Meet The Press (12/19/2010)

(Sundays: 885-4200)

MR. DAVID GREGORY: This Sunday, closing strong. The president prevails on some big votes during the lame duck session of Congress. The ban on gays and lesbians in the military has been lifted, and the president claims victory on a tax deal with Republicans.

PRES. BARACK OBAMA: The final product proves when we can put aside the partisanship and the political games, when we can put aside what's good for some of us in favor of what's good for all of us, we can get a lot done.

MR. GREGORY: So what will it mean for the economy and jobs? And what is the political fallout for 2012? The Afghanistan war grinds on, but to what end? How many troops will come home next summer? And what are the administration's priorities for the new year? This morning, an exclusive interview with the vice president of the United States, Joe Biden. Then, analysis on the president's leadership and how Washington will change in 2011 with a Republican House of Representatives. Our political roundtable weighs in: host of MSNBC's " Morning Joe," former Republican congressman from Florida, Joe Scarborough; mayor of Newark, New Jersey, Democrat Cory Booker; GOP strategist, co-founder of No Labels, and former adviser to President George W. Bush and Senator John McCain, Mark McKinnon; and NBC News chief foreign affairs correspondent Andrea Mitchell.

Announcer: From NBC News in Washington, MEET THE PRESS with David Gregory.

MR. GREGORY: Good morning. A busy Saturday in the Senate as eight Republicans joined with Democrats to end the ban on gays and lesbians in the military. Democratic sponsors of the Dream Act immigration bill, however, fell several votes short of the 60 needed to overcome Republican opposition. Still unsettled, the fate of the new START treaty, the nuclear arms treaty with Russia, which will continue to be debated today in a rare Sunday session. Late Friday I sat down with the man who has become the president's point man in dealing with Congress, the vice president of the United States, Joe Biden. Mr. Vice President, welcome back to MEET THE PRESS.

VICE PRES. JOE BIDEN: Good to be back.

MR. GREGORY: Good to have you here. And it's an important time. The end of the week saw you and the president closing a very important deal, this compromise over an extension of the Bush-era tax cuts, a bill signing at the White House, striking in that you had a Republican there...

VICE PRES. BIDEN: Yeah.

MR. GREGORY: ... Mitch McConnell, for the first time. So a new era, perhaps, in Washington. The bottom line is the focus on getting people back to work. What does this deal mean to the end of that goal?

VICE PRES. BIDEN: This means two things. Number one, every econometric model, every basic economist out there says, look, this is going to grow the economy faster next year than it would have. The projections are instead of the economy growing at a -- the GDP growing at a roughly 2.5 percent, some suggest it would grow as high as 4 percent. That means employment. That means more people employed, number one. Number two, this wasn't just extending the Bush-era tax cuts. It extended all the tax cuts for the middle class and all the tax cuts for the poor that were in our legislation, the Obama legislation. We came up with a tax cut of two percent for everybody who gets a payroll check, and on their -- not the employer, the employee gets a two percent. For example, someone making $60 grand a year is going to get another $1,200 on top of the middle-class tax cut. We continued all those tax cuts for the working poor, the so-called EITC, earned income tax credits, and maybe most importantly, were able to extend for another 13 months unemployment insurance for those devastated by this recession.

MR. GREGORY: What about the prospect of eliminating uncertainty? In what may be the first salvo of the 2012 campaign, Mitt Romney said, "Look, this really doesn't solve the problem. This is not good for the economy because businesses understand that in a couple of years these rates are going back up."

VICE PRES. BIDEN: No. Look, here's the -- businesses don't care about the top-end tax cut except those people making a million bucks. They're the ones that care. What the businesses care about are the extension of all of those tax cuts for business that we extended, the so-called extenders. For example, we provided for 100 percent expensing. The guy run -- runs a contracting company, he goes buy a $50,000 backhoe, he can expense it in one year now. That's going to encourage him to go out, invest, buy, build. And so all of those we hope we're going to be able to continue. The one target for us in two years is no longer extending the upper income tax credit for millionaires and billionaires, and scaling back what we had to do to get the compromise, the estate tax for the very wealthy.

MR. GREGORY: But the president has said he thinks he can win this argument on the merits in...

VICE PRES. BIDEN: I think he can.

MR. GREGORY: Well, then why not do it now? Why wait until 2012, an election year? Do you really expect, in an election year, that anybody's not going to vote to extend the tax cuts?

VICE PRES. BIDEN: Yeah, I do. I do.

MR. GREGORY: What'll be different?

VICE PRES. BIDEN: Well, I think what'll be different is that we will have had the outcome of the deficit commission, we will be able to make the case much more clearly that spending $700 billion over 10 years to extend tax cuts for people whose income averages well over a million dollars does not make sense, number one. Number two, we're not going to be -- we're not in a position, David, where we're going to have, God willing, the shaky economy where we could not afford to continue uncertainty for a month or two or three in the next year had we not made a deal which would actually grow the economy. The, the obverse was equally as true. Had we kicked this into next year, it would have created such uncertainty, and there are a number of economists who thought that it would -- may, in fact, induce a double-dip recession. So we not only avoided it getting worse, we made it -- the prospects much better for the economy.

MR. GREGORY: The, the irony of achieving this tax deal is that it does represent a broken promise by this president in how he campaigned, and how you campaigned as well. In September you were interviewed by my colleague Rachel Maddow, and you had an exchange about this fight over extending the tax cut for wealthier Americans. Let me play a portion of that.

MS. RACHEL MADDOW: Does that mean that letting the Bush tax cuts expire for the richest people in the country while pushing for their extension, a middle-class tax cut for everybody else, is that a black and white issue? Is that a -- we haven't heard a veto threat, for example, from the president on that.

VICE PRES. BIDEN: No, it, it is a black and white...

MS. MADDOW: Is -- it's a black and white issue. That's something that the administration's going to go to the mat for.

VICE PRES. BIDEN: It's a black and white issue. Yes, absolutely.

MR. GREGORY: That was September.

VICE PRES. BIDEN: By the way, we did...

