President-elect Obama Moves From One Person at a Time to All Hands on Deck

This is a rush transcript from "The Beltway Boys", November 29, 2008, that has been edited for clarity.

FRED BARNES, CO-HOST: Coming up on "The Beltway Boys," President-elect Obama moves from one person at a time to all hands on deck. We'll tell you how he's taking the reins as the economy continues to falter.

MORT KONDRACKE, CO-HOST: We'll take a closer look at team Obama and what it tells us about Obama's management style.

BARNES: Treasury Secretary Hank Paulson goes from hero to goat on the bailout crisis.

KONDRACKE: And we'll tell you why we think Obama's plan to revamp the college bowl system is right on the money.

BARNES: That's coming up on "The Beltway Boys" right now.


BARACK OBAMA, PRESIDENT-ELECT OF THE UNITED STATES: I think it is very important for the American people to understand that we are putting together a first-class team, and for them to have clarity that we don't intend to stumble into the next administration.


BARNES: I'm Fred Barnes.

KONDRACKE: I'm Mort Kondracke. And we're "The Beltway Boys".

BARNES: Tonight's first hot story, Mort, is lurch to the center. Now I don't think Obama was stumbling. On the other hand, he was not moving at a quick pace in his transition. It was sort of leisurely and unhurried. But turmoil in financial markets really have changed all of that. They forced him to step forward and try to reassure financial markets and Wall Street, and mentioned Main Street too, but it's particularly financial markets. And he began in the right way, something you have been urging repeatedly, and that is to let everybody know who his treasury secretary will be and the rest of his economic team.

But, Mort, let me show you the contrast between Obama a couple of weeks ago, the time of transition leisure, and this week when he really seized the reins. Watch.


OBAMA: My transition team is going to be monitoring very closely what happens over the course of the next several months.

I've requested that they brief me on these matters on a daily basis. And in the coming weeks, I will provide the American people and the incoming Congress with an overview of their initial recommendations.


BARNES: See? Sounded more alarming the second time, just a couple days ago.

But, Mort, as you noted, there is one trend here, and that is all his appointees seem to come from the center right of the Democratic Party. That doesn't make them conservatives but it means they are not hard core liberals or leftists either. And Obama's message seems to be to those folks, the lefties in the party, are they're dominant wing of the party, but no need for you to apply for a job.

OK, he's a pragmatist, but he's a pragmatist in one direction and that has been right wing.

KONDRACKE: Exactly. You remember on "The Beltway Boys," after the first press conference, we said how come he didn't he name his treasury secretary, and the market collapsed that day. So he finally got busy.

Look, I don't think this is a lurch to the center. I think that this guy is what he said he would be, a total pragmatist. Whatever works. If you need to be a liberal in order to get nominated in the Democratic Party and elected president, you are a liberal. If you need to be a pragmatist in order to govern — I mean a centrist in order to govern, you are a centrist. But you're right. The left is certainly left — out! Yes.

BARNES: Mort, I go by this. If I am relieved by the nominees, even happy about them, the left is bound to be mad!


BARNES: I don't agree with them any way.

Anyway, let's look at Obama's recent appointees, starting with his economic team, which, as we know, consists of Tim Geithner, who is the treasury secretary; Larry Summers, a former treasury secretary, who will be the head of the National Economic Council, at the White House. Christina Romer will be the head of the Council on Economic Advisors; and Peter Orszag, who's what, OMB. He's the budget officer. And now, Paul Volcker.

KONDRACKE: Yes. Congressional Budget Office now and will be OMB.

BARNES: And Paul Volcker who...


BARNES: ... of economic politics. So what do you think of this group?

KONDRACKE: Well, look, there is not a socialist among them, you know, the way McCain said Obama would be a socialist. They are market people. And that — that delights me.

I read a Christina Romer article, academic article about the so-called theory that if you cut taxes, you starve the beast. It's a conservative idea.

BARNES: Yes. Right.

KONDRACKE: She shows historically how it ain't so. What tax cuts do, if not paid for is it encourages an atmosphere of fiscal irresponsibility and increases spending, not decreases spending by the federal government. It happened under Reagan and it happened under Bush.

BARNES: You know what the Democrats on the left are mad at her about is her study of the New Deal, which showed that all the spending on infrastructure and all these other government programs didn't do much. It's only monetary policy, handling the money supply, increasing it or not, is what matters. So that is why they don't like her. That's one of the reasons I do like her.

