updated 1/5/2006 11:28:17 AM ET 2006-01-05T16:28:17

Guests: Susan Schmidt; Richard Ben-Veniste; Ben Ginsberg; Byron York; Katrina Vanden Heuvel

CHRIS MATTHEWS, HOST:  Godfather part two—on Tuesday, Jack Abramoff copped a plea to federal charges of conspiracy, fraud and buying members of Congress.  Today, the confessed criminal pled guilty in Florida to conspiracy and wire fraud in buying a fleet of gambling boats.

As Abramoff sinks lower, the number of politicians, scores of U.S.  senators and members of Congress identified now on Abramoff‘s holiday gift list rises.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews on day two of the biggest Washington money scandal since Abscam. 

The big question:  Who knows what evil lurks in the heart of Jack Abramoff and his junior partner Michael Scanlon?  How many dirty deals did they make with members of Congress?

It‘s not a mystery to Abramoff or Scanlon, or perhaps now the federal prosecutors, who let Abramoff plea to get him to talk.  Nor is it a mystery to the members of Congress who took gifts from Abramoff.  They know what they have done.  They know the take of their dealings with a confessed felon. 

What we know and we‘ll show you tonight is the incredible reach of this character Abramoff, the scores of senators and congressmen to whom he made campaign contributions over the years. 

Meanwhile, the prosecutors push on.  Today, Abramoff pleaded guilty to conspiracy and wire fraud stemming from his 2000 purchase of the SunCruz gambling boat fleet.  The tawdry tale of the SunCruz Casinos reads like a script straight out of “The Godfather,” mixing gambling with bogus money transfers and even a mob-style murder. 

We‘ll get to the latest on the Abramoff case in a moment.

But first, Israeli prime minister Ariel Sharon has suffered a massive brain hemorrhage, a cerebral hemorrhage. 

NBC News chief foreign affairs correspondent Andrea Mitchell is with us. 

Andrea, what‘s the latest? 

ANDREA MITCHELL, NBC NEWS CHIEF FOREIGN AFFAIRS CORRESPONDENT:  Well, the latest is that American and Israeli sources both confirm that Ariel Sharon is on a respirator, that he‘s apparently being taken into surgery.  There may be bleeding, cerebral bleeding as a result of this apparent stroke.  There is some paralysis. 

He is, as you know, 76, 77 years old.  He weighs upwards of 300 pounds.  He is not in very good health. 

They discovered on December 18th when he had a slight stroke which did not at all disable him that there was a slight congenital defect, a heart defect, a hole in the heart that was supposed to be repaired at that same hospital tomorrow.

But instead on the eve of that surgery, he suffered this apparent massive stroke on his farm in the Negev Desert. 

This is obviously an enormous political earthquake for Israel as well.  He is the longtime leader.  He has recently left the Likud Party to form his own centrist Kadima Party. 

And he is really the leader of this effort, the unilateral withdrawal from Gaza, and the peace effort, aligning himself with Shimon Peres, his former rival from the Labour Party, in a centrist coalition to oppose Bibi Netanyahu and some of the hard liners who have opposed any negotiations with the Palestinians.

So this is a major, major setback for not only Israeli politics, but also the Bush administration‘s agenda in the Middle East, which rested heavily on the shoulders of Ariel Sharon, who has now been forced to turn over power to his second in command, the deputy prime minister Ehud Olmert, the former mayor of Jerusalem. 

MATTHEWS:  Yes.

Let me ask you, this bold move of putting together the center and teaming up with Shimon Peres and trying to force a deal with the Palestinians to create some kind of living arrangement with the two states next to each other, is this dead if he‘s gone, if he‘s no longer able to be prime minister? 

MITCHELL:  Well, it‘s hard to imagine how the peace effort could survive without his leadership. 

But I wouldn‘t say that it‘s dead.  There is certainly a majority of Israeli citizens interested in peace negotiations with the Palestinians despite the anger on the far right over the forced withdrawal from Gaza. 

He was a hands-on favorite to win.  It was his personal leadership, and none of his followers are—have anything near the personal popularity. 

Shimon Peres, although a former leader, has never enjoyed real popularity from the Israeli populace.  He‘s far more popular overseas than at home in Israel.

Olmert is untested on the national stage. 

So there is no one else.  And then, of course, there is Bibi Netanyahu, who had been forced out of the government, or quit the Sharon government in a ploy to run for office himself and has, of course, always wanted to return to power and is hard line against any negotiations with the Palestinians. 

MATTHEWS:  So Big Casino (ph), we hope him well.  We hope he does well.

A cerebral hemorrhage, of course, is what took the life of Franklin Roosevelt. 

When you hear that phrase—Andrea, I don‘t know about you, when I hear the phrase I think of FDR in ‘45. 

MITCHELL:  Absolutely.

MATTHEWS:  I think this is horrible business—horrible. 

MITCHELL:  Well, it is.

And of course we‘ve seen a transformation of this man.  This was the man who was at least blamed by—indirectly for the hideous massacres in the early ‘80s in the Palestinian refugee camps in Lebanon. 

