'Countdown with Keith Olbermann' for Tuesday, November 18, 2008
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Guests: Richard Wolffe, Chuck Todd, Lawrence O'Donnell, Clarence Page, E.J. Dionne

DAVID SHUSTER, GUEST HOST (voice over): Which of these stories will you be talking about tomorrow?

The next attorney general: President-elect Obama reportedly taps D.C. lawyer Eric Holder, to head the Justice Department, while back at the State Department, the vetting continues for the Clintons and the process is proving difficult for the "No Drama Obama" camp. Will Bill Clinton give up his global business dealings? And how will the Obama team deal with potential Clinton backlash?

Vote of confidence? The Senate Dems lets Joe "Pro-McCain/Anti-Obama" Lieberman keep his post as homeland security chair?

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN, (I) CONNECTICUT: This is the beginning of a new chapter.

(END VIDEO CLIP)

SHUSTER: His colleagues are counting on it.

(BEGIN VIDEO CLIP)

HARRY REID, (D-NV) SENATE MAJORITY CHAIR: We're moving forward recognizing that there's a period of time that in Joe Lieberman's political career that I will never understand or approve, but I also recognize that he's been in public office for four decades.

(END VIDEO CLIP)

SHUSTER: And the still to-be decided Senate races. As the final votes are tallied, Ted Stevens' challenger doubles his lead in Alaska, the hand recount begins tomorrow in Minnesota, and in Georgia, Bill Clinton and Al Gore are about to stump for the Democratic hopeful, but there are still nothing from Barack Obama.

Chuck Hagel unleashed: The Republican senator blasts his party and the right-wing talkers, taking special aim at Rush Limbaugh. The GOP identity crisis and the fight over who will pick up the pieces.

And the rise of a Presidential Barack star. He draws massive crowds in blockbuster ratings. And the earnings potential for inauguration ticket scalpers is off the chart.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN, (D) CALIFORNIA: The chance to witness this solemn event should not be bought and sold like tickets to a football game. This is not a football game.

(END VIDEO CLIP)

SHUSTER: Let the tailgating begin.

All that and more: Now on Countdown.

(on camera): Good evening, everyone. I'm David Shuster, in tonight for Keith Olbermann. This is Tuesday, November the 18th, 63 days until the inauguration of President-elect Barack Obama.

And now, two names closer to building his cabinet. No, Hillary Clinton is not yet one of the names but there is movement on that front.

In our fifth story tonight, however, we begin with another milestone, Obama's choice for attorney general. Eric Holder, sources tell NBC News, has accepted the job and will be the first African-American to hold the post if he is confirmed.

Holder serves as deputy attorney general during the Clinton administration and reportedly had reservations about accepting Obama's offer due to concerns that the confirmation process could dredge up Clinton's pardon of Marc Rich, which the Justice Department signed up while Holder as acting A.G., despite the fact that Rich was a fugitive from justice. You're not supposed to pardon people until they actually face justice first.

But NBC tonight reports that Holder, so far, has had a positive reception in Congress. The judiciary's ranking Republican, Arlen Specter, however, is telling NBC News he was not contacted about Holder, but also says that Marc Rich is not a big issue.

Another Clinton vet likely to find Congress welcoming is Peter Orszag, director of the Congressional Budget Office, whom the "National Journal" reports, will be asked to run Obama's Office of Management and Budget. You know, the lucky stiff who gets to figure out how to pay for Obama's domestic agenda as the nation slide into recession.

And Clinton vet numero uno, ABC is reporting both serious progress and increasing optimism that Hillary Clinton will become secretary of state, with some Democrats predicting an announcement within a week.

The "New York Times" reports that Bill Clinton is inclined to make some of the concessions required of him to avoid conflicts between his wife's potential new job and his job as head of the Clinton Foundation, which involves raising money from undisclosed sources including foreign heads of states, businesses, and individuals with considerable stakes in the direction of U.S. foreign policy.

With us tonight is MSNBC political analyst, Richard Wolffe, also, senior White House correspondent for "Newsweek."

And, Richard, thanks for joining us. Eric Holder has been up for confirmation three times. He's never had any problems before. How about now?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Well, you got to put this in some context here. Compared to Alberto Gonzales as attorney general and the situation that he faced with the U.S. attorneys, with waterboarding, I mean, these are not big issues. Marc Rich, the Clinton pardons are controversial. That he will be questioned about it.

But this is a Democratic Congress. These were pardons from a Democratic president and Eric Holder's role was, while important, was not the key critical piece of that puzzle. So, I think he'll be just fine based on his service in the last Clinton administration.

SHUSTER: How will federal law enforcement change under Eric Holder?

