updated 12/15/2005 10:31:16 AM ET 2005-12-15T15:31:16

Guest: Carl Levin, E.J. Dionne, Jeff Sessions, Kate O'Beirne

CHRIS MATTHEWS, MSNBC ANCHOR:  President Bush has a dream, a theme, a strategy.  He will use the invasion of Iraq, he says, to transform the Middle East and protect American people from terrorism worldwide.  This is where Bush stands.  Is it a smart move?  Is it worth the cost and the risk? 

If so, what he is doing is right and all the critics are wrong.  What a debate.  What a time in American history.  Let's play HARDBALL.

Good evening.  I'm Chris Matthews.  And welcome to HARDBALL.

Today President Bush gave his fourth and final pre-balloting speech on Iraq accepting responsibility for his decision to take Americans to war on bad intelligence. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  And it's true that much of the intelligence turned out to be wrong.  As president I am responsible for the decision to go into Iraq. 

(END VIDEO CLIP)             

MATTHEWS:  Following the president's speech, his strongest and most credible critic, Congressman John Murtha of Pennsylvania gave his response. 

(BEGIN VIDEO CLIP)

REP. JOHN MURTHA (D) PENNSYLVANIA:  We go to war because of our national security interests.  We don't go to war to start democracy in other country.  We go to war for one reason, and they keep mischaracterizing why we went to war by telling a history that turns out not to be true.

(END VIDEO CLIP) 

MATTHEWS:  And a new NBC “Wall Street Journal” poll shows that the Bush administration's campaign blitz to reverse public opinion in Iraq might be working with 42 percent now saying the president has given good reasons why the United States must keep troops in Iraq.  That's up from 38 percent a month ago.  More on this in a moment.

And later one of the key players in the CIA leak case, columnist Bob Novak, tells a luncheon that President Bush can solve one of the biggest mysteries surrounding the investigation. 

David Shuster has the story. 

But first, reaction to the president's speech from two U.S. senators who sit on the Armed Services Committee.

Beginning with the ranking Democrat on the committee, Michigan Senator Carl Levin. 

Senator Levin, the president is getting clearer and clearer about his philosophy.  It sounds more and more like classic neoconservative philosophy, that we can change the shape of the Middle East by use of American military prowess by giving the Iraqis a democracy by force more or less. 

That we'll give democracy to the Middle East, and we will begin a chain reaction of democracy in that region.  It will reduce or eliminate the terrorist threat to the United States.  What is your counter assessment? 

SEN. CARL LEVIN (D) RANKING MEMBER, ARMED SERVICES CMTE.:  Well, that's much too optimistic an assessment.  It is an exaggerated view of what we are able to achieve if we're lucky. 

We can make some progress in Iraq if—and this is a big if, Chris—if the Iraqis come together politically after the election and amend their constitution to do what they have not done so far, which is to come up with a constitution which all three of the major participants in Iraq can sign up to. 

And our military leaders have told us repeatedly there is no military victory possible unless there is a political coming together by the Iraqis.  And number two, they tell us that the Iraqi Constitution, as it now stands, unless amended is a divisive instead of a unifying document, and it's up to the Iraqis to change this document to bring the Sunni Arabs on board. 

And what the president has not said so far, despite urging by many us to him to say this, he has got to tell the Iraqis they must make the changes in the constitution that are essential to bringing the Sunni Arabs on board not that they possibly can, not that he hopes they will, not that the structure is there for them to do it, although that structure is there they have got four months to consider these changes.

But that they need to.  They must make those changes to put their political house in order.  That's what's missing. 

MATTHEWS:  You know, you and I are part of the majority in this country.  But if you're a minority in this country like African-Americans, you have to live with the fact that you're always going to be basically, at least for the foreseeable future, a minority. 

Do you think the Sunnis will ever accept—having been the bosses over in that part of the world—will ever accept minority status in their society no matter how many deals are cut? 

LEVIN:  Some will.  But I think some won't.  And we're going to have to face that situation that they're going to be divided.

But what needs to happen, according to our military leaders, is that the constitution needs to be amended to bring at least most of the Sunnis on board, and unless the president makes a clear statement that this constitution needs to be amended—we can't write the constitution for them.  We can't say what the new constitution should say in terms of sharing power, sharing resources, so that the minority is protected.

But what we can say is we got 150,000 troops there.  We have done our thing.  We have made our contribution.  Now it is up to the Iraqis to get their political house in order.  That is something only they can do, but only the president can tell them that is what they need to do.

MATTHEWS:  Aren't you saying that the Sunni minority over there, 27 percent of the country at the most, has a veto on whether the constitution can be acceptable? 

LEVIN:  No, I wouldn't give them a veto. 

What I would, however, is to tell the Shia and the Kurds that they've got to share power and share resources in a way which they have not done. 

Our own ambassador will say, at least privately he'll say as our secretary of state said today privately, that there need to be changes in this constitution. 

But they have not given that message clearly to the only people who can make those changes, the only people who can provide the Sunnis enough power, not majority power, but enough participation so that they can finally unify against the insurgency.  Without that unity this insurgency will not be beaten military.  That's not me saying it.  That's our military leaders saying it.