MR. GREGORY: By January, you didn't go to the mat.

VICE PRES. BIDEN: By the -- we did go to the mat. We did go to the mat. We went through every -- I went into a total of 130 races out there campaigning for Democrats. Every single race I made this case. Here's what happened. We got to the end, we couldn't get it done, and we had

to make a decision: Were we going to let the middle-class tax cuts expire? Let me remind everybody, the House passed middle-class tax cut only. It got to the United States Senate, we supported that provision, and the Senate could not pass it. So now we're left with, do we let those folks who are going to bed tonight staring at a ceiling wondering whether they're going to be in that same bed next month, or those two million people who already lost their unemployment insurance this month, seven million more losing it next month, and economic uncertainty occur? Life is a matter of really tough choices.

MR. GREGORY: The president wrote in " Audacity of Hope" that he found the Bush tax cuts for the wealthy morally troubling.

VICE PRES. BIDEN: They are.

MR. GREGORY: Is that still his belief?

VICE PRES. BIDEN: It's still his belief.

MR. GREGORY: Your belief as well?

VICE PRES. BIDEN: Mine as well.

MR. GREGORY: But you're willing to compromise on that?

VICE PRES. BIDEN: Look, it's -- the idea -- to compromise to save people who are drowning -- there's people out there drowning. There are two million people this month that can't afford to go get a Christmas tree, let alone buy any gifts, because their unemployment has run out, which means they've been unemployed for well over a year to two years. It is unfortunate we were put in the position where the Republicans made it clear they were ready to let everything fall unless they got these tax cuts. They're for two years. They're for two years, and we're coming back and going at it again.

MR. GREGORY: Can you be thought of as being serious about cutting the deficit when 80 -- within 80 hours of, of announcing the deficit commission's proposals this administration agrees to add a trillion dollars to the deficit?

VICE PRES. BIDEN: Absolutely, positively. Look what the deficit commission suggested. They suggested we do exactly what we did. They suggested we have a payroll tax. They suggested that we stimulate the economy this year into next year. They suggested that this has no impact on long-term debt because it's for two years. Look, you know this, the only people who are going to agree with me when I say this are the economists listening, left, right and center. In the middle of a recession, where we're just climbing out of it, where the economy-- unemployment is still at 9.7 percent, the idea of raising taxes and reducing spending is a prescription for disaster. No one is suggesting that.

MR. GREGORY: Is the balance -- to that point, do we think the balance is out of whack? There's so much attention on austerity...

VICE PRES. BIDEN: Yeah.

MR. GREGORY: ...on cutting the deficit. And yet, Larry Summers, the president's outgoing top economic adviser...

VICE PRES. BIDEN: Yeah.

MR. GREGORY: ...saying, look, at this particular moment in time, the priority next year should be more spending. You're the shovel-ready projects guy. There should be more investment in infrastructure. Should there, should there be more of that before we really focus on bringing down the deficit?

VICE PRES. BIDEN: We can do both. Let me explain what I mean. In the budget we submitted and the omnibus or the, or the, the, the -- I'm sorry to sound like a senator here, or a wonk. But in the spending proposal for next year, we freeze discretionary spending. Freeze it. Freeze it. We think we have to start by all those things that have tails on them, the long-term impact, we should not be spending in those areas and we should be freezing or reducing. On those issues that have no long-term deficit-- look, the entire recovery bill -- I know you know this, but the entire recovery act of the last 18 months, over roughly $800 billion, you know how much it added to the long-term debt? Two-tenths of one percent to GDP. Two-tenths of one percent. The places where we have to go are those things that have tails, that are long-term commitments to the government. That's where the problem is, and that's what we have to attack.

MR. GREGORY: You brought up spending and I want to talk about this earmark issue, not to sound wonkish, these are the pet projects that lawmakers...

VICE PRES. BIDEN: No. Yeah.

MR. GREGORY: ...put into the budget; and you had a lot of back and forth here, and ultimately Democrats had a defeat. They pulled back their big spending bill, eliminated the earmarks. And yet, Harry Reid, the leader of the Democrats, took on the White House, wasn't

happy with all of this and said this, this week: I am convinced that I do not want to give up more power to the White House, whether it's George Bush or Barack Obama. And I'm going to fight as hard as I can against President Obama on these earmarks and my Republican colleagues who hate to vote for them, but love to get them.

SEN. HARRY REID (D-NV): Bottom line is, if there is some temporary measure to keep the government funded, will the president down the road veto a bill that includes earmarks or not?

MR. GREGORY: David, if the question is, in order to keep the patient alive, we have to use medicine we don't like, we may have to do it. I'm not going to second -- if...

VICE PRES. BIDEN: But the president said he regretted when he's done that in the past.

MR. GREGORY: Well...

VICE PRES. BIDEN: He regretted signing a bill with earmarks...

MR. GREGORY: Well...

VICE PRES. BIDEN: ...and that after the election it was a new day.

MR. GREGORY: Well, look, in this budget that was -- is being debated for -- to keep the government running for the next month and year, there is a freeze in discretionary spending. Also, there is an increase in spending for our troops that are in the middle of a war. Those two things we think are essential. Now, if you say to me, do we have to accept a project in -- and by the way, there were six Republican appropriators who supported this who had earmarks in it. If we say we have to support a, a levy in Mississippi in order to make sure my kid, who's out in the middle of Iraq or Afghanistan gets what he needs, I'm going to say yeah. I don't want to do it, but I may have to do it. It depends on the proportions. It depends on what to say. Harry just reinforced the point we've been making. We don't like earmarks. You have the Democratic leader criticizing the president of the United States because we say we don't want earmarks.

VICE PRES. BIDEN: So, so you may not like it, but there's no veto threat.

MR. GREGORY: No, there -- it depends on the proportion. It could be very well that you wind up in a situation where you say, "OK, in order to be able to have the funding for the continuation, the support for the troops in Afghanistan, we have to accept an earmark, and that's what the Congress sends us." Are we going to veto a bill that will jeopardize troop safety? Probably not. Conversely, if there's a bunch of earmarks in a bill that we think is funding for several agencies that we're willing to fight over and can take a chance on losing on, yeah, we'll veto.

