dec. 27

Read the transcript to the 7 p.m. ET show

Guest: Lawrence Eagleburger, Dana Rohrabacher, Paul Krugman

PETE WILLIAMS, GUEST HOST:  A new tape said to be from Osama bin Laden calls the man behind the Iraqi insurgency the leader of al Qaeda in Iraq.  And the head of the political opposition says his party won‘t take part in the coming elections.  In Ukraine, the pro-Western candidate appears to the be the new president.  The man who won the first time isn‘t giving up.  And what will it take for President Bush and the Democrats to get what they want in 2005? 

Sitting in for Chris Matthews, I‘m Pete Williams.  Let‘s play


Good evening, I‘m Pete Williams.  Chris Matthews will be back next week. 

Today, the Arab satellite network Al Jazeera revealed a new audiotape believed to be from Osama bin Laden.  He calls the head of the insurgency the leader of al Qaeda in Iraq, and calls for Iraqis to boycott the January elections. 

We are delighted and honored to have Lawrence Eagleburger with us to help sort this out.  He served as the secretary of state under the first President Bush, and is custodian of one of the sharpest political minds on these questions. 

Secretary Eagleburger, what does this new tape from bin Laden mean? 

LAWRENCE EAGLEBURGER, FORMER SECRETARY OF STATE:  You‘ve got me so surprised with the introduction, I can‘t proceed. 

Well, it can mean several things.  First of all, he‘s done so many of them lately, I am wondering whether he‘s beginning to worry about whether people are still listening to him or not.  Now, that‘s pure guesswork on my part.  But certainly what it does mean is that if there wasn‘t a link between al Qaeda and what is going on in Iraq before, there certainly is now.  And I suspect that‘s nothing new either.  It has been there for some time.

WILLIAMS:  It removes any question about whether there is. 

EAGLEBURGER:  Yes, it certainly removes the question of it, and beyond that, I am not sure what it means. 

WILLIAMS:  Well, let‘s step back and look at the larger question.  Is Iraq ready for Democratic elections at the end of the month? 

EAGLEBURGER:  It better be, my friend.  It better be.  If we can‘t—how do I answer this?  It is going to be a serious failure of American foreign policy if we can‘t pull that election off.  Now, having said that, if things become so bad that we can‘t do it, then we have to delay it and do it as soon as we can, but I can only tell you that, you know, we have got to understand that either we succeed in Iraq, or our foreign policy is going to be in shambles for years to come.  Now, maybe it takes more time than this to get the election going, but I hope not. 

WILLIAMS:  Well, is a delay even an option, or if you delay the elections, does that basically tell the insurgents, hey, you are on the right track, keep it up? 

EAGLEBURGER:  It may well do that.  That‘s why I say if there is any way to get this election through, we ought to do it.  And if that means we have to protect every single bolt—polling place and so forth, we are going to have to do it.  So—and I guess I think you are right, that if, in fact, we postpone it, we have certainly told the insurgents that they have the power at the moment to keep it from happening ever.  So it is very important that we get it done if we can. 

WILLIAMS:  So that makes a postponement a virtual impossibility. 

EAGLEBURGER:  I think that‘s right. 

WILLIAMS:  Let me read to you a quote from today.  This is from the leader of the largest Sunni political party, which announced today that it‘s going to pull out of the elections.  And he cites the security situation and he says this: “When a house is on fire, you should first put out the fire before working on decorating and arranging it.” 

What do you make of that?  If the Sunnis stay home, does that hurt the credibility of this election? 

EAGLEBURGER:  It surely does.  I am not sure in the last analysis they would stay home, if it looks like we can pull this election off as we hope.  Right now I think he could be playing games, but if the Sunnis were to stay out permanently, it would be a very serious problem, no question about it. 

WILLIAMS:  The Sunnis, of course, are the by far the minority.  The Shia are the majority in Iraq. 

EAGLEBURGER:  That‘s right.

WILLIAMS:  What do we know about the Shiite commitment to democracy? 

EAGLEBURGER:  Oh, my goodness.  Let me say first of all, by the way, the Sunnis, though they are the minority, they were largely in charge under Saddam, and the Shiites have never forgiven them for that I think even now.


EAGLEBURGER:  I think in that sense, the Shia have a commitment, at least for the moment, to democracy, because it is the one possible way, avenue that they can get back in charge, at least partly in charge, of affairs in Iraq.  So I think for the moment, at least, the Shia will be substantially in favor of the election. 

What I can‘t predict to you is once they get into power, if they do, do they stay democratic and have elections when they should?  We‘ll have to see how that comes out. 

WILLIAMS:  You are saying they are more dedicated to be in power, necessarily, than they are to democracy? 

EAGLEBURGER:  What would you say about most political parties in most countries that have never had an election before?  The answer is I hope—let me put it this way.  The fact of the matter is, the Shia are, certainly at the moment, in favor of going ahead with the election, because it is the way in which they can express their majority. 

Now, if they have any sense at all, they will also recognize there are minority rights.  And in fact, as the process of democracy begins to take hold in Iraq, they will observe all of the rules and regulations.  But at the moment, I couldn‘t possibly tell you that that‘s what‘s going to happen.  All I can tell you is, for the moment I think they are in favor of the election. 