Next, his foreign policy team is certainly centrist. You have Hillary Clinton as secretary of state. You've got Jim Jones, the former Marine general, who will be the national security advisor. Jim Steinberg will be deputy secretary of state. He was a big deal in the Bill Clinton White House. And lastly, and most surprising to me, Bob Gates, George Bush's defense secretary, will be staying on a year or more

KONDRACKE: Yes, bipartisanship.

BARNES: Amazing. Amazing. And Jones is the most amazing to me though, particularly — I'm not even sure Obama knows this — that when it comes to energy, his policy is, drill, baby, drill.

KONDRACKE: Well, Jones works at the Chamber of Commerce, the U.S. Chamber of Commerce, which is, you know, the business lobby. And he is an all-of-the-above person on energy policy, drilling, nuclear, all the rest of that stuff. And he makes the point, absolutely correctly, and Obama ought to listen to him, that it will take us 20 years to get off fossil fuels before the technology comes on-line. So, you know, this is where policy ought to be. And he's national security advisor and he understands that energy security is part of national security.

BARNES: All right. And there is Obama's appointment of Rahm Emanuel as his White House chief of staff. I think that's a move to the center — at least toward the center as well. But has Emanuel got to do particularly, Mort, to make sure that the White House stays in his direction and to help Obama succeed?

KONDRACKE: Well, he has three jobs basically. One is to manage the president's time, which is this traditional job. Second is to control the liberals on Capitol Hill, starting with his old colleague, Nancy Pelosi, the speaker of the House. And then, to control the liberals on the White House staff, the congressional liaison, the communications director, the policy director, and the domestic policy director, are all liberals. And two of them come from the labor unions and one comes from Kennedy's staff and the other comes from Henry Waxman's staff. So they are liberal inclined and they can't dominate policy for the administration.

BARNES: Yes, but don't you see ideological feuding ahead with these. And they may be lower-level White House aides but will disagree with the cabinet members and with Emmanuel.

KONDRACKE: Yeah, but the White House staff can be superseded. And, look, what Obama does is going to be what works. And if this centrist stuff doesn't work, my guess is he'll go left and see if that works.

BARNES: Is that a threat?

Coming up, Obama's plan to jump start the economy, spend, baby, spend. We'll tell you what is in Obama's stimulus plan and if it will work.



KONDRACKE: Welcome back to "The Beltway Boys."

Hot story number two, acting president. That is Barack Obama. Actually, you know, now we have two presidents. We have Barack Obama and we have Hank Paulson, this treasury secretary! We have three presidents, if you count Ben Bernanke, the chairman of the Fed.

BARNES: And four if you count George Bush.


BARNES: That guy!

KONDRACKE: There is a lot of cooperation. You have got to say that this is a bipartisan activity. These people are working together. And the — and Obama has not said one negative word about the Bush administration's current policy, which has been to inject, count it, $7.8 trillion into the financial markets.

Now, what Obama wants to do is not only help Wall Street recover, but also Main Street. And his idea is a huge stimulus package which may amount to $700 billion. A tenth of that or maybe a trillion or maybe even more.

Here's Barack Obama talk about it. Watch.


OBAMA: It is my hope that the new Congress will begin work on an aggressive economic recovery plan when they convene in early January so that our administration can hit the ground running. (AUDIO PROBLEM) ... have is you've got the large stimulus package that the new president is proposing and members of Congress are talking about, is this going to be more of the same when it comes to Washington spending? And the answer, I want to be very clear, is no.


KONDRACKE: You're skeptical.

BARNES: I am skeptical. Everything I have heard from Obama, and from Democrats, is that he and Democrats will fail both tests on bipartisanship and economic savvy. I'm sorry. I hope I'm proven wrong at some point.


KONDRACKE: Not only that, part of it does depend on whether the Republican stance on this is to be cooperative or to just say no. They do have the policy preferences but — and I hope that Obama will lean in their direction. but they can't say no on this.

BARNES: They're not going to say no, but they have ideas that can be included.

KONDRACKE: Well, let's take a look at some of the elements of Obama's package.

Number one, boost infrastructure spending. Now, what the idea is, is to put people to work, building things that America needs, roads, bridges, schools, etc. Now I hope that, in a bipartisan fashion, that he will also unleash — eliminate the kind of regulations that have prevented a lot of private investment, which includes electric grid, electric power lines, oil pipelines, offshore drilling rigs and that sort of thing. That will keep the Republicans happy, won't it?

