Interview with Tom Brokaw on NBC's "Meet the Press"

BROKAW: President-elect Obama, welcome back to MEET THE PRESS.

THE PRESIDENT-ELECT: Great to be here. Thank you.

BROKAW: Very nice to have you with us. As we saw in the opening, the world has gotten considerably worse since your election. There is no evidence that it's cause and effect, you should be happy to know. But, nonetheless, we now are officially in a recession. It's around the world, and most analysts think it's going to get worse before it gets better. Sixty-seven years ago this day, one of your predecessors, Franklin Roosevelt, faced Pearl Harbor.

THE PRESIDENT-ELECT: Right.

BROKAW: What are the differences between his challenges and the ones that you face?

THE PRESIDENT-ELECT: Well, first of all, I think it's important for us to remember that as tough as times are right now, they're nothing compared to what my grandparents went through, what the "greatest generation" went through. You know, at this point you already had 25, 30 percent unemployment across the country, and we didn't have many of the social safety nets that emerged out of the New Deal. So there's no doubt that Franklin Roosevelt had to re-create an entire economic structure that had entirely collapsed, and we've got some strengths that he didn't, he didn't have.

But, look, if you look at the unemployment numbers that came out yesterday, if you think about almost two million jobs lost so far, if you think about the fragility of the financial system and the fact that it is now a global financial system, so that what happens in Thailand or Russia can have an impact here, and obviously, what happens on Wall Street has an impact worldwide, when you think about the structural problems that we already had in the economy before the financial crisis, this is a big problem and it's going to get worse. And, and one of the things that I'm constantly mindful of are all the people I met during the campaign who were already struggling before things got worse. You know, mothers and fathers who were working hard every day but didn't have health care, couldn't figure out how to send their kids to college. Now they're looking at pink slips, jobs being shipped overseas that devastate entire towns. And that's why my number one priority coming in is making sure that we've got an economic recovery plan that is equal to the task.

BROKAW: Here's what you had to say a short time ago to the national conference of governors. It was kind of a reality check for them to put it in some kind of a context. Let's share that with our audience now, if we can.

(Videotape, Tuesday)

THE PRESIDENT-ELECT: We're going to have to make hard choices. Like the ones that you're making right now in your state capitals, we're going to have to make in Washington. And we are not, as a nation, going to be able to just keep on printing money; so, at some point, we're also going to have to make some long-term decisions in terms of fiscal responsibility and not all of those choices are going to be popular.

(End videotape)

BROKAW: On this program about a year ago, you said that being a president is 90 percent circumstances and about 10 percent agenda. The circumstances now are, as you say, very unpopular in terms of the decisions that have to be made. Which are the most unpopular ones that the country's going to have to deal with?

THE PRESIDENT-ELECT: Well, fortunately, as tough as times are right now--and things are going to get worse before they get better--there is a convergence between circumstances and agenda. The key for us is making sure that we jump-start that economy in a way that doesn't just deal with the short term, doesn't just create jobs immediately, but also puts us on a glide path for long-term, sustainable economic growth. And that's why I spoke in my radio address on Saturday about the importance of investing in the largest infrastructure program--in roads and bridges and, and other traditional infrastructure--since the building of the federal highway system in the 1950s; rebuilding our schools and making sure that they're energy efficient; making sure that we're investing in electronic medical records and other technologies that can drive down health care costs. All those things are not only immediate--part of an immediate stimulus package to the economy, but they're also down payments on the kind of long-term, sustainable growth that we need.

BROKAW: To give an indication of how quickly things change now, at warp speed, when you and I last saw each other, six weeks ago, I think it was, in Nashville, when I asked you your priorities, you said health care, energy and education would be your top three priorities.

THE PRESIDENT-ELECT: Right.

BROKAW: You didn't anticipate at that time that you would have to outline this kind of a stimulus program. The real question in the stimulus program that you have just described and as you shared with, with the American audience in your radio address is how quickly will it mean jobs out there across America and how much is it going to cost and who's going to pay for it?