WILLIAMS:  Well, there‘s been some talk here in the last few days about, no matter who wins, and of course the Shia will likely win because they are so far in the majority, to give the Sunnis, the minority party, some role in the government.  Do you think that is a good idea? 

EAGLEBURGER:  Yes, I do.  At the moment, it would seem to me that to build any commitment to a democratic system at all, the majority is going to have to make it clear to the minority that they are going to be represented, they are going to have their day in court.  I think it‘s very important that they bring in some Sunnis. 

WILLIAMS:  It sounds odd, but this would be a little bit like President Bush putting a Democrat in the cabinet, nothing more exotic than that? 

EAGLEBURGER:  Well, it‘s—probably—no, it‘s more exotic than that, in the sense that I don‘t think President Bush puts a Democrat in the cabinet, that the Democrats are going to think that this is the only way they‘re going to have any chance of power.  So I think it is more than that in this case.  If the Sunnis are brought in in a minority situation, but brought into the government, I think it gives them some confidence that, in fact, this is going to be a government for the nation, not simply for the Shiites. 

WILLIAMS:  But does that sound a little bit, though, like you are sort of tinkering with the election?  Well, you lost, but you get—you win some anyway? 

EAGLEBURGER:  Yes, well, it depends on how—I don‘t know that it is tinkering with the election.  What it is doing is it‘s saying the majority party, if that turns out to be Shia, is saying, yes, we‘re the majority, but we recognize that Iraq is a country that has had decades of antagonism between the different groups.  And one of the ways to begin to hopefully settle that is to bring some of them into the government. 

WILLIAMS:  Now, we are talking here about the Shia and the Sunnis, two sects of Islam.  Will Iraq be anything like a Western-style democracy, or will it be heavily influenced by the Islamic religion and Islamic law, and should that matter to us? 

EAGLEBURGER:  My answer—well, again, you know, this is really reaching hard, very hard to reach out this far, but there is no question I think it will be dominated by the Muslim faith.  The question is, what kind of Muslim faith are they going to be dominated by?  And if it‘s the Osama bin Laden type, we and they are in serious trouble.  If, on the other hand, it is traditional and much more in keeping with Muslim tradition, it will be a reasonably open government, I hope. 

But again, remember, this is their first experience with democracy, and there are lots of things that we are going to have to watch for as the process proceeds.  But it will be more Muslim, certainly, than anything else. 

WILLIAMS:  Well, given the importance of this election, does the United States have enough troops now in Iraq? 

EAGLEBURGER:  I have thought for some time that we haven‘t had enough troops in Iraq.  Not—we won the war, well, without any further advance in troops.  So that isn‘t my argument.  But it seems to me fairly clear that we have—part of the reason that we haven‘t been able to secure the peace, in my judgment, and I‘m not a military excerpt—is that we haven‘t had enough troops there for some time. 

I gather that we have put some more in in the last month or so, and are putting in some more.  The best I can tell you is that the more troops we have in that country at the time of the election, the more likely we are going to be to be able to secure it. 

WILLIAMS:  Well, do you believe this is a mistake by Secretary Rumsfeld, that he didn‘t put more in before this time? 

EAGLEBURGER:  I think it‘s a mistake on the part of the administration, whether it‘s Rumsfeld or who is another question.  But I think—well, I think in general they have handled things in Iraq very well.  The one failure, the one mistake, I should put it that way, that the administration has made is I do not think they had enough troops in country from the period right after the war itself up to today. 

WILLIAMS:  Well, Secretary Eagleburger, I want to come back and talk to you a little more about another election, and that is the one that‘s already happened twice in the Ukraine.  And when we do come back, we‘ll be joined by Republican Congressman Dana Rohrabacher, who just came back from there. 

And still ahead, yesterday Americans brought many happy returns back to the mall, but was this holiday season bright for retailers?  You‘re watching HARDBALL on MSNBC.


WILLIAMS:  Coming up, more with former Secretary of State Lawrence Eagleburger, plus California Congressman Dana Rohrabacher, on his recent trip to Ukraine and that country‘s tumultuous presidential election, when HARDBALL returns.


WILLIAMS:  Welcome back to HARDBALL.  Viktor Yushchenko declared victory today after Ukraine held a rerun of its presidential election on Sunday.  But the Prime Minister Viktor Yanukovich refuses to concede defeat and says he will challenge this all the way to the Supreme Court again.

I‘m back with former Secretary of State Lawrence Eagleburger, and Republican Congressman Dana Rohrabacher of California is just back from visiting the Ukraine to watch this election process. 

Congressman, did it seem fair to you this time? 

REP. DANA ROHRABACHER ®, CALIFORNIA:  Well, it was certainly more fair than the first election.  And you know, we even have discrepancies in the elections in the United States that causes our parties to fight with one another, but the first election was a total fraud.  Everybody knew it.  And this second election, the people were there, they were diligent, and it was a much freer and fairer election than the first.

WILLIAMS:  This has been an astonishing thing to watch from afar.  Independence Square in Kiev jammed with demonstrators demanding another election.  What was it like to be there in Independence Square the second time around? 

ROHRABACHER:  Oh, it was the most fascinating thing.  I was privileged in my youth to have been in Prague, Czechoslovakia during the Prague Spring.  And there, I witnessed this incredibly impressive upsurge of the human spirit and the demand for freedom for the young people.  I haven‘t seen that since this moment, when I went down to Independence Square there in Kiev and talked with the young people. 

