kathy black taking over. we'll hear from chancellor kline about the shake-up. anger and outrage in the uk. thousands lining the streets to protest plans to triple tuition rates. star of the new political drama about washington corruption. oscar winning actor kevin spacey is here with us live in the studio. the wall street journal is coming out way piece. >> i'm the super lobbyist! potentially bad news for the -- >> you're costing us $70 million, jack. go day. i'm andrea mitchell live in washington. president obama is defending his own federal reserve. some global leaders argue the fed's any plan helps the u.s. at the expense of rest of the worlds. here's nbc's savannah guthrie in seoul. >> reporter: the president arrived here in seoul late today for the g-20 summit, the meeting the world's largest economic powers, and the big issue here has to do with trade and what some are calling a currency war. the u.s. has been criticizing china. it believes china artificially keeps its currency low which they say is unfair to american businesses, because it makes chinese goods cheaper. that issue is sure to come up when the president meets with the president of china tomorrow. the other big issue has to do with the south korean free trade agreement. the two sides trying to hammer out a deal. they may be close. we may see some movement on that. thisguthly in seoul. and benjamin netanyahu in new york, secretary of state hillary clinton issued a sharp rebuke for israel's decision to build more housing in east jerusalem echoing what president obama said in indonesia. >> the united states was deeply disappointed by the announcement of advanced planning for new housing units in sensitive areas of east jerusalem. this announcement was counterproductive to our efforts to resume negotiations between the parties. we have long urged both parties to avoid actions which could undermine trust, including in jerusalem. >> while criticizing israel, clinton also announced today the united states is accelerating its already scheduled payments to help the palestinian authority pay down its debt more quickly. clinton is trying so far unsuccessfully to get the israelis and palestinians back to negotiations. house republicans could be heading for a fight themselves over who gets choice leadership posts when they take over. tea party caucus leader michelle bachman is challenging the aspect's choice, texas congressman jeb for a place in the inner circle. wall congresswoman cathy mcmorris rodgers is vit chair of the party's conference a title she's hoping to hold in the next congress as well. congresswoman, thank you very much for joining us. where do you stand on the shaping battle between bachman and hensarling? >> i'm ready for vice chair and pleased we have two great candidates that want to serve on the leadership team. they both bring some exceptional experience, and i look forward to working with whoever gets the nod from the conference. we'll be having those elections next week. >> well, most everyone else in leader shapp taken sides. we know where eric cantor stands, for instance. hensarling is the choice of most of the leaders. that's been the indication, that they are not happy about having michelle bachman doing the leadership. do you really think michelle bachman is qualified to be in leadership given some of the things the unsupported claims she's made? should she be the spokeswoman for the conference? >> i would say that it's up to the conference to decide who they think is going to be the best person in that position. the competition is healthy. it makes us all work harder and i think the conference will make the best decision in the end and that will happen next week, and both michelle and jeb bring a lot to the table, and it's good for to us have -- good for us to have the debate. >> i'm just a little taken aback, because healthy debates are not always useful when it comes to working together. these are the kinds of things most political parties are trying to avoid. you don't want this kind of in-fighting. it creates civil wars. >> well we have a very diverse conference. we have members from all different regions, all different perspectives, and when we're choosing leadership there's a lot of things that you take into consideration. you want -- you want a broad face for the party as broad as possible and you want different perspectives around that table. so the conference takes a lot into consideration. the conference member. we have 80-plus new republicans that are going to be joining us. next week. as we focus on these leadership elections and i'm confident that the conference will make a smart decision for putting the right people at the table for this time. >> does this underscore the fact it's going to be difficult for establishment republican leaders to work with the tea party, the newcomers, who are coming in? michelle bachman is not a newcomer but leads the tea party caucus. so many more tea party representatives in the house. >> well we are united in that we are republicans. and you have, in this contest in this particular contest, you have two very strong conservatives, actually. jeb hensarling and michelle bachman have both been very strong conservatives both fiscally, socially and i really don't see it as a fight between the tea party and the establishment in this case. they both probably have very similar voting records as such. it's other considerations that the members will take into regard. >> now, i know you've been sensitive to the fact that women have had a hard time breaking into the inner circle of the house republican leadership. couldn't michelle bachman make the argument that there aren't enough women, you're a leader, but there haven't been very many more republican leaders? it's been an all-boys club? >> i would love to see another woman around the leadership table. i think is important that the leadership table, that our committee chairman, that our conference in general reflects america. and that when possible, we're putting -- you know, we want to put the best person possible in every position, but it's also -- i think it's also helpful to have that diverse perspective around the table, and that's all taken into consideration as the members make these decisions. >> thank