VICE PRES. BIDEN: I want to button up a couple of other very important agenda items in this lame duck session.

MR. GREGORY: Sure.

VICE PRES. BIDEN: As we sit here today, it looks like a repeal of the ban on gays and lesbians serving in the military will be successful. It will be repealed.

MR. GREGORY: We hope so.

VICE PRES. BIDEN: That, that is, as we sit here today, how it looks. What will be the impact of that happening?

MR. GREGORY: The impact, David, is we'll be in line with seven other of our allies around the world. We will not be squandering the abilities of combat soldiers as well as interpreters who happen to have a different sexual preference, who happen to be gay or happen to be lesbian. Look, all of our major allies have, for some time now, provided for all -- the chairman of the joint chiefs of staff, the secretary of the Defense, the vast majority of the American people say you're -- whether you are gay or straight, it does not affect whether you can shoot straight or whether you can speak Urdu.

VICE PRES. BIDEN: What about the START treaty, the nuclear arms treaty with Russia? Do you have the votes as we sit here to get that ratified?

MR. GREGORY: I believe we do. I believe we do.

VICE PRES. BIDEN: So what's holding this up? Is this political gamesmanship by Republicans or are there substantive criticisms?

MR. GREGORY: Both. With some, with John McCain, there are substantive criticisms. He was worried about whether or not we're going to make good on our commitment to deploy all four phases of the missile defense system in Europe. We are. That's a legitimate concern. There's other legitimate concerns. There have been 18 hearings, 1,000 questions we've answered and -- but another is they just simply are against any arms control agreement. That's the category that, when I say any, they're simply against this arms control. Senator DeMint is absolutely four square against it. It wouldn't matter what it said. And conversely, and there are people like Senator McCain and leading Republicans like Johnny Isakson in Georgia who think this is a good, substantive thing for U.S. security. I might add, every former Republican secretary of Defense, secretary of State, national security adviser, and head of strategic command says this is essential for U.S. security.

VICE PRES. BIDEN: Let me move on to foreign affairs. I want to talk about the fallout from the WikiLeaks scandal. Julian Assange appeared on the "Today" show on Friday morning and he said there are more leaks to come. This is what he told Matt Lauer in part:

MR. GREGORY: As we have seen, WikiLeaks is a robust organization. During my time in solitary confinement in the basement of a Victorian prison, we continue to release, our media partners continued to write stories. The important revelations from this material continue to come out. We have approximately 2,000 cables into 250,000.

MR. JULIAN ASSANGE: More to come. Should the United States do something to stop Mr. Assange?

MR. GREGORY: We're looking into that right now. The Justice Department is taking a look at that, and I'm not going to comment on, on that process.

VICE PRES. BIDEN: Do you think he's a criminal?

MR. GREGORY: If he conspired to get these classified documents with a member of the U.S. military, that's fundamentally different than if somebody drops on your lap, "Here, David, you're a press person, here is classified material."

VICE PRES. BIDEN: Mitch McConnell says he's a high tech terrorist, others say this is akin to the Pentagon Papers. Where do you come down?

MR. GREGORY: I would argue that it's closer to being a high tech terrorist than, than the Pentagon Papers. But look, this guy has, has done things that have damaged and, and put into jeopardy the lives and, and occupations of people in other parts of the world. He's made it more difficult for us to conduct our, our business with our allies and our friends. For example, in my meetings, you know I meet with most of these world leaders, there is a desire now to meet with me alone rather than have staff in the room. It makes things more cumbersome. And so it is, it has done damage.

VICE PRES. BIDEN: Let me ask you about Afghanistan. The president's review released this week, you've been described in The New York Times as " Obama's in- house pessimist on Afghanistan." Are we winning or losing in Afghanistan?

MR. GREGORY: Let me separate this out, remind everybody what our goal is. Our overarching goal and our rationale for being there is to defeat and -- to dismantle, ultimately defeat al-Qaeda, residing -- central al-Qaeda residing in the Fatah, the western regions of the mountains of, of Pakistan. Secondly, to make sure that terrorists do not, in fact, bring down the Pakistani government, which is a nuclear power. Toward that end, we think it's important that there be stability in Afghanistan so that al-Qaeda cannot re-establish it as a base from which to attack the United States of America. With regard to our efforts to degrade al-Qaeda, we're making great progress. The so-called C.T., that is counterterrorism, the use of special forces and the like to go after individuals who make up the leadership of al-Qaeda and of the Taliban. On the issue of counterinsurgency, that is where we clear, hold and build and transfer, we're making progress not as rapidly as we are on the other front. President's been frank to say that in his release, pointing out that we need two things that we're working on very hard and we're making

VICE PRES. BIDEN: one, Pakistan and safe havens; and two, governance in Afghanistan.

some progress: All of this is so complicated.

MR. GREGORY: It is.

VICE PRES. BIDEN: After 10 years, Mr. Vice President, can't you just say straight whether we're winning of losing?

MR. GREGORY: Well...

VICE PRES. BIDEN: Don't the American people deserve to know something about where we stand?

MR. GREGORY: Well, no -- they -- I, I -- the one thing I've never been accused of is not being straight. They are -- we are making progress.

VICE PRES. BIDEN: Yeah...

MR. GREGORY: Are we making sufficient progress fast enough? The answer remains to be seen. Here's what we said. We said we were going to -- we -- after seven years of neglect of an Afghan policy when we came to office, we had to sit down. I went off to Afghanistan at the president's request, came back with a recommendation, and said we have to clarify our objectives and then decide what forces we need in order to sustain the possibility of making sure we accomplish those objectives. We've done that. We said we'd sit down in December and make -- and look at it and review the progress we're making. We were honest with the American people, we're making progress in all fronts, more in some areas than in others. We are going to, come July, begin to draw down American forces and transfer responsibility to the...

VICE PRES. BIDEN: Will that be a token amount of soldiers? Will it be a couple of thousand troops and no more?