I went into their tents.  They had been camped out in below zero weather for weeks.  And they were the most idealistic—they were inspiring to me.  And I think they will inspire the people in Russia, too, as well.  The spillover effect will be in Russia, that the young people there are going to say, we want to have honest government here.  We don‘t want to have a third world government here. 

WILLIAMS:  What about that, Secretary Eagleburger?  Do the results and the enthusiasm from Independence Square translate to the Kremlin? 

EAGLEBURGER:  That may be one of the reasons Kremlin is a little bit worried about what went on in the Ukraine.  But certainly what we are seeing there, what the congressman saw there, is if there is anything you need in the way of a demonstration of how democracy, at least the concept, can grab people‘s hearts and minds, this is another example of it.  And that is why, going even back to Iraq, if we‘d never get these things started, they seem to go on on their own.  So to me, what‘s gone on in Ukraine so far is a demonstration of the real attraction of democracy. 

WILLIAMS:  Yes, it‘s fascinating...

ROHRABACHER:  And also, there is a factor—you know, there is one factor I would like to bring up that a lot of people are missing.  And that is, we went into one of these tents and there was a cross on the tent.  And these young people said, well, are you Catholics?  And they said, we are worshipping God and we believe in worshipping God, but any denomination is OK with us.  These young people were the first generation of people in Ukraine and who came from behind the iron curtain who were free to worship God.  And I think it‘s had an impact on their society. 

WILLIAMS:  Well, it‘s something like 75 percent of eligible voters turned out to vote in this election, and Secretary Eagleburger, let me come back to you.  What does this say about the allure of democracy?  And does it translate to Iraq, or are they just so—their cultures and histories so totally different that it doesn‘t matter? 

EAGLEBURGER:  No, that‘s a good point.  Their cultures and history do make a difference.  And certainly in the question of the Ukrainian people, they have had more Western orientation.  They have, as the congressman pointed out, they have had a Christian tradition.  They have had a religious tradition.  And in that sense, I suppose it—now, after many, many years of hoping for this sort of thing, these people now for the first time have seen the possibility of grabbing hold of it. 

So yes, I think it certainly cuts more in Ukraine than it does in Iraq, but even there, what I am trying to get at here is you give people a chance to begin to understand that they can govern their future, up to a point, and I think that makes things a lot easier in terms of trying to describe what democracy really is.  And you have to hope that it would translate into Iraq, but it has certainly done so in Ukraine. 

ROHRABACHER:  People don‘t like to live with a boot on their face. 

And they are happy to be free of that boot on their face. 

WILLIAMS:  Congressman, let me ask you about someone who hasn‘t gotten a lot of attention here.  And that‘s Viktor Yushchenko‘s wife, Kateryna.  She was born in Chicago from Ukrainian parents.  She graduated from Georgetown University here in Washington, D.C.  Then she goes to the University of Chicago.  She is an international businesswoman.  You‘ve met her.  How much of an influence will she be in... 

ROHRABACHER:  Oh, she is terrific.  She is going to be a major asset for that country.  She was active during the Reagan administration.  We all knew Kathie.  And she‘s been active in the anti—you know, in all of the anticommunist things that we‘ve been doing, to try to topple the Soviet empire.  She was there, and she was friends with all of us who were part of that whole process. 

And so she is sophisticated.  She has contacts.  She‘s got education. 

She will be a tremendous asset for Ukraine. 

WILLIAMS:  Well, of course, he decided to marry her, so that decision is done.  Does the fact that she is there indicate a past fact, he was attracted to her, he married her and that‘s that, or a future one, that she will somehow influence how he runs Ukraine? 

ROHRABACHER:  Well, first of all, I have to believe that they are in love and that‘s why they got married.  And I am happy for her that she found her man.  And you know, having him go through this travail where he was poisoned, and they tried to kill him several times, that shows you the personal drama that goes with freedom and democracy.  Freedom doesn‘t come cheap.  And Kathie is one of the real heroes in democracy, in building it.  And I think that now that we are looking forward to a free Ukraine, with her knowledge and her contacts, she will help her husband, Viktor, lead that country into a brighter tomorrow. 

WILLIAMS:  Secretary Eagleburger, always glad to have democracy triumph, but in what way, other ways is this election good for the U.S., or is it? 

EAGLEBURGER:  Oh, there is no question it‘s good for the U.S., if for no other reason than we now have democracy taking solid foot in Ukraine, although we still have to watch the future.  But it is, it is, I think, as well substantially a benefit to us if for no other reason—and I have to be careful how I say this—but for no other reason than it gives us another—what‘s the best way to put it?  Another hook as far as the Russians are concerned, in the sense that we don‘t—we are going to have to deal with the Russians, there is no question about that.  But at the same time, with what‘s happened in Ukraine now, I think it gives us a little more flexibility in dealing with the Russians than would have been the case before. 

WILLIAMS:  In what way? 

EAGLEBURGER:  Well, in the sense that we—we are now able to point out to Mr. Putin, for example, that there are limits on—in terms of what we‘re prepared to accept in the way in which he deals with his neighborhood, and I think that is an important thing to make clear.  We now have a solid—now, be careful here, Eagleburger.  We have a hopefully...

WILLIAMS:  But not too careful. 

