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After Party: Where Do We Go from Here?

Aired December 27, 2008 - 18:00   ET

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


DAVID BRODY, CNN CO-HOST: A massive financial meltdown leaves the nation heading towards the worst economic condition since the Great Depression. And an historic election ushers in the first African- American president and possibly, just possibly a new kind of politics.
And as more U.S. troops head for Afghanistan, issues of war and peace confront a new administration. I'm David Brody, and we will look at what is certain to be a tough 2009 in a special edition of the AFTER PARTY. Cue the music.

All right, let's get right down to brass tacks. What do you guys see as the number one economic priority for the Obama administration? Tara Wall, "Washington Times?"

TARA WALL, THE WASHINGTON TIMES: I say restoring consumer confidence, while not increasing taxes and cutting government spending, but I know that's a conservative wish list. If the president-elect can find some middle ground in there, that'd be a good thing.

BRODY: All right, Michelle Cottle, "New Republic." Hello, welcome.

MICHELLE COTTLE, THE NEW REPUBLIC: Hello.

BRODY: What do you think?

COTTLE: I'm going to go with jobs. Jobs, you know, just within the last month, they've bumped up projections for what they're going to try to do from 2.5 million to 3. This is kind of their top priority going forward.

BRODY: And we've heard a lot talk about jobs. Steve Hayes, "Weekly Standard?"

STEPHEN HAYES, WEEKLY STANDARD: It's first do no harm. I mean, you had a Barack Obama who campaigned on raising taxes. In some cases, he seems to have backed off on that a little bit. I think that's a smart decision. First, do no harm.

BRODY: All right, Chris Hayes, "The Nation." Another Hayes at the panel - on the panel.

CHRIS HAYES: That's right. With different views. Avoid a Great Depression is the overriding imperative. And the way 20 do that is to spend as much money as humanly possible in a short amount of time.

C. HAYES: Michelle... WALL: That's a plan. Spend money, spend more money. But you have a challenge when people aren't spending money, particularly and the confidence as well. I think that's going to be a challenge.

BRODY: Let me ask real quick, Michelle, about this stimulus plan that we're going to see a lot about in January of 2009. I mean, really, this is like a Charles Dickens "Great Expectations" for the Obama administration, because this is public policy. I mean, in essence, what we're talking about -- infrastructure, energy, green jobs. I mean, this is what it's all about, isn't it, for Obama to get the thing going here.

COTTLE: Yes, I actually think it's going to be kind of a challenge to figure how to spend that much money. I mean, we're talking about hundreds of billions of dollars. And everybody jokes about how much government likes to throw money out the door, but when you're talking about these sizeable sums, there is a kind of challenge to figure out how best to spend it. And...

UNIDENTIFIED MALE: They'll find a way.

WALL: Exactly.

COTTLE: They've got it broken down into like three categories. You know, tax relief for lower, middle income people. And then they're sending out huge chunks to the states...

S. HAYES: Right.

COTTLE: ...to work on kind of dealing with the unemployed. And then they've got the infrastructure. You know, and that's where you get into the education and health care and all of the stuff. But you know, they're still going to have to figure out how to do this smart.

WALL: But I think even with that, there has to be accountability and transparency. I think that's the one thing -- if nothing else that we've learned from the first big bailout to now the second big bailout that we're into that are racking up in the trillions of dollars is the second package that's gone through against the will of the people essentially, is that there has to be accountability. You can't just throw money out there and hope it sticks and hope it applies. And they're not accountable to anyone. And no one's accountable for. And I think that's the challenge going forward.

C. HAYES: I absolutely agree 1,000 percent with that. I think actually that's the key - I do. This is amazing, amazing.

(CROSSTALK)

WALL: Write it down now.

C. HAYES: No, I mean, there has to be accountability for all the reasons that Tara just mentioned. And also, I think that the only way to make big government work is for it to be clean and transparent government. Otherwise what you get is a lot of rent seeking. And that's basically what we've seen out of this first bailout. BRODY: Why not put it up on the Internet? Why not put this bill, whatever this massive bill put - Grover Norquist has talked about this. Put it on...

S. HAYES: Well, you could, you could. But I mean, look, you already have a problem with the initial bailout. I mean, you've got banks who have gotten billions upon billions of dollars, who are refusing to make public what they've actually done with this money. And you have great resistance from Congress to even making public the projects that members are requesting in the budget process, the earmarks. And that's a disaster.

COTTLE: We're told that they're trying to cut some deal with congressional leadership to make sure that the earmarks don't go through. But I think you're right that you have to keep an eye on it. And they have been talking about putting some stuff up on the Web like to see what's been spent, like how much of the bailout - that the stimulus has already gone out the door.

C. HAYES: That's a campaign promise also. I mean we all know that Obama made the campaign promise that they were going put up bills, certain preordained amount of time before they were voted out -- up on the White House website. You reiterated that...

WALL: This is a watershed moment. This will be his watershed moment for transparency.

S. HAYES: Well, he reiterated that before he went on vacation to Hawaii. He reiterated that in a press conference that said quite clearly I don't want earmarks in this bill. And I think it's one way that Democrats and liberals could have real problems with the stimulus package. If it's not transparent and if it's loaded with earmarks that could be a big problem.

BRODY: Right now, the only transparency we're seeing is like Obama without his shirt on the beach.

(LAUGHTER) COTTLE: Don't say that like it's a bad thing.

BRODY: Well, that's a good point. Let's just quickly move on.

COTTLE: There you go!

BRODY: Thank you.

WALL: Let's paint another picture. I don't think many (INAUDIBLE) necessarily want to see our president-to-be in that light.

COTTLE: (INAUDIBLE0 if female. Let's just keep that...