MR. GREGORY: No. Well, well -- it, it will not be a token amount, but the degree to which we draw down -- if I can make an analogy to Iran-- I mean, excuse me, to, to Iraq, which I've been put in charge of.

VICE PRES. BIDEN: Yeah.

MR. GREGORY: What happened there? We signed, three years ago, an agreement with the Iraqis saying that what we're going to do is, two summers ago we're going to draw all combat troops out of the cities, populated areas. Then we said, our administration, we're going to draw 100,000 troops out the next summer. And we're going to be totally out. In the meantime, we're going to help build a government, we're going to transfer responsibility, and we're going to be gone. That's exactly what we did at the recent Lisbon conference, the NATO conference, where we said, "We're starting this process, just like we did in Iraq. We're starting it in July of 2011, and we're going to be totally out of there come hell or high water by 2014."

VICE PRES. BIDEN: Let me ask you about something that's on a lot of Americans' minds. As we talk about Afghanistan, number one goal is preventing another terror state in Afghanistan from, from where terrorist attacks can be launched. We know what happened with the Christmas Day bomber during the holidays last year. What is the capacity of al-Qaeda or affiliated organizations to pull off a large scale terror attack against this country?

MR. GREGORY: Well, you never say never, OK? But we are, our intelligence community, is united in the view that the ability of central al-Qaeda, that is Osama bin Laden and company in the Af-Pak area, in those mountains, has been significantly degraded, and we don't believe they have the capacity from there to pull of a, a 9/11 type operation. But what has also happened, as you've noticed, you've seen in the Arabian peninsula, you've seen in other parts of the world where there are al-Qaeda, al-Qaeda-related affiliates not under the direct control of, of Osama, but yet engaged with him. They are planning much smaller-bore but yet deadly attempts to go after the United States of America. We saw that in the underpants bomber last Christmas, we saw that in the Times Square effort. So there are going to be continued efforts to be able to, coming, quite frankly, more likely out of places other than the Fatah-- excuse me, other than Pakistan, where bin Laden is. But we have significantly degraded and knocked off a lot of the main planners and organizers and trainers. Does that mean we've succeeded? No. Does that mean we're in much better shape than we were a year ago and two and three? Yes.

VICE PRES. BIDEN: I want to ask -- let's spend a couple minutes talking about leadership and politics here as we look ahead to 2011. You know this town pretty well. You know politics in this town very well. President Obama has just come through a real tough election. What is the key to turning things around for him?

MR. GREGORY: The key to turning things around is that having everyone understand the message of that election. We understand it. The message is the American public wants us to cooperate, wants us to work together. That's why, if we get the START agreement, we will have this lame duck session, since the election, heard the message and the Republicans will have heard the message that they want us to reasonably compromise to move the business of the nation forward as we just did on the economy with regard to taxes and growth, and as, God willing, we're going to do on national security with regard to START. And I think that is the message of the election.

VICE PRES. BIDEN: But don't you -- can't you understand, though, a lot of voters look up at this president and say, you know, "We're not sure we get him. Is he, is he a liberal, is, is he a moderate, is he a pragmatist? What is he, exactly?"

MR. GREGORY: What he is, is he is a progressive leader who, in fact, understands that politics is all in the art of the, the possible, and it's critically important to do two things. He

VICE PRES. BIDEN: Promote economic growth and keep America safe. And so, to the extent that he has to make compromises that don't compromise those two objectives, he will.

knows his job as two overarching responsibilities: This is not a guy who campaigned saying, "Look, politics is the art of the possible." This is someone who campaigned, both of you did, coming to Washington saying, "Business is going to change around here."

MR. GREGORY: Well...

VICE PRES. BIDEN: And that's why so many new voters came into the process. They expected more.

MR. GREGORY: By, by the way, that's exactly what the president did say, that business was going to change. You remember, I ran against him in, in the primaries. I've always been a little less optimistic about the idea that somehow the Republicans last year were going to join hands with us. The president reached out. He reached out in every way to the Republicans last year to say, "Hey, let's work on health care. Let's work on this. let's work..." They made a very calculated decision. You know it and I know it. I'm not -- most people know it. I know it, that they decided that it was in their best interest to not see much move forward cooperatively and it would hurt the Democrats because they were in charge. They turned out to be right. But they got a second message. They found out that, that the public didn't like the Democrats, but they sure in the devil didn't like the Republicans either. And most polls showed they liked the Republicans less. And so the message that came out, I believe, and would -- you saw what Mitch McConnell and John Boehner, both who are friends of mine, who I've worked with for years, they came out of this and say, "Hm, we better get, get a compromise." Can you imagine last year, the Republicans agreeing on a compromise like the one we had here, where they took things that are religion to them, which are, "No earned income tax credit, that's not a tax, that's a giveaway, that -- we're not going to do that." Guess what? There's $200 billion of that stuff now.

VICE PRES. BIDEN: When you look at compromise, does Vice President Biden become the negotiator-in-chief from here on in? You've got the relationships on the Hill.

MR. GREGORY: Well, by the way, you know, every -- I, I, I get asked that a lot lately since this worked. That's been my role from the beginning. For example, I've repeated -- I've met with -- I, I'm the guy that's gone up on the important issues to the House, and I'm the guy that goes -- I'm vice president of the United States. They know when I speak, I speak for the president. So last year, everybody said, " God, you -- you know, if Rahm Emanuel were here, he would have been the one going up to the House and the House caucus." Not true. It would have been me, whether he were here or not. Just like it was last year. On three important occasions, I was the guy that went to the House to try to sell them, and in two cases sold them, on what to do. And look, I have -- one of the things that matters in this town, and you know it as well as I do, your word matters. There's not a single Democrat or Republican who's ever worked with me that will not look you in the eye and say, " Biden has never, ever, ever broken his word." So that's why I'm able to go up there. I don't always succeed, but I like these guys, they're my friends. I've got -- a lot of these Republicans are my friends.

VICE PRES. BIDEN: Final question, Mr. Vice President. I know you're a Phillies fan. I've been talking about the Phillies a lot here...