WOLFFE: Well, look, he's seen as a professional and he's seen as someone who can restore the ethos of the Justice Department. That's an important piece of what Democrats promised they would do going into the election. So, I think he'll face some key tests in terms of his confirmation about the kinds of things he would move forward with. But, I think generally, you're looking at a sort of restoration of principles for the career folks to justice.

SHUSTER: On the Clinton front. Is the former president willing to give up the lucrative speeches, the jet-setting, the glad-handing, essentially changing his lifestyle that he's built for himself in order to get his wife the job?

WOLFFE: Well, it looks that way. We don't know exactly where these negotiations are right now. But, the thinking is that this is more about the forward-looking process in terms of what contributions will he forego, is there a way for him to move out of day to day operational responsibility with his foundation, and yet, allow contributions to continue anyway. Because there's still philanthropic work that goes on that he would want to see continued, and I'm sure President-elect Obama would, too. I think these are all solvable problems.

SHUSTER: A lot of these un-sourced stories about Hillary Clinton as possible secretary of state, they contain certain caveats that Hillary is torn or conflicted that she might not want the job as secretary of state. Can you explain why that might or might not be the case?

WOLFFE: Well, there's something about not wanting to do a job too much, in case you look too desperate. And here is someone who wants to show that she can do many different things. I often hear that she was conflicted to run for president, conflicted about being vice-presidential nominee. There's a certain dance that goes on here. From everything I'm hearing from my sources this is a job she wants that people think, in the Obama camp, she'd be good at. It's a question of can the vet proceeds especially with her husband. That's not something you're conflicted about.

SHUSTER: Could some of the caveats be a negotiating position?

WOLFFE: You know, this is the working theory insight. Some folks in the Obama camp, are they trying to push off the vetting process? Or from the Hillary side, are the Obama people trying to play their own games in terms of jockeying around for position? I do think that there's a certain reluctance-oh, if the country asks me, then I'm ready to serve.

SHUSTER: MSNBC political analyst, Richard Wolffe, also, senior White House correspondent for "Newsweek"- Richard, thanks, as always. We appreciate it.

WOLFFE: Thank you, David.

SHUSTER: While Republicans are praising the possibility of Secretary of State Clinton, McCain's campaign blogger posted today, "Hail Clinton," some Democrats are not so sure. Politico reported today that some of Obama's earliest supporters are leery, especially those who first became Obama supporters precisely because they saw him as an alternative to Clinton.

And even if you do think she would do well on the job, there is still Obama's much discussed political philosophy on this question. A philosophy he suggests was shaped by the Lincoln biography, "Team of Rivals," chronicling how Lincoln succeeded politically by stacking his cabinet with former political rivals.

But in a "Los Angeles Times" op-ed today, Lincoln biographer, Matthew Pinsker, calls that account a myth, arguing that three of Lincoln's top presidential rivals left the cabinet on less than amicable terms after serving Lincoln poorly.

Joining us now is Clarence Page, syndicated columnist for the "Chicago Tribune."

And good evening, Clarence.

CLARENCE PAGE, CHICAGO TRIBUNE: Good evening. How are you, David?

SHUSTER: Good.

Forget the politics. Is Hillary Clinton really the best person for this job? And would, I don't know, Richard Holbrooke agree with that?

PAGE: Well, when you say forget the politics, you're trying to forget a lot there. I think, politically, she's a better choice that diplomatically because she does no have a lot of foreign policy experience. I think the biggest memory people have is that the time when she said she was under fire in Kosovo, I believe that was, when it turned out that she wasn't under fire per se. But, I think, on the political side, this shows him reaching out. It gets a potential rival inside the tent rather than outside, and shows him to be the kind of a leader who might want to put a team of rivals together-despite the Pinsker piece.

SHUSTER: Yes. And never mind the exaggerations about Bosnia, even before her campaign ended, we knew it was basically a dysfunctional because of internal rivalries and she claims she was also running a team of rivals. Even today, a Clinton confidant tells Politico, We don't really know what Clinton wants to do because, quote, "we've gotten rid of all of the other idiots who leak stuff like that."

But, even that is a leak. Is this really the model for running America's diplomatic efforts?

PAGE: Well, you know, Democrats are famous for leaks and we journalists love it, don't we? I think this is such a market contrast to the Bush years. Both Bushes, that it seems almost typical as far as leaks are concerned. But, there is some wonder as to what kind of a team she will put together. When it comes to foreign policy, what's interesting here is that Barack Obama ran against her foreign policy.

That was a key issue for him right off the bat that he was opposed of Iraq while she voted for it and was so slow to back down away from that. That it seems like an odd choice for him to make now. But, at the same time, she does have a lot of fans out there, and this, in a way, is a consolation prize for not picking her as a running mate.

