updated 1/20/2006 2:02:39 PM ET 2006-01-20T19:02:39

Guest: Joe Biden; Robert Baer; Bob Herbert; Byron York; John Shadegg; Roger Cressey

CHRIS MATTHEWS, MSNBC ANCHOR:  Bin Laden warns of attack on American ground and calls for truce, saying Americans overwhelmingly want out of Iraq.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.  Al-Jazeera Television is airing a new audiotape from Osama bin Laden.  The tape warns of new attacks against American grounds, but adds al Qaeda is open to a long-term truce with Americans.  HARDBALL‘s David Shuster has more on the story. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  The audiotape broadcast today on Al-Jazeera is 10 minutes long and marks the first time in 13 months bin Laden has been heard from. 

OSAMA BIN LADEN:  (SPEAKING IN ARABIC)  

SHUSTER:  Counterterrorism officials believe the al Qaeda leader made the tape as recently as last month.  Bin Laden refers to last summer‘s bombings in London and warns that similar attacks are coming in the United States. 

BIN LADEN (through translator):  The delay in the occurrence of similar operations in America is not because of the inability to penetrate your security measures, because the operations are already being planned and you will see it in the heart of your land when the planning is finished.

SHUSTER:  Bin Laden gives this reason as to why the tape is coming now. 

BIN LADEN (through translator):  What prompted me to address you is the repeated mistakes of your President Bush in his comments about the polls that indicated the vast majority wish to withdraw forces from Iraq.  He rejected this wish.  Bush‘s rejection... is a mistake.  Reality proves the war against American and its allies—it‘s not just limited to Iraq as he claims.  Indeed, Iraq has become a point of attraction for those capable of fighting.

SHUSTER:  Bin Laden describes the U.S. presence in Iraq and Afghanistan as benefiting al Qaeda by inspiring more recruits to his cause.  And he offers, without any details, a long-term truce. 

BIN LADEN (through translator):  We do not object to a long term truce... so both sides can enjoy security and stability... so we can build Iraq and Afghanistan, which have been destroyed in this war.  There is no shame in this solution, which prevents the pumping of billions of dollars to the warlords and those of authority in America.

SHUSTER:  Four years ago, after the 9/11 attacks, President Bush pledged repeatedly to bring Osama bin Laden to justice. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Dead or alive, either way, I mean, I—it doesn‘t matter to me.  Secondly, I don‘t know whether we‘re going to get him tomorrow, or a month from now, or a year from now.  I really don‘t know.  But we‘re going to get him. 

SHUSTER:  Today with the fresh reminder the U.S. is still not gotten bin Laden, the president‘s press secretary dismissed suggestions of failure. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  Well, he is someone who is clearly on the run, and has been hiding, and we will continue to pursue him and bring him to justice. 

SHUSTER:  The bin Laden tape release follows last week‘s U.S.  rMD+IN_rMDNM_attack in Pakistan that killed several al Qaeda leaders.  The attack led to reports that the organization had suffered setbacks. 

(on camera):  But at the very least, al Qaeda‘s leader, Osama bin Laden, still has the ability to make and deliver an audiotape.  The question is, is he merely trying to undercut President Bush or is bin Laden signalling possible terror cells in America and ordering an attack?  I‘m David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Senator Joe Biden is the ranking Democrat on the Senate Foreign Relations Committee.  Senator Biden, what do you make of this truce offer from bin Laden? 

SEN. JOE BIDEN (D-DE), FOREIGN RELATIONS CMTE.:  I think it‘s more directed to the Muslim world, Chris.  I think this is a guy who is on the run.  He has alienated a considerable portion of the Muslim world by the horrific attacks against Muslims in Muslim countries, and I think this is a guy who is trying to set up a rationale for a win. 

I think this is about a message to the Muslim world that says, look, I‘m offering a truce, I‘m really the good guy here, I‘m not being irrational, I‘m not being unreasonable. 

And then the interesting part to me is he talks about Iraq and the need for a truce, which to me underlines even more significantly the need for a political solution in Iraq, so that when we leave and we‘re sure in the devil going to leave the way it looks like from this president, that he cannot claim what he‘s trying to do.  He‘s trying to set up when we leave that he, quote, “ran us out,” which is bizarre. 

MATTHEWS:  Is he right when he says that our war in Iraq has helped him recruit? 

BIDEN:  I think that is right.  I‘m not sure it helped him recruit, but what it has done is it has splintered and multiplied the number of jihadists in the Muslim world, which seems to me it presents us with another opportunity here. 

While he is, I think, reaching out to try to regain credibility with the Muslims, we should be reaching out to the rest of the Muslim world, making it pretty clear that our value set is not inconsistent with their needs, and promoting their economic well-being and promoting their political well-being, and so it seems to me it presents us with an opportunity. 