MATTHEWS:  Well place your bets Senator.  Do you think the Sunnis will ever be comfortable in a Shia dominated government?

LEVIN:  I think many Sunnis, most Sunnis, will be providing their sharing or oil resources.  Right now this constitution says that the north and the south regions can control those resources.  That means the center part where the Sunnis are can be locked out of those resources.

If they get a fair share of the future oil resources, I think, that they can sign on to this, but that's the best hope we've got.  It's going to take pressure from us on the Shia and the Kurds to give up some power so that there is this kind of a participation and partnership. 

MATTHEWS:  The president said today two things that might be in contradiction.  Let me ask you that.

He said, first of all, he was wrong about Intel used to justify the war with Iraq, and then he said but the war with Iraq was justified.  How do you put those together? 

LEVIN:  He'd have to put those together.  The Intel was clearly wrong.  We went to war on the premise that he sold to the American people where the intelligence was right that somehow or another Saddam Hussein was linked to bin Laden.  That's not what the intelligence said.  That's where the intelligence was right.

But where the administration manipulated, exaggerated, distorted correct intelligence to give the American people the belief that somehow or other the attackers of 9/11 were connected with Saddam Hussein.  That is what the American people believed before the war.  That is not what the intelligence provided to us.  And it seems to me that is what the administration has still not owned up to. 

MATTHEWS:  You know, that shell game that the hustlers play on the street corner?  You can't find the little pea under the shell because they keep flipping it around. 

When I listened to the president again today sometimes he talks about Iraq as a country we are trying to change.  And then he says justification for going into Iraq is that al Qaeda struck us in '93 and 2001 in the middle there at the USS Cole, as if al Qaeda is Iraq.

Why do you think he keeps doing that, flipping from one to the other until you are almost dizzy trying keep up with him?  If we were going to attack al Qaeda, we did it in Afghanistan, but he keeps saying we attacked Iraq because al Qaeda came after us. 

Anyway I don't follow it. 

LEVIN:  Well, the reason that they are continuing to do this is that they want to keep that linkage in the public mind, which is not the reality, that somehow or other that the 9/11 attackers al Qaeda and Saddam Hussein were somehow linked. 

That is not what the intelligence said, but that's what the president, the vice president, Condi Rice, and everybody linked together in a way that the majority of the American people, according to the public opinion polls, believed. 

When we went to war it was because somehow or other Saddam Hussein had participated in the 9/11 attack with us.  That is why he puts them in the same paragraph is to keep that linkage in the public mind.  Although the intelligence does not support that linkage.

MATTHEWS:  In other words, he admitted he had bad intelligence and then continued to use the bad intelligence today? 

LEVIN:  Well, there was bad intelligence over weapons of mass destruction.  They were completely wrong on that in the intelligence community. 

MATTHEWS:  Right. 

LEVIN:  But they were right when they said that Saddam Hussein was not collaborating with the al Qaeda terrorists, that there was no collaboration or cooperation between them. 

MATTHEWS:  Is that where they stand right now?  In other words, he's doing cognitive dissonance.  He's saying on the one hand, we've got to watch the pattern of terrorism against this country.  Therefore, we had to go to Iraq.  And at the same time, you're saying he's repudiated the argument there was a connection between al Qaeda and our attack on Iraq.

LEVIN:  He's not repudiated at all.  He hasn't addressed the issue where that linkage was created in the public mind.  He has not clearly said what he should say, which is that the intelligence community did not find collaboration or cooperation between the two. 

And the few very, very minute links they found like there was a member of al Qaeda who got some kind of medical treatment in Baghdad, that kind of thing, has been discounted ever since then, but they still like to keep that linkage in the public mind between Saddam Hussein and terrorism. 

The truth of the matter is that the right target that we should have gone after and stayed after was al Qaeda in Afghanistan where all of us voted to go after al Qaeda, but he changed his target from Afghanistan and al Qaeda.

MATTHEWS:  Why?  You've been watching this for two years now and Senator, why did this president take us into Iraq if it wasn't for Intel, if it wasn't for a connection to 9/11?  Why did he do it?

LEVIN:  I can't analyze the president in this regard.  He said he did it at the time because he was afraid that they may hand—that Saddam might give weapons of mass destruction to the terrorists, but the intelligence community said there that was no way he would give ...

MATTHEWS:  Is he—I hate to interrupt.  We've only got a minute.  Is he now a full-fledged neoconservative, someone who believes that we can transform the world in an almost Napoleonic fashion?  You can go in by force in another country and convert it into a democracy by force of our weaponry and our political and economic power.

LEVIN:  Well, I don't know if he holds that kind of a belief, but I'll tell you this, that the only chance we have for success in Iraq is it—now that we're there, and I thought it was a mistake to go and I think it's been mishandled, but now that we're there, the only chance we have is if this president will now tell the Iraqis they need to come together politically.  That much I'm confident of.

MATTHEWS:  Carl Levin, senator from Michigan, thank you very much for joining us, sir. 