you very much, congresswoman. it's going to be interesting to watch it from the outside. thanks for joining us today. and governor bob mcdonnell of virginia led the republican wave a year ago when elected governor. governor mcdonnell joins me frou in richmond. thank for joining me. good to see you. >> thank you. >> first, our condolences. i know you recently lost your father around the election. we're very sorry for your loss, your family. >> thank you for that. >> and talking about politics, a lot has changed since were you first elected. now we've seen, first of all, you've picked up three republican congressional seats just in virginia. defeating some democrat whose were very high-profile. the president campaigning for tom perriello and making a big case of that district. >> right. yeah, there was a big swing. republicans now hold 8-3 majority now and the virginia delegation and a sign of what happened nationally, andrea. the issues here in virginia where people were focused on cutting spending, job creation, lower taxes. getting people back do work, really dominated those campaigns and i think the republicans had the bert message on actually getting stuff done and fixing problem. it's part of what happened nationally. >> haley barbour, fellow governor, head the republican governors has spoken out against michael steel and the job he did. when do you stand on whether michael steel should be replaced by someone else as republican national chairman? >> well, i haven't said anything on that. michael steel was very helpful to me a year ago when i was for governor and the rnc did a great job supporting our campaign as well as the republican governors association, immensely helpful pap decision played in a couple of months by the leaders that we elect. two people from each state that will vote on that. honestly, since the election i've been focused on working with new leaders, eric cantor, talking about things we need do to improve state and frel relations and i haven't focused on the party issues. >> one of your other -- well a former governor, sarah palin, was in pennsylvania yesterday, abscess one of the things that she's campaigning against is a local option there. public school there's trying to cut back on fats and junk food for the kids, but then let's play a little bit of her response to one of the young people who was singing "the national anthem." watch? >> that singing, absolutely beautiful. would you like to sing that at inauguration? not necessarily mine. he should, though. at somebody's. right? >> she seems to have inaugurations on her mind. it's becoming clear to a lot of party insiders that she has taken this one step more farther along that she really is considering it. do you think she's qualified to be president the united states? >> well, first let me say i encourage young people to get involved in the political process and learn how to sing well. especially the "star-spangled banner." listen i think sarah palin's been a mayor, andrea, she's been a governor of the state. i happen to be partial and think governors make great chief executive officers and have the experience to be a good chief executive officer of the united states. i think sarah palin's qualified. i think the republicans will have probably ten or more people that will be looking at running for president in 2012, and i look forward to talking to some of them, meet wig them and then making a decision down the road. >> one of the big issues i don't know if you talked to eric canter about this, one of the big issues that the republicans in the caucus are pushing is something that came up in "usa today's" study that federal workers are now paid higher than, than any previous point. the increase in their salaries especially under this white house. is that an issue for you? i know a lot are your constituents that live across the river here in virginia? >> well it is. obviously, northern virginia benefits a lot from everything from defense contract, federal employee, technology used by the federal government. it helps drive in part that northern virginia economy. we've looked at that. the state employees in virginia are generally paid less than both the federal government employees and some local government employees. so it is an issue. i think what the congressman is talking about is trying to see some kind of pard pip state and federal government employee celeries and benefits of a huge part of the overall cost of government. unfunded liabilities and pension funds, andrea, you know, something governors are talking about all over the country, concerned what will happen in solvency of these pension funds down the road. i think the federal government right as they look at paring back spending and doing something about this $13.5 trillion debt fop look at all issues and federal salaries is one of them. >> all right, governor bob mcdonnell, thank you again for joining us today. and we are following breaking news in london right now. conservative party headquarters under attack from students and lecturers. protesting a plan to hike tuition fees by more thanes 14ds,000 a year. that is triple the current rate. the protesters have now smashed windows and lit a fire at a clock tower in the building forcing it to be evacuated. eight people hospital sewed far, and we continue to monitor the situation there. up next, shake-up in the nation's largest public school system. new york city. with us, outgoing new york city school's chancellor joe kline. still ahead right here, oscar winning actor kevin spacey. with us a sneak peek into the world of casino lobbying. his new movie, "casino jack." are if old water bottles became new seats? 