THE PRESIDENT-ELECT: Well, I think we can get a lot of work done fast. When I met with the governors, all of them have projects that are shovel ready, that are going to require us to get the money out the door, but they've already lined up the projects and they can make them work. And now, we're going to have to prioritize it and do it not in the old traditional politics first wave. What we need to do is examine what are the projects where we're going to get the most bang for the buck, how are we going to make sure taxpayers are protected. You know, the days of just pork coming out of Congress as a strategy, those days are over.

How much it's going to cost? My economic team is examining that right now. And one of the things I'm very pleased with is how fast we've gotten a first-rate economic team in place, the fastest in modern history. They are busy working, crunching the numbers, looking at the macro-economic data to make a determination as to what the size and the scope of the economic recovery plan needs to be. But it is going to be substantial. One last point I want to make on this is that we are inheriting an enormous budget deficit. You know, some estimates over a trillion dollars. That's before we do anything. And so we understand that we've got to provide a, a, a blood infusion into the patient right now to make sure that the patient is stabilized, and, and that means that we, we can't worry short term about the deficit. We've got to make sure that the economic stimulus plan is large enough to get the economy moving.

BROKAW: One of the great concerns in this country, of course, is additional job loss, which would be considerable if the Big Three in the auto industry in this country--GM, Ford and Chrysler--were to go down. That drama has been playing out in Washington and across America. Do you think the Big Three deserve to survive?

THE PRESIDENT-ELECT: Well, I, I think that the Big Three U.S. automakers have made repeated strategic mistakes. They have not managed that industry the way they should have, and I've been a strong critic of the auto industry's failure to adapt to changing times--building small cars and energy efficient cars that are going to adapt to a new market. But what I've also said is, is that the auto industry is the backbone of American manufacturing. It is a huge employer across many states. Millions of people, directly or indirectly, are reliant on that industry, and so I don't think it's an option to simply allow it to collapse. What we have to do is to provide them with assistance, but that assistance is conditioned on them making significant adjustments. They're going to have to restructure, and all their stakeholders are going to have to restructure. Labor, management, shareholders, creditors--everybody's going to recognize that they have--they do not have a sustainable business model right now. And if they expect taxpayers to help in that adjustment process, then they can't keep on putting off the kinds of changes that they, frankly, should have made 20 or 30 years ago. If, if they want to survive, then they better start building a fuel-efficient car. And if they want to survive, they, they've got to recognize that the auto market is not going to be as large as some of their rosy scenarios that they've put forward over the last several years.

BROKAW: It's pretty clear that the Democrats are going to try to get them a bridge loan to get through the short term, but it's the long term that is the larger question here.

THE PRESIDENT-ELECT: Right.

BROKAW: A number of people--Paul Ingrassia, as a Pulitzer Prize-winning reporter from The Wall Street Journal has said we ought to have a government-structured bankruptcy and maybe even an automobile czar of some kind. One name that has come up is Jack Welch, the former CEO of GE, the parent company of NBC. Does that kind of plan have any appeal for you?

THE PRESIDENT-ELECT: Well, there are a lot of discussions taking place right now between members of Congress, the Bush administration. I've had my team have conversations with these folks to see how can you keep the automakers' feet to the fire in making the changes that are necessary. But understand, these aren't ordinary times. You know, some people have said let's just send them through a bankruptcy process. Well, even as large a company as GM, in ordinary times, might be able to go through a Chapter 11 bankruptcy, restructure, and still keep their business operations going. When you are seeing this kind of collapse at the same time as you've got the financial system as shaky as, as it is, that means that we're going to have to figure out ways to put the pressure on the way a bankruptcy court would, demand accountability, demand serious changes. But do so in a way that it allows them to keep the factory doors open. And, you know, right now there's a number of discussions about how to do that, and I hope that we're going to see some short-term progress in the next few days. My economic team is focused on what we expect to inherit on January 20th, and we'll have some very specific plans in terms of how to move that forward.

BROKAW: But help me out here. Are you looking at the possibility of some kind of a government structure that runs that reorganization?

THE PRESIDENT-ELECT: I--we don't want government to run companies. Generally, government historically hasn't done that very well. What we want...

BROKAW: Not to run the companies but...