He is—he has changed over the years.  He was the hard liner.  He helped set off the intifada by going to the holy sites in Jerusalem and challenging the Palestinians on what they considered their holy ground.

And then over the years has moderated for a number of reasons, partly because he did I believe think that it was more in the interest of Israeli security to negotiate and to withdraw from some of those—well, first of all, unilaterally to withdraw from Gaza, because they could not hold them, they could not be secure, and to force also further withdrawals and to agree to further withdrawals from the West Bank while simultaneously building that wall, which is so hated by the Palestinians, to separate the West Bank.

But he was a linchpin of all these negotiations between the so-called quartet, the U.N., the U.S., Russia and Europe, aided by the quartet‘s special envoy, the American World Bank, former World Bank leader Jim Wolfensohn.

All of this was in play, and critical moments as they headed toward an election March 28th

Unlikely, by the way—should the worst befall the Israelis and Sharon, unlikely that they would postpone this election.  They didn‘t after Rabin‘s sudden death, the assassination, and that of course led to Shimon Peres‘ ascension.

MATTHEWS:  Well, we can‘t afford to lose another peacemaker in the Middle East. 

Thank you very much, Andrea Mitchell, chief foreign affairs correspondent. 

MITCHELL:  You bet.

MATTHEWS:  Stay with us.  She‘ll be part of this conversation.

Here in Washington, politicians, including President Bush, are rushing to distance themselves from the Abramoff corruption case by announcing plans to donate his campaign contributions to them now to charity now that Abramoff has been caught. 

HARDBALL‘s David Shuster has more with this report.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  In Miami today, Jack Abramoff pleaded guilty to fraud charges related to his purchase of Florida casino boats. 

The deal is part of Abramoff‘s larger agreement with federal prosecutors to testify about congressional corruption.  And although the SunCruz story is separate from Abramoff‘s lobbying for Indian tribes, the Florida case also includes criminal deception and fraud and adds in the background a gangland-style murder. 

Just months after Abramoff and his partner Adam Kidan bought SunCruz Casinos from Gus Boulis, Boulis began complaining about the sale and even had a physical altercation with Abramoff‘s partner.  Then, Boulis was found shot to death in his car.  Police arrested three men, including Anthony “Big Tony” Moscatiello who did catering for Abramoff‘s partner. 

Abramoff and Adam Kidan, however, who first became friends as college Republicans, have denied knowing anything about the murder and have not been charged. 

And their plea deals relate only to the SunCruz fraud. 

R. ALEXANDER ACOSTA, U.S. ATTORNEY:  Frauds like those committed here are not victimless.  Bank fraud affects real people.  Health care fraud affects real people.  Securities fraud affects real people. 

SHUSTER:  In Washington, the growing stink over Abramoff has worried Republicans, even those not linked to allegations of bribery. 

White House officials acknowledged today that Abramoff and President Bush may have met in recent years at least three times during holiday parties.  But the press secretary was quick to add the president and the powerful lobbyist were not friends. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  The president doesn‘t recall meeting him.  He certainly doesn‘t know him.

SHUSTER:  In fact, nobody wants Abramoff‘s money now. 

McClellan said the president‘s re-election campaign was giving up $6,000 in contributions from Abramoff. 

Yesterday, House Speaker Dennis Hastert gave up $69,000 and former Republican majority leader Tom DeLay gave up $57,000. 

Tom DeLay appears to be the most powerful Republican who may be implicated by Abramoff.  His former press aide Michael Scanlon was an Abramoff partner in the fraud against Indian tribes and has been cooperating with prosecutors for months.

And former DeLay chief of staff Tony Rudy has said to have testified that DeLay‘s office was bribed in exchange for supporting Abramoff‘s agenda. 

ALICE FISHER, U.S. ATTORNEY:  Abramoff had a congressman insert statements in the Congressional Record, had a congressman endorse a wireless telephone contract for the House of Representatives, had a congressman agree to seek passage of legislation to help Abramoff‘s clients. 

SHUSTER:  The web of connections is complicated, but according to prosecutors it began with Abramoff convincing Indian tribes they needed him to keep Congress and the administration from putting taxes on Indian casinos. 

Over three years, the tribe‘s paid Abramoff $80 million.  Abramoff has admitted pocketing some of the money and spending part of it on luxury sky boxes and lavish travel to bribe members of Congress.

Lawmakers under investigation allegedly include DeLay, Bob Ney, John Doolittle and Senator Conrad Burns.

Abramoff also gave money to organizations run by anti-tax crusader Grover Norquist and former Christian Coalition leader Ralph Reed.  And the two conservatives in turn also lobbied members of Congress to keep the Indian casinos from being taxed. 

A year ago, after corruption probe began, Jack Abramoff portrayed himself as a victim.

JACK ABRAMOFF, LOBBYIST:  It‘s been devastating.  It‘s been devastating on every level for me, on a financial level, on a social level, on a personal level, on a political level.  It brings nothing but tears to my eyes to think of how 10 years of very hard work and achieving very tangible goals on behalf of my clients and other Indian nations has been turned around to make it look like I was a villain. 