BRODY: All right, all right. Look, March of '09, the automakers, they'll be back. We all know it's going to happen. I want to show you a few polls that were very interesting, where the American people are on this. Those $13 billion in loans for the auto companies, 63 percent favor going ahead and doing that. Only 37 percent oppose. But look at this next question. If the auto companies are going to come back for additional assistance, the government should provide them assistance, only 28 percent think that. Let them go bankrupt, 70 percent.

Chris Hayes, Obama's going to have a decision to make in March because the American people don't want any more money for these auto companies.

C. HAYES: Yes, although one thing to keep in mind here is that one of the reasons that the automaker became the big issue it did was because it was during this sort of slow news period. Everyone else is outside the Capitol. The automakers were there. And they were getting all the benefit of this accrued and stored up rage at the previous bailout. The amount of attention that's going to be specifically on the automakers when you look at the whole legislative agenda in March is going to be much diminished. So I think it's going to be a tough political choice for him, but it's not going to have -- rise to the relevance -- the level of saliency that we saw...

S. HAYES: See, I disagree with that strongly because I think precisely for the point that you made, that it's gotten so much attention this first time around when we're talking about $13 billion to $17 billion this first time around. You have them coming back in March asking for significantly more, having to prove that they're going to be viable companies, which I think it'll be very difficult for them to prove. I think we're going to all focus on that quite a bit just because of the focus that we put on at this time.

WALL: And that is the - I mean, that's the challenge. I mean, obviously, once you open that barn door, when does it shut? And there's going to be the continue coming back. Also, you know, quite frankly, the auto industry, this is a problem that has been bubbling for years and years and years. And many, I know, you know, liberals want to argue, oh, well, they're working on -- they've been working on the problem. Well, they're not working efficiently enough, obviously, when you have makers like Toyota and Lexus and the German automakers that are succeeding, that are thriving, that have found ways to...

C. HAYES: Toyota just announced. Toyota declined for the first time.

WALL: Well, for the first time. But look at, I mean, we are talking about an economic reality here that we're in an environment. But over the - I think there are some things that these other three automakers could have done, should have done. Ford doesn't even need the money right now. And if you ask me, if you ask a lot of folks, essentially they are bankrupt already.

COTTLE: It comes down to in terms of jobs one more time. I mean, if you talked to people a month ago, I think the numbers would have been reversed. The majority of the American public really, really, really oppose these lines. I mean, it was political suicide to vote for these loans.

BRODY: That's right. COTTLE: Then the jobs numbers got a little uglier. And the financial situation got a little grimmer. And people were like, well, we certainly don't want to make it worse. So I think the situation we'll have to look at in March is kind of how people are perceiving whether things are getting back on track or not.

BRODY: Yes, who's going to be the ringmaster in all of this? I mean, you know, everybody...

UNIDENTIFIED MALE: ...the czar, the car czar.

BRODY: But I don't even...

UNIDENTIFIED MALE: The car czar.

BRODY: Well, I don't even mean - I'm really not so much on the auto bailouts, but I'm talking from the economy overall, I understand Obama's, you know, at the top of this whole, you know, food chain, if you will. But you've got Geithner, you've got Summers and their dynamic and how they're going to work together. I mean, Henry Paulson, Hank Paulson going to be gone. He'll be on a beach somewhere in Cancun hopefully without his shirt. But you know, what is going to happen?

WALL: They're following the pattern of Hank Paulson. And I think there's already agreement within this transition period, some consensus between the two administrations on how to move forward and in managing all this. I don't think that there's been a lot of disagreement. And you all can agree or disagree with me so far, but I think that the money's there. Now there's this opportunity, I guess, they would see it as, for the new administration to assess how to spend the money and how to move forward, how to hold these folks accountable under -- and rework what essentially is going to be a new structure, I think, in the way we deal with these businesses. Whether it's banks, whether it's the auto industry, and how the government works in tandem. And I think restores the viability of capitalism. We can't lose sight that we are still a capitalist...

UNIDENTIFIED MALE: Capitalism, what's that? What do you mean?

COTTLE: Naive.

WALL: A sign of that. And I think most taxpayers, and also, we need to refocus on what is going to happen to the everyday taxpayer, and how these taxpayers, these homeowners are going to get relief? Because I think there's a bubbling and a resentment when they see all these big bailouts.

S. HAYES: Yes, I think there is some of that resentment. I mean, you look at, you know, I know somebody who was involved with the small business, that started two years ago. Looks like it's going to fail. Had to take a couple weeks off at the holidays. Looks it's not going to continue. Where's that bailout, you know?

WALL: That's right. S. HAYES: They don't get a bailout. Look at the loggers in the Northwest. You know, we've seen their industry ravaged. Where's their bailout? You're going to start to have people like this.

C. HAYES: Working people who are going into, you know, I know people, in - I was talking to my friend who works in western Mass. A family of the working poor that are going into this winter $2,000 behind in their utility bill. Now before the bailout, you could say, well, that's terrible, but you didn't pay your utility bill. Now that rationale's been vitiated. How can you tell them that they shouldn't...

COTTLE: When had Barney Frank on the Hill sitting there talking about he wants a new regulatory structure for a lot of these financial...

WALL: But (INAUDIBLE) are going to be accountable to the taxpayer. At the end of the day, the Geithner, the Summers, they're going to be held accountable to the taxpayer. And they're going to have to figure in how big government doesn't swoop down on everyday Americans and get - issue them some relief.

BRODY: There you go. All right, we'll talk about it during the break. And we need to go to a break.

Coming up, the political roadblocks facing the next president. It's going to be quite a course. We'll talk about that in a moment.

(COMMERCIAL BREAK)

BRODY: Barack Obama campaigned as someone who wanted to change the way Washington works. But now facing two wars, rising unemployment, and a global economic crisis, will change have to take a back seat to political reality?