SHUSTER: Yes. And never mind the rivalry between Obama and Clinton. Is Obama really putting together a team of rivals? I mean, if we spot Joe Lieberman and maybe, Hillary Clinton, that's too, but Rahm Emanuel, Eric Holder, I mean, not so much, though, right?

PAGE: Not all. No, these were the initial choices. What's important about these choices, David, is that they are showing him right off the bat trying to get an early start on putting his cabinet together, and he picks the people who are the key positions, people he'll have to work with closely. Perhaps, farther down the line, we might see one or two Republicans.

Right now, Hillary Clinton is a very dramatic choice, compared to the others. She's not part of his old team. But she, at the same time, would be motivated to do a good job because I think she still has dreams of running for the presidency herself and, she could score some good foreign policy credentials.

SHUSTER: We're going to talk later on the show about Joe Lieberman's free pass today, but add that to a Clinton appointment, and doesn't Obama risk losing the progressive left that helped fuel his campaign?

PAGE: Yes, he does. I was thinking about that Pinsker piece you're talking about in the "L.A. Times." It quoted our old managing editor, Joseph Medill of the "Chicago Tribune," who personally talked Lincoln into running, that was so incense by his cabinet choices that he said, "We made you and we can tear you down, too." That's the kind of thing that we're hearing grumbling from the left as far as the Clinton choice is concerned.

But at the same time, you know, Barack Obama is a guy who likes to play in the middle, and likes to show that he's a moderate, and can reach out to people who aren't just in his camp.

SHUSTER: Clarence Page, Pulitzer Prize winner, and nationally syndicated columnist-Clarence, thanks for coming on.

PAGE: Thank you.

SHUSTER: Coming up: Senator Joe Lieberman says, "It's a whole new chapter," now that he's escaped any serious punishment for attacking Obama on the campaign trail. Republican Senator Chuck Hagel says it's time for a whole new chapter from the GOP after the last eight years, even calling out the biggest right-wing gasbag.

And Obamamania: Can Washington, D.C really handle 4 million people on the Mall on Inauguration Day? You got to be kidding me.

Next on Countdown.

(COMMERCIAL BREAK)

SHUSTER: After all the hand-wringing about what to do with Joe Lieberman, the vote among Senate Democrats to let him keep his prized chairmanship wasn't even close. Has "Let's all get along" fever really hit D.C.?

And: What do we do now? The GOP edition-wait until you hear what Chuck Hagel had to say about his own party. That's ahead on Countdown.

(COMMERCIAL BREAK)

SHUSTER: Joe Lieberman gets to keep his gavel so say his colleagues in the Senate Democratic Caucus who voted overwhelmingly to let him stay as chairman of the Homeland Security Committee.

In our fourth story on the Countdown: As recently as yesterday, the senator's fate was still up in the air, with hard feelings still simmering over his support for John McCain and for roundly, repeatedly and often, misleadingly, attacking Barack Obama on more than one occasion. A resolution which condemns those statements passed 42 to 13 and it did include one punishment. Lieberman will give up his subcommittee chair on the environment and public work's panel.

After the vote, Majority Leader Harry Reid embraced Lieberman as a fellow Democrat, and part of this caucus but didn't hold back about his prior disappointment.

(BEGIN VIDEO CLIP)

REID: I would defy anyone to be more angry than I was. But I also believe that if you look at the problems we face as a nation, is this a time we walk out of here saying, "Boy, did we get even"? I am very satisfied with what we did today. I feel good about what we did today.

I don't apologize to anyone about what we did today. We're moving forward recognizing that there's a period of time that in Joe Lieberman's political career, that I will never understand or approve.

(END VIDEO CLIP)

SHUSTER: As for Lieberman who said he regretted some of the negative comments about Obama, admitting some were simply not true, he clearly knew whom to thank.

(BEGIN VIDEO CLIP)

LIEBERMAN: This is the beginning of a new chapter. And I know that my colleagues in the Senate Democratic Caucus were moved, not only by the kind words that Senator Reid said about my long-time record, but by the appeal from President-elect Obama himself that the nation now unite to confront our very serious problems.

(END VIDEO CLIP)

SHUSTER: Time now to call in MSNBC and NBC News political director, Chuck Todd.

And, Chuck, good evening.

CHUCK TODD, MSNBC POLITICAL DIRECTOR: Good evening, David.

SHUSTER: Chuck, Joe Lieberman says this is a, quote, "new chapter."

Cliche but apt nonetheless. Is he right?

TODD: Well, it is. I mean, it was quite striking. You know, there are going to be a lot of-a few Democrats in the Senate, the ones that voted, basically, against this deal, who are going to feel like that they did not-they have almost given a permission slip to other Democrats to do what Joe Lieberman did, to not play ball inside the Senate, who feel like that all of the words and all of the threats, that they never backed him up.