THE PRESIDENT-ELECT: But...

BROKAW: ...to run the terms.

THE PRESIDENT-ELECT: Well, what, what we do need is, if taxpayer money is at stake, which it appears may be the case, we want to make sure that it is conditioned on a auto industry emerging at the end of the process that actually works, that actually functions. The last thing I want to see happen is for the auto industry to disappear. But I'm also concerned that we don't put 10 or 20 or 30 or whatever billion dollars into an industry, and then, six months to a year later, they come back hat in hand and say, "Give me more." Taxpayers, I think, are fed up. They're going through extraordinarily difficult times right now, and they want to see the kind of accountability that, that, that, unfortunately, we haven't always seen coming out of Washington.

BROKAW: But under that organization or any reorganization that you settle on...

THE PRESIDENT-ELECT: Right.

BROKAW: ...should the current management be allowed to stay in their jobs?

THE PRESIDENT-ELECT: Here's what I'll, I'll say, that it may not be the same for all the, all the companies, but what I think we have to put an end to is the head-in-the-sand approach to the auto industry that has been prevalent for decades now. I think, in fairness, you have seen some progress made incrementally in many of these companies. You know, they have been building better cars now than they were 10 or 15 or 20 years ago. They are making some investments in the kind of green technologies and, and the new batteries that would allow us to create plug-in hybrids. What we haven't seen is a sense of urgency and the willingness to make tough decisions. And what we still see are executive compensation packages for the auto industry that are out of line compared to their competitors, their Japanese competitors who are doing a lot better.

Now, it's not unique to the auto industry. We have seen that across the board. Certainly, we saw it on Wall Street. And part of what I'm hoping to introduce as the next president is a new ethic of responsibility where we say that, if you're laying off workers, the least you can do, when you're making $25 million a year, is give up some of your compensation and some of your bonuses. Figure out ways in which workers maybe have to take a haircut, but they can still keep their jobs, they can still keep their health care and they can still stay in their homes. That kind of notion of shared benefits and burdens is something that I think has been lost for too long, and it's something that I'd like to see restored.

BROKAW: Let's talk for a moment about consumer responsibility when it comes to the auto industry. As soon as gas prices began to drop, consumers moved back to the larger cars once again, to SUVs and the big gas consumers.

THE PRESIDENT-ELECT: Right.

BROKAW: Why not take this opportunity to put a tax on gasoline, bump it back up to $4 a gallon where people were prepared to pay for that, and use that revenue for alternative energy and as a signal to the consumers those days are gone.

THE PRESIDENT-ELECT: Well...

BROKAW: We're not going to have gasoline that you can just fill up your tank for 20 bucks anymore.

THE PRESIDENT-ELECT: Well, keep, keep in mind what's happening in--to families all across America. Yes, gas prices have gone down. But, in the meantime, maybe somebody in the family's lost their job. In the meantime, their housing values have plummeted. In the meantime, maybe their hours have been cut back. Or if they're a small-business owner, their sales have gone down 50, 60, 70 percent. So putting additional burdens on American families right now, I think, is a mistake. What we have to do long term is make sure that we have an energy strategy that focuses on fuel-efficient cars, that focuses on providing incentives for fuel-efficient cars. Same applies to buildings. We have a enormously inefficient building stock, and we can save huge amounts of energy costs and reduce our dependence on foreign oil by simple things like weatherization and changing the lighting in, in major buildings. That's going to be part of our economic recovery plan. It actually allows us to spend some money, put some people to work right away, but it also creates a long-term, sustainable energy future. And I think making some of those investments in ensuring that we change our auto fleet over the next several years, that's going to be important as well.

BROKAW: The other big financial storm that continues to build out there, of course, are mortgages. You said recently that is an area of particular concern to you. The chairman of the Federal Reserve, Bernanke, said recently that something that--needs to be done urgently. During the course of the campaign, you suggested a three-month moratorium. Is that still part of the policy that you would like to have begun when you become president of the United States? And what else needs to be done to do something about mortgages?