SHUSTER (on camera):  Today, Jack Abramoff admitted for the second time in as many days that he is a villain.  Now the question is, who else was part of his criminal conspiracy, and how many members of Congress will Abramoff implicate. 

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Let‘s bring in Susan Schmidt of The Washington Post who has been right on this story.  Susan, why are piling on?  Why are the prosecutors going for this big plea bargain down in Florida as well? 

SUSAN SCHMIDT, THE WASHINGTON POST:  They‘re trying to clear the decks.  This is a global settlement with Abramoff, that takes care of a bank fraud case in Florida in which he and a partner basically provided a counterfeit document to lenders, saying they would put up $23 million when they hadn‘t put up any money, so that case has been pending for three years, under investigation, so they had to clear the decks on that case. 

It‘s twinned with this plea deal up here yesterday.  The link between the two is Congressman Bob Ney, who helped Abramoff and his partner in Florida when they were trying to buy that cruise line by putting comments in the Congressional record that put pressure on the reluctant seller down there. 

And Congressman Ney turns up in—is going to be a factor in both proceedings up here and down there and now they‘re trying to figure out where to move against Ney, in Florida or up here. 

MATTHEWS:  Let me ask you about Tom DeLay and Tony Rudy, the young staffer, we just saw a picture of him.  Is he likely to be one of the sort of the, as they say in “The Godfather,” the Frankie Five Angels character, the Pantangelo, who does bring state‘s evidence against DeLay? 

SCHMIDT:  Well, Mike Scanlon has already been a big source for the prosecution.  He‘s been cooperating for months and months, providing extensive download of information.  And he‘s plead guilty. 

Tony Rudy is—was mentioned in yesterday‘s court filings, not by name, but as “Staffer A,” and he—I would expect that the next thing we‘re going to see is the prosecutors go after staffers, senior hill staffers, former hill staffers, and try to get their cooperation or move against them. 

You know, it‘s—they are the people that can sort of find out what - disclose what members of Congress were actually saying and doing to help Abramoff. Abramoff is not likely to have gotten members of Congress, or too many of them anyway, into directly compromising sorts of conversations.  But his his team of lobbyists, who work for members of Congress, may have gotten in to those kinds of conversations, and I think that‘s what the prosecutors are going after now. 

MATTHEWS:  Having worked on the hill, I think you‘re looking at, you know, it‘s the old question of how tough a deal did they strike.  Did they say Abramoff and Scanlon, we want all arrest and conviction of these people or your sentences are going to be long? 

Do you think they have that tough of a deal with them?  In other words, they have to have young staffers who will say when I sat with the boss he said give me the money and I‘ll put the statement in the record?  They got it right—firsthand testimony of a bribery? 

SCHMIDT:  Yes.  I think that that‘s what they‘re looking for at this point and they‘ve gotten what they can get from Scanlon and now they wanted to get Abramoff the deal signed with him before they made any deals with these other staffers. 

It puts a lot more pressure on these staffers, now that they‘ve got Abramoff who can testify against them.  So they are really jamming these people up. 

MATTHEWS:  What a situation.  It‘s unbelievable.  We‘ll be right back with Susan Schmidt and Andrea Mitchell talking about this incredible scandal, this octopus of mayhem, coming down the road here in Washington. 

Still ahead, the latest from West Virginia and the tragic loss of 12 courageous miners who worked hard for their families and gave their lives in a very tough job down there two and a half miles underground. 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with NBC News Chief Foreign Affairs Correspondent Andrea Mitchell and Susan Schmidt of The Washington Post.

And as promised on the bottom of the screen, your TV screen during this segment, is a running tally of the money Jack Abramoff gave to members of Congress since the start of 2001.  He gave a lot away.  I counted it, 170 names at one point there. 

Anyway, let me ask you, Susan Schmidt, about where you see, you see this prosecutor going into using staff people from Capitol Hill, current or former leadership staff people in some cases, to try to establish behavior by actual members of Congress.  Is that it? 

SCHMIDT:  Yes.  I think that‘s probably where this is going next actually and I think one of the—one of the elements is five years ago this month, Abramoff and his partner flew a bunch of staffers down to The Super Bowl in Florida, so the statute of limitations for bribery on that activity is running this month. 

Yesterday you saw Alice Fisher of The Justice Department specifically mention this Super Bowl trip.  So staffers for Senator Burns and Congressman DeLay went on that trip.  So either they‘re going to have to get those staffers to agree to waive the statute of limitations, or they‘re going to move on some of those people, I would think very quickly, this month. 

MATTHEWS:  Did Jack Abramoff, according to any of the testimony you‘ve heard or any of the leaks that come out of this, the prosecution, ever give any cash to anybody?  It was always these trips to Scotland, trips to Super Bowls, these perks he seems to have given away rather than cash.