But, you know, victory-when you have a victory it's easy to be magnanimous and Obama has shown that when it comes to whether it's been John McCain, the Hillary Clinton speculation, or now, Joe Lieberman. And, so, he's collected a chip. I think it was very interesting here that Joe Lieberman thanked Obama publicly and Obama, now, can cash that chip at some point when, maybe, he needs Lieberman out there, maybe, to get a McCain onboard for something or something that he may need to get passed.

SHUSTER: But, as for those 13 Democrats that voted against him, some of them say that the Democratic Party as a whole in a cave by letting Lieberman get away with this. And Bernie Sanders, in a poignant to, as you know, didn't have a vote; he said this was a slap in the face to millions of Americans who supported Obama. Was this a bad precedent, at least, politically?

TODD: Well, there are some in the Democratic caucus who believe it's a bad precedent. They are not happy. That's why you had 13, not an insignificant number.

But, you know, it is very tough. Harry Reid got up and spoke in support of Lieberman getting this slap on the wrist. Dick Durbin spoke up. These are the number one and number two leaders inside the caucus. So, virtually, assuring that Lieberman was going to get through this.

So, yes, there is going to be some on the left-and the question is, at what point-and, David, I heard you bring this up earlier to Clarence Page, at what point are the liberal blogosphere, the progressive left going to say, "Wait a minute. OK, first it's Hillary Clinton. Then, it's now Joe Lieberman. What's next?" And, you know, maybe it will end up being on wiretapping. At what point does the liberal blogosphere say, "Hey, enough, we were out there first for you, you know, we're going to now cause you some of the same heart burn that conservative talk radio had cause caused for President Bush on various issued"?

SHUSTER: Well, Chuck, let's take that very point. I mean, where would that point be? How much room does Obama have with the liberal left blogosphere?

TODD: I think with this appointment and this political stuff, he's got a lot of room, because at the end of the day, I think the liberal blogosphere likes the idea of 60 Senate seats. It is still hanging out there. Alaska looks like Democrats are going to win there. That recount, statistically, anything can happen. That's not a lot of votes for Franken to find in a recount. And then, of course, the Georgia runoff.

So, to get that magical 60 number, you need to play nice with Lieberman, and I think, politically, the liberal blogosphere will be OK with that. The question will be: When he gets into office in and a President Obama looks at Guantanamo Bay and looks at that issue, or looks at the wiretapping issue, and suddenly gets some information that says-you know what? Maybe I can't-maybe I'm going to have to go along with some of these expanded powers. Maybe I'm not going to roll back all of this. Or, maybe I'm not going to shut down Gitmo right away.

I think it will be a policy issue like that-I'm not saying it's going to be one of those two, but something like that, David, that will say, these guys will say-hey, wait a minute. They'll use the Lieberman and use the Clinton to say-hey, we gave you a pass on that stuff. We're not giving you a pass on this.

SHUSTER: Bernie Sanders, of course, wasn't the only guy carrying a grudge. According to the "A.P.," Patrick Leahy of Vermont.

TODD: Right.

SHUSTER: . gave a thumbs down on letting Lieberman keep his gavel. Does that conflict between Leahy and Lieberman matter, especially some of those very issues that Leahy has been very involved with like wiretapping, like Guantanamo Bay?

TODD: You know, I think this stuff, over time, it won't be a big issue. I tried to reach out, tried to figure out who were the other of these baker's dozen that came out against Lieberman. Lieberman will never know. He knows Sanders was against this. He knows Leahy. That's going to take some time.

But he also knows who was with him. So, I think he's going to-you know, he may, overdo it in trying to always get the protection of Obama here. Once again, I go back to what he said. He thanked President-elect Obama. He knows that's who saved him today.

SHUSTER: Chuck Todd, political director for NBC NEWS and MSNBC-

Chuck, thanks, as always. We appreciate it.

TODD: All right, David.

SHUSTER: Senator Lieberman might still get another chance to campaign for his friend, Senator McCain. The "Associated Press" is reporting tonight, the Arizona senator is taking initial steps to run for the Senate again. McCain's fourth term as senator is up in 2010. A McCain spokesperson wishing to remain anonymous is telling the "Associated Press" tonight that the senator will set up a political action committee so he can start fundraising for a potential fifth term as senator. If reelected, McCain would be 74 years old.

For the Republicans trying to shake off election defeats, some very candid remarks from Senator Chuck Hagel who leaves no stone unturned in critiquing the problems with his own party.

And, Oddball meets "Green is Universal" week. The beauty of news and corporate synergy collide next on Countdown.