THE PRESIDENT-ELECT: Well, I, I'm having my team examine all the options that are out there. I'm disappointed that we haven't seen quicker movement on this issue by the administration. And we have said publicly and privately that we want to see a package that helps homeowners not just because it's good for that particular homeowner, it's good for the community. When you have foreclosures, property values decline and you get a downward spiral all across America. It's also good for the financial system because keep in mind how this financial system became so precarious in the first place. You, you had a huge amount of debt, a huge amount of other people's money that was being lent, and speculation was taking place on--based on these home mortgages. And if we can strengthen those assets, then that will strengthen the financial system as a whole.

So I think a moratorium on foreclosures remains an important tool, an important option. I think we also should be working to figure out how we can get banks and homeowners to renegotiate the terms of their mortgages so that they are sustainable. The vast majority of people who are at threat of foreclosure are still making monthly payments, they want to stay in their homes, they want to stay in their communities, but the strains are enormous. And if we can relieve some of that stress, long term it's going to be better for the banks, it's going to be certainly better for the community, it's going to be better for our economy as a whole. This is going to be a top priority of my administration.

BROKAW: Have you personally conveyed your disappointment to the administration or had your economic advisers get in touch with Hank Paulson and say, "Why aren't you doing more about mortgages?"

THE PRESIDENT-ELECT: We, we have specifically said that, moving forward, we have to have a housing component to any actions that we take. If we are only dealing with Wall Street and we're not dealing with Main Street, then we're only handling one-half of the problem.

BROKAW: And finally, what about those homeowners out there who are struggling to do the responsible thing, to pay their mortgages?

THE PRESIDENT-ELECT: Right.

BROKAW: And now they look across the street and the neighbor may be getting bailed out. So they feel they're the victim of a double whammy.

THE PRESIDENT-ELECT: Right.

BROKAW: They're paying their taxes to bail out the guy across the street and struggling to pay their mortgages. Why wouldn't they just take a walk on their mortgage and say, "I want in on that"?

THE PRESIDENT-ELECT: Well, look, that, that's one of the tricky things that we've got to figure out how to structure. We don't want what you just described, a moral hazard problem where you have incentive to act irresponsibly. But, you know, if my neighbor's house is on fire, even if they were smoking in the bedroom or leaving the stove on, right now my main incentive is to put out that fire so that it doesn't spread to my house. And I think most people recognize that even if there were some poor decisions made by home buyers, that right now our biggest incentive is to make sure that the housing market is strengthened. I do think that we have to put in place a set of rules of the road, some financial regulations that prevent the kind of speculation and leveraging, that we saw, in the future.

And so, as part of our economic recovery package, what you will see coming out of my administration right at the center is a strong set of new financial regulations in which banks, ratings agencies, mortgage brokers, a whole bunch of folks start having to be much more accountable and behave much more responsibly because we can't put ourselves--we, we can't create the kind of systemic risks that we're creating right now, particularly because everything is so interdependent. We've got to have transparency, openness, fair dealing in our financial markets. And that's an area where I think, over the last eight years, we've fallen short.

BROKAW: Mr. President-elect, we're going to take a break. When we come back, we're going to talk about taxes, the fallout from Mumbai, obviously, Iraq and Afghanistan. A lot more to talk about when we continue here on MEET THE PRESS with this exclusive interview with the President-elect.

(Announcements)

BROKAW: We're back with President-elect Obama. We want to talk about taxes. That was a central piece of your campaign. Here's what you had to say.

(Videotape, April 15, 2008)

THE PRESIDENT-ELECT: We need to roll back the Bush-McCain tax cuts and invest in things like health care that are really important. Instead of giving tax breaks to the wealthy, who don't need them and weren't even asking for them, we should be putting a middle class tax cut into the pockets of working families.

(End videotape)

BROKAW: Have the economic conditions changed what you hoped to do about taxes? When Bill Daley, your friend and economic adviser, was on this broadcast two weeks ago, and I raised the question about whether you would raise taxes on those earning $250,000 or more a year, he gave a very strong indication that you would probably not do that, you would let the Bush tax cuts play out until 2011. Is that your plan?