SCHMIDT:  There hasn‘t been any substantiation of him giving cash to people.  There were lots and lots of meals and fund raising events, which you know he had four sky boxes that he was filling every night or every other day, you know.  That‘s something like 80 seats at four different sports arenas.  That‘s a lot of seats to fill with staffers and members of Congress.  But I haven‘t heard about cash in a way that‘s been substantiated at all.

MATTHEWS:  Let me go to Andrea Mitchell.  Andrea, you know one of the highlights or low lights of this story the last several hours has been this story coming from the White House and elsewhere, Denny Hastert‘s office, other places, where people are peeling off the money that they got from Abramoff and sending it to charity.

MITCHELL:  It‘s a great day for charity.

MATTHEWS:  Now that they‘ve been caught.  Yes, it‘s a great day to raise money for good causes.  What do you think of that, is that going to work for these guys?

MITCHELL:  I don‘t think so.  I don‘t.  And one really interesting political sidelight is Newt Gingrich today, who hasn‘t completely disavowed presidential ambitions.  He coming out in a news conference and saying that the Republicans now, 10 years, 11 years into power, have become what the Democrats used to be when they, according to Newt Gingrich, were corrupt and holding on to so much power in both houses of Capitol Hill.

And so he says there should be lobbying reform, there needs to be extensive reform.  And of course John McCain already has lobbying reform legislation, which would change the way lobbyists can work, the amounts of money, the time before they can lobby some of their former bosses.  Really tighten up some of those restrictions.  McCain has really been the one pushing behind this, and probably would not have been exposed if not for “The Washington Post” and John McCain.

MATTHEWS:  So Newt Gingrich is now a reformer?

MITCHELL:  Newt Gingrich is a reformer.  Well he actually, in fairness to Newt, he was a reformer when he created the Republican revolution.

MATTHEWS:  We do remember.  But we also remember some of us with even short memories remember why he left, why he‘s no longer speaker.  I mean, it wasn‘t like he left because he had been canonized.  He had a few problems.

MITCHELL:  There were a few problems there as well, but he has completely changed his image.  There‘s so many acts in American politics, he has reinvented himself and he is now becoming one of the standard bearers of lobbying reform as he travels around this country and today in a Washington news conference.

So it‘s really interesting to see how this is going to play.  It was asked of Scott McClellan at the White House press conference, the regular briefing today, and he kind of blew off the question about lobbying reform as something front and central of the president‘s agenda. 

They‘re trying so hard to say that this is a bipartisan scandal and in some respects it is.  There was money on all sides, but let‘s face it, the Republicans are in charge in both houses.  If you‘re going to lobby Congress, you lobby Republicans and clearly Abramoff was from 1980 on, a young college Republican.

MATTHEWS:  That reminds me of the old Hollywood line of “I knew Doris Day before she was a virgin.”

Anyway, thank you very much, Andrea Mitchell, thank you very much, Susan Schmidt. 

Up next, ecstasy than agony in West Virginia.  What went wrong when the families of 12 miners were told they survived, only to find later that their loved ones had died.  A much bigger story coming on that, what went wrong in that mine?  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  We don‘t even know if there is a Lord anymore. 

We had a miracle and it was taken away from us.  What happened, people? 

Tell me.

(END VIDEO CLIP)

MATTHEWS:  What did go wrong in that mine tragedy in West Virginia?  International Coal Group CEO Ben Hatfield expressed his regret today for letting the families believe so many had survived.

(BEGIN VIDEO CLIP)

BEN HATFIELD, CEO, INTERNATIONAL MINE GROUP:  They needed good information and we were trying to get them good information.  And in the process of being cautious, we allowed the jubilation to go on longer than it should have.

(END VIDEO CLIP)

MATTHEWS:  So let‘s get the latest from NBC‘s Bob Hager, he‘s live in Tallmansville, West Virginia.  Bob, it‘s the smaller part of this story, but it‘s certainly the biggest part of this story today.  What was the miscommunication that led to the elation that the miners had survived?

ROBERT HAGER, NBC NEWS ANALYST:  Well in trying to put it together, the best they can come up with is that down deep in the shaft, when they found the one miner had survived and the others dead, they—he‘s got a mask, an oxygen breathing, the rescuer does, oxygen-breathing equipment over his mouth.  And he sends some word back halfway up the shaft that they‘ve got one dead.

And somehow that gets translated along the way as if they‘ve got 12 survivors.  They did report that to the surface then from the halfway station, they reported out at Eastern time, a quarter to midnight, that they had 12 survivors. 

And then the snowball just started.  The company found out that that was erroneous information at about 12:20, 12:30, so that would be 45 minutes later.  Then an agonizing another couple of hours goes by before they make it right with the families to tell them what was going on and they say they were just having got it wrong once, they wanted to be sure what was happening.

Wanted to be sure that they did have 11 dead people besides the one survivor, and then the 12th dead person from earlier that had already been reported.  So an overabundance of caution, they said, but they clearly admitted that they had been wrong in that, so they ate crow today.

MATTHEWS:  The more serious question, I guess is, I know is, and we all know is, why did it happen?