When we return, Republican reaction to the president's bold vision of a Democratic Middle East from Senator Jeff Sessions of Mississippi. 

And later, now that the president has delivered four speeches on the future of Iraq and his poll numbers are turning around, let's see what's going on.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We're joined now by Senator Jeff Sessions of Alabama.  I was wrong.  It's Alabama, not Mississippi.  He's a member of the Armed Services Committee. 

Senator Sessions, I began the broadcast by saying I heard the president with clarion clearness tonight.  He's talking about changing the direction of the Middle East, reforming it, democratizing it, reducing the threat of terrorism to us by transforming Iraq into a democracy. He has accepted the full philosophical tenets of what is called neoconservativism.  Do you share that faith? 

SEN. JEFF SESSIONS (R-AL), ARMED SERVICES CMTE.:  This is what the president has said from the beginning.  He said it at the time we debated whether or not to authorize military action in Iraq and it is his vision for the world. 

I don't know who else shares it, but I'll tell you George Bush believes that we have an opportunity to make Iraq a better place, a stable place.  We are going to have an election—while you all were quite negative I thought just a while ago, we are about to have an election in Iraq to elect a constitutional government by the people of Iraq for the time in its history. 

This is a big deal.  We had 10 -- eight million people vote in January, 10 million people vote in October.  I think we're going to have more vote this time.  The Sunni leaders are urging all their leaders to go out and vote this time.  I think we're going to have a nice election.  I believe we're going to work through the difficulties that Senator Levin expressed concern about. 

You know, whatever good stuff you achieve, some of our colleagues on the other side who want to blame President Bush always point out some danger in the future.  But timetable after timetable after timetable have been met. 

We have 130,000 Iraqi soldiers making sure the January election this year was safe.  We're going to have 225,000 this time, 95,000 more.  They are taking over whole areas of the country now under Iraqi control and if we stay the course, if we keep our poise, we don't look like we're dictating to them how this sovereign nation should establish its government, but work with them to help them in every way possible, I think we can be successful and I do support the president's view. 

MATTHEWS:  So you have faith that the cost of this war in casualties and the cost of like a half a trillion dollars in federal spending, taxpayer money, borrowed money, the risks in terms of getting people in the world not liking what we're doing, which is fairly obvious, is all worth it because at the end of this effort over the next couple of years, we're going to end up having a democracy in the Middle East that's going to spread that philosophy around the Middle East and reduce terrorism? 

SESSIONS:  Well, Chris, we've had a lot of good things happen.  I just left the NATO conference.  The European nations are no longer complaining about Iraq.  They are discussing how to make Iraq successful.  Afghanistan has established a good and decent government.  Pakistan has chosen to renounce terrorism and be an ally of ours. 

Lebanon has thrown off Syria to a large degree.  Libya has renounced terrorism now.  We've made a lot of progress already because the president has been clear.  Elections have—modest elections have occurred in Saudi Arabia and some in Egypt. 

So don't say nothing has happened here because of the boldness of the leadership of President Bush.  And if we can maintain this momentum and see these things develop, and a stable, Democratic government grown and form itself in Iraq, it will be positive for that whole area of the world. 

MATTHEWS:  And you believe that once our troops come home, whenever they come home, that what we leave behind will in fact be a democracy? 

SESSION:  Well, it's—we're creating a democracy right now.  They're voting this day and tomorrow, and they will be establishing their first elected representatives.  I hope they can keep that.  I can't guarantee what will happen.  You asked is President Bush bold in this, does he have a bold vision and is he willing to commit his career to it? 

Yes, he did that.  He took his case, HARDBALL, to the American people last time and it was fully debated and the American people affirmed his vision. 

MATTHEWS:  But I'm just asking the hardest question because if we do

fail—things fail and we come, or we come home and after we come home it

fails over there, they go back to some military coup and they start running

the government the way they always did over there, and the way they want to

do it their own way and all these Americans were killed and all this money

·         we spent a half trillion dollars and they end up right back where they started from a few months after we leave, isn't that a danger that we can't change the course of a country if we're only going to be there a limited amount of time? 

SESSIONS:  Well, I don't believe that's going to happen.  I believe this government is going to form itself.  I believe it has a broad-based participation by the people of Iraq.  I think they will be working together to establish the kind of coordination that they need and I think this government can last just like the one is lasting now in Afghanistan. 

MATTHEWS:  What do you make—you were one of the nine senators that voted in this—voted against the McCain Amendment on this torture issue.  Where do you stand on the use of tough treatment of terrorists or other kinds of prisoners who aren't normally considered combatants?

SESSIONS:  You know, this nation does not accept torture.  We prosecute and we discipline people who violate our laws.  We have threedy (ph) commitments and we have American law.  We have an explicit American law that prohibits torture. 

But it does not prohibit some stress on individuals, it does not that a prisoner has to be kept in his own country if they are an unlawful combatant.  And these combatants are not covered by the Geneva Conventions.  They operate outside of rules of law, of international warfare, and therefore they are not protected by the Geneva Convention. 