THE PRESIDENT-ELECT: Well, understand what my original tax plan was. It was a net tax cut. Ninety-five percent of working families would get tax relief. To help pay for that, people like you and me, Tom, who make more than a quarter million dollars a year, would play--pay slightly more. We'd essentially go back to the tax rates that existed back in the 1990s. My economic team right now is examining do we repeal that through legislation? Do we let it lapse so that when the Bush tax cuts expire they're not renewed when it comes to wealthiest Americans? And we don't yet know what the best approach is going to be, but the overall thrust is going to be that 95 percent of working families are going to get a tax cut, and the wealthiest Americans, who disproportionately benefited not only from tax cuts from the Bush administration but also disproportionately benefited when it comes to corporate profits and where the gains and productivity were going, they are going to give up a little bit more. And it turns out that...

BROKAW: But right away or 2011?

THE PRESIDENT-ELECT: Well, as I said, my economic team's taking a look at this right now. But, but I think the important principle--because sometimes when we start talking about taxes and I say I want a more balanced tax code, people think, well, you know, that's class warfare. No. It, it turns out that our economy grows best when the benefits of the economy are most widely spread. And that has been true historically. And, you know, the real aberration has been over the last 10, 15 years in which you've seen a huge shift in terms of resources to the wealthiest and the vast majority of Americans taking home less and less. Their incomes, their wages have flatlined at a time that costs of everything have gone up, and we've actually become a more productive society.

So what we want to do is actually go back to what has been the traditional pattern. We have a broad-based middle class, economic growth from the bottom up. That, I think, will be the recipe for everybody doing better over the long term.

BROKAW: Your vice president, Joe Biden, said during the course of this campaign it would be patriotic for the wealthy to pay more in taxes. In this economy, does he still believe that?

THE PRESIDENT-ELECT: Well, I--you know, I think what Joe meant is exactly what I described, which is that if, if our entire economic policy is premised on the notion that greed is good and "What's in it for me," it turns out that that's not good for anybody. It's not good for the wealthy, it's not good for the poor, and it's not good for the vast majority in the middle. If we've learned anything from this current financial crisis--think about how this evolved. You had a situation in which you started seeing home foreclosures rise. You had a middle class that was vulnerable and couldn't make payments. Suddenly, all the borrowing that had been--and, and, and all the speculation that had been premised on those folks doing OK, that starts evaporating. Next thing you know, you've got Lehman Brothers going under. People used to think that, well, there, there's no connection between those two things. It turns out that when we all do well, then the economy, as a whole, is going to benefit.

BROKAW: I want to move now to international affairs, the war on terror. Obviously, we have all been stunned by what happened in India at Mumbai. It is still playing out in that part of the world. You have said that the United States reserves the right to go after terrorists in Pakistan if you have targets of opportunity. Does India now also have that right of hot pursuit?

THE PRESIDENT-ELECT: Well, I'm not going to comment on that. What, what I'm going to restate is a basic principle. Number one, if a country is attacked, it has the right to defend itself. I think that's universally acknowledged. The second thing is that we need a strategic partnership with all the parties in the region--Pakistan and India and the Afghan government--to stamp out the kind of militant, violent, terrorist extremists that have set up base camps and that are operating in ways that threaten the security of everybody in the international community. And, as I've said before, we can't continue to look at Afghanistan in isolation. We have to see it as a part of a regional problem that includes Pakistan, includes India, includes Kashmir, includes Iran. And part of the kind of foreign policy I want to shape is one in which we have tough, direct diplomacy combined with more effective military operations, focused on what is the number one threat against U.S. interests and U.S. lives. And that's al-Qaeda and, and, and their various affiliates, and we are going to go after them fiercely in the years to come.

BROKAW: President Zardari of Pakistan has said that he expects you to re-examine the American policy of using unmanned missiles for attacks on terrorist camps in Pakistan; and there have been civilian casualties in those attacks as well. Are you re-examining that policy?