HAGER:  Yes and that will be a big thing for the investigation, I think.  They got all these citations against this mine, but I don‘t know whether they play a numbers game with that or not.  They did have more violations than the average mine, but on the other hand, they hand out a lot of citations. 

I think it‘s too early to read too much into that.  It will be a long careful investigation, but that‘s a key question.  I would think the big things for investigators are A, why did the explosion occur?  Was it methane gas that exploded?  Probably was, because that‘s always in minds. 

But what was the ignition point?  What set it of?  And then I would think there would be a big issue about the oxygen, because we know now that these men who died survived the initial blast, except for the one miner who was working up very close to the explosion.  But the other 12 survived the initial blast, but then 11 of those died, somewhere between an hour and 24 hours, you can pretty much put it, after that, before their oxygen ran out. 

So the oxygen is really only good for an hour unless you take extra steps to conserve it and then there‘s a question of how much longer it can run.  So I‘m just wondering, I bet you the investigation would focus on whether they can find better oxygen-generating equipment to carry into the mines.

MATTHEWS:  Serious business, tragic business.  Thank you very much, Robert Hager.  Up next, the legal fallout in the Jack Abramoff case.  Now that he‘s working with prosecutors, which congressman could be toppled by Abramoff‘s testimony?  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

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MATTHEWS:  Welcome back to HARDBALL. What will be the fallout from the Abramoff investigation and who has the most at stake?  I‘m with Richard Ben-Veniste who was a prosecutor in the Watergate investigation and also served, as we know, on the 9/11 Commission, and Ben Ginsberg, Republican lawyer, who was counsel to the Bush-Cheney campaign in ‘04.  Congratulations on that victory. 

GINSBERG:  I‘m sorry it‘s only taken you a year to get around to that. 

MATTHEWS:  Let me ask you, why did the president give back the $6,000? 

BEN GINSBERG, FMR. BUSH/CHENEY ‘04 COUNSEL:  Well because I think that there are perception problems with Jack Abramoff and what he did, and properly you don‘t want to be associated with some of those issues. 

MATTHEWS:  Who is going to buy the fact that you‘re clean because you gave back the money after the bag man got caught? 

GINSBERG:  I don‘t think you‘re dirty with it. 

MATTHEWS:  What good does it do P.R. wise? 

GINSBERG:  Because I think you‘re talking about it and it‘s a gesture. 

That‘s why. 

MATTHEWS:  Richard, do you like the cases where guys get caught taking money that they‘re embarrassed by after they get caught.  I‘m looking at Tom DeLay giving back, you know, a huge amount of money, and all these guys.  Denny Hastert, $69,000?

GINSBERG:  Money is not illegal.  They‘re perfectly reportable contributions within the limits. 

MATTHEWS:  But it stinks. 

GINSBERG:  But it‘s not a legal issue. 

RICHARD BEN-VENISTE, FMR. FEDERAL PROSECUTOR:  Some of this stuff could gag a maggot. 

MATTHEWS:  Let me ask you about who‘s worried right now.  Robert Ney obviously has been named over and over again.  But other senators, I mean, senators and congressmen.  How wide is this going, Richard? 

BEN-VENISTE:  Well, it‘s going into the Executive Department, the Interior Department, many aides and former aides to representatives.  This is a tsunami of quid on the quid pro quo side. 

The real question is whether prosecutors will be able to show that there were favors given in return for the enormous amount of money that was spent. 

MATTHEWS:  I‘ve been brought up in this town for 30 some years to believe bribery is the hardest case to make.  You have to prove that in a room the member of Congress, the official, the appointed official said, OK, if you give me X many dollars or this kind of favor, or trip, I will do this for you. 

You almost need it like in finger painting.  You need it just like that to prove the case in court.  You can‘t say he did this and I did that and that was a bribe. 

GINSBERG:  Right.  And why people are so nervous is that there‘s a sense that there a may be a shifting standard and nothing scares people more than a shifting standard.  Because if there‘s a clear, while they were on a golfing trip to Scotland, Abramoff said in return I need you to put something in the Congressional record, that‘s a clear case. 

MATTHEWS:  That never happens that way, does it? 

GINSBERG:  No.  That‘s why people are so nervous, because now the definition is becoming temporal.  They went to Scotland, they were feeling good about themselves and each other when they got back, they came into the office the next day and said, hey, I have this legislative process, can you help me about it, that‘s where it becomes tough to make a living. 

MATTHEWS:  If that‘s not bribery, what else is it, influence pedaling? 

Is it illegal? 

GINSBERG:  I‘m not sure that it is. 

BEN-VENISTE:  It does get to be illegal, Chris, and it doesn‘t have to be paint by the numbers.  You know, people are not insensitive to the kind of signals that can be passed.  The question is whether some substantive activity took place.  And whether in fact a substantial amount of money was paid.

What‘s nerve racking to some of these people is hubris has taken over here.  Standards have been down.  Not everyone is going to be in the Duke Cunningham situation where everything is so blatant, but a lot of money was paid to a lot of people, and now the Department of Justice, the Public Integrity Section, the career people over there will have their day in demonstrating that they will take a hard look and go off people on the basis of what they do. 