All right, welcome back to the AFTER PARTY. I'm David Brody.

Michelle Cottle, let me ask you, how does Obama exactly avoid partisan gridlock? He should - maybe he should hand out those yes we can buttons to everybody. Go, Obama. They could go chanting in the halls, yes, we can, yes, we can.

COTTLE: You can't underestimate the power of a good chant. I mean...

BRODY: Good point.

(LAUGHTER)

COTTLE: The housing's not going to be a problem. You know, Pelosi in there. And there, you know, they've got the majority and Rahm will do what he has to do to...

BRODY: I bet he will.

COTTLE: Put everybody, you know, put the stick about. But on the Senate side, it's always going to an issue. Even if the Democrats had gotten 60. You know, the Senate is like 100 independent kingdoms. And he's going to have go in there and just on individual issues, he's going to one have to take his case to the public. And he's a great salesman. And so, you apply pressure that way. Especially on issues like health care and you know, education and those kind of issues that a lot of people care about.

But also, he's just going have to like - he's going to have to go to McCain. He's going to have to go to specific people on the other side of the aisle who agree with him on things and kind of work one by one to pull those votes.

BRODY: Steve, what do you think?

S. HAYES: Yes. I think you can't overstate how big a role John McCain is likely to play in some of this stuff. I mean, this is -- we will revert back to the "old John McCain" that the media longed for.

WALL: John McCain redemption tour.

S. HAYES: Right, exactly. And I think he will help. I mean, look, he's -- John McCain has already said in several interviews I want to be helpful. I want to do what I can to help the new president-elect. So I think we're likely to see McCain take a bigger role. That said, he opposed the auto bailout. So we've still got the old...

COTTLE: (INAUDIBLE).

S. HAYES: ...taxpayer John McCain there, too.

BRODY: But Chris, our founders set up our government in a way that, you know, provokes debate, provokes this sort of, you know...

C. HAYES: Stasis in the preservation of the status quo.

BRODY: Wait, so how does Obama, you know, really break through that in the sense that he's going to have a -- he's talked a lot about this. He's got to deliver, does he not?

C. HAYES: Well, look, yes, he does have to deliver. I mean, they're first of all, there's going to be political imperative for it. The status quo is untenable politically, not just substantively, politically. You cannot just be seen as sitting around and doing nothing while Rome burns.

And there are states that are represented by Republican senators. Maine, for instance, that Obama won by 25 points. There's new political pressure.

Second of all, you know, my -- I would love to see the resurrection of a great conservative idea from a few years ago, which is to get rid of the filibuster. I mean, I think that was actually one of conservatism's high points was what they called the constitutional option in conservative publications. Get rid the filibuster and you know, I think we'd see a lot less gridlock in the Senate.

COTTLE: Clear options... (CROSSTALK)

C. HAYES: The liberal media calls (INAUDIBLE).

WALL: You can -- Democrats almost had that when they almost - you know, they almost had that this election, but not quite. Almost.

But I think actually that President-elect Obama will face a little bit more opposition than people are anticipating from Nancy Pelosi. I mean, she has already laid down the gauntlet, so to speak. The line in the sand. And he can't, you know, he's got come to her first and always.

BRODY: Right.

WALL: And see, he can't come down to Congress without speaking to her, without her knowing about it. And so I think -- I think that there is going to be a little tit for tat going on between the two of those.

S. HAYES: We also should take just a moment to pause, to going back to your package, to talk about what Barack Obama said when he campaigned. He said, and I think this is a direct quote, if not, it's a close paraphrase. I'm not going to run Washington with all the same Washington players.

BRODY: Right, right.

S. HAYES: How does that look now?

WALL: That's right.

S. HAYES: We have all the same Washington players in place. So he's already, it should be noted, he's already broken what I would argue was one of his fundamental campaign promises in order to be a pragmatist. You can say it's a good idea, but he's done it.

BRODY: I think the question then, Michelle, becomes what are Obama's non-negotiables here? We're going to find out pretty soon what those are. Are there, well, do you guys, I mean, from more of a progressive point of view, do you have concerns about what those are going to be? And do you even know what they might be?

COTTLE: Well, I think probably if you're looking at them in terms of kind of categories, I think health care probably trumps the environmental agenda starting out. I think if you're going to try and put them in a list, health care would come before, say. There's a lot of talk of whether or not he's going to get his green initiatives in with the carmakers, while they're having to go through this bailout. I mean, kind of what kind of leverage he has, what kind of tit for tat he'll have to give up with the United Autoworkers and stuff like this.

WALL: There are a lot of political realities that begin to set in. And I think you're starting to see that already. Whether it's health care, where 51 percent of Americans have already said and continue to say they don't want big, universal health care coverage. That's not what they want. The other -- but there are...

COTTLE: That's not what he said.

WALL: But there are other -- well, he is pitching that in a sense. He's not - he's - it's still, it's still voluntary, but he's still pitching that.

The other, I guess, concession that's being made, it has to do with Iraq. I mean, he said on day one, as soon as he's president, January 21st, he's going to end the war in Iraq. Well, he's had to come off that.

C. HAYES: No, he never said that.

WALL: He...

C. HAYES: He never said that.

WALL: He did say that. He..

(CROSSTALK)

WALL: Back in July, he said he's going to end the war. I pulled it up.

C. HAYES: Begin the process, begin the process.

WALL: But he has had to pull off of that, given the considerations. That's why he's kept Bob Gates on. That's why he has tempered that approach a bit. Because he realized there are some political realities to governing. There's one thing to run a campaign.

C. HAYES: Sure, right.

WALL: But when it comes to governing, there are political realities, whether it's, you know, talking about who's going say the prayer. He has, you know, over the inauguration....

COTTLE: (INAUDIBLE) a political opportunities I think, when you have people losing their jobs.