THE PRESIDENT-ELECT: Well, I--what I want to do is to create the kind of effective, strategic partnership with Pakistan that allows us, in concert, to assure that terrorists are not setting up safe havens in some of these border regions between Pakistan and Afghanistan. So far President Zardari has sent the right signals. He's indicated that he recognizes this is not just a threat to the United States, but it is a threat to Pakistan as well. There was a bombing in Pakistan just yesterday that killed scores of people, and so you're seeing greater and greater terrorist activity inside of Pakistan. I think this democratically-elected government understands that threat, and I hope that in the coming months that we're going to be able to establish the kind of close, effective, working relationship that makes both countries safer.

BROKAW: That part of the world is such a hot zone.

THE PRESIDENT-ELECT: Right.

BROKAW: Is it going to be necessary for you to appoint some kind of a special envoy to worry only about South Asia with presidential authority?

THE PRESIDENT-ELECT: Well, my first job is to make sure that my core national security team--Secretary of State designee Hillary Clinton; Jim Jones, who will be my national security adviser; Bob Gates; Susan Rice, my U.N. representative--that my intelligence folks, when they get appointed, that we come up with a comprehensive strategy. I have enormous confidence in Senator Clinton's ability to rebuild alliances and to send a strong signal that we're going to do business differently and place an emphasis on diplomacy.

BROKAW: Let's talk for a moment about Iraq. It was a principal--it was one of the principals in the organization of your campaign at the beginning. A lot of people voted for you because they thought you would bring the war in Iraq to an end very swiftly. Here is what you had to say on July 3rd of this year about what you would do once you took office.

(Videotape)

THE PRESIDENT-ELECT: I intend to end this war. My first day in office I will bring the Joint Chiefs of Staff in and I will give them a new mission, and that is to end this war responsibly, deliberately, but decisively.

(End videotape)

BROKAW: When does the drawdown of American troops begin and when does it end in Iraq?

THE PRESIDENT-ELECT: Well, one of my first acts as president, once I'm sworn in, will be to bring in the Joint Chiefs of Staff, to bring in my national security team, and design a plan for a responsible drawdown. You are seeing a convergence. When I began this campaign, there was a lot of controversy about the idea of starting to draw down troops. Now you've seen the--this administration sign an agreement with the Iraqi government, both creating a time frame for removing U.S. troops. And so what I want to do is tell our Joint Chiefs, let's do it as quickly as we can do to maintain stability in Iraq, maintain the safety of U.S. troops, to provide a mechanism so that Iraq can start taking more responsibility as a sovereign nation for it's own safety and security, ensuring that you don't see any resurgence of terrorism in Iraq that could threaten our interests. But recognizing that the central front on terror, as Bob Gates said, started in Afghanistan, in the border regions between Afghanistan and Pakistan. That's where it will end, and that has to be our priority.

BROKAW: Jim Jones, who is your new national security adviser, the man that you want to have in that job, who was the Marine commandant when we first went into Afghanistan, I had a conversation with him at that time, and he said to me, "I know how we're going to get into Afghanistan; I don't know how we're going to get out of Afghanistan." What is he telling you today about how we're going to get out of Afghanistan?

THE PRESIDENT-ELECT: Well, I think we're, we're starting to see a consensus that we have to have more effective military action, and that means additional troops, but it also means more effective coordination with our NATO allies. It means that we have to have much more effective diplomacy in the region. We can't solve Afghanistan without solving Pakistan and working more effectively with that country. And we are going to have to make sure that India and Pakistan are normalizing their relationship if we're going to be effective in some of these other areas.

And we've got to really ramp up our development approach to Afghanistan. I mean, part of the problem that we've had is the average Afghan farmer hasn't seen any improvement in his life. You know, we haven't seen the kinds of infrastructure improvements, we haven't seen the security improvements, we haven't seen the reduction in narco trafficking, we haven't seen a reliance on rule of law in Afghanistan that would make people feel confident that the central government can, in fact, deliver on its promises. And if we combine effective development, more effective military work, as well as more effect diplomacy, then I think that we can stabilize the situation. Our number one goal has to be to make sure that it cannot be used as a base to launch attacks against the United States, and we've got to get bin Laden and we've got to get al-Qaeda.

BROKAW: Here's something else that Afghan farmer has never seen nor have any of his ancestors ever seen this: foreign powers coming into Afghanistan and being effective and staying very long.