EAGLEBURGER:  ... solid democracy and we have the beginnings of democracy in Ukraine.  And it seems to me fairly clear that by making it clear to Mr. Putin that we support that democracy, we are at the same time telling him, OK, we‘re going to do business with you, we have to, but there are going to be limits to how much we are going to be prepared to accept your concerns. 

ROHRABACHER:  Putin seems to be sliding in the wrong direction.  And the fact is that right next door in Ukraine he has got people who are serving as an example to his own people in Russia on what the right direction to go is.  Putin is going to take his country back to being a Third World country if they don‘t watch out. 

WILLIAMS:  Well, thank you both very much, Lawrence Eagleburger, former secretary of state, and Congressman Dana Rohrabacher, back from Ukraine. 

Up next, HARDBALL‘s political correspondent David Shuster with a look at the post-election political landscape here.  You‘re watching HARDBALL on MSNBC. 


RICHARD ARMITAGE, DEPUTY SECY. OF STATE:  And I would like to take an opportunity to send a message to all of our heroes who are returning home from combat in Afghanistan and in Iraq.  I know your injuries cause you great pain.  They cause the nation pain.  We share your pain.  Please be assured that the leadership of the nation as well as all the citizens are fully aware of your sacrifice and so in your debt.  Thank you. 



WILLIAMS:  It may be the holidays, but in Washington even the frigid air cannot chill politics as usual.  Fights are heating up over Social Security, Defense Secretary Don Rumsfeld is trying to ward off his critics, and voters in Washington State may soon have a new governor, maybe. 

HARDBALL correspondent David Shuster reports. 


DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  It has been nine weeks since Election Day and the governor‘s race in Washington State finally appears to be over.  After three counts of more than 2.8 million ballots, Democrat Christine Gregoire is now leading Republican Dino Rossi by 130 votes.  Washington‘s secretary of state, a Republican, plans to certify Gregoire the winner on Thursday.  And other Republicans with their eye on the next election are considering dropping lawsuits over this one. 

CHRISTINE GREGOIRE (D), WA GUBERNATORIAL CANDIDATE:  The count has been concluded.  Every county has certified their results and I am very grateful to be in the lead. 

SHUSTER:  Survival has been the political name of the game recently, not only in Washington State, but also in the nation‘s capital. 

DONALD RUMSFELD, SECRETARY OF DEFENSE:  As you know, you go to war with the army you have and not the army you might want or wish to have at a later time. 

SHUSTER:  Republicans have been calling for Donald Rumsfeld‘s resignation.  And yet on Christmas Day, there was the defense secretary with U.S. troops in Baghdad, making a surprising effective and emotional visit. 

RUMSFELD:  Good to see you.  Thanks for what you‘re doing. 

SHUSTER:  Back in Washington, D.C., the holiday spirit has not led to any sort of political cease-fire over President Bush. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  By volunteering our time and talents where they are needed most, we help heal the sick, comfort those who suffer and bring hope to those who despair, one heart and one soul at a time. 

SHUSTER:  This weekend Democrats called the president‘s radio address insulting.  They pointed out that in the weeks leading up to Christmas, the Bush administration slashed funding for charities that help feed the hungry, cut grants for low-income college students and announced plans to downsize health care for the poor. 

Finally, Democrats and Republicans are girding for an epic struggle early next year over the future of Social Security. 

BUSH:  I‘m not going to negotiate with myself and I will negotiate at the appropriate time with the law writers. 

SHUSTER:  But the law writers say that if you are going to fix Social Security, you are going to have to cut some benefits or raise the retirement age. 

(on camera):  And that will make the Social Security debate downright nasty.  One observer noted today that it could get so ugly and mean that it will make the Washington State governor‘s race look in hindsight like a walk in the park.  I‘m David Shuster for HARDBALL in Washington. 


WILLIAMS:  David Shuster, thank you.  Up next, MSNBC political analyst Monica Crowley and Ron Reagan on the Washington State cliffhanger, President Bush‘s second term and the future of the Democratic Party.  You‘re watching HARDBALL only on MSNBC. 


WILLIAMS:  This half-hour on HARDBALL, how will President Bush shape his second term and what‘s the future of the Democratic Party?  We‘ll talk about that when HARDBALL returns.

But, first, let‘s check in with the MSNBC News Desk. 


WILLIAMS:  Welcome back to HARDBALL.  I‘m Pete Williams, substitute elf for Chris Matthews, who will be back Monday. 

Will the Democrats find a new leader to bring them out of the political wilderness and will there be yet another recount in Washington state?

For answers to these questions and more, we turn to Monica Crowley and Ron Reagan, both MSNBC political analysts. 

Ron, I‘d like to begin by reading this quote to you, “In my opinion, the one who loses should call and congratulate the winner and put an end to this prolonged election campaign.”  That was actually the outgoing president of Ukraine, but it could have been said by somebody in Washington state.  You live in Seattle.  What is going on there? 

RON REAGAN, NBC POLITICAL ANALYST:  Well, it‘s been quite a roller coaster.  We had an election out here.  It was very close. 

The Republican, Dino Rossi, seemed to prevail in the initial count by a few hundred votes.  I can‘t remember exact—the exact number right now.  Then, they did—it was close enough to have an automatic machine recount, which brought his margin of victory down to 42 votes.  This was out of nearly three million cast.  At that point, it was within Christine Gregoire‘s, the Democrat‘s right to ask for a hand recount. 