BRODY: Yes.

COTTLE: When you have millions of people being dumped into a health care system that's not prepared to deal with it.

C. HAYES: Right, right.

COTTLE: You have to decide. Am I going to take the initiative? And the American public is at a point where they might be willing to try things they wouldn't during a normal period.

C. HAYES: Exactly right. I mean, 90 percent, 95 percent in some polls almost 100 percent of people think the country's on the wrong track. And if you continue to see the level of economic devastation which we are seeing now, which is just not paralleled in recent memory. I mean, we haven't had a really bad recession since '79 to '82. You know, that's what, 30 years ago. Right? We have not had this recently. And if you begin to see month after month of half a million jobs being lost, of double digit unemployment, you know, there's going to be a tremendous amount of political pressure built to do big things.

BRODY: Steve?

S. HAYES: But look, I'm one of those people who thinks the country's on the wrong track. The last thing I want is my government to spend as much as it can as quickly as it can. I mean, I think that's exactly the wrong solution.

I think if you look at polling across the board, and you have still, 35 percent, 36 percent of people who identify as conservatives in this country. And they're still going to have a voice. It's going to be a much diminished voice.

BRODY: Sure.

S. HAYES: It's not going to be as loud as it was.

COTTLE: (INAUDIBLE) that he's a good salesman.

S. HAYES: Exactly.

COTTLE: You have to make the case that you spend the money on the front end so that you're going to save it on the back end. And I think health care is one of those issues where it makes a lot of sense.

C. HAYES: Yes, but it's also just quickly, the crisis tends to change the rules of democratic governance in terms of what's possible. 9/11's a perfect example.

WALL: Everything's not a crisis either. I mean, let's...

(CROSSTALK)

WALL: Everything -- 93 percent of Americans still have their jobs. You know, there - most people still pay their mortgages on time. Let's not overemphasize what the crisis is.

COTTLE: You're suggesting there's not an economic crisis?

WALL: No, I'm not saying there's not a crisis. But I said everything is not in crisis.

C. HAYES: No, no, I agree. Well, I do think that, you know, what you're going to see, look, if you polled Americans right before 9/11 or even after 9/11, do you think preemptive war with Iraq is a good idea, I don't think you would have gotten a lot of people saying yes, right? You wouldn't. In fact, I'm sure you wouldn't have.

WALL: Yes. C. HAYES: But the fact of the matter is the conditions of fear that sort of rack the country created a totally different political feasibility. Now I think that the way that that was manipulated was awful, but I do think that it's hard to project forward what's politically right.

BRODY: Let me go around the table real quick because two of the big domestic policy items on the table would be health care and energy, especially. And Obama has talked about both of those a lot. What do you think will get done first? Do you think there will be a health care bill before they'll be an energy bill or vice versa? Anybody?

COTTLE: I'm going to go with health care just because...

UNIDENTIFIED MALE: Yes.

COTTLE: ...Americans freak out with energy when the gas prices are terrible. And right now, the pressure's off. You're going to see people buying big cars again. And you know, it's just kind of that American focus.

WALL: You know? The gas prices yes.

BRODY: What do you think?

WALL: But that's true.

C. HAYES: I also think - I think one thing they'll -- what they'll do is this. They'll essentially embed a lot of the green agenda in the stimulus to a certain degree.

BRODY: Right.

C. HAYES: And they've already talked about, you know, green renovations of public buildings. And then the actual first bill is going to be health care. We're not going to see a climate change.

S. HAYES: Private infrastructure projects.

C. HAYES: Yes, right.

S. HAYES: I totally agree with you. I think the point is exactly right. And people don't think of the energy situation as a crisis anymore, because we're paying $1.66...

WALL: You fill up your car, you don't care.

C. HAYES: You think it's actually good.

BRODY: Does the other (INAUDIBLE)?

S. HAYES: I agree with health care.

BRODY: But do you think it'll -- you think you can get through the Senate?

S. HAYES: Well, I mean...

BRODY: I mean, who knows exactly?

S. HAYES: A lot of it depends on the details of the plan. And a lot depends on where we are in this broader economic situation. How much Republicans feel like they can step forward and say look, this is way too much. And a lot of it will depend frankly on outside groups of conservatives and whether they're ready to fight the fight that they fought in '93 against Hillary care and say we don't need this.

COTTLE: He's laid a groundwork that's better. I mean, Hillary - the Hillary care thing was managed badly.

WALL: Right.

S. HAYES: Right.

COTTLE: And they, you know, it was people who didn't really know how to deal with Congress. I mean, she offended the Democrats in Congress...

S. HAYES: True.

But there's a ground truth there, I think when you're talking about now the situation may be different, as I suspect you'll argue. But there was a ground truth there that people didn't want the same people running the post office to be running their health care.

COTTLE: But they also didn't expect HMOs and what happened after that is people wound up having their health care run by HMOs. And I think that actually serves the cause a little bit.

(CROSSTALK)

WALL: But you still need to focus too on them. It's - there's roughly estimates about 15 percent of people who are actually uninsured. We talk about all these millions and millions, but it's only about 15 percent of the population that we hear that are uninsured. And now...

C. HAYES: That's like only, sure. WALL: Well, that's not a crisis, but we also have to talk about the people who are insured, where the problem is affordability and helping them with the affordability issue, whether it's coming down the pharmaceuticals, the medical companies, bringing down costs, and also making health care more accessible, more versatile, and being able to carry it. Those are the issues that also have to be brought into the discussion. I think the conservatives could add to the weight of the discussion.

BRODY: Time to move on. The Christmas season, peace on earth, all of you.

All right, back in a moment, where guess what? We'll probably have some discussion and maybe some disagreement about foreign policy as well. Stick around. You're in the AFTER PARTY holiday edition. Back in a moment.