MATTHEWS:  Let take a look at a defense here by the man himself.  NBC‘s investigative unit interviewed Jack Abramoff himself a year ago, it‘s the only television interview Abramoff has allowed so far in this case.  Here he is now defending his work that he did for the Indian tribes. 

(BEGIN VIDEO CLIP)

ABRAMOFF:  They were very grateful for all that we did, and frankly, for whatever amounts that were charged them, the benefit that we brought to these tribes was far in excess by multiples of tens and hundreds of the charges of the costs of these efforts. 

(END VIDEO CLIP)

MATHEWS:  This guy has a lot of tentacles.  I‘m impressed in kind of an amoral way by how many people he knows, how many people he has on the payroll, people I thought were pretty upstanding in the past.  Ralph Reed, for example, the Christian conservative guy.

All these people working for him, he‘s buying fleets of casino boats, he‘s got members of Congress putting ads in the congressional record, basically, he‘s taken everybody off to Scotland.  He is a big shot, a wheeler dealer.  Did you know who he was? 

GINSBERG:  Yes I knew who he was.  Sure. 

MATTHEWS:  What did you make of him, before you—

GINSBERG:  I never really did business with him. 

MATTHEWS:  What did you make of him? 

GINSBERG:  I made of him that he was a guy that knew a lot of people and spread a lot of money around. 

BEN-VENISTE:  Let me give you a business card then. 

MATTHEWS:  I‘m serious about this.  Was he a guy who seemed like a sleazy customer or just a big-shot lobbyist?

GINSBERG:  I don‘t know because I never go close enough to tell.

MATTHEWS:  Did you know about him?  Had you ever heard of him before? 

This is a big name here.

BEN-VENISTE:  Not until all this happened.  But it is part of this whole K Street Project.  Again, the arrogance ...

MATTHEWS:  The K Street Project was where the Republican leadership, once they took over the Congress, said, no more Democratic lobbyists, right?

BEN-VENISTE:  Right, and ...

MATTHEWS:  There‘s nothing wrong with that, that‘s just hardball. 

BEN-VENISTE:  Well, that‘s not the way it worked before.  And the amount of money that has come into the system is just obscene and it‘s created a level of hubris.  We‘ve seen it before but not to this magnitude.

MATTHEWS:  Was it just a matter of time before somebody billed the Indian tribes because they had so much money they were willing to spend to protect themselves from taxation.  Answer that question.  Is this so somebody who was going to be the guy who was the sleazeball to grab this easy money? 

GINSBERG:  Well, I don‘t know of any other lobbyist who had the hubris to charge these fees that were done.  And if that happened, that should be rooted out and dealt with.  But let‘s deal with something that Richard said which I think is an important point. 

He said there was a lot of money passed around.  Now if that was Abramoff‘s lobbying fees, that‘s absolutely true that that‘s got to be dealt with.  If what you‘re talking about is the quid quo pro bribery, there‘s no evidence at this point, and there‘s really not in the indictment, of vast sums of money going to members of Congress or staffers. 

MATTHEWS:  Right, it was a trip to Scotland that put something in the record, that kind of thing. 

GINSBERG:  And there are very few members of Congress who have not taken nice trips before.  Now with this guy ...

BEN-VENISTE:  Now hang on.  There are wives who are on the payroll, there‘s large amounts of money. 

GINSBERG:  That‘s another part of it and in fact if there were wives on the payroll who didn‘t perform work, that‘s going to be a problem.  Legal campaign contributions given in close proximity of votes on a bill, if that‘s where they‘re going with it, 500 of the 535 members of the House and Senate are going to go down. 

MATTHEWS:  But the guy sleaze—not that he gives up the guy with the big roll of money.  Lobbyists don‘t operate like that.  They come up with a tan and a nice suit, like we saw one the other day with his Chesterfield collar, and they say, look, do you want to be rich like me?  How would you like to go on a trip with me?  Then I say it‘s legal.  It‘s totally legitimate.  They sleaze them into these deals.  They don‘t say here‘s a wad of money.  But you‘re saying it‘s OK.

GINSBERG:  The lobbying reform can deal with the trips and I really don‘t know other lobbyists who have gone to the extreme that Jack Abramoff did about this. 

MATTHEWS:  Well, how about the Russians giving money to the Republican side?  It‘s unbelievable.  That‘s where Newt Gingrich is right.  It‘s sleazy.  Russians. 

GINSBERG:  Nobody is going to defend that practice. 

MATTHEWS:  They used to be the enemy, remember?  Now they‘re bank rolling the parties.

GINSBERG:  But nobody‘s defended.  Nobody‘s defended.

MATTHEWS:  I want to make sure you‘re not.  Anyway, thank you Ben Ginsberg, thank you Richard.  We‘ll be back in a minute to talk about—this is a bigger story maybe.  It‘s a question of U.S. spying on American citizens, big brother stuff.  Is it that or is it just good, old, solid national defense?  This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The New York Times reported again today that the NSA expanded its spying operations even before the president specifically authorized a secret program for domestic eavesdropping. 