And when that happened, she ended up prevailing by 130-some-odd votes, as you heard David Shuster say.  There will be litigation.  Dino Rossi will probably not call to congratulation Christine Gregoire.  He will probably sue instead.  And that‘s just the way things seem to go these days. 


WILLIAMS:  Monica, is this the right thing to do?  Is there anything but to do to go to court here? 

MONICA CROWLEY, NBC POLITICAL ANALYST:  Well, you know, this is yet another lesson, as if we needed another one after the 2000 presidential election.  This is another lesson in every vote really counting.  And to have a span of only 130 votes separating these two candidates after almost three million cast, it‘s really remarkable. 

I think, when it is this close, both sides see an interest in having the recounts and in going through the court system.  But I have to tell you, having worked for former President Nixon—and the 1960 presidential race was so close.  And that night, President Nixon was presented with all kinds of evidence of vote fraud in various places around the country.

And he said, you know what?  I am not going to order a recount.  Let‘s just let it go.  The country really needs a president.  And I think the people of the state of Washington, including my great friend Ron Reagan, he really needs a governor.  And so, to go through three recounts already and then face litigation, I think—and I speak as a Republican.

I think that, probably, in this case, the Republican should concede and allow the people of Washington to get a governor. 

REAGAN:  That is very nice of you, Monica.  Thank you. 


WILLIAMS:  Do you feel governorless? 


CROWLEY:  Yes, Ron.  Do you feel like you‘re without a governor?

REAGAN:  We can‘t tell yet.  Maybe once the holidays and the eggnog is over...


WILLIAMS:  Well, let me ask you both quickly, though, what do we learn here, that this is a virtual tie?  Is everybody surprised that it was this close? 

REAGAN:  A little bit.  I think most people thought Gregoire would do a little bit better. 

But it just highlights the fact that our democracy, our electoral system, really doesn‘t handle ties very well.  And I guess, if there is a lesson here, it‘s, as Monica said, every vote counts.  And we have to be very fastidious about the way the votes are tabulated, the way they‘re collected and counted and what have you, because these sorts of close elections could happen more often now.  We are a closely divided nation. 

WILLIAMS:  And, Monica, you were giving President Nixon credit for saying let‘s not fight this in the courts.  I suppose you would give the same credit to John Kerry.

CROWLEY:  Oh, absolutely.  Yes. 

I think when it becomes clear that your side has not prevailed and will not prevail, I think it‘s really sort of a sad commentary in this country that we end up fighting elections in the courts.  And I think, when it is clear that you can‘t prevail, even when it is this close, as is in the state of Washington, you don‘t go the whole nine yards unless it is absolutely necessary. 

And I think the people of this country, they need their governors.  They need a president, especially in wartime.  And so in this case, the gracious thing to do is concede. 


WILLIAMS:  Yes, sir.  Go ahead.

REAGAN:  Oh, I was just going to say, once you have had a full state hand recount—and most people will admit that the hand recount is actually the most accurate way, you could—when it is this close, you could recount over and over again and get a different number every time. 


REAGAN:  So, you just have to say, we have had the hand recount.  The whole state has been recounted.  That‘s right.  We‘re going to go with this number.

WILLIAMS:  All right, Monica, you were speaking of a president in wartime.  Let‘s talk about that.

Last week, the president had warm words for his defense secretary, Don Rumsfeld.  How long will Secretary Rumsfeld stay?  Can he stay as long as he wants? 

CROWLEY:  I think as long as he has the full confidence of President Bush, he is welcome to stay. 

Remember, all of these Cabinet members serve at the pleasure of the president.  And there is only one person whose confidence matters, and that is President Bush.  I found it incredibly remarkable that President Bush felt it necessary and felt compelled to go before the press corps last week and stand up for his secretary of defense, who has really been criticized and under attack now for several months, if not a full year. 

WILLIAMS:  Including by—including by members of the president‘s own party members in the Senate.

CROWLEY:  Well, that‘s exactly true. 

There are some fellow Republicans, like Senator John McCain, who have spoken out against Secretary Rumsfeld.  So, for President Bush to come out publicly and defend him I think was a great vote of confidence in Secretary Rumsfeld.  So, as long as Rumsfeld wants to stay and as long as the president believes in him, and, most importantly, Pete, is willing to fight for him, as he did last week—now, we just had the Bernie Kerik debacle.  He was the nominee for Homeland Security and that position there.

President Bush was not willing to fight for him.  He accepted his resignation and walked away.  So long as President Bush is willing to fight for Secretary Rumsfeld, he will stay. 

WILLIAMS:  Ron, should the president continue to fight for Secretary Rumsfeld?  Is that the right thing to do?

REAGAN:  Well, in Mr. Bush‘s mind, I believe he is not just fighting for Secretary Rumsfeld.  He‘s fighting for himself.

To unload Rumsfeld now and admit that he‘s been incompetent in planning the occupation of Iraq would be to admit that he, Mr. Bush, has himself made mistakes.  And, as we know, Mr. Bush is not prone to taking responsibility for error or even thinking of mistakes that he might have made.  So, that is not likely. 

When Rumsfeld, if Rumsfeld becomes a real political liability to President Bush, he will go.  But the judgment right now is that he is not such a liability and they are not ready to admit error yet. 