The president has said they will be treated with the spirit of the Geneva Conventions and they will not be tortured.  But no, I was a little worried about the language there.  I'm hopeful that Senator Warner and Senator McCain can reach some language that does not unduly restrict our ability to stress individuals who have critically important information.  They should not be tortured, however.  That's against our law and cannot be condoned.

MATTHEWS:  Hey, thank you very much joining us, Senator Jeff Sessions of Alabama. 

SESSIONS:  Thank you, Chris.

MATTHEWS:  Merry Christmas, Sir and thank you for coming on.

SESSIONS:  Merry Christmas.

MATTHEWS:  Thank you.

Up next, did President Bush's speeches on Iraq help his sagging poll numbers?  Obviously they're bumping back up.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The CIA leak grand jury did not meet today, as had been scheduled.  It's unclear why.  However, MSNBC has learned new information about the ongoing focus on Karl Rove, who is back under the spotlight.  HARDBALL correspondent David Shuster was at the courthouse today and has this report.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  Lawyers in the CIA leak case now say Karl Rove's status could be decided at any time.  This morning, outside his home...

UNIDENTIFIED FEMALE:  Do you expect to testify today to the grand jury or what are your plans for today?

KARL ROVE, FORMER PRESIDENTIAL ADVISER:  My plans are to have a fantastic day, working and attending meetings. 

UNIDENTIFIED FEMALE:  Sounds good.  Do you feel that Viveca Novak's testimony will be damaging, Sir?

SHUSTER:  While the grand jury ended up not meeting today, lawyers expect Viveca Novak's deposition to be read to the panel soon.  Seven weeks ago, Rove's lawyer Bob Luskin stopped charges at the 11th hour, by arguing he could prove that the presidential adviser did not intent to mislead the investigation early on.

Luskin pointed to a conversation with Viveca Novak and said it refreshed Rove's memory and prompted Rove to immediately seek to correct and update his earlier testimony.  But lawyers say Novak, in a conflict with Luskin, has testified their conversation came at least five months before Rove went back to the grand jury and acknowledged disclosing information to “Time” reporter Matt Cooper.

Furthermore, Rove's change came just two days after Cooper was subpoenaed.  A lingering issue, according to lawyers, is the Karl Rove e-mail, significant not just for what it says, but possibly for who turned it over and when.  On the day Rove and Cooper spoke in July, 2003, Rove wrote to White House colleague Stephen Hadley, quote, “He (Cooper), immediately launched into Niger.  Isn't this damaging?  Hasn't the president been hurt?  I didn't take the bait.  But I said if I were him, I wouldn't get 'Time' far out in front on this.”

It's not clear whether prosecutor Patrick Fitzgerald was given the e-mail early on by Hadley, or received it later from Rove.  That's important, though, because from the start then-White House counsel Alberto Gonzales ordered officials to find all e-mails about administration critic Joe Wilson and turn over the e-mails immediately. 

The investigation began following the public disclosures about Joe Wilson's CIA wife.  The first report came from columnist Robert Novak, who said he received the information from two administration officials and later added, quote, “I didn't dig it out, it was given to me.”  Lawyers in the case say Karl Rove has testified being one of Novak's sources. 

The other source has remained a public mystery.  At a luncheon in North Carolina on Tuesday, it's not clear which official Novak was referring to.  But Novak said, quote, “I'm confident the president knows who the source is.  I'd be amazed if he doesn't.  So I say, don't bug me, bug the president as to whether he should reveal who the source is.”

(END VIDEOTAPE)

SHUSTER:  For the last several months the president and his spokesmen have refused to comment on whether the investigation or on whether any actions might be taken against Karl Rove.  In the meantime, lawyers say the grand jury probe continues to bear down on whether Rove should face charges.  I'm David Shuster for HARDBALL in Washington. 

MATTHEWS:  Well, the plot gets thicker.  Anyway, thank you, David Shuster.  Up next, is the clock ticking for President Bush's top political kick, Karl Rove?  “The National Review's” Kate O'Beirne and syndicated columnist E.J. Dionne will be here.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET WRAP)

MATTHEWS:  Welcome back to HARDBALL.  We're talking about the CIA leak case and whether Karl Rove, the president's top kick, could learn whether he's in legal trouble in just a couple of days. 

Kate O'Beirne is the Washington editor of the great National Review, and E.J. Dionne, I had trouble with the French.

(CROSSTALK)

MATTHEWS:  To get to the big picture here, well, let's get the small picture, what is going on with the CIA leak case.  Your friend Bob Novak came out and blasted the world with this statement this afternoon. 

Somebody said, who leaked to you, who leaked to you, cause he was the guy who started this thing when he ran it in his column back on the 14th of July in 2003.  He said, ask the president, I'm confident he knows who the source is. 

KATE O'BEIRNE, NATIONAL REVIEW:  Having spent years of quality time with Bob Novak, I wouldn't read too much into a throw away line like that that might have been born of Bob's frustration with the whole case.  Having tried to talk to him about it a number of times, he won't.  And he would never reveal anything telling in a setting like that off the cuff.

MATTHEWS:  Well, why does he think the president knows who leaked? 