(COMMERCIAL BREAK)

TIME STAMP: 1824:48

BRODY: An Iraqi journalist demonstrated quite vividly his feelings of anger over the Bush administration's policy in Iraq. You could call it the Iraqi shoe toss, but it's clear that U.S. troops will be in harm's way in Iraq for at least another 18 months. And now more units are deploying to the battlefront in Afghanistan.

And there are other serious foreign policy issues to confront as well. The growing global recession, the rising power of Russia and China, and the continuing ever-perplexing state of the Middle East. How will Barack Obama and his choice for Secretary of State, Hillary Clinton, deal with a lot of these issues?

Steve Hayes, is Hillary going to play nice here?

S. HAYES: I think we may need some diplomacy between Hillary Clinton and Barack Obama, given the things that they've said on the campaign trail. No, you know what? Actually, I think that we're likely to see more continuity between George W. Bush's second term foreign policy agenda and Barack Obama's first term foreign policy agenda. And probably most of us thought during the campaign, I mean, if you look sort of issue by issue, Iraq, there seems to be a lessening of the eagerness to get out quickly. Afghanistan, I think both sides are broadly in favor of sending more troops. Something on the lines of a surge. Iran, the infrastructure's been set up for mediation, for further diplomacy, which the Bush administration has been conducting. North Korea, the Bush administration screwed that up beyond belief. And the Obama administration will have to clean that up. So I think there's likely to be a lot of continuity, especially on a lot of the things that we viewed at flashpoints.

C. HAYES: The first term of the Bush administration was, you know, there's kind of a through line of kind of soft imperial management that kind of runs through the American foreign policy enterprise. And the first term of the Bush administration was kind of like crazy psycho hard imperialism. And then they kind of have backed off that and gone back to much more of the kind of mainline tradition of American foreign policy, which is using the international institutions when necessary, diplomacy in other places, not starting preemptive wars.

And in some ways, that's kind of what Obama has promised is a return to this kind of - he even said himself, I'm an old line realist.

COTTLE: And that's what you're seeing his appointments. I mean, his appoint - he's farther left than any of his appointments. I mean, he's got Hillary Clinton at State who has hawkish tendencies. He's got Geith, he's got Jim Jones. These are not people who are going to kind of like be singing kum ba yah and ripping all the troops home.

BRODY: Well, Tara, doesn't Barack Obama need some help here from Hillary Clinton as it relates to Israel especially, and Gates in others? Because I mean, you know, Obama's had an issue, you know, regarding Israel to a certain degree. We can talk about more, but he's not getting invited any Passover or Seder.

WALL: No, he's had naivete as it relates to Israeli relations. And he's really going to have to - he's really going to have to bone up on policy with the Mideast. He's also going to have to bone on the threat that Iran, you know, the threat of Iran as it relates to Israel. And I think he made some missteps early on, some misstatements. And I think -- but I think that for conservatives having Hillary Clinton at the helm of Secretary of State eases those concerns a little bit, because of Barack Obama's negativity on this issue. And...

C. HAYES: Can we just note also how insane it is that conservatives, the sentence that conservatives minds are eased by Hillary Clinton.

(LAUGHTER)

WALL: I know, well, I know.

(CROSSTALK)

BRODY: (INAUDIBLE) and Hillary...

WALL: She tends to get it in that regard. She tends to get me - remember, she was the one who disagreed with this notion that you just sit down with Ahmadinejad, you know, without any type of preconditions.

She was the one, although she criticized the war, she did essentially vote in favor of the war because she had - she received, like everyone else, the flawed intelligence. And we can all, you know, go back in, you know, hindsight, but I think she has a more tempered approach. She talks more about - she has this nationalistic, internationalistic viewpoint of dealing with our enemies as it relates to being forceful, though, at the same time being diplomatic. And I think that that will serve him well.

S. HAYES: Well, one of the real question, too, is, what's Joe biden going to do? I mean, this is a guy who was chosen largely because of his foreign policy jobs.

BRODY: Yes.

S. HAYES: And he's been muted so far. And when he's spoken up, it's not been largely on foreign policy. Can he stay quiet? I don't think he will. What about his debates with Hillary Clinton? Also, as it relates to the Middle East policy. You've got Jim Jones, who's steeped in Middle East policy, and has worked on the issue for years having views that are somewhat at odds with Hillary Clinton. I mean, I think there's a potential for a lot of fun for conservative journalists.

WALL: I agree. I think there's actually going to be more - I'd like to -- I want to see how that interaction is going to go between Barack Obama and Hillary Clinton, when this really gets going and talks start going. I think that there is going to be some -- some -- some tempered disagreements from time to time.

I could see that coming, although you know, I will give him kudos for at least recognizing where his weaknesses are and being able to either keep people on board who have a solid handle on this, at least in the short term, and also be willing to work with his enemies, so to speak, because of their positions on foreign policy, which he recognizes where most Americans stand, is more of a centrist position.

BRODY: But Michelle, let's give Hillary a little credit here. I mean, she could have gone rogue during the presidential campaign. She didn't do that. I mean, she's not really going go rogue here. Right?

COTTLE: No. If we've learned one thing from Hilary in the Senate, she's actually a pretty good team player. And for all of the talk about kind of what trouble Bill Clinton might cause, I think it actually serves you well to have Hillary in the tent. I mean, people talked about, you know, Jimmy Carter caused trouble for this president, running out.

UNIDENTIFIED MALE: Yes.

COTTLE: Bill Clinton could have done that anyway. I think the only kind of hope of having them, you know, pull your way is to have her on the team.

WALL: She's a team player as long as it's also serving her interests.

COTTLE: Well, it is serving her interests to be a team player.

WALL: (INAUDIBLE) a long term player in this.