WILLIAMS:  So, neither of you sees a big change right after the Iraqi elections? 


CROWLEY:  Not in that position, no.

WILLIAMS:  All right, they‘ve looked at the Republicans.  In a moment, they‘ll look at the Democrats.

More with Ron Reagan and Monica Crowley when MSNBC‘s HARDBALL continues. 



And I want to wish the men and women who are serving this country in uniform all around the world the very best for the holidays.  I know it‘s a tough time for many people who are separated from their families.  But I can tell you and I can tell your families that the American people are very proud.  They are in great support of our fighting men and women.  And you are doing a wonderful job for freedom.  And we thank you very much.



WILLIAMS:  More with Monica Crowley and Ron Reagan coming up.  And later, “New York Times” columnist Paul Krugman on what might happen with the economy in 2005 -- when HARDBALL returns.


WILLIAMS:  More now with MSNBC‘s political analysts Monica Crowley and Ron Reagan. 

Ron, a question for you.  In the past couple of days, many prominent Democratic leaders have been saying that the party needs to rethink its position on abortion, especially on questions of restrictions of abortion, for example, on parental notification when a teenager demands access to abortion, requests access to it.  Is that something the party should do?  Is its position on abortion hurting it? 

REAGAN:  It may be hurting it in the short term, but that wouldn‘t be my concern if I was a member of the Democratic Party. 

I think that they have to redefine certain terms.  For instance, the Republicans identify themselves—or anti-abortion people, anti-choice people identify themselves as pro-life.  Well, that implies that the other side is anti-life, which is hardly a winning position to be in, in an election.  You don‘t want to be the anti-life party. 

The issue is choice here.  It‘s whether a woman wants to make the choice herself in tandem with her doctor or whether she would rather Tom DeLay and Antonin Scalia make the choice for her.  And I think, when it‘s explained in those terms, that the Democrats might do a little better. 

On things like parental notification, it is a very tough thing, because, generally speaking, when you say something like that to somebody and they think, well, I‘m a good parent and of course I would want to know if my child was having some sort of medical procedure.  And it‘s hard to argue against that.

But you forget that, in some families, thank goodness not many families, but, still, some families, it is the father that has impregnated the daughter.  And she may be living alone with him.  Is she going to go to the father to ask permission to have his child aborted?  Now, when you say things like that, people raise their eyebrows and scoff and think, well, that is just such an extreme case.  Well, it is extreme, but it does happen.  And it needs to be taken into account.  And that sort of scenario needs to be explained. 

WILLIAMS:  So, the party doesn‘t need to change its position.  It just needs to change the way it describes it. 

REAGAN:  It needs to change the way it describes it and it needs to stand up for what it believes, not just on abortion, but on a whole host of other issues.  The Democrats are going to get nowhere by Republicans-light. 

I was appalled after the election when I heard Democrats talking about

·         people who had been in public life for 20, 30 years talking about, we have got to come up with some principles we can stand for and believe in.  Well, for goodness‘ sake, what have you been doing for the last few decades? 

WILLIAMS:  Monica, what about that?  Is the Democratic Party—does it have the wrong position on abortion or just the wrong way of describing it? 

CROWLEY:  Well, I think there‘s something broader going on here.

I think, if you look back over the last 10 years, this country has been ever gradually trending more conservative, not necessarily Republican, although we have seen that borne out in election results, but more conservative in their thinking about values-oriented issues.  You raised apportion, Pete.  Ron just addressed it. 

I don‘t think the parties need to change one way or the other on where they stand on this, but the Democrats have a lot of work to do in terms of looking at themselves and where they stand not just on abortion, but a whole range of other values-oriented issues, such as gay marriage, such as reciting God in the Pledge of Allegiance and so on. 

I think one of their big problems is that they have become so tied to liberal causes, that it‘s hard to get away from that, even when an issue as obvious as, say, saying “under God” in the Pledge of Allegiance, the Democratic Party has difficulty backing away from defending the guy who wanted to remove “under God” out of the Pledge of Allegiance. 

If you look from ‘94, sort of the Newt Gingrich revolution, through today, Bill Clinton being the aberration, electorally, this country is moving more conservatively.  And I don‘t think that requires the Democrats giving up a lot of their position on these host of issues, but I do think that they should take a closer look at some of their more extreme views on these issues. 

WILLIAMS:  But is it surprising—for both of you, I want to ask you this question—is it surprising that the Democrats would be talking about rethinking their position on abortion when most Americans describe themselves as pro-choice? 

CROWLEY:  Yes, I think that that is a really important point, Pete, because I think both sides, whether you are pro-life or pro-choice, both sides I think need to deal in the political reality. 

And we can debate abortion.  It is a highly emotional issue.  But the reality is—and I firmly believe this—that Roe vs. Wade will never be overturned in this country.  So, if you operate from that premise, then the pro-life people need to understand that that is not going to happen.  The pro-choice people need to understand also that there have to be restrictions put on abortion, so that they are rare. 

And I think, if you move on from that premise, both sides may be able to come together in a more rational way and have a conversation about this issue in this country. 

REAGAN:  This whole values conversation is fascinating to me. 

Because, I mean, how do you define values?  Why is it a value to say “under God” in the Pledge of Allegiance?  What if you are a child from a family of atheists?  Should you be forced to say “under God” or do you just sort of clam up when those two words come up? 