O'BIERNE:  I don't know that he does.  I know he had a throw away line that could be prefaced by don't bug me, and I wouldn't read too much into it.  He has not revealed anything in particular about his sources. 

MATTHEWS:  A man of great principle, Bob Novak, who has kept two years the secret, only as a matter of principle.  His word must be taken to some extent as having a value.  If a man won't tell you who leaked to them, for two years under pressure from the law, perhaps, and then comes out and says, well, the president knows about it, isn't there some gravity you must attach to that claim? 

E.J. DIONNE, SYNDICATED COLUMNIST:  I do.  Kate has spent more quality time with Bob than I have, although I've known him a while.  I think it's astonishing and I think it's the first time somebody has directly linked the president to this.  I think people want to know, Bob, what did you mean here? 

And I think people are going to be asking the administration, did the president call Bob Novak? 

MATTHEWS:  If the source is Cheney, which has been a buzz for a long time, the president would know, wouldn't he? 

DIONNE:  Who knows what the president ever knows, the way this administration works?  But I'm inclined to take Bob Novak at face value.  I don't think he shoots of his mouth like that about something this important. 

O'BIERNE:  He clearly knows something but that's not the way we would learn it after two years of such strict silence.  The underlying question is what's going on.  What we know is something is going on, Chris, because Peter Fitzgerald has gone to a second grand jury—

MATTHEWS:  Patrick Fitzgerald.  Peter Fitzgerald is the guy that got him the job.

O'BIERNE:  Pat Fitzgerald has gone to a second grand jury.  Either to pursue a different target like Karl Rove, maybe to make some sort of change in the “Scooter” Lobby indictment.  We don't know.

But we know he feels he has to put the old pieces of the case, plus new evidence, before a second grand jury.  So something is up.  It's just speculating to try to figure out.

MATTHEWS:  My dream is that behind all this day to day stuff is something really important and worthy of the attention a lot of us have given it. 

That, in fact, when the special prosecutor Patrick Fitzgerald went to Judge Hogan and asked for all this incredible latitude in pursuing the case, throwing reporters like Judy Miller into jail for months, that he had some big enchilada behind this, some big problem that made the judge go, whoah, we better give you a lot of latitude to investigate this baby.  Not that Richard Armitage the number two guy at state, or somebody else leaked it by accident, but that there is some big possible bad motive here. 

DIONNE:  I agree with that for the following reason.  That Judge Tatel, a liberal judge who is very sympathetic to reporters on these shield cases, issued a very strong ruling saying yes, reporters must testify.  There are I believe seven missing pages from his opinion that the journalists are trying to get him to release.

MATTHEWS:  The redacted stuff? 

DIONNE:  Yes. 

MATTHEWS:  That wouldn't—would tell us the treasure chest at the end of the rainbow here, that, what this is all about? 

O'BIERNE:  His first indictments of “Scooter” Libby give us no reason to raise expectations now because he didn't find any violation of the underlying statute. 

MATTHEWS:  He slammed him with 30 years in prison, potentially.

O'BIERNE:  No violation of the statute.  It seems hard to believe he would come up with somebody guilty of that underlying statute now.  We only have perjury and false statements and it seems, “Scooter” Libby, given that there are so many different recollections in this case now—

MATTHEWS:  Seven people have testified in the indictment that he knew about this relationship, about Valerie Wilson working at the CIA long before he talked to Tim Russert or anybody else.  They've got all that on the record.  It's in the indictment.  He's got big problems here.

O'BIERNE:  The only one who's been indicted for having a different recollection than others is “Scooter” Libby. 

MATTHEWS:  He's the chief of staff for the vice president. 

O'BIERNE:  These are criminal charges when almost everybody else involved in the case has had different recollections from other people involved in the case. 

MATTHEWS:  You're saying he's innocent.

O'BIERNE:  It seems harder and harder to make a different recollection case against a single person when every week we seems to learn that people's recollections are all different. 

DIONNE:  Two things.  One, I think that was a pretty strong indictment.  A lot of prosecutors I talked to who are not necessarily Democrats said this is a pretty strong indictment.  Here are the facts of what Libby said and here is what we know.

Secondly, the fact that he didn't prosecute under the statute, the leak statute, reflects the fact that he's a careful prosecutor.  Again, a lot of lawyers I talked to said that's a very hard statute under which to prosecute. 

He felt he had Libby down on the cover up and that's why he went after him.  It's the old Mark Shields saying, two rules in Washington, rule one they always get you on the cover up, and rule two, everybody forgets rule one. 

O'BIERNE:  The case against “Scooter” Libby looks strongest, as is typically the case, the day it was announced by the prosecutor.  I think it's looked weaker since.  I think the Bob Woodward revelations have weakened it some. 

MATTHEWS:  How so? 

O'BIERNE:  Bob Woodward is now saying I know I didn't mention Valerie Plame to “Scooter” Libby.  “Scooter” Libby didn't mention it to me.  I may have mentioned it to “Scooter” Libby is what Bob Woodward tells us now. 

MATTHEWS:  What does that tell you? 