THE PRESIDENT-ELECT: Right. Well, I, I think that we do have to be mindful of the history of Afghanistan. It is tough territory. And there's a fierce independence in Afghanistan, and if the perception is that we are there simply to impose ourselves in a long-term occupation, that's not going to work in Afghanistan. By the way, that's not going to work in Iraq either. There are very few countries that welcome long-term occupations by foreign powers. But Afghanistan has shown that they are fiercely resistant to that. We're going to have to convince the Afghan people that we're not interested in dictating what happens in Afghanistan. What we are interested in is making sure that Afghanistan cannot be used as a base for launching terrorist attacks. And as long as al-Qaeda and the Taliban, working in concert with al-Qaeda, threaten directly the United States and are engaged in mayhem, then we've got to take action. And, and that very limited goal of making sure that that doesn't happen, I think, can serve as the basis for effective cooperation with the Afghan people.

BROKAW: Before we leave that part of the world, on Iraq, there's a new phrase that has come into play called "residual force," how many troops will stay behind in an Obama administration. Speculation is 35,000 to 50,000. Is that a fair number?

THE PRESIDENT-ELECT: Well, I'm not going to speculate on the numbers. What I've said is that we are going to maintain a large enough force in the region to assure that our civilian troops--or our, our, our civilian personnel and our, our embassies are protected, to make sure that we can ferret out any remaining terrorist activity in the region, in cooperation with the Iraqi government, that we are providing training and logistical support, maintaining the integrity of Iraq as necessary. And, you know, I--one of the things that I'll be doing is evaluating what kind of number's required to meet those very limited goals.

BROKAW: Now, two other areas that could be problematic in your administration, I want to deal with them fairly swiftly here if I can. What are the circumstances under which you would open a dialogue with Iran?

THE PRESIDENT-ELECT: Well, I've said before, I think we need to ratchet up tough but direct diplomacy with Iran, making very clear to them that their development of nuclear weapons would be unacceptable, that their funding of terrorist organizations like Hamas and Hezbollah, their threats against Israel are contrary to everything that we believe in and what the international community should accept, and present a set of carrots and sticks in, in changing their calculus about how they want to operate. You know, in terms of carrots, I think that we can provide economic incentives that would be helpful to a country that, despite being a net oil producer, is under enormous strain, huge inflation, a lot of unemployment problems there. They could benefit from a more open economy and, and being part of the international economic system. But we also have to focus on the sticks, and one of the main things that diplomacy can accomplish is to help knit together the kind of coalition with China and India and Russia and other countries that now do business with Iran to agree that, in order for us to change Iran's behavior, we may have to tighten up those sanctions. But we are willing to talk to them directly and give them a clear choice and, and ultimately let them make a determination in terms of whether they want to do this the hard way or, or the easy way.

BROKAW: And, briefly, how soon after you take office do you want to meet with the leaders of Russia? And which ones do you meet with? Your counterpart is Medvedev; but, of course, the power behind the throne is Vladimir Putin.

THE PRESIDENT-ELECT: Well, you know, this is something that we're going to make a determination on. I think that it's going to be important for us to reset U.S.-Russian relations. Russia is a country that has made great progress economically over the last several years. Obviously, high oil prices have helped them. They are increasingly assertive. And when it comes to Georgia and their threats against their neighboring countries, I think they've been acting in a way that's contrary to international norms. We want to cooperate with them where we can, and there are a whole host of areas, particularly around nonproliferation of weapons and terrorism, where we can cooperate. But we also have to send a clear message that they have to act in ways that are not bullying their neighbors.

BROKAW: You still have some appointments to make coming up, and there's also a good deal of consideration here in Illinois about who will replace you in the Senate. But in New York this weekend the big buzz is Caroline Kennedy in the United States Senate, perhaps as the appointment to fill the seat that Hillary Clinton is expected to vacate if she gets confirmed as secretary of state.

THE PRESIDENT-ELECT: And?

BROKAW: Is that a good idea?