I noticed that “under God” was not in the original Pledge of Allegiance.  We only started doing that during the McCarthy era in the late ‘40s and early ‘50s.  We shoved it in there with the idea that we would be exposing communists who wouldn‘t want to say “under God” or something.  I don‘t see that as a value. 

I mean, I‘ll tell you what.  We have killed more children in Iraq than we lost in citizens lost on 9/11 here.  Tens of thousands of innocent Iraqis have been killed.  Whose values does that reflect?  We have got a medical system that it‘s fine if you‘re wealthy, but we have got 40 million people without any health insurance.  Whose values does that reflect? 

You can work a 40-hour week in this country and get wages that guarantee you a life of poverty.  Whose values does that reflect? 

CROWLEY:  You know, I‘ll tell you whose values, the majority of Americans...

REAGAN:  Really?

CROWLEY:  ... that elected President Bush and reelected him.  Yes, because that‘s...


REAGAN:  You think that they are for...

CROWLEY:  Well, that is why you see these kinds of electoral results happening across the country in the sea of red, Ron.


CROWLEY:  And that‘s why your party needs to take a closer look at some of these issues and not be as radicalized on the issues that you just raised, such as health care and so on.

WILLIAMS:  Well, speaking of ticking...


REAGAN:  Can I just interject? 


REAGAN:  Do you think, Monica—because I am interested in this.  Do you think the Republican values are such that they say that a person who works 40 hours a week shouldn‘t make a living wage?  Is that a Republican value? 

CROWLEY:  That is not what I am talking about.  I‘m talking about some of the more radical positions that the Democrats have on, say, nationalizing health care. 


REAGAN:  You mean single-payer health care?  Universal health care, single payer, like every other industrialized nation has? 


CROWLEY:  I‘m talking about the broader values themes, Ron.


REAGAN:  What are they?  Name three. 

WILLIAMS:  Let me ask you both.  This debate will be carried out when the Democrats have to choose a new chairman.  I wonder who you think is likely to get it.  And if it is Howard Dean, does that mean he will be a candidate for president in 2008 or will he be anyway? 


REAGAN:  I don‘t think that Howard Dean will be appointed chairman of the DNC.  He will probably run again in 2008. 

No, I think you‘ll probably see a head of the DNC that is more closely allied to the—let‘s just call it the Clinton wing of the Democratic Party, the part of that party that wants to triangulate and sort of tactically maneuver themselves closer to the Republicans. 


WILLIAMS:  Well, do you think that is a bad thing?  Because he did get elected twice. 

REAGAN:  I do.  I do. 

And I think it was good for the Republicans—or the Democrats short term.  As a tactical matter, I think it kept them in the game and disguised the fact that they really don‘t stand for anything right now.  I think they should find things to stand for. 

WILLIAMS:  Monica, you get the last word on this. 


There are three basic wings in the Democratic Party.  You‘ve got the Howard Dean wing.  You‘ve got the Kerry-Edwards wing.  And you also have the Clinton wing.  And I think, of the Democrats, the head of the DNC for so long has been Terry McAuliffe, who was a Clinton guy.  And so it may be that the strength of the Clintons is still so magnetic and powerful, that their choice of an Ickes or someone like that to take over from Terry McAuliffe may prevail. 

If they choose Howard Dean, I have to tell you, the Democratic Party is going to continue to be marginalized.  This man could not win a single primary.  He was considered extreme and radical in his anti-war positions and his domestic positions.  And I‘ll tell you, if the Democrats choose him, they are going nowhere fast. 

WILLIAMS:  So, we have agreement.  It‘s not going to be Howard Dean. 


REAGAN:  It‘s not going to be... 

CROWLEY:  It‘s not going to be Howard Dean. 

WILLIAMS:  Monica Crowley...

REAGAN:  See, Monica and I don‘t always disagree. 


CROWLEY:  That‘s right.  That‘s right.  

WILLIAMS:  OK, well, we found one. 

Monica Crowley, Ron Reagan, thank you both. 

REAGAN:  You bet, Pete.

CROWLEY:  Thank you, Pete.  Happy new year.


WILLIAMS:  Same to you.

Up next, why are U.S. airlines taking a financial nosedive?  We‘ll talk to “New York Times” columnist Paul Krugman. 

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


WILLIAMS:  This weekend, several U.S. airports were full of stranded passengers and missing bags.  Is this a peek at what‘s ahead for airline travel in 2005? 

For that and more on the economic outlook for the coming year, here is “New York Times” columnist and Princeton economics professor Paul Krugman. 

Professor, what is going on?  Why are the airlines going broke? 

PAUL KRUGMAN, COLUMNIST, “THE NEW YORK TIMES”:  Well, it‘s a long-term process. 

There‘s a lot of competition since deregulation, high fixed costs.  They—it‘s very intense.  I think the point is that this is—what‘s happened at the airlines is kind of typical of what‘s happening in a lot of American businesses, very, very intense competition, very aggressive cost-cutting, and pushing closer and closer to the edge. 

And guess what?  U.S. Airways and Comair went over the edge this holiday weekend. 

WILLIAMS:  Well, is this just the result of too many airlines basically and the winners will vote the losers off the island and then everything will sort itself out? 

KRUGMAN:  I don‘t know. 