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SHUSTER: Big birthday news for a certain senior senator from Alaska today, born all the way back in 1923 today-Ted Stevens turns 85 years young. Raising the question-what do you get and (IANUDIBLE) and seven-count convicted felon who trails in a Senate race by 2,374 votes-what do you get him for his birthday? You can start with a pardon and if you have 2,375 votes going around that would work, too.

On that note, let's play Oddball.

We begin in Japan with ongoing coverage of "Green is Universal" week. Today's tip: Plant a tree and if you're lucky, in a few years' time, it will grow up to look like an atomic fire breathing movie monster and terrorize your town. In Ichiba (ph) prefecture of Japan, it's the Godzilla tree. The owners say the giant lizard's imager can only be seen from a certain angle and that there was no pruning to make the tree look like, but get all your gawking in now because there won't be a mantra, but mother nature that takes out Godzilla when the trees leave, fall to the ground.

To a feeling inside the United Nation's building in Switzerland, where it only looks like they have a severe mold problem, actually, somebody did this on purpose. The painting is by Spanish artist, Michael Barcelo. It took a year and 100 tons of paint to create. Barcelo said his inspiration came while he was in the desert where he saw, quote, "Trees, dunes, donkeys, multicolor beings, flower flowing drop by drop. Oh, you can definitely see the donkey droppings and some scallops types, I think. Anyway, the best part is the price tag - $23 million. Needless to say, many diplomats are unhappy. On the positive side, if you chuck your pencil up there and it sticks, no one will ever notice.

Finally, to the Netherlands, where last week they held World Dominos Day. The made-for-TV event was beamed all over the globe. A record of 4 million-plus dominos were toppled. But the best part was the man-versus-domino race. Could world class marathoner Andy Martino (ph) run 30 meters faster than cascading dominos?

And, there's the gun and it looks like-sure, Andy took it. All you sucker that took the dominoes-pay up.

What's wrong with the right? Senator Chuck Hagel says Rush Limbaugh is one place to look, and offers a very tongue-in-cheek suggestion for how Rush can make things better.

And the Obama frenzy is taking D.C. By storm. The future first lady brought the kids to the White House toady, but elsewhere in DC, concerns are growing as to how the authorities will handle the massive interest in Inauguration Day. These stories ahead, but first time for Countdown's top three best persons in the world.

Number three, best feline fire detector, Peaches the cat. She was alert enough to pop the chest of her sleeping owners when a box fan caught fire in the middle of the night. Peach's owner only suffered minor burns to her hand and arm, and admits the situation would have been much worse if not for the cat-like quickness of their beloved pet. It's a good bet that Peaches will be Fancy Feasting for some time to come.

Number two, best reason for a hair-raising experience, Eric Hahn of Omaha, Nebraska, who is the new Guinness record holder for the world's tallest Mohawk, measuring in at a whopping 27 inches high. The do took nearly three hours of cutting and styling, but was all worth it, says Hahn, who donated all his left-over hair to Locks of Love, a charity that makes wigs for cancer patients.

Number one, best living up to a name, say hello to our little friend, Dalcapone Alpaccino Morris. No, we are not kidding. He was picked up for felony drug possession last month, and is currently biding his time behind bar, awaiting the judge in Montgomery County, Ohio. We're guessing his parents were either big fans of the mob or big fans of the movies or big fans of mob movies or maybe John Gotti Robert Deniro Morris just didn't have the right ring to it.

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SHUSTER: It's a question that Countdown has been asking President-Elect Obama every night since he won the White House: what do we do now? Tonight, in our third story, we switch that question's focus to ask it of the losing party in this election. As the GOP met to decide their new Senate leadership and find their feet, a couple of common themes emerged.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: The mood of the Republican conference, obviously, is that we're looking forward. I think our group, though diminished in size, is very much committed to moving forward.

SEN. LAMAR ALEXANDER (R), TENNESSEE: We don't need new principles. We don't need to hire a PR firm. We've had a failure of imagination on the Republican side.

SEN. JOHN ENSIGN (R), NEVADA: We are focused. We are a big tent party.

SEN. JOHN CORNYN (R), TEXAS: We are together. We are energized. We are ready to forward.

(END VIDEO CLIP)

SHUSTER: Not all of the GOP is so sunny about their party. Retiring Senator Chuck Hagel of Nebraska took some time at a forum of the Johns Hopkins School of Advanced International Studies to analyze just how the Republicans ended up in their current predicament. Quote, "87 percent of the American people said America is going in the wrong direction. You don't need to know about another number about anything. So the election was pretty predictable. The American people don't like what's going on. They just want us to start doing what leaders are expected to do, address the problems, find some consensus to governing, get along. There will be some disagreements, sure, but in the end, we can't hold ourselves captive to this raw, partisan, political paralysis.