COTTLE: She still has to watch out for Hillary and set the platform for...

WALL: It's not going to serve her interests well to be seen as undermining the man -- or having her husband running amok.

S. HAYES: At the same time, think about the great temptation that there will be, if she disagrees strongly with one of the positions that he's taken, one of the policy positions that he's taken. You know, if she - if she has future political ambitions, we probably all agree that she does, you know, she probably won't want to be saddled with, you know, x, y, z policy position.

BRODY: Let me go around the table real quick. Russia, China, Iran. I mean, you can go on and on. Where -- I mean, I understand -- right. Yes, wackable. You know, where -- Afghanistan -- where is the biggest foreign policy challenge do you believe for the Obama administration in 2009? Because, I mean, I understand world events are going to dictate this to a certain degree. But going in, at least, in 2009, Chris what...

C. HAYES: I think Afghanistan. I mean, I think right now that there is real reason to worry that Afghanistan, which has been the graveyard of foreign occupiers for millennia literally, could play that role again. I mean, we're talking about there's now this consensus we're going to send troops there. And it's based partly on the model that was successful in Iraq, but in very different conditions. We now have essentially there's no control in the Karzai government outside of Kabul. And even in Kabul, there are pockets that are controlled by the Taliban. So that to me is going to...

BRODY: I've got 30...

WALL: Iran.

WALL: In the Mideast.

BRODY: All right, Steve, what do you think?

S. HAYES: I think it's a toss up between Iran and Pakistan. And Pakistan could be the one that really gives us the most trouble given the instability.

COTTLE: Yes, I'm going with Pakistan. It's a disaster waiting to happen.

BRODY: How do you really feel? All right, guys. Thanks.

Did the election of 2008 prove that the old paradigm of red states and blue states, of winner take all politics is gone forever? Maybe. The AFTER PARTY continues in a moment. We'll talk about that.

(COMMERCIAL BREAK)

BRODY: More Americans voted in 2008 than in any election in the past 50 years. But did they simply vote for Democrats over Republicans? Was it a real vote for change, because of partisan gridlock? In 2008, will we find that the bitter division between Republican red and Democratic blue, between urban and rural, between conservative and progressive, has been replaced by a nation more willing to compromise, less willing to accept the winner take all politics of recent years?

And we are back on the AFTER PARTY with a very purple panel, if you will. You know, we want to know. Is the nation somewhat purplish? You know, Barney the dinosaur was purple. I love you, you love me.

WALL: Well, purple's my favorite color. And although that's my favorite color, I don't think that's indicative of a nation -- I don't know what that means.

(LAUGHTER)

BRODY: If you take red and blue.

WALL: And blue and put it together, we're all melted together. I think there are very distinct ideals. I think that obviously, there are areas where we agree and disagree. Ideologically, we are divided down the middle. I think this election bore that out. It was a very close election. This panel kind of bears that out, but I think there's obviously issues that we can find common ground and consensus on. If that means purple, then, yes. BRODY: Michelle, center left, center right, does it matter? Are we too worried about labels here? What's your sense of what this country is about?

COTTLE: Well, I think that when you're looking at individual issues, there's a lot of common ground. You know, people want to work towards solutions on certain things. But I think culturally, people tend to identify as a red state or a blue state.

I come from a red state family. You will not talk to my dad about Democrats. You know, the family - you know, they're descending on me for Christmas. And we will not discuss the new administration. But you know, that kind of thing. People tend to identify. And you can blame the media. You can blame the politicians, but I think that's the reality. In a lot of ways, people do identify with one team or the other.

C. HAYES: Yes, I mean, we are fairly polarized. But also, that's part of Democratic politics in a nation of 300 million people. I mean, you know, it's easy to overstate the degree of that polarization. I mean, you had people -- there were riots and church bondings in the '60s over essentially political issues. Right? There were - I mean, we have been incredibly polarized to the point of violence in the past. So in the long, historical scale, I think we're polarized because people have, you know, different interests and different...

(CROSSTALK)

WALL: (INAUDIBLE) and partisanship. I mean, they're not the same thing.

S. HAYES: There are disagreements, too, even among conservatives. For instance, I think that purple is a totally lame color.

(LAUGHTER)

WALL: Thanks, Steve. That's my color.

S. HAYES: That's the worse color out there. No, seriously, though, I think a point that Chris made earlier, I think some of these divides, some of the polarization we've seen in recent years may diminish, if these problems that we're facing continue to grow.

C. HAYES: Yes, right.

S. HAYES: In the bigness of all of the stuff that we're looking at going forward really could cause people to say, look, this is too much for me. I know I believe in this. I mean, look at George W. Bush. This is a guy who came in, arguing that he was a free market conservative. And he's now, you know, essentially partially nationalizing banks and giving money to the automakers. I mean, this is...

COTTLE: He did unify the country. And then almost everyone has done a really bad job. So... WALL: That's where Steve and I probably disagree.

COTTLE: (INAUDIBLE) not special in that point.

WALL: There is a, that you can't take a simplistic approach to every issue. I mean, as Steve mentioned, I mean, even among conservatives, there's going to be disagreement. You can take one issue alone, health care. And we still will come up with two different ways to address it, or agree on it, or disagree on it.

COTTLE: But those are issues. People tend to take to like take it almost like a sporting event, where politics is a team sport in this country.

C. HAYES: Right.

COTTLE: You have to get beyond your team a..

WALL: And that's great, though. Isn't that great?

COTTLE: It's not violent. It's kind of like more of a -- I think that's great for the country.