MR. GREGORY: Yeah.

VICE PRES. BIDEN: ... and I'm a Dodgers and a Nationals fan.

MR. GREGORY: I know, I know.

VICE PRES. BIDEN: But I've got to ask you, quickly, are they the odds-on favorite to win the championship with that rotation?

MR. GREGORY: I think they are. I think they are. I honest to God think they are.

VICE PRES. BIDEN: That's the prediction?

MR. GREGORY: But last time we spoke, I told you I still thought we had a chance to make it to the series this year. I was obviously wrong about that. But I really do. I mean, and how many people said, "We'll never, ever, ever sign him"?

VICE PRES. BIDEN: That's right. We'll leave it there. Mr. Vice President. Merry Christmas.

MR. GREGORY: Where there's life, there's hope.

VICE PRES. BIDEN: Thank you very much. Appreciate it.

MR. GREGORY: Thank you very, very much. Appreciate it.

VICE PRES. BIDEN: And up next, analysis on the president's leadership as the 111th Congress wraps up its work, and what can we expect from both parties in the new Congress. Plus, setting the stage for the 2012 race for the White House. Our political roundtable weighs in: Host of MSNBC's " Morning Joe," former Republican congressman from Florida, Joe Scarborough; mayor of Newark, New Jersey, Democrat Cory Booker; GOP strategiest and co-founder of No Labels, Mark McKinnon; plus NBC News chief foreign affairs correspondent Andrea Mitchell.

MR. GREGORY: Coming up, our political roundtable weighs in on how the president scored victories in the week before Christmas, and how a Republican House will change Washington, after this brief commercial break.

MR. GREGORY: We're back, joined now by our political roundtable, and much to discuss: GOP strategist, co-founder of No Labels and former adviser to President George W. Bush, Senator John McCain, Mark McKinnon, in a very handsome scarf this morning; NBC News chief foreign affairs correspondent Andrea Mitchell; host of MSNBC's " Morning Joe," Morning Joe himself, former Republican congressman -- I think we all know that by now -- from Florida...

MR. GREGORY: I'm from Florida. With a tie.

MR. JOE SCARBOROUGH: Yeah, I think you've mentioned it once, once in a -- with a tie. Joe Scarborough.

MR. GREGORY: I don't like talking about myself like Joe Biden. I try not to.

MR. SCARBOROUGH: And mayor of Newark, New Jersey, Democrat Cory Booker. Welcome to all of you. Good to have all of you. We've got news to talk about, Joe Scarborough. "Don't_Ask,_Don't_Tell," this was a significant campaign promise by the president. He got it done, that's been lifted. And look at the bipartisan support that he gets here. Look at the Republicans who voted to lift the ban: Scott Brown from Massachusetts, but then you got guys like Richard Burr from North Carolina, John Ensign from Nevada. Give the president his due here, this is a big deal.

MR. GREGORY: It's a big deal for him politically, as well for a lot of Americans who supported this. This is a president who was forced to go on Jon Stewart saying, "Yes, we can, but..."

MR. SCARBOROUGH: Mm-hmm.

MR. GREGORY: It's a president that's had to strike a deal with Republicans, a tax deal that his base loathed. Whether -- Joe Biden can spin it anyway he wants to spin it. This -- that tax bill was a big loss for the Democratic base and for the president. So this was something the president really needed going into the new year to explain to his base, "This is one reason why you elected me."

MR. SCARBOROUGH: And yet, Mark McKinnon, John Cornyn from Texas, senator, spoke for others like Senator McCain who said this is going to do a lot of damage. That's what Senator

MR. GREGORY: "With three of the four military chiefs expressing clear reservations over the proposed repeal of Don't Ask, Don't Tell, today's vote shows blatant disregard for the opinions of those who know our military best. With our troops engaged in combat overseas, now is not the time to increase the level of stress on our Armed Forces through such a dramatic policy change. It's a disgrace that this latest item from the liberal legislative wish-list is being jammed through at the expense of military readiness."

McCain said. This is what Cornyn said in a statement that he released: I strongly disagree with that, David. I think that's the same kind of thing we heard when we integrated the armed forces years ago. And I think, you know, a decade from now we're going to look back on this and just couldn't believe that it took us this long. The tide of history is rolling forward, and the president did the right thing, and so did the Republicans who crossed over.

MR. MARK McKINNON: Interesting, though, Andrea, how did they pull it off? Because we -- "Don't_Ask,_Don't_Tell" looked like it was dead here, and that they were going to have to suffer this defeat. It came back.

MR. GREGORY: Joe Lieberman, Susan Collins-- so bipartisan in that regard -- stripping it out of the defense appropriations bill, a clean bill that came over from the House. And you have to give a lot of credit going back to the passionate and really moral stand taken by Mike Mullen, the admiral who is the chairman of the Joint Chiefs. When he first testified to armed services and said, "You cannot ask our uniformed men and women to tell a lie about themselves. That is against the whole conduct of the military code." And that principled stand, a little more reluctantly but still going along with it, Robert Gates saying, "We, we serve. We will follow the orders." That outweighed, I think, what the combat -- the Marines and some of the...

MS. ANDREA MITCHELL: Right.

MR. GREGORY: ... front line forces were saying.

MS. MITCHELL: Mayor Booker, as a Democratic leader yourself, you can look at the president's leadership, see what he's accomplished here. He hopes to get the START treaty ratified as well. And then there is this tax deal, the pros and the cons. This is the president as he signed the bill, laying out what was accomplished, but also what's ahead. Take a look at this.

MR. GREGORY: Now, candidly speaking, there are some elements of this legislation that I don't like. There's some elements that members of my party don't like. There's some elements that Republicans here today don't like. That's the nature of compromise. In some ways this was easier than some of the tougher choices we're going to have to make next year. There will be times when we won't agree, and we'll have to work through those times together.

PRES. OBAMA: What does this deal represent about how this president wants to approach Republicans?

MR. GREGORY: Well, first of all just let me say, back to "Don't_Ask,_Don't_Tell"...