BARNES: That will keep me happy as well. But, look I'm for highways and bridges and more of those. And I've written about this over and over again. On the other hand, it's people in the Democratic Party, environmentalists and so on who hate that stuff. They think, tear down one — chop down a tree and it is like a human dying. But...

KONDRACKE: So you're in favor of this infrastructure.

BARNES: No, no. I'm in favor of that part.

But, Mort, that kind of thing has never gotten us out of a recession. It just never worked that way. It is fine to give these people jobs. It deals with one of the symptoms, and that's joblessness, but not the core. And for that you need permanent tax cuts across the board that will stir investment, which, in turn, will create jobs and economic growth. That is the way you get out of recessions. That's how Ronald Reagan did it.

KONDRACKE: The other elements to the stimulus package are a focus on green jobs, wind farms and that sort of thing, middle class tax cuts. And I hope that he has the sense to specific say I am not going to raise taxes on rich people, until the recession is over. And that he will cut capital gains taxes. I mean, Summers and Volcker and those people know that capital gains is one place that — one tax cut that really does pay for itself. And, then the last thing is apparently investment in maybe tax credits for doctors and so, to buy the kind of computer systems that you need to have a health I.T. system that really is a system.

BARNES: Doctors can't afford them on their own? All the doctors are doing OK.

KONDRACKE: No, no. It's the whole system. I mean, if we put — if we put health records on computers, we could save a lot of money and a lot of lives, too.

BARNES: Don't punch me by explaining it to me. But, look, green jobs, you know, wind farms, we've got a wind farm on Capitol Hill, what do you need to provide for money for that.

Look, the op thing that matters here — and this is the test of the stimulus, the package and that is, if serious across-the-board permanent tax cuts are included. They need to be. If not, forget it.

KONDRACKE: Well, I don't know that serious long-term tax cuts across the board will be included. Capital gains taxes may be...

BARNES: Worked for Bush.

KONDRACKE: Yes. And also unpaid for, and caused a huge leap in the national debt which Obama wants to stop.


BARNES: Mort, Mort. That had to do — you haven't looked at this closely. What caused that? Spending, soaring spending, it's not tax cuts.

KONDRACKE: Coming up, second-guessing Hank Paulson. And might college bowl games become a thing of the past? They will if first-man Barack Obama has his way. We'll explain, next.


BARNES: Welcome back to "The Beltway Boys." Let's check out the "Ups and Downs."

Down, Treasury Secretary Hank Paulson. His inconsistent positions on how to help the struggling economy have failed to calm markets big time as the holiday shopping season begins.

Here's Paulson pleading his case on Tuesday.


HANK PAULSON, SECRETARY OF THE TREASURY: I know it's a hard sale to tell people, if you hadn't done this it would be worse. But, this is the — the fact is, it would be much worse if we hadn't done it. And the fact is we now have the tools and the capacity to stabilize the system and work to get credit flowing again. and it will take a while to do that.


BARNES: You know, things might have been worse, absent this $7.8 trillion — I almost said billion — trillion dollar budget you mentioned. I'm glad you threw out that figure earlier.

But here's why I insisted on giving Paulson, who I like, a down arrow. Because, look, things might have been worse but they haven't been good, $7.8 trillion. I mean, that's not all actual cash sent out. It's loans and guarantees and so on. But it's a lot of money. And financial markets are still unstable and jittery. I don't think we have gotten much for our money. And we still don't know, Mort, how many — how much more bailing out Hank Paulson may want to do. So, I think it is time for a down arrow for Paulson.

KONDRACKE: You know, somebody I talked to likened Hank Paulson to the quarterback on a Sandlot football team. It is entirely improvisation. Everybody go out for a pass and I'll throw the bomb.

The problem is, they have been injected all this money into the banking system and the banks refuse to lend. They're still locked up with all these toxic securities they used to have. And the latest play that these improvisers are doing is to pump $800 billion into consumer credit and auto loans and home — a little bit — not enough on home loans, and also credit cards and student loans and stuff like that. They are gradually getting from Wall Street to Main Street, which is where the effect needs to be.

BARNES: OK. But a long time getting there.

KONDRACKE: Up, President-elect Obama. For years, college football fans have argued the merits of a playoff system. And now he has chimed in, suggesting an 18-playoff tournament to replace the current BCS ranking system.