Yes, there have been differences and some pretty significant ones in the Republican party. But when you ask the question, has our approach worked? I don't think many people will say it has worked."

He added, "God knows, I would never question the quality of our elected officials. That's why I'm so popular with many of them."

Hagel, likewise, had some biting words for the foreign policy attitude of many of his fellow Republicans. Quote, "engagement is not appeasement. Diplomacy is not retreat. Somehow too many in this town and in this country have disconnected that. There's always going to be a certain know-nothing element to democracy. That is their choice. But in a world that's so vitally interconnected, it does help if you try to understand the other side. Ask them, what is it that scares you about the French so much?"

But Senator Hagel saved his harshest criticism for the most popular host on right wing talk radio. Quote, "we're educated by the great entertainers like Rush Limbaugh. You know, I wish Rush Limbaugh and others likes him would run for office. They have so much to contribute and so much leadership. And they have an answer for everything. They would be elected overwhelmingly. The truth is they try to rip everyone down and make fools of everybody but they don't have any answers."

Joining us now is E.J. Dionne, columnist with the "Washington Post," and senior fellow at the Brookings Institution. E.J., thanks for your time tonight.

E.J. DIONNE, "THE WASHINGTON POST": Good to be with you.

SHUSTER: That was a pretty unvarnished assessment by Senator Chuck Hagel. Your reaction? How long will it take his party to rebound from this year's elections?

DIONNE: Well, I would love Rush Limbaugh to run for office. That would be a hoot. But, you know, I think Hagel is broadly right. And I think the Republicans are in a real fix here. No-in two elections in a row, the Democrats have won two elections in a row. That doesn't make a realignment yet. But it really suggests some of the problems Republicans face.

First, they cannot lose the minority vote in the country the way they did. African-Americans, Latinos, Asians, they were a quarter of the electorate. It's a growing share. They got wiped out in those groups. More importantly, in some ways, are the young people. Young people are usually an indicator of where things are going. They roughly voted 60 percent roughly for Ronald Reagan in 1984. We had a fairly conservative era.

They voted two thirds for Barack Obama. That's a huge problem. And then when the Republicans can't carry the suburbs, they've got a real problem. And the suburbs went for Obama. In Virginia, the suburbs near here in Washington gave the state to Obama. In Pennsylvania, in Colorado, in North Carolina; all of these are places where people are fundamentally moderate and they are looking for solutions. They don't want huge government, but they want government to succeed and they judge that it hasn't been.

SHUSTER: And, yet, the current Senate GOP leadership doesn't seem to think the party needs a change in principles. But isn't that exactly what Senator Hagel is suggesting they do need, especially when it comes to their attitude about foreign policy?

DIONNE: I think on foreign policy the Republicans are genuinely split, and those splits were suppressed in the Bush years, because they occupied the White House. But even within the Bush administration, we know that Colin Powell and Richard Armitage-there are a lot of people who had grave doubts about Iraq, and the direction of this foreign policy. I think that is all going to come out.

But I also think that the kind of extreme social conservatism just doesn't serve the Republicans well. A kind of anti-government ideology at a time when their own administration is engaging in a kind of socialism by having to partly take over the banks. The rhetoric doesn't square with the problems. I think that's one of the reasons they lost. They need to rediscover a kind of moderate brand of conservatism. That could be a lot more popular than what they've been offering lately.

SHUSTER: Yet, speaking of flame-throwing rhetoric, Governor Sarah Palin is back in Alaska, but she'll be the speaker at the 2009 Conservative Political Action Conference. Is she being set up for some kind of leadership role? And if so, doesn't that leave the GOP in a sort of raw, partisan, political paralysis that Senator Hagel warned about?

DIONNE: I think Barack Obama's fund raising machine would be tempted to turn itself into a Palin fund raising machine, to make sure she's on the ticket in 2012. She's the most popular Republican in terms of the ability to draw a crowd. She will probably be an enormous fund raiser for the Republican party. But first of all, she's got to go back to Alaska. The history of people who lose in national elections and then go home isn't very good, especially in economic down turns. Mike Dukakis, a very good governor of Massachusetts, after he lost in 1988, the economy went down, he became very unpopular.

She's going to have to navigate Alaska. And there are a lot of Republicans who are now saying publicly it hat wasn't a good choice for the ticket. But she sure has a future on television, maybe on Fox News and on the cover of "People Magazine."

SHUSTER: Speaking of issues of trust, doesn't the GOP need to heal itself before regaining the trust of the voters, and to reconcile the Evangelicals and the neo-cons and the moderates and the fiscal conservatives, who have been so alienated by Bush and the McCain/Palin campaign to start with?