MAYOR CORY BOOKER (D): Yeah.

MR. GREGORY: ...this is a, a week where we saw pragmatism prevail. I think it's a moral issue, a just issue when it comes to "Don't_Ask,_Don't_Tell." But the reality is, the argument that won was the military preparedness. And so this is another example where pragmatism prevailed. We are in the nadir of our economic life, at least in my lifetime, as a nation. And this is a bill full of things that will immediately benefit our economy. And I look at my city, not just the expansion of unemployment benefits, which is something that all economists say will help, but more importantly, incentivizing small businesses, which are the real driver in our economy, to create jobs in cities like mine by giving them tax credits for investments they make. The earned income tax credit, giving incentives for education by giving more -- extending the tax benefits for people putting people through -- going through college. All of these things bring real benefits. And, of course, the -- our liberal base might be upset and consider it a, a treason to go against his very firm stance, going to the mat on the issue of tax breaks for the wealthy. But the reality is, in its totality, this was a victory for pragmatism, a victory for the president; but more importantly, a victory for people in, in our country.

MAYOR BOOKER: Well, I -- Joe, you, you heard the vice president say this is a president who's a progressive but who believes that politics is the art of the possible.

MR. GREGORY: Right.

MR. SCARBOROUGH: Is that the new President Obama?

MR. GREGORY: "Yes, we can, but..." It, it's the reality. It is the reality that, that the president's had to face up to. I've got to say, though, I've got to, got to take exception with something the president said. He said, you know, we're going to face choices next year that are going to be even tougher. Well, there was nothing tough about this bill. In fact, it's frightening, it straps with -- it straps us with another trillion dollars worth of debt. Just this summer, in July, the CBO told the president and Congress, "If you guys don't get your act together on the debt, you're going to see our credit rating go down. That's going to lead to higher interest rates, which will lead to higher debts. It'll lead to bonds collapsing. That could lead to the markets collapsing. It could lead to the United States looking a lot like Ireland and Greece." That was the warning. How did they respond? Adding another trillion dollars to the debt. And how did Moody's respond? By saying, "You know, over the next two years we may have to devalue your bond rating just like Ireland's." It's recklessness.

MR. SCARBOROUGH: And yet, I -- it seems to me that, that austerity has to wait. I mean, that's what you saw out of this deal was that, that this president wants to do everything he can to somehow move the needle on jobs, you know, in the next -- immediate term.

MR. GREGORY: That, that's the politics of it. I think Joe is absolutely right about the long- term because basically they have so raised the level from which you're eventually going to have to cut. So to say that we're going to get serious about deficit cutting in the future...

MS. MITCHELL: Mm-hmm.

MR. GREGORY: ...is, is really silly at this point.

MS. MITCHELL: This happened a week, a week...

MR. SCARBOROUGH: Right, a week.

MS. MITCHELL: ...after the debt commission figured out how to shave $3, $4 trillion, something that added another.

MR. SCARBOROUGH: But, but, but you've seen the debate. But, Mark, you see guys like Larry Summers and others saying, "Look, we got to get the balance right. We can't move to austerity yet. We got to keep investing in the economy."

MR. GREGORY: Well, I think that this deal's actually going to put a lot more physics and gravity on, on now doing a real deficit reduction program and, and significant tax reform. I think there's great weight now there to bring the parties together. And by the way, I agree with the vice president. He said the American people want us to cooperate and want us to work together. That's exactly why we started No Labels, because that's what people in America are saying. They like this deal. Sixty percent or more like this deal the way it is.

MR. McKINNON: David, "No Labels, no ties." If you put that on a bumper sticker, you're going to...

MR. SCARBOROUGH: Wait, I want to talk about No Labels in a little bit more detail in, in just a moment. Mayor, you're on the front lines of this. What's going on in Newark, New Jersey, in your state? What's the real economic impact of this tax deal, do you think?

MR. GREGORY: Well, you know, the first rule of holes is to stop digging. And this is a bill, in many ways, that continues the digging, and we have to be worried if that's going to run up the deficit in the long term. But it is, in the short term, undeniably going to benefit our economy. It's going to create jobs, it's going to sustain people who are hurting right now. We have a herd of hurt going on in our nation right now. But the reality is -- I don't like the, the false debates that we create in America that often make for great spectator sports, but that's not what democracy's about. It's about doing something that's really going to advance our country. And what bothers me is an attack on wealth. I'm not in favor of sort of just tax cuts for the wealthy that they're just going to hold on to. But creating the right incentives in our nation, especially right now, that incentivize investment in business, research, education. These are the kind of things that I think are good to spend on right now because they're going to build a longer -- a stronger economy in the long term.

MAYOR BOOKER: Also -- but, Andrea, in terms of 2012, you have Republicans lining themselves up -- Mitt Romney, Mike Pence, others -- who voted against this thing.

MR. GREGORY: Right. You know, I think the smartest thing that, that the White House did in the last couple of days, and the, the dumbest thing that the Republicans did was the Dream Act. To go against giving a fast track towards citizenship to infants who came here, and with the growing Latino community in 2012, that is going to turn out to be a real setback for Republicans because these are, are people who wanted to serve in the military and get educated and contribute to this society. It is a win-win from the standpoint of The Wall Street Journal and The New York Times. So this is...

MS. MITCHELL: But forget the politics. The pragmatism of it, we are a nation that's built our country on immigrants.

MAYOR BOOKER: Exactly.

MS. MITCHELL: From Einstein to some of our greatest scientists have been people coming in. And to tell people who've been through high school, been high school presidents, gone to the college, some of the best brains, who have no relation to the home country.

MAYOR BOOKER: And served on the front lines.

MS. MITCHELL: Exactly. This is crazy. It's hurting America.

MAYOR BOOKER: But I want to get a quick comment from Mark on this...

MR. GREGORY: Yeah.