BRODY: That's interesting, because that kind of leads me a little bit to Rick Warren. And believe me, I don't want to get into the whole Rick Warren thing again, okay? But Rick warnen seems to me at least to be a microcosm of this purplish conversation we're having, because in essence you have two different camps here. You know, and the -- the homosexual activists got very concerned about Prop 8. And they got kind of tangled up in that. But Obama was trying to simply say look, we've got Rick Warren, we've got Joseph Lowry. If nothing else, that inauguration ceremony may be somewhat purple.

(CROSSTALK)

C. HAYES: And we all have -- look, we all have spectrums of beliefs. And there are certain beliefs that are in a qualitatively different category. For someone like myself, the equality of gay human beings, is in a qualitatively different category than whether the best way to achieve universal health care is through mandates or not.

And so, when you hit that principal bedrook, to me, it is like having someone who doesn't believe in interracial marriage giving an invocation at the presidential ceremony. So that's just - you know, and that -- look, that's just the way people are. I mean, we have principle beliefs.

WALL: But you also take someone as -- you take a person, like a Rick Warren who was not partisan at all, who is a uniter, who brings people -- who has disagreement within the Republican party, because of his stance on the environment.

C. HAYES: And good for him.

WALL: So, I mean - so but I think he symbolizes or at least it was Obama's attempt to symbolize someone who can bring both sides together as he did with his Saddleback Forum was to bring both sides together. And he may say this is what I believe and this is what I stand for, but I can still bring people together.

We all have those solid, core beliefs that we believe in, but that doesn't mean I still can't be united. That doesn't mean that I can't bring people together. And I think that that is what's indicative. There's so much ire about this that, I mean, just really boggles my mind. You know, but I think that he represents, or he can represent this purple mentality that we're talking about. You can still have very strong beliefs, but still have an ability to bring people together and be neutral.

BRODY: Steve, what do you think? Are we guilty, when I say we, all of us collectively, conservatives and liberals, of stereotyping if you will? You know, that the liberal is a certain way. The conservative guy in the south is a certain way. And we seem to get into stereotyping that seems to hinder the process?

S. HAYES: Yes, I think that's right. And just to follow up on something that Michelle said earlier. I think when you talk about the country dividing into teams, I think that's really more a function of Washington more than it is in the rest of the country. I think the rest of the country really, people don't think about teams as much.

(CROSSTALK)

S. HAYES: Well, maybe these are my Midwestern roots, where people aren't so focused on (INAUDIBLE) on party identification and who's team you're on, but I certainly think you find that in Washington. When you go to a - you know, you go to a bar, the first question you're going to get is...

COTTLE: What people in Washington...

S. HAYES: ...whose side are you on? Oh, you're a conservative?

COTTLE: ...mix more than people in other parts of the country.

WALL: That's right.

COTTLE: I have been to conferences with people from other parts of country who be conservatives.

BRODY: Right.

COTTLE: And they're like, you have conservative friends? I don't know anybody who's a liberal. I don't actually think you can blame Washington for this.

C. HAYES: And I think it's also important to distinguish between two kinds of polarization. One is this polarization I'm talking about principles in which there's just conflict over, you know, conceptions of the good. The latter is this more cultural aspect, which is the sort of culture war, you know, you're a know nothing redneck bible trumper and I'm an effete latte sipping -- you know?

WALL: Those are the type of stereotypes I think that we - yes, we could do less -- less talk...

(CROSSTALK)

WALL: And quite frankly, I think that is an unfair characterization of Sarah Palin during the election.

S. HAYES: Yes, exactly. You that you with Sarah Palin.

WALL: Absolutely.

S. HAYES: Where you had a media that had - you know, that doesn't know the lyrics to any country songs.

BRODY: Yes.

S. HAYES: And a group of people who like Sarah Palin. The media, which...

(CROSSTALK)

S. HAYES: You're the asterisk. You would acknowledge that you're the exception to the rule.

BRODY: But it is easy to pile on. I don't think there's any question about that.

Quick, we have a minute left. That leaves -- 15 seconds each. I'm doing quick math.

COTTLE: Okay.

BRODY: New Year's resolution. Anybody want to start? Michelle? What about New Year's resolution?

COTTLE: Rod Blagojevich image consultant.

(LAUGHTER)

BRODY: Okay.

C. HAYES: You know, my New Year's resolution is to give more money to charity and nonprofits, because they're really getting killed right now by the downturn, the financial downturn. And a lot of people are going to be hurting this year.

UNIDENTIFIED MALE: Boy, you're putting my New Year's resolution...

(CROSSTALK)

S. HAYES: How you follow that up? Let me make first a quick political point and then I'll give you mine. People give more to charity when they have more of their own money to keep at least by tax cut. Okay, sorry. You know, the real resolutions, I think - I am making a resolution for Barack Obama. I think he should sit down and spend three hours reading "Road to Surfdom" by Frederick Hayek on New Year's Day and then make policies for the next four years. BRODY: Oh, boy.

WALL: Read "The Purpose Driven Life" as most Americans have as well. But I would say for me and for most Americans, I resolve and we should all resolve to save more. And that includes government, taxpayers, all of us should save more.

BRODY: All right. My New Year's resolution is in a month I want to host the AFTER PARTY without a shirt like Obama. All right, and I don't think we'll have any ratings for that, by the way.

When we come back, thanks, panel, appreciate all you guys. Coming back in a moment, Hayes versus Hayes? Or is it Hayes squared? I don't know. But we're going to check you guys out in a moment. They're going to go head-to-head. Back in a moment.

(COMMERCIAL BREAK)

BRODY: All right, welcome back. As promised, it's all Hayes, all the time. We have Steve Hayes on the right, Chris Hayes on the left like fight night in Vegas. I'm grabbing popcorn. How much do I have to pay for this? That's what I want to know.