We‘re back now to talk about this development with Ben Ginsberg and Richard Ben-Veniste.  Richard, it seems like the NSA moved ahead and began to spy, electronically surveil these potential al Qaeda contacts in the United States even without getting the finding from the president, even before. 

BEN-VENISTE:  Well, this is characteristics of this administration, it‘s secrecy, secrecy, secrecy.  They don‘t like oversight.

MATTHEWS:  Are we supposed to announce that we‘re catching al Qaeda guys in this country? 

BEN-VENISTE:  Only to our friends who are members of the judiciary of this country, equally patriotic, to the members of Congress, whose job it is to provide oversight.  That‘s what this country is all about, a balance of power. 

In this administration, we see an ever-shrinking circle of people who are in the know.  Somebody disagrees, like the deputy attorney general of the United States, what do they do?  They cut him out of the loop.  They go to Ashcroft, the attorney general, while he‘s in the hospital. 

MATTHEWS:  The vice president said today that if we had—been this kind of a program underway, if the United States National Security Agency had been tapping the phones, electronically surveilling these groups, these people, who had contacts with al Qaeda before 9/11, there wouldn‘t have been a 9/11.  That‘s a powerful claim. 

GINSBERG:  It‘s a very powerful claim, and what Richard is talking about is the historic balancing in this country of the need for civil liberties with the need to protect the country.  And in the days after September 11th, if the NSA professionals on their own went out and started this program, I‘m not sure you can attribute that to the elected branch of the government. 

MATTHEWS:  So it was common sense you‘re saying. 

GINSBERG:  Well, I‘m saying they saw a necessity to further protect the country when the danger was great and if the Democrats want to try and make the case that somehow protecting this country is an evil thing, then I think that‘s a bad argument.  Now, the protection of civil liberties is an extremely important argument, as the president has repeatedly said. 

BEN-VENISTE:  The point is you can do both.  They‘re not mutually exclusive, but you don‘t have a system in this country that will work where you have one branch of government proclaiming its sovereignty over the other two branches.  That‘s just not how it works. 

And this stuff about electronic eavesdropping of al Qaeda before 9/11, that‘s a bunch of bunk.  We knew that there were two al Qaeda in the United States, months—at least a month.  The FBI knew, the CIA knew longer before 9-11.  What did they do to catch them?  Nothing.  They could have put their pictures on “America‘s Most Wanted.”  Do you think they would have showed up on 9/11 at the airport?  I don‘t think so. 

MATTHEWS:  Do you believe that the NSA has been effective in preventing another 9/11? 

BEN-VENISTE:  Nobody knows the answer to that. 

MATTHEWS:  You should. 

BEN-VENISTE:  I don‘t.  Nobody knows the answer to that. 

MATTHEWS:  But you‘ve been watching this stuff.  You did the 9/11 Commission, you were on the panel.

BEN-VENISTE:  Yes, but I don‘t know ...

MATTHEWS:  Can you ascertain whether we‘ve been effective on stopping another 9/11?  That‘s critical, isn‘t it.

BEN-VENISTE:  We don‘t know any information, properly so, because it wasn‘t our job to collect that information.  They had no right to it.

MATTHEWS:  Well the press...

GINSBERG:  ... your commission was critical of the inability to be able to track that sort of information, so now they‘ve got a program to track the information.

BEN-VENISTE:  This program isn‘t tracking information.  This is the data-mining program looking for patterns.  And you know, if you are focused, if you are not drinking out of a fire hydrant here, and you‘re focused and you know what you‘re doing, then yes, America needed to be smarter.  But it‘s not a mutually exclusive game with protection of civil liberties.  If we lose our civil liberties as the result of all this, and that‘s why there‘s the hue and cry in the country, and among conservatives as well.

MATTHEWS:  Should you have civil liberties if you‘re on the telephone with al Qaeda right before an attack?  Should you have civil liberties?  I‘m asking.

BEN-VENISTE:  No.  I‘m not suggesting that that‘s protected, but you haven‘t seen any suggestion that anybody was on the telephone with al Qaeda coming out of any of this information.  And I haven‘t seen that information.  We don‘t know what it is.

GINSBERG:  Well they‘re not going to broadcast that information.

BEN-VENISTE:  We don‘t know what it is.

MATTHEWS:  Cheney said that today in his speech, that‘s why I‘m repeating what he said.  I don‘t know either.

GINSBERG:  Well I think the administration actually looks forward to the Specter hearings to be able to explain this program more.

MATTHEWS:  I‘m watching Arlen Specter.  I trust Specter.  He‘s going to be looking out, I think as a centrist Republican on any of these violations because I think he has a sensitivity about this stuff.  Anyway, thank you very much Ben Ginsberg, thank you, Richard Ben-Veniste.

When we return, much more on the domestic surveillance story with the “National Review.”  This is going to be high concept.  Byron York against Katrina Vanden Heuvel.  None of this nuance anymore when they get on the show.