MR. McKINNON: ...because I have talked to Republicans as well. And by the way, this is -- there's some set back here for the president's attempts to get immigration reform. The Republicans I've talked to, as well, say look, I wish my party would stand up and get immigration reform done. President Bush did it, perhaps, at the wrong time, suffered for it, couldn't get it done in his term, but the impact of the Republican Party has been great.

MR. GREGORY: Absolutely. It's the right thing to do, but on the pure politics of it, the Republican Party has got to recognize that Hispanics are the huge growing demographic in this country. When President Bush ran in 2000, we got 40 percent of the Hispanic vote. We knew we had to grow that in 2004. We got 44 percent. John McCain got 29 percent of the Hispanic vote. We've got to send the right signal to Hispanics in this country in addition to the fact that it's the right policy.

MR. McKINNON: Let me get a break in here. I want to come back after a break, talk about some of the larger challenges that the country faces and how our politics will respond. More from our roundtable right after this.

MR. GREGORY: We're back, joined by our political roundtable, and look at this finding from our latest NBC News/ Wall Street Journal poll about how people feel about where the country's headed. Look at that, 63 percent think the country's off on the wrong track. Mark McKinnon, you know as a political pro, that that is a really good indication of the independent vote and where that independent vote might actually go. This was a scene this week, the No Labels launch, the idea of an independent political movement that could somehow break ties. And you had some pretty big figures on the right and the left, but you've also been accused of "childish magical thinking." That was Frank Rich in The New York Times today. The idea that the heavy lifting of moving the country forward could be accomplished by a no labels group is on many, on the left and the right, just unthinkable.

MR. GREGORY: Well, the political-- 63 percent of Americans are disenfranchised with what's happening in Washington because they see this harsh, poisonous environment and harsh partisanship. A thousand people from -- representing all 50 states came to New York to help launch this effort called No Labels, which is designed to bring more civility to politics and address the hyperpartisanship. And we've had a great success already because we brought together the harsh partisans on the left and the harsh partisans on the right, Rush Limbaugh, Frank Rich, they're all attacking us because they don't want -- they think it's magical thinking when Cory Booker works with Governor Christie, working together for solutions. They don't want that because it doesn't help their ratings, it doesn't help their profits. And Frank Rich attacked us in The New York Times today saying we only had three black speakers. Well, he obviously didn't watch the event or he's doing sloppy research because we had three prominent featured African-American speakers, including Mayor Booker, who spoke about all the things that he's doing as mayor there. So it's been a tremendous response we're getting from the middle of America who think that we need to work together like the, like the vice president said.

MR. McKINNON: Well, Joe, what about devil's advocate time here, which is why don't we recognize that politics is not a dirty game...

MR. GREGORY: Right.

MR. SCARBOROUGH: ...that people have deeply held ideological views and differences.

MR. GREGORY: Right.

MR. SCARBOROUGH: ...and that -- look what's happened in the Republican Party. It has become more conservative because a lot of Republicans thought, and even independents, that it got away from basic principles.

MR. GREGORY: Well, sure. But, but as we've been saying for two years on our show, this is still James Madison's Constitution. You have Frank Rich on the left enraged by what Mark's doing; Rush Limbaugh on the right, enraged. And they have the luxury of never actually governing. Never being a president, never being a senator, never being in Congress, realizing you actually have to, at the end of the day, sit down and deal with people across the aisle. You want to talk about magical, childish thinking? To quote Joan Didion, Frank Rich and the left have had a year of magical thinking right now, where they believed they can get absolutely everything they wanted, and when they didn't get it, they became petulant and went off in the corner. What did that end up getting them? Well, about 80, 85 newly elected Republicans in the House of Representatives. We govern in the middle. We always have. With, with apologies to Arthur Schlessinger, there's not a pendulum swing ideologically in America. America stays in the middle, and we saw it.

MR. SCARBOROUGH: And...

MR. GREGORY: When, when you go too far left, they slap you back and when Republicans go too far right, they slap you back as well, into the center.

MR. SCARBOROUGH: But here's -- Mayor Booker, here's the question I have for how President Obama tries to channel that vibe in the country. What does he do to actually make the politics difficult for Republicans now? Because it hadn't been that difficult up till now.

MR. GREGORY: But, but this is what's ridiculous and this is what I think President Obama, his experience on streets in Chicago really helped out. You've got real people-- my city, you've got real people who don't care about politics or process, they're looking for progress. And when it comes to issues like this tax bill, the president made a compromise to help Americans who are desperately in need. And this is what frustrates me, seeing what's going on in Newark every single day, I cannot advance our city with a Republican governor unless we find common ground. Some of the best advancements we've had, working with the Manhattan Institute on issues around ex-offender re-entry, there's enough common ground in the United States of America for us to stop this silly pulling left and right, which is good for the ratings, but has nothing to do with us moving our country forward.

MAYOR BOOKER: Andrea, I know you want -- I'm sure you have a comment on this, but I want to get you on Afghanistan.

MR. GREGORY: Sure.

MS. MITCHELL: Because hearing the vice president, who made news this morning saying, " 2014, come hell or high water"...

MR. GREGORY: "We're out of there."

MS. MITCHELL: ..." the United States is out of there. That's a significant piece of news.

MR. GREGORY: It's a significant piece of news and he has always been one of the skeptics...

MS. MITCHELL: Yeah.

MR. GREGORY: ...about the Afghan policy and the surge policy. I think that they realize they have to give people an endgame, an end in sight. This country cannot afford it, not politically, not fiscally, to continue with no end in sight. And with the evidence, which was really diminished in their report this week, this past week, they did not focus on what everyone knows from other reports -- the corruption of that government, the Karzai government, the fact that we don't have a partner there. Now, tragically, we don't have Richard Holbrooke trying to hold people to the fire, what General Petraeus in The Washington Post today calls his "diplomatic wingman"...

MS. MITCHELL: Mm-hmm.

MR. GREGORY: ...in a very telling...

MS. MITCHELL: This goes back to the irresponsibility again...

MAYOR BOOKER: Yeah.

MR. GREGORY: ...where it's the first time in the history of our country where we went to war and we gave tax breaks at the same time. The cost of this war, the upfront cost, over a trillion dollars right now.