O'BIERNE:  Well, if “Scooter” Libby told the grand jury or the FBI that I think I heard it from journalists, we now have a journalist who is saying, I can't exactly remember but I may have mentioned it. 

MATTHEWS:  We know the vice president told him on June, 12 of 2003.   But we know all this.  We know the case.  We know how he found out.  We know that the vice president counseled him on how to deal with this matter before the press, we know that the afternoon the vice president counseled him he told two reporters, Matt Cooper and Judy Miller. 

We know so much of this case.  What do you deny? 

O'BIERNE:  I think we now have evidence that he may have heard it from a journalist, which is one thing he maintained.  It doesn't mean he didn't hear it from another source, too, but that he heard it from a journalist. 

MATTHEWS:  How would that exonerate him that the vice president told him a fact, he told that fact to two reporters, and then denied such to the special prosecutor?  Where does the exoneration or the innocence come in here.

DIONNE:  Because you've got those two reporters saying no, we're not the ones who passed it back to him.  Which was what “Scooter” Libby was in  effect discerning. 

MATTHEWS:  Let me ask you a political question where we can find common ground here, even among those who think different outcomes are coming.

First of all, if Karl Rove is in this crosshairs here, which he seems to be.  I think we agree, this constant, constant turning of the wheels over at the special prosecutor's office suggests there is somebody about to be nailed here.  If Karl Rove goes, is this a big story?  If he is prosecuted.  If he's indicted and has to quit.

O'BEIRNE:  I think that's a very big story, absolutely.  Sure. 

MATTHEWS:  Why? 

O'BEIRNE:  Well, on every level, such as senior—just as the Scooter Libby story was a darned big story, such a senior aide to the president and having to leave the White House at a crucial time?  He's an enormous asset to the White House.  Yes, that's a big story. 

(CROSSTALK)

MATTHEWS:  No one has criticized the work of Patrick Fitzgerald?  Often times you would find Richard Nixon going after like him (ph), because he fired him—Archibald Cox because he thought he was an overzealous liberal going after him back there in Watergate.  No one seems to criticize Patrick Fitzgerald as being an overzealous.  Nobody is calling him Ken Starr, nobody is trashing him in the media, have you noticed?. 

DIONNE:  The president doesn't leak.  You can't get anything out of that office. 

MATTHEWS:  No. But nobody's been criticizing...

(CROSSTALK)

O'BEIRNE: Well, in fairness, Chris—in fairness, that has not been the M.O. of this administration...

MATTHEWS:  Not to trash its enemies? 

O'BEIRNE:  It has not...

MATTHEWS:  Excuse me.

O'BEIRNE:  I think that's terribly unfair.  I mean, it was the way the Clinton administration, obviously, responded to—reacted to...

MATTHEWS:  Do you think Valerie Wilson believes that they haven't—do you think Joe Wilson hasn't been trashed? 

O'BEIRNE:  Joe?  Are we going to go back to the motives—are we going to go back to the motive, the supposed motive, the alleged motive for this?  They could have and didn't.  They didn't respond to this, because...

(CROSSTALK)

MATTHEWS:  I think the way the president played hardball with their critics of the and everyone else that have had their basic motives questioned, we can go further.  They have been very tough with their critics. 

O'BEIRNE:  Will you agree they responded very differently than the Clinton White House to a prosecutor?

MATTHEWS:  You're right.  That's true.  To a prosecutor.  I'll hold you to that.  They've been very respectful to Patrick Fitzgerald in the way that Clinton was never respectful to Ken Starr, ever.

We'll be back with Kate O'Beirne and E.J. Dionne to talk about President Bush's plan for Iraq.  I think it's clear now there's a philosophical difference between the president and his critics in the congress. 

And check out “Hardblogger,” out political blog web site for the best political debate online.  Plus, watch my video blogs tonight on the effect President Bush is having on the hot Senate race in Pennsylvania.  Just go to our web site, hardball.MSNBC.com.

(COMMERCIAL BREAK)

MATTHEWS:  We're back with “The National Review's” Kate O'Beirne and syndicated columnist EJ Dionne.

Well, President Bush gave his fourth speech now on the future of Iraq. 

And in it he said this about his critics.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Some of the most irresponsible critics about manipulating intelligence have come from politicians who saw the same intelligence I saw and then voted to authorize the use of force against Saddam Hussein.  These charges are pure politics.  They hurt the morale of our troops.  Whatever our differences in Washington, our men and women in uniform deserve to know that once our politicians vote to send them into harm's way, our support will be with them in good days and bad, and we will settle for nothing less than complete victory.

(END VIDEO CLIP)

MATTHEWS:  President Bush also said that a Democratic Iraq will spark reform all across the Middle East.  Let's take a look at his very optimistic note here.

(BEGIN VIDEO CLIP)

BUSH:  Freedom in Iraq will inspire reformers from Damascus to Tehran.  This new Iraq shares our deepest values, and it shares our most determined enemies.  By helping Iraqis build a nation that can govern itself, sustain itself and defend itself, we will gain an ally in the war on terror and a partner for peace in the Middle East. 