Look, the role of the vice presidency. Joe Biden, Dick Cheney, kind of going at each other a little bit this week especially Cheney going after Biden. I want to play a couple of those clips. Let's take a listen.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT-ELECT: My role as vice president is unlike some of the others. I've asked for no specific portfolio. That is, I take care of the environment or one particular area. And that I'd be essentially his counselor in chief.

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: If he wants to diminish the office of vice president, that's obviously his goal.

(END VIDEO CLIP)

BRODY: Well, Chris, I think that's a political smackdown. Come on! As you would - I mean, come on. I mean, he -- there's some bad blood there between these guys.

C. HAYES: Look, let's be honest about Dick Cheney. He is probably the most despised man in American politics or at least the least popular right now. I think, and at the risk of sounding strident, and Steven I'm sure will disagree that there's a good - that he's a war criminal essentially, that he has sanctioned torture. And I think that we should distinguish between two distinct issues, a process question and a content question.

The process question is, what is the constitutional role of the vice president and to whom is he accountable? And the content question is, all of the things that Cheney use that power to advocate for. And those are two separate issues. I think that what we're going to see is the Cheney vice presidency being the high water mark for that sort of process level of input into...

S. HAYES: Well, I think, yes, it might be, we might call it strident to call him a war criminal. Some might strongly disagree with that.

Look, I think it's impossible to have a rational conversation about Dick Cheney with many members of the left, frankly. I'm not suggesting you're necessarily in this company although "the war criminal" rhetoric is a bit much.

I talked to a network news reporter, prominent person who asked me if Dick Cheney was really the devil when I interviewed him. He sat across from he. Is he really the devil? And that's sort of the level of discussion that we've had.

Now I think what we've seen over the weekend is frankly, a lot of pent up frustration by Dick Cheney, who has not been out there talking about these things and defending himself. And certainly not as much as I wish he would.

I think on the question of substance, on the question of his role, what you really have to wrestle with is what have his policies done to and for the country? He said in the days after September 11th, my number one goal, my sole mission in a sense was to keep the country safe. Now you can certainly disagree with the way that he did it, the kinds of things that he advocated, but there's no question that they were effective. We have not been hit again.

And I know that the left these days wants to sort of just put an asterisk by that and set it aside, but it actually matters. If you talk to George Tenet, who is no Dick Cheney fan, he wrote in his book that the way that we got more than 50 percent of our intelligence was through harsh interrogation methods. 50 percent of our intelligence on al Qaeda. Now that's no small thing.

C. HAYES: OK. Well, so there's a question about it. I mean, we could - well, I'm sort of tempted to litigate this argument because I think it's an important one about this legacy of Dick Cheney and the safety of the country.

There were eight years that passed between the '93 World Trade Center bomb from the 2001 bombing. Now at any point in that interim, you could have said well, whoever's in charge is doing a great job of keeping everyone safe.

And the fact of the matter is Bush and Cheney were in power for the first nine months before September 11th hit. So you know, that has to account for something if you actually hold the chief executive and his vice president accountable for, you know, mass attacks that take place on their watch. And that counts for something.

And second of all, I think that the notion that essentially harsher - what are called harsh interrogation techniques or enhanced interrogation techniques, waterboarding deemed the most sort of crucial one of this, which Cheney has admitted to, which is universally recognized as torture and violating the Geneva Conventions that we have an imperative as a player in the international system, a moral imperative and a legal imperative not to violate that. I'm sure there are situations in which we could do all sorts of crazy, heinous stuff that might provide some little marginal smidgen of safety, but there are rules.

BRODY: You got 30 seconds.

S. HAYES: The marginal smidgen of safety, I have to say a marginal smidgen of safety in the aftermath of something like September 11th when, you know, 85 percent of the country thought that we were going to be subject to another catastrophic attack.

C. HAYES: Right.

S. HAYES: And the intelligence community thought that we were going to be subject to another catastrophic attack. There are times when you have to have those discussions and have those debates. Now you may not like it, but the fact of the matter is those interrogation techniques according to George Tenet, not Steve Hayes, not Dick Cheney...

BRODY: Right.

S. HAYES: ...were tremendodously effective and forestalled additional attacks. Now you can set that aside as another smidgen of reality, but it may have prevented catastrophic attacks. That's not a small thing.

C. HAYES: And that contention is essentially nonfalsifiable. I mean, we can't rerun the counter factual. I don't think George Tenet has a tremendous amount of credibility. I do think I can safely say that the office of vice presidency under Joe Biden will be one much more commensurate with domestic and international law than the regime we've seen the last eight years.

BRODY: And with that, the last word. Take it in the alley, duke it out. You know, and we'll watch for that as well. All right, thanks, guys.

Now when we come back, the really important events of 2008. We'll talk about it and show it to you in a moment.

(COMMERCIAL BREAK)

BRODY: And welcome back to the last AFTER PARTY of the year. You know, we could take this opportunity to bring you the best political moments of 2008. Yes, we could, but it wouldn't be much fun.

So instead, here's the rundown of the year's worst political mistakes. And be sure enough, it is bipartisan. Let's start now Hillary Clinton. Remember how she talked about her support among white Americans? But along came Sarah Palin, who managed to step in it by talking about real Americans and I guess unreal Americans.

In 2008, it was the economy, stupid. Both sides can lay claim to the stupid title, no doubt. Barack Obama promised to spread the wealth around. John McCain thought the fundamentals were strong, even while the stock market was making sure that no one had any wealth to spread.

John McCain was forced to check with his staff to find out about how many houses he owned. But heck, that could really happen to anyone. I own eight or nine, I'm not sure, actually. And let's end with Barack Obama's imitation presidential seal, possibly one of the worst political staff decisions since someone told President Bush, hey, it will be perfect, you want a carrier deck with "mission accomplished" right behind you, be perfect. Ah, the memories. I'm David Brody. For everybody here at the AFTER PARTY, have a great holiday.