MAYOR BOOKER: And...

MS. MITCHELL: And we're still doing it. Hold on a second though. Barack Obama tripled the number of troops in Afghanistan, and he just doubled down without really giving a big fight on tax cuts for millionaires.

MR. SCARBOROUGH: That's why what the -- that's why what the vice president said was so significant.

MS. MITCHELL: But, but, but no, it's not significant because, with all due respect to the vice president of the United States, we just told our NATO allies a few weeks ago to ignore that 2014 deadline because we're going to be there past 2014. They went to the NATO conference and they said, "OK, we know about 2014, but it's actually going to be extended beyond." So, if you're keeping score at home on Afghanistan, the generals are winning with talk...

MR. SCARBOROUGH: I think...

MS. MITCHELL: Well, and -- but you have an issue, you have an issue, Andrea...

MR. GREGORY: ...of 2011 to 2014, now beyond.

MR. SCARBOROUGH: ...in Pakistan where, if, if insurgents and al-Qaeda can still hide in the sanctuaries in Pakistan, what are we going to turn, turn over to?

MR. GREGORY: Look, you've had U.S. officials this very week saying that it was the Pakistan intelligence service that outed our CIA station chief there. Whether or not they have evidence of that, that shows the attitude, the lack of cooperation. As long as Pakistan is such a pit, really, of instability, and a nuclear-armed country, you're not going to have the outcome in Afghanistan you want.

MS. MITCHELL: Our two partners...

MR. SCARBOROUGH: But what they are really doing now is forecasting a, a way out. Whether Barack Obama is there to see this way out in 2014, I think they think it is critical. Just last night, I was with an officer who is just back and has been told they have to return. And I stood and watched the look in his -- it was a male officer...

MS. MITCHELL: Mm-hmm.

MR. GREGORY: ...looked at his wife and saw the tears welling up in her eyes as they're acknowledging what's happening in their life. He has just returned from a tour. We cannot sustain these multiple tours.

MS. MITCHELL: By the way, this has been going on for a decade.

MR. SCARBOROUGH: That's exactly why there has...

MS. MITCHELL: The generals want us to stay there for another decade, and I guarantee you we're not out of there in 2014 if they continue, if they continue to take the course they're taking.

MR. SCARBOROUGH: Right.

MR. GREGORY: I think public sentiment turns to...

MAYOR BOOKER: And our allies are Karzai and Pakistan. That is a nightmare.

MR. SCARBOROUGH: But, Mayor, you say public sentiment -- I mean, the public is already saying it's not worth it.

MR. GREGORY: I think -- and you also have a president now that is saying...

MAYOR BOOKER: Yeah, right.

MR. GREGORY: ...is giving firm deadlines and a clarification of what our role -- we're not nation-building. We're trying to disrupt and dismantle terrorism. That's a singular mission, and we're going to get that done as soon as possible.

MAYOR BOOKER: All right. Let me, let me get a, let me get a break in here.

MR. GREGORY: But we are nation building.

MR. SCARBOROUGH: Let me get a break in here, a quick break. We'll come back with final thoughts from our roundtable right after this.

MR. GREGORY: Just a minute here to button up our conversation. Well, if you've seen Time magazine, Person of the Year, Mark Zuckerberg from Facebook. And Mayor Booker, you spent a little time with Mr. Zuckerberg this year. It's not just Facebook, but what he's trying to do for education in your town is significant.

MR. GREGORY: It's inspiring. Look, the greatest threat to our national security in a noble- -in a global knowledge-based economy is education. You cannot have a first class democracy and not even be in the top 10 in the globe in reading, science and math.

MAYOR BOOKER: Mm.

MR. SCARBOROUGH: In fact, the math not even in the top 15. So it's great to see Mark Zuckerberg, who I think is a genius in creating wealth, creating connections, really manifesting in a, in a virtual way, this interwoven destinies that we have. But him doubling down on education like Broad, like Gates, like Walton and so many others, is...

MAYOR BOOKER: And it is, like I say, it's the new form of American patriotism. We're going to really see a big push on this next year, that the competitiveness of America is tied to how well our kids are doing in schools.

MR. GREGORY: It's not tied, it's actually, it's more than tied. It's essential. If we do not have a great education system, we will fail as a democracy.

MAYOR BOOKER: And the Asian countries are completely outdistancing us.

MS. MITCHELL: Right.

MR. GREGORY: That should -- that should be our new moon shot.

MR. McKINNON: That's why cities like Newark...

MAYOR BOOKER: It really should be.

MR. McKINNON: Yeah.

MR. GREGORY: ...and Oakland and San Antonio, that's where the destiny of America's going to be formed.

MAYOR BOOKER: We got to...

MR. McKINNON: And for the new year let's hope President Obama, Michael Bloomberg, Cory Booker, conservatives altogether, education reform.

MR. SCARBOROUGH: Yeah. This is why we're all coming together.

MAYOR BOOKER: You guys could do some great things this year.

MR. SCARBOROUGH: Want to -- that's a good note to leave on. Before we go this morning, Andrea mentioned that we remember Richard Holbrooke, President Obama's special representative for Afghanistan and Pakistan, died Monday at the age of 69. An iconic American diplomat, Holbrooke worked for every Democratic president since John F. Kennedy, was perhaps best known for negotiating an end, of course, to the Bosnian War in 1995. He appeared on this program five times over his long career. His first appearance back in 1976 was not as a newsmaker -- look at that -- but as managing editor of Foreign Policy magazine when he was part of a panel of journalists questioning Israeli Prime Minister Yitzhak Rabin. His family and loved ones are in our thoughts and prayers this morning. That is all for today. We will -- we'll be back next week, the day after Christmas, a special discussion on the incredible political year of 2010, and what to look for in 2011 and 2012.

MR. GREGORY: Tom Brokaw, Doris Kearns Goodwin, Peggy Noonan and Bob Woodward.

In the meantime, we wish you and your family a very merry Christmas.  If it's Sunday, it's MEET THE PRESS.