(END VIDEO CLIP)

MATTHEWS:  Well, he's certainly broadening the stakes here.  He is

saying, basically, if we don't win this war in Iraq, we are going to lose

the war on terror, which is an effort by these Islamists to regain the old

Muslim empire which goes all the way from Spain to Indonesia.  But if we

can win, we can turn around the Middle East and turn it into something like

a democracy and bring peace and stability to that region.  Are the stakes

that high in just Iraq whether we come in or out?  Stay there three years,

come out in six months

O'BEIRNE:  Yes.  I think the stakes are extremely high in Iraq.  Absolutely.  It's certainly the way our adversaries, the terrorists see it, given the traffic in messages between al Qaeda and their guy on the ground in Iraq.  They totally understand.  They cite Vietnam all the time.  What we have to do is get the United States to abandon their allies and leave.  It certainly was an inspiration for Osama bin Laden in his own words when we so-called cut and run from other places. 

And there is an opportunity.  I thought the Democrats were totally off message today by announcing the Iraqis have to get their political house in order.  How tone deaf.  They've met every single milestone.  And what are we going to be seeing tomorrow?  We're going to be seeing images where millions of Iraqis, under threat of violence, go to the polls yet again.  They are getting their political house in order in an extreme act of courage.  They're only constitutional government in the all of the Middle East.  There's an enormous potential here. 

MATTHEWS:  Why don't the Democrats—I mean, you don't speak for the Democrats, EJ, but why don't the Democrats challenge the whole philosophy we've just heard here.  The grand threat of a resurgence Muslim world, based on Islamism, dangerous Islamism all the way from Spain to Indonesia like in El Cid days, all the way across to Jakarta, or this blossoming of democracy in the Middle East that can only made possible by this forceable entry by us into Iraq?  And this bold determinism to stay there long enough to instill Democracy.  That's a bold philosophy. 

And all you hear from the Democrats is well, we'll come home in six

months, or come home in a year-and-a-half, or come home—there's never

any grand counter proposal.  Is the president wrong?  Is everything he says

·         and Kate just exemplified, is that all stupid, and crazy?  If so, why doesn't somebody say it?  Why do the Democrats dick around and say, oh well, maybe make it six months.  They never say he's wrong.  They just say, well let's have the troops come home a little faster.  Or let's get those people to cut their deal a little faster.  Where's the grand challenge to the president?  Who is giving it?

DIONNE:  I think the guy who has challenged them from the beginning is a guy you had on you show today, Carl Levin.  Carl Levin said from the very beginning we do not need to fight this war to defeat the war on terrorism because Saddam is not linked to 9/11.  We can put pressure on Saddam without, and perhaps even get him to fall without fighting this big war. 

And then I think the second piece of it is that this big war has bogged us down in Iraq, sucked all the energy out of American foreign policy, and we're in a worse position for having fought this worse. 

MATTHEWS:  But will it work?  DIONNE:  Will Iraq work?

MATTHEWS:  Will this grand strategy?  It is almost like Gallipoli or something like Operation Market Garden in World War II, one of these grand notions.  I know how to make something happen, the president is saying.  We can stop back and forthing a Middle East peace deals and never get anywhere.  I'm going to change the color of the Middle East, turn it into a democracy by this grand strategy. 

Why don't the Democrats say, you're nuts, Mr. President?  It won't work.  It's hallucinatory.  You're crazy.  It ain't working.  Instead they dick around.  They go, oh, why don't we stay a little month shorter.

DIONNE:  John Murtha says that.  I think there are two things...

MATTHEWS:  No, Murtha says bring the troops home.  We're getting killed, which we know.  Everybody knows that.

KATE O'BEIRNE, NATIONAL REVIEW:  They don't criticize the visions thing.  And the response to Republicans if they did would be we know it doesn't work.  We know it doesn't work.  The situation in the Middle East prior to 9/11 didn't work.

(CROSSTALK)

DIONNE:  We're going to blow up the Middle East and see what happens. 

That's really the core.

O'BEIRNE:  It promotes murder and hatred.

MATTHEWS:  Are you saying what the president is proposing won't work?

DIONEE:  Well, I am saying that...

MATTHEWS:  No, just yes or no.  Because if it won't work then you're right.  If it will work, let him do it. 

DIONNE:  No, but I think that the chances of it working get less and less by the day.  And, I think, the problem here is Democrats do want to get into an argument, as does a Republican like Chuck Hagel, that maybe even if the whole theory was—it's a very liberal theory, big government can transform the entire Middle East. 

(CROSSTALK)

O'BEIRNE:  Typical Democrats who say let's attack root causes.  Well, the root causes of the murder and hatred we've seen...

MATTHEWS:  I agree.

O'BEIRNE:  ...was the political situation in the Middle East.

MATTHEWS:  Would you like it if Madeline Albright was behind this war instead of this president? 

DIONNE:  No, but I think the problem...

MATTHEWS:  Because I think a lot of people on her side wouldn't like it if Madeline Albright was behind this same exact war.  They would have thought it was hallucinatory. 