Here's his pitch.


OBAMA: I think it is about time that we had playoffs in college football. You know, I am fed up with these computer rankings and this and that and this other thing. Get eight teams, top eight teams at the end. You got a playoff. Decide on a national champion.


BARNES: I saw, President-elect Obama, you got that exactly right.

But, Mort, here's what the BCS coordinator said in dismissing the president-elect's suggestion. Here's what he said. He said, "I'm glad President-elect Obama has a passion for college football, like so many other Americans. For now, our constituencies — and I know he understands constituencies — have settled on the current BCS system, which the majority believes is the best system yet to determine a national champion, while also maintaining the college football regular season as the best and most meaningful in sports. We certainly respect the opinions of President- elect Obama and welcome dialogue on what's best for college football."

That was darned condescending of John Swofford (ph). For heaven's sake, and he's completely wrong. There's no majority that's in favor of the BCS system. Quite the contrary. Fans, players, coaches, America, me, everybody wants a...


BARNES: You too? Everybody wants a playoff system. Obama has it right, exactly eight teams.

Look, what is the BCS? Who likes it? The bowls — people who sponsor bowl games and ESPN, they like it because they are tied in to get those bowls on television. And college presidents, they like, you know, 36 bowls, all the no-name bowls, because they have a steady stream of revenue that comes from the — to the colleges from the bowl games.

But what does the BCS do? They arbitrarily pick out two teams and say these two teams will play for the championship when there — and this year there will be a half dozen or more teams that will be, I think, equally qualified to play in the championship game.

Now, you have an 18 playoff. You can have all those teams in it. We have them in every other college sport and in college football at every level, below Division 1A. There's even a 16-team playoff for Division 1AA. It works fine! Let's have it. We can still have all those bowl games.

KONDRACKE: Here's the Kondracke solution to this problem — all the playoff games, become a bowl.

BARNES: All right.

KONDRACKE: And you can rotate them around and call them different bowls and then national championship game, sometimes you could have it in Pasadena, were the Rose Bowl's played, sometimes you could have it in New Orleans, where the Sugar Bowl is played, and sometimes in Phoenix, where the Fiesta Bowl is played, and in Miami. You just shift them around and call them bowls and problem solved.

BARNES: And then have all these lesser bowls. You can still have them anyway.


BARNES: For teams not in the BCS.

KONDRACKE: Exactly so.

BARNES: Mort, you stumbled onto the ultimate solution.

KONDRACKE: We've solved the problem.

BARNES: All right, down, Hugo Chavez. The leader of Venezuela is planning desperate measures to keep oil prices between $80 and $100 a barrel to stabilize the market and finance his hold on power. Oil is $50 a barrel now.

KONDRACKE: The great thing about the decline or the deflation that is happening, at least on the energy market, is that the bad guys, like Hugo Chavez and Mahmoud Ahmadinejad and Vladimir Putin, don't have the revenue any more to cause mischief all over the place.

BARNES: Look, Hugo Chavez cannot survive as dictator and socialist whenever he is, in Venezuela, on $50 a barrel oil. That is for sure. And so I think we can wave bye-bye to him soon. I mean, the economy is already failing.

KONDRACKE: It can't happen too soon.

Hang onto your seats. "The Buzz" is coming up next.


KONDRACKE: What's "The Buzz," Fred?

BARNES: Mort, you can count on the fact that my objections to president Obama will begin piling up soon. But they haven't really started much yet because of his appointees and the BSC thing. But there is one other thing I particularly like about Obama and you know what that is? Short press conferences! I hate these long — president Bushes go an hour. Obama takes three or four questions, and he's out of there! More power to him.

KONDRACKE: I think you'll like him. Actually, you're going to...

BARNES: I don't.


BARNES: But I like his press conferences.

KONDRACKE: In any event, for months, I have been conducting a poll among Middle East experts and intelligence officials and so on, asking them, on a scale of zero to 100, what is this likelihood that Israel will attack Iran in the next several months.

BARNES: You mean the nuclear facilities?

KONDRACKE: The nuclear facilities. And so it got up to 55 percent. I mean, the consensus was 55 percent. Now that Ehud Olmert is leaving office and he's the head of the interim government you've got elections are coming, the possibility among these people descended to 30 percent. However, Ehud Olmert was in Washington last week. lord knows what he was asking president Bush about.

That's all for "The Beltway Boys." Join us next week when the boys will be back in town!

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