THE PRESIDENT-ELECT: Well, let me tell you this. Caroline Kennedy has become one of my dearest friends and is just a, a wonderful American, a wonderful person. But the last thing I want to do is get involved in New York politics. I've got enough trouble in terms of Illinois politics. But just in terms of our appointments, I am very proud of the speed with which we have started to put together our core economic team, our national security team, but also the excellence of the candidates. And I, I think that it's an indication of part of the change I was talking about during the campaign, an emphasis on competence, an emphasis on people who are nonideological and pragmatic and just want to do business.

You know, tomorrow, you had mentioned earlier, is when we commemorate Pearl Harbor, and so I'm going to be making announcement tomorrow about the head of our Veterans Administration, General Eric Shinseki, who was a commander and has fought in Vietnam, Bosnia, is, is somebody who has achieved the highest level of military service. He has agreed that he is willing to be part of this administration because both he and I share a reverence for those who serve. I grew up in Hawaii, as he did. My grandfather is in the Punchbowl National Cemetery. When I reflect on the sacrifices that have been made by our veterans and I think about how so many veterans around the country are struggling, even more than those who have not served--higher unemployment rates, higher homeless rates, higher substance abuse rates, medical care that is inadequate--it breaks my heart. And I think that General Shinseki is exactly the right person who's going to be able to make sure that we honor our troops when they come home.

BROKAW: He's the man who lost his job in the Bush administration because he said that we would need more troops in Iraq than Secretary of Defense Rumsfeld thought that we would need at that time.

THE PRESIDENT-ELECT: He was right.

BROKAW: And General Shinseki was right.

Let me ask you as we conclude this program this morning about whether you and Michelle have had any discussions about the impact that you're going to have on this country in other ways besides international and domestic policies. You're going to have a huge impact, culturally, in terms of the tone of the country.

THE PRESIDENT-ELECT: Right.

BROKAW: Who are the kinds of artists that you would like to bring to the White House?

THE PRESIDENT-ELECT: Oh, well, you know, we have thought about this because part of what we want to do is to open up the White House and, and remind people this is, this is the people's house. There is an incredible bully pulpit to be used when it comes to, for example, education. Yes, we're going to have an education policy. Yes, we're going to be putting more money into school construction. But, ultimately, we want to talk about parents reading to their kids. We want to invite kids from local schools into the White House. When it comes to science, elevating science once again, and having lectures in the White House where people are talking about traveling to the stars or breaking down atoms, inspiring our youth to get a sense of what discovery is all about. Thinking about the diversity of our culture and, and inviting jazz musicians and classical musicians and poetry readings in the White House so that, once again, we appreciate this incredible tapestry that's America. I--you know, that, I think, is, is going to be incredibly important, particularly because we're going through hard times. And, historically, what has always brought us through hard times is that national character, that sense of optimism, that willingness to look forward, that, that sense that better days are ahead. I think that our art and our culture, our science, you know, that's the essence of what makes America special, and, and we want to project that as much as possible in the White House.

BROKAW: Finally, Mr. President-elect, the White House is a no-smoking zone, and when you were asked about this recently by Barbara Walters, I read it very carefully, you ducked. Have you stopped smoking?

THE PRESIDENT-ELECT: You know, I have, but what I said was that, you know, there are times where I've fallen off the wagon. Well...

BROKAW: Well, wait a minute.

THE PRESIDENT-ELECT: ...what can I tell...

BROKAW: Then that means you haven't stopped.

THE PRESIDENT-ELECT: Well, the--fair enough. What I would say is, is that I have done a terrific job under the circumstances of making myself much healthier, and I think that you will not see any violations of these rules in the White House.

BROKAW: Mr. President-elect, thank you very much for being with us today.

THE PRESIDENT-ELECT: Thank you. I really enjoyed it.

BROKAW: And I know that I speak not just for MEET THE PRESS, but for all of America when I saw we wish you only the very best.

THE PRESIDENT-ELECT: Well, Tom, thank you and congratulations on doing such a great job on this show.

BROKAW: Well, these were circumstances none of us, none of us wanted to have, but Tim remains with us in a lot of ways, as you know.

THE PRESIDENT-ELECT: He does.

BROKAW: Thanks for being with us.