DIONNE:  The Democrats problem is a lot of Democrats, including Joe Biden not just Joe Lieberman, wish that the thing could work.  The thing got messed up by the way they did it...

MATTHEWS:  They keep voting for it.

DIONNE:  ...and now they're in a situation where...

MATTHEWS:  Joe Lieberman is the president's biggest supporter in this. 

And Biden still hasn't come back off his vote for authorization. 

Thank you very much, Kate O'Beirne.

Thank you, E.J. Dionne.

This is a philosophical place here.  Fair warning next time. 

When we return, the latest poll numbers and whether President Bush's speeches on Iraq are helping him lift his approval ratings.  Clue, they are.  This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

For more on the president's speech today, it was his in a number of speeches, his poll numbers. 

Let's welcome Charlie Cook, publisher of “The Cook Report” and a contributor to “The National Journal.”

Charlie, well, is the president bouncing back? 

CHARLIE COOK, NATIONAL JOURNAL:  Yes, he has. 

If you look, Chris, at the polls between October 28th and November 11th or mid-November, you had 11 out of 12 polls, national polls, had the president like between 35 percent and 39 percent. 

Since November 16, seven out of eight have had him between 40 and 43.  So it's not a huge shift, but, you know, the difference between 39 to 30's and even a 41 or 42 is huge. 

MATTHEWS:  Well, it's directional too.

COOK:  Yes.  Well, one is kind of toxic but the other is radioactive. 

I mean, it looks horrible.

MATTHEWS:  I'm going to ask you why.

Let's take a look at our own poll, NBC “Wall Street Journal” poll out just today.  Forty-two percent say Bush is been giving some good reasons for keeping those troops in Iraq. 

So people believe that he's trying and succeeding in articulating, at least, his reasons.  In other words, they're beginning to say, agree or not, he knows what he's talking about. 

COOK:  But you are seeing the president's numbers across the board come up a little bit.  And I think it's three things. 

One, is you had a lot—you've had good economic news all year long, but I think they finally—the good economic news finally get a critical mass. 

MATTHEWS:  Where is it showing itself, the good news?

COOK:  Excuse me?

MATTHEWS:  Where is the good economic feeling showing itself?

COOK:  Across the board just sort of Republican and general approval numbers unrelated to Iraq have gone up. 

MATTHEWS:  How do you put that against the news from out of the General Motors with 30,000 guys and women, you know, laid off? 

COOK:  OK. Here you go right direction, wrong track.  Do you think the country is headed in the right direction or off on the wrong track?  Right direction numbers have moved up a little bit.

The other thing is Harriet Myers really cost him.  Whenever the president's approval ratings among Republicans only is above 80 than his  overall approval is over 40.  But when it drops below 80 percent, he starts getting down into the 30's. 

After Harriet you had enough Republicans, enough conservatives left him that allowed him to drop it back into the 30's, and then when that was over kind of push back up. 

MATTHEWS:  I agree with you.  And you know what I think watching these events and being on television tonight.  I do sense that something clicked back.  There was a bad period there, which was Katrina when he seemed to be out to lunch not really aware of what was going on.  He had to have somebody put together a DVD together to tell him what was going on. 

And then that odd weekend when he went off and picked Harriet Miers because her deputy said so.  And then something clicked.  What clicked in?  And he started to give these very impressive speeches the last couple of weeks. 

COOK:  I have to throw Libby in there too. 

I think sometimes you have to hit rock bottom to start turning around.  And I think that was it.  And then one last thing is Democrats.  When the focus was on, look, we never should have gone into Iraq, and we have screwed it up.

MATTHEWS:  They won that argument.

COOK:  Right.

But when the venue changed over to what do we do now?  That's when Democrats lost—started—went on a much more less...

MATTHEWS:  Has Howard Dean helped him by calling, you know, we can't win, that statement? 

COOK:  Yes, I think that was a problem.  What was that on a San Antonio radio station?  But it got a lot of play elsewhere. 

MATTHEWS:  A lot of bounce.

COOK:  Yes, absolutely. 

And the Democrats are just all over the map.  When they were focused on one, pretty much one message, they were doing well.  When they went all over the map, down. 

MATTHEWS:  Why didn't the Democrats focus on the bad Intel and stay there?  That this war was misdirected from the beginning.  We shouldn't have gone in and keep saying we shouldn't have gone in? 

COOK:  Because Democrats are undisciplined.  I mean, you know, our grandparents could have told us this. 

MATTHEWS:  You mean, like mice like cheese. 

COOK:  Yes, yes.

MATTHEWS:  OK.  Thank you, Charlie Cook.  You're the best.

COOK:  Take care.  See you.

MATTHEWS:  Thank you.

Join us again tomorrow night at 7:00 and 5:00, 5:00 and 7:00 Eastern for more HARDBALL.

Right now it is time for “The Abram's Report” with Dan.

DAN ABRAMS, MSNBC ANCHOR:  Coming up, more of my exclusive interview with the author of the new book on the Scott Peterson case, who argues Peterson is innocent and that his defense team effectively blew the case.

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

END   

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