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[ gasps ] [ male announcer ] get a retirement plan that works... at e-trade. over the past eight years joel who stake an organization that was a case study in dysfunction and turned it into one that the obama administration has hailed as a national model. he has also incidentally in spite of doing all this, much of had controversy, he's been the longest serving school's chancellor in the city's history which happened provide much needed stabt in the reform effort. >> after more than eight years leading sweeping reforms in new york city, joel kline is stepping down at the public school's chantsler. his successful, magazine publisher kathy black is leaving the private sector to take on the challenge. chancellor kline joins us. >> now congratulations, i think, are in order, and the thanks of a lot of grateful citizen, but why the decision to leave now? >> first of all, thank you, andrea, and the decision is when i took this job, i really was planning on doing it for eight years. i didn't expect the mayor would be running for a third term. in terms of my own life i really think that i would like to move on to a new career. we've got a terrific replace innocent in kathy black. give her three years with the mayor to do the work they need to do. and i have an exciting offer to really work on something i care deeply about, which is a the whole use of technology to change the way we instruct kids to bring in new and different content. so for all of those reasons this seemed to be the right time. >> do you want to -- i want to talk to you, it might be surprising to some people for someone who came out of bill clinton's justice department, a democrat, to be joini ining rup murdoch. what kind of career path or choice is that? >> first of all i still am a democrat, and i wear with pride the fact that i worked in bill clinton's white house and justice department. i work with rupert murdoch closely on the whole issue of education reform. he's been a big is a porter of the work done in new york fill tlopically and he's interested in the whole area, a burgeoning area of education and technology, of online programs and so forth which i think are really going to become essential in trying to change education. i've done a lot of it in new york. as we talked about it, he made clear to me he would leak to get involved in ta area, have newscorp involved and that's something i want to work on deeply. i must say, good education la no politics. >> a number of things you had accomplished. there's controversy, teachers' union, the others you battled with, but first of all because were you reporting to the mayor, the first mayor with control the school system, you managed to take back all of these decentralized school districts. you gave more budget clout to principals. you eliminated a lot ever the practices that the ten-year practices and some of the other practices long criticized. just going over the record, joel. we talk about math proficiency from 21% to 35% over the years. for fourth graders. reading proficiency went from 22% to 29%. drotout rate cut nearly in half. graduation rates, all-time high of 63%. i know there's some concern about a drop in some of the test scores in the last year, because the tests were made much tougher, but overall, it's a pretty darn good report card. >> well, thank you, and i do think we made real progress, because the mayor showed leadership. took on a lot of really the sacred cows in education. manageded system effect 2i6shly. willing to hold people accountable, and those numbers you read on the federal tests where you're talking fourth grade, talking significant improvements to go from 251% to 35% is a 67% growth in proficiency of our students. there's a lot more that needs to be done, andrea. nobody would think we're remotely where we need to be, but the key point is that serious school reform can work, it does work. we saw it in washington, d.c. we've seen it in new york. but if we continue to play politics and play the power game, then our kids are not going to get the education they need and we're going to be in the same ditch we've been in for a long time. >> i want to troupe the next chancellor, the chancellor designate, kathy black. someone we all know, both know, rather. schae newcomer to education. this is what she had to say at news conference yesterday i. have no illusion about this being an easy next three years. quite the opposite. but what i ask for is your patience as i get up to speed on all of the issues facing k-12 education today. what i can promise is that i will listen to your concerns, your interests and your expectations. in turn i ask the same of you. >> how hard is it going to be for her coming without education experience but with a lot of management experience, obviously, in the business world? >> i think it's a trade-off. yeah, terrific management experience and we're facing great management challenges in terms of our budget, in terms of personnel and the issues that i think she brings a real strength and power to. by the same token, she's going have to learn about the insides of the education system. the great news is, the team i have, i think it's clearly the best thing ever assembled in public education. i've been doing this 8 1/2 years now and we've got significant career educators and deputy chancellors. people with real manager's budget material skills. she's got a team and she'll be heavily engaged with them the next several weeks and trail support her strongly. in looking for the precise right kind of person, you want some of this, some of that, but i think the management issues that the district is going to face, particularly as the nation looks as budget cuts is going to become really significant. >> joel klein, thaen thanks so . you'll be there and we'll talk to be before you leave. >> looking forward to it, andrea. thank you. up next, democratic in-fighting. how ugly have it going to cigarette and alaska starts counting votes this hour. how long will that take? chaos in london. the shock of budget cuts sending tens of thousands to the streets, storming government buildings protesting big tuition increases. this is "andrea mitchell reports" only on msnbc. cars with me by the way. no problem. is there gas in it? yeah, um, you got plenty. and the oil? oil is good to go. tires? all four tires. full of air. now only if i could get the keys... i could start it for you too. ok, now your just showing off. the onstar mylink app. safely connecting you in ways you never thought possible. live on. everyday i eat your soups, i save a lot of money. that's great. so, your rich and hearty soups have made me, rich and hearty. that's funny. i'm hearty because of your juicy steak, your potatoes... you're really, rich and happy. 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