And a reminder for the best political debate online, just go to Hardblogger, our political blog Web site.  And now you can download Podcasts—I love that word—of HARDBALL.  Just go to our Web site, HARDBALL.MSNBC.com.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Now another shoe has dropped.  Newt Gingrich has called for Tom DeLay to step aside from the leadership and not run for it again.  Now the “National Review,” one of DeLay‘s staunchest defenders, a big conservative magazine, has said today DeLay must go.  He should step down, not try to regain the leadership, even if he gets through these legal problems, which are mounting.  We‘re joined right now by Byron York of the “National Review” and Katrina Vanden Heuvel of the “Nation.”  First Byron, why is your magazine saying this now?

BYRON YORK, NATIONAL REVIEW:  Well, what the magazine is saying is that the Texas prosecution against DeLay was quite flimsy and really pretty worthless.  But the Abramoff issue is a very serious issue.  DeLay has stepped down as majority leader and that he should not try to regain the post.

MATTHEWS:  What did he do wrong?

YORK:  In the DeLay issue?

MATTHEWS:  Yes.  What did DeLay do wrong?

YORK:  Well, what the editorial says is there‘s simply so many questions involving DeLay, his former aides, money from Abramoff, the golfing trip, the story in “The Washington Post” about the Russians giving money to a nonprofit that was connected with DeLay.  So many things that it doesn‘t make a lot of sense for DeLay to become a majority leader again until that‘s resolved.

MATTHEWS:  It is embarrassing.  Let me go to Katrina Vanden Heuvel.  Your views on the Republicans now jumping ship?  In fact, I should put it this way.  They‘re telling Tom DeLay to jump ship in the wake of this Abramoff growing scandal.

KATRINA VANDEN HEUVEL, THE NATION:  Well, Abramoff and DeLay have become symbols of this metastasizing scandal, Chris.  And it‘s a self-protective move.  It‘s a much larger scandal, this pay-to-play politics that‘s democracy for sale.

So it makes sense that this is the first step, but it‘s a much deeper issue.  And I‘m sure the “National Review” knows that.  And for the Democrats, it seems to me, Chris, what‘s crucial now is they become the party of change.  They lead the way.  Russell Feingold has one of the best lobbing and ethics reforms plans. 

And at the end of last year, Chris, you may know this, but he and McCain nearly put out a bill together and it broke down because McCain wants to keep it very limited, simply to disclosure.  But Feingold and Marty Meehan in the House, deep.  And those are the reforms Democrats should champion and become a party of change.

MATTHEWS:  You know back in 1994, Newt Gingrich was very effective in bringing the Republicans to power on the charge.  It was a strong charge, that the Democratic leadership of Congress was corrupt.  That was a word he used.  It was a tough one.  Nobody liked it on the other side.  Is it now a fair charge against Republicans?

YORK:  I think it‘s a fair charge against Republican to say they‘ve become too comfortable in power and that some of them are ensnared in this investigation.  The one thing I would point out though in the Abramoff plea agreement, read it.  It seems—they seem to have representative No. 1, everybody thinks that‘s Bob Ney, Republican of Ohio, they seem to have him in their sights.  But they don‘t mention anyone else.  Now is this the tip of the iceberg or is this pretty much what the iceberg is?  I‘m not entirely sure.

MATTHEWS:  What do you make of the fact, I don‘t want to push you too hard, but I want to move on this.  What do you make of the fact that there‘s aide one, or aide A, is a guy who was working for DeLay.  It looks like they have a stoolie, I hate to use that word, how about a velache (ph)?  Or a Frankie Pentangeli ready to talk.

YORK:  Well no, clearly, they‘re going to—look, this is the way prosecutions work.  You get people lower down and you...

MATTHEWS:  ... Yes, well they would talk against DeLay.

YORK:  You flip them and they may talk against DeLay.  But I will say the thing that is interesting is that the Abramoff plea agreement charges one representative essentially with being bribed, with exchanging official acts for things of value.  That‘s all it says right now.  Now are prosecutors simply keeping their powder dry and not mentioning other stuff they know or not?

MATTHEWS:  Let‘s go to the NSA issue.  I am amazed, I was away for two weeks, Katrina.  I thought the NSA story maybe would be two or three day story.  It‘s still big, why?

VANDEN HEUVEL:  How could it not be a bigger story?  Today the vice president goes out as the hustings (ph) as a representative of unfettered imperial power.  Instead of representing the values of this democracy, Chris, make no mistake.  This president had the powers necessary to protect Americans, a secretive court which could have expedited warrants. 

Warrantless wiretapping is a felony.  And the judges on the FISA Court know that.  Hard-nosed members of the Justice Department knew that, Chris.  So I think we‘re facing again, just the tip of the iceberg.  And you now hear calls for impeachment from mainstream people.

MATTHEWS:  OK, Katrina more time next time when you‘re on.  Thank you for joining us, thank you Byron for being here with the big story from your magazine—Katrina Vanden Heuvel and Byron York.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Homeland Security Secretary Michael Chertoff will join us from the California/Mexico border.  Right now, it‘s now for “THE ABRAMS REPORT” with Dan.

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

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