DIONNE: I think there are two things. First, organizationally, they are just totally out-organized this year. BarackObama.com is probably the most successful start-up company of the last two years. And they are one -it seems like in four years, they've gone one generation behind in organization. And then, philosophically, this mish-mash doesn't work anymore. Charismatic leaders can make it work. Ronald Reagan made it work. But it doesn't hold together, and they have to discover something different, like the British conservatives did.

SHUSTER: E.J. Dionne of the "Washington Post" and the Brookings Institution, thanks for coming on tonight, E.J. We appreciate it.

DIONNE: Great to be with you. Thank you.

SHUSTER: You're welcome.

Coming up, breaking news from Alaska. The Democrats pick up another Senate seat. The Associated Press says Democrat Mark Begich has defeated long time Republican Senator Ted Stevens.

And the fascination with the Obamas. Even though we're two weeks past the big election night, Obama-mania shows no signs of wavering.

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SHUSTER: Three thousand, seven hundred and twenty four; breaking news, in our second story on the Countdown, that's how much incumbent Republican Senator and convicted felon Ted Stevens is currently trailing Democratic challenger Mark Begich in Alaska at this hour, with almost all of the votes counted. And the Associated Press has just called that race for Mark Begich. Most of the remaining votes will be tallied up later tonight, with more overseas ballots to be counted over the next few days. But the Associated Press says there's only 2,500 votes left to be counted, which means Begich's lead is insurmountable.

It is still unclear if Senator Stevens will request a recount starting in early December. But joining us now for more on this breaking news, "Huffington Post" contributor Lawrence O'Donnell. Lawrence, first of all, you're reaction to the news. And my math suggests that if Stevens wants a recount, based on the margin, he would have to pay for it himself?

LAWRENCE O'DONNELL, MSNBC POLITICAL ANALYST: This has been trending this way and this is the most conservative way you could call it. This was actually, in rough terms, callable prior to now. This will, if it holds, deprive us of a possible run for the Senate by Sarah Palin. If Ted Stevens had been re-elected, then he probably would have faced a move to expel him from the Senate next year. That would have opened up a special election in Alaska, because they don't have appointment power by the governor of a new senator. And we may have seen in that scenario the candidacy of Sarah Palin for Senate.

Instead, we'll have what looks like a more orderly transition in the Alaskan Senate situation. And this is-it seems, this is the end of Senator Stevens career.

SHUSTER: In fact, just today, the Republican Senate leaders had a resolution that they drafted, essentially, that would have expelled or started the process of expelling Senator Stevens. They pushed that off until Thursday, thinking there would be this very call. How much pressure is there now on the Republican side on Senator Stevens to declare it and let it go?

O'DONNELL: Well, Stevens doesn't respond to pressure. I think we've seen that-I've certainly seen that throughout his year. That certainly was my experience in the years that I worked in the Senate when he was there. So there's really no such thing as putting pressure on Ted Stevens. I think this makes for a more quiet end to his Senate career than we would have otherwise seen. And this, I think, is a tremendous relief to the Republican party in the Senate right now.

SHUSTER: And as far as Ted Stevens, he's responsible for so much pork and projects that will have gone to Alaska over these many years. Is the longest serving Republican senator-how big a vacuum does that lead on something like appropriations or these other committees where he had so much power?

O'DONNELL: That sort of work has gotten a bad name, certainly during this last Republican presidential campaign. Earmarks, earmarks, earmarks was what the McCain campaign was all about for a while. Usually after a presidential campaign like that, there is an inhibiting effect on that kind of activity, when it's become such a large item in the campaign. So this would have been a tough world for Stevens to continue to play the earmark game for Alaska. And so Alaska's going to have to get by without that massive flow from Ted Stevens. But it is still and it will remain a client state, as it were, of the federal government.

Alaska will always take in much more money from the federal government than it sends to the federal government.

SHUSTER: By the way, an update on why the Associated Press is calling it now, even though there's still votes to be counted. The difference of 3,724, but the remaining votes to be tabulated, 2,500, and these are overseas ballots. So again, no way that Ted Stevens can make up the difference. In any case, Lawrence O'Donnell, stand by. We'll be right back with him.

And coming up, record ratings on "60 Minutes," projected record crowds for his inauguration. Can President Elect Obama live up to the hype? Does he even care? That's next on Countdown.

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SHUSTER: The expectation of all-time record-breaking crowds, the scalping of tickets that do not yet exist and the kind of preparation and hype the likes of which Washington, D.C. has never seen before. In our number one story on the Countdown, when Barack Obama takes the Oath of Office as president of the United States, he will bring along the luster and the burden of his rock star status.