There is this sort of hyper-competition that‘s been spreading through the economy.  And it may be.  It may be that, in the very long run, really, competition without some regulation is not workable.  This is kind of like the old days in the 19th century when the railroads went from boom to bust to boom to bust.  And the airlines have got somewhat similar economics to that.

WILLIAMS:  Well, were you an advocate of deregulation? 

KRUGMAN:  Yes, I was.  And I think there was a lot of gains for it. 

But we seem to be at this point, you know, finally—and we have had more than 20 good years from deregulation, but we seem to be actually hitting some serious problems.  But I think it‘s—to some extent, this may be just a particular story about a particular airline that was badly run and handled this thing very, very badly. 

WILLIAMS:  Well, should the government be doing anything to bail the airlines out? 

KRUGMAN:  You know, it‘s hard.  I don‘t have a really good answer there. 

I think the government probably has to—should do something, because this is so important to people.  But it‘s got to be a quid pro quo.

WILLIAMS:  Right. 

KRUGMAN:  So we are talking about ejecting the government a little bit back into transportation regulation. 

WILLIAMS:  Well, one other question about the holidays, and that‘s holiday sales.  The recent numbers apparently show that the holiday retail period ended a little better than it started out.


WILLIAMS:  That most retailers are on track to meet modest sales goals.  What does this tell us about the overall economy? 

KRUGMAN:  You know, we have a recovery that‘s ongoing. 

The real story is what lies inside those sales.  High end is doing very, very well.  Low end is not doing very well.  And what we have here is a recovery that doesn‘t feel like a recovery for many people. 

WILLIAMS:  By the way, why isn‘t that always true?  Why isn‘t it always true that the places that cater to people with a lot of money do better than the places that don‘t? 

KRUGMAN:  Well, because there‘s competition at both ends.  It‘s possible to have too many Tiffany‘s outlets. 

The point is that this is unusual.  What‘s happening is that people with lower-end incomes are not seeing those incomes go up, that we have had a recovery that just basically didn‘t trickle down.  Wages are—purchasing power hasn‘t gone up in the last three years.  Employment, the unemployment rate is the same as it was three years ago, despite all of this talk of recovery.  All of the big gains have been for people with high incomes to start with. 

WILLIAMS:  Well, let me ask you about a subject that I know is important to you.  You wrote in “The New York Times” in the last couple of weeks that you sort of dragged yourself out of isolation to write about the Social Security privatization, because you feel strongly about it.  You say, first of all, that there really is no crisis.  Why not? 

KRUGMAN:  Because the system, the way we have always financed it, has set itself up to run for about 40 years, conservative estimate, without a crisis.  We have had this—look, four years ago, Alan Greenspan was asked, are these tax cuts that you are supporting going to endanger Social Security?  And he said, no, because it has got a good trust fund that will be building up.  It will be able to pay interest. 

Well, that hasn‘t changed.  Social Security, the finances actually look better now than they did four years ago.  The exhaustion data on the trust fund has backed up from 2037 to 2042.  And most people think it is going to recede further into the future. 

So, there is no crisis in Social Security.  This is an attempt to displace what is really a crisis in the rest of the federal budget and say, oh, let‘s not pay attention to that.  Let‘s do Social Security. 

WILLIAMS:  But what happens?  Everybody agrees that there is going to be a nasty point out in the future. 



WILLIAMS:  What happens when we get to that point?  Do we run out of money or you just don‘t have enough money to pay everybody?

KRUGMAN:  Well, yes, Social Security, at that point.  The best estimates I‘ve seen say that, in 2052, maybe, Social Security will run out of the trust fund, which means it will only be taking in enough revenue to pay for 80 percent of the benefits. 

That‘s a fairly manageable size problem.  So, at that point, we should do something before then, but at that point—it‘s not a big thing.  Even then—look, the rest of the federal budget right now, the rest of the federal government outside Social Security, right now, is only taking in enough money to pay for 70 percent of its spending. 

WILLIAMS:  And, in 30 seconds—I‘m sorry to say this, but, in 30 seconds, what is wrong with privatization? 

KRUGMAN:  It doesn‘t solve the problem.  It‘s just three-card monte.  It‘s pretending that you can make the problem go away by reshuffling things among accounts and pretending that, somehow, you are going to create magic and make money come out of nowhere. 

WILLIAMS:  But you say it‘s just basically taking money out of the trust fund, putting it in private accounts and it‘s just juggling the figures around? 

KRUGMAN:  Yes and pretending that we know for sure that stocks will somehow yield enough money to offset the—more than offset the couple of trillion dollars we‘ll have to borrow over the next 10 years to make it happen. 

WILLIAMS:  All right, Professor Krugman, thanks very much.  Happy holidays to you, too.

KRUGMAN:  Happy holidays.

WILLIAMS:  Join us tomorrow night at 7:00 Eastern for HARDBALL, as we take a look at the role Osama bin Laden may play in the elections in Iraq.  On Wednesday, the co-chairs of the 9/11 Commission, Tom Kean and Lee Hamilton, will be here. 

And don‘t forget to tune into for this Friday‘s HARDBALL special edition, “A Soldier‘s Journey Home.”  Chris Matthews visits America‘s bravest sons and daughters, soldiers wounded in Iraq, now recovering at Walter Reed Hospital.  That‘s Friday at 7:00 Eastern.

Right now, it‘s time for the “COUNTDOWN” with Keith Olbermann. 



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