Federal officials are preparing for up to four million people for Obama's inauguration. That would make Obama's election night victory speech, which had a crowd of 200,000, would make it look like a tea party. Officials may open up the entire mall for the big event, a first for an inauguration. Extra jumbo-trons will be set up to make it feel like the world's biggest stage, according to the Washington, D.C. Mayor Adrian Fenty.

And some Internet sites have been offering phony tickets for thousands of dollars. Senator Diane Feinstein announced special legislation prohibiting the counterfeiting and sale of inauguration tickets which will be free, as usual, and distributed by members of Congress. However, the tickets are not yet available.

Meantime, in the search for schools, the future first lady visited Sidwell Friends today, with her daughters in tow. This afternoon, First Lady Laura Bush graciously invited Mrs. Obama and the girls to the White House, so that Malia and Sasha could see their rooms for the first time. The Obama's interview on "60 Minutes" is just the latest indication of the nation's intense interest. It was the highest rated television show this season and "60 Minutes" best rated program in nine years.

Let's bring in Lawrence O'Donnell, contributor to the "Huffington Post" and an MSNBC analyst. Lawrence, thanks again for your time tonight. The current record for the mall in Washington for inauguration was about 1.2 million people for Lyndon Johnson in 1965. It looks like that will be easily surpassed by Obama. At the risk of too much hype, is this the biggest ticket since the millennium?

O'DONNELL: It's a big one. Every member of Congress, every member of the House of Representatives, David, gets 198 tickets. There are senators who get more than that. Certainly, Diane Feinstein will have access to many more tickets than that, because she's in charge of organizing this. But a senator like Feinstein has a lot of demand. There's a lot of Californians who want to go. There's a lot of big contributors in California who want to go.

The day before, pretty much every first class seat to Washington from L.A. is sold out already. We're going to see a massive demand for these tickets, and like we've never seen before. The only thing that can really keep this number down, the turnout down, at this point, is what the weather turns out to be on January 20th in Washington, D.C.

SHUSTER: And, yet, these 250,000 tickets, that's just for the west side of the Capitol, the west front. That's all they can accommodate. The question is, how many millions of more will essentially spill on to the mall. Obviously, Barack Obama has become an inspirational figure and he is making history. But is this huge anticipation multiplied by the fact that the exiting administration is still so incredibly unpopular?

O'DONNELL: Well, the exiting administration seems forgotten already in many ways. My sense of this is that-the feel that I have for it is that it's a very positive outpouring for Obama, as opposed to a dancing on the grave of the previous administration. By the time you get to this point in a presidential administration, it's-there's no real relevance going forward. So, what's happening now in the build-up of this anticipation is all about seeing Barack Obama take the Oath of Office.

SHUSTER: Now to the burden this whole Barack-star stuff imposes; how can the president-elect possibly manage these expectations for his presidency?

O'DONNELL: Well, in one way, he's fortunate enough to have a situation that's so grim on so many fronts that a very slight marginal improvement will feel great. I mean, for example, if he's able to just tweak the unemployment rate down one point, we can still have a high unemployment in relative terms, but it could feel like progress. It's really just a matter of him conveying that he's engaged in these problems, and engaged in them in a serious way for the first six months that will get him through.

No one is going to expect some immediate change in the economy as a result of Obama taking the Oath and giving his inaugural address. And no one is going to expect that Iraq suddenly becomes a very easy thing to extricate from once Obama's in office. He just really has to show that he's on the case and he's on the case in a serious way. If he can get any marginal improvement in any of the statistical indicators on the economy, that will be great for him.

SHUSTER: And a continued plus, perhaps, if Obama marshals his use of the airwaves judiciously, much like President Ronald Reagan did, will he have the potential there to use his public appeal when he needs it the most?

O'DONNELL: Well, we'll see. Bill Clinton, who became good at it eventually, was not good at it at the outset. Bill Clinton's first national address was from the Oval Office, where he announced that he had just looked up the books and discovered that we're running a very big deficit, something that was quite obvious while he was running for president, that he seemed to ignore.

So it's not clear how well Obama will do in this new role and in this new posture. He's been a great performer in the past. He's been, to many eyes, a disappointing performer in some of the debates in the primary season. This is going to be a whole new venue for him. We don't know how he handles the presidential address. I think you can expect an inaugural address that will be soaring and will be memorable. That is his-that's a real plus for him. That's his style of speech. But the presidential address from the Oval Office on policy, that's a different thing. We haven't seen that from him yet.

SHUSTER: Lawrence O'Donnell, MSNBC political analyst and contributor to the "Huffington Post," Lawrence, thanks, as always. We appreciate it.

O'DONNELL: Thank you.

SHUSTER: That will do it for this Tuesday edition of Countdown. "THE RACHEL MADDOW SHOW" is up next. I'm David Shuster in for Keith Olbermann. Have a good night, everybody.

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