MATTHEWS:  Let me ask you about some of the things that show, I think, and ask if you think so, some media sophistication here.  He seems to be aware, although he‘s not quite right—he overstates that the polling data in America, which you see as well as we do, that suggests a division in this country, about 50-50 over the war in Iraq.  He says it sounds like to him that we‘re overwhelmingly for pulling out right away.  What did you make of that assertion? 

BIDEN:  Well exactly what you did, that this guy is fairly sophisticated but also that he overplayed it.  He is trying to make the case that you know, I‘m the one and my folks are the ones that are causing you to have to leave Iraq. 

Your people don‘t want you staying there, and by the way, when you leave, it all amounts to the Muslim world that exactly what I said three years ago, we‘re going to run you out of Iraq like we did the Russians out of Afghanistan.  That‘s what I think he‘s setting up.

MATTHEWS:  They did run the Russians out of Afghanistan. 

BIDEN:  That‘s true.  By the way, they did with our help.  We gave them billions of dollars. 

MATTHEWS:  We rooted for them I believe at the time. 

BIDEN:  We did a little more than root for them.  And by the way, I was there.  I‘m not blaming anybody else.  I was rooting for them too at the time, but it seems to me, Chris, that he really has been hurt in the Muslim world.  He‘s been hurt badly in Jordan, he‘s been hurt badly in Saudi Arabia.  He‘s been hurt badly, not just in the leadership, but with the ordinary Muslim people. 

He has though, at the same time, generated as a consequence of our effort in Iraq, or we have generated, a number of jihadists who are just absolutely lost folks with no alternative, and you know, susceptible to this garbage.  So it seems to me we have two goals. 

One is to find him and kill him—kill him or find him and bring him to justice.  And the second one is to begin to compete with him now when he‘s at his lowest ebb, in my view, in the Muslim world about exactly what he‘s doing and what we‘re prepared to do. 

MATTHEWS:  You point out that he—you believe that he‘s also—he‘s trying to really talk to the Muslim people of the world who he has harmed so much in places like Iraq, but let me read some of these lines.  I know you‘ve been over these, Senator, almost like Biblical text trying to figure these things out.  But look at this line. 

This is from bin Laden in the audio today.  “There is no defect in the solution other than preventing the flow of hundreds of billions to the influential people and war merchants in America.”  I mean, he sounds like an over-the-top Michael Moore here, if not a Michael Moore.  Do you think that sells in America, that this war is being fought for the Daddy Warbucks? 

BIDEN:  I think this is just to reinforce sort of the stereotypical negative images in the Muslim world of us.  That‘s why I really think this is much more directed towards the Muslim world and his loss of standing, not vis-a-vis us, but loss of standing as the guy who‘s going to be the—he‘s going to be their deliverance.  So I think that‘s what it‘s about more than anything else, but it is bizarre when you read this.  It goes on and on. 

But I don‘t think anybody doubts anywhere in our government that they‘re still—not withstanding the fact he‘s on the run, that there are still a number of free agents out there, and possibly disconnected but not uninterested cells in the United States, who‘d like very much to pull off what they pulled off in Europe in the last year and last year in the United States, so I wouldn‘t be sanguine about this.

So I‘m not suggesting we don‘t have something to be concerned about.  We do, but again, I think this is more an open letter, and an epistle to the Muslim world saying hey, I‘m really trying to save you here.  All of those things, and my killing all those innocent people, this is all for a purpose. 

MATTHEWS:  Well, he‘s not worrying about a war crimes trial here because he‘s confessed or he‘s bragged about 9/11, he‘s bragged about Madrid, about London and, Senator, I haven‘t asked you about this yet.  He‘s also talking about “you will see them on your own ground once they are finished, the latest operations.”  How do you read that?  Continental United States I guess that he‘s targeting. 

BIDEN:  Well, that‘s what I think.  I mean, I think it‘s directed directly at us to try to, you know, scare the American people.  And I think that that‘s—I think that‘s the purpose. 

I think he‘s trying to conflate two things here, Chris. 

Basically he‘s saying, “You know, if you guys get out of Iraq and we have a truce, then I‘m not going to do anything at home and already”—I mean in your homeland, our homeland.

And I think he figures he‘s playing the game that already the American people want out, their heart‘s not in it according to him and therefore this may be something of—that will put more pressure on us getting out. 

I don‘t think it will have that effect.  As a matter of fact, it‘ll probably have the opposite effect.

MATTHEWS:  What do you make of him naming American leaders? 

I mean, I‘m just looking through the text here, he mentions President Bush, Vice President Cheney, Secretary Rumsfeld, former undersecretary or deputy secretary Paul Wolfowitz.  I mean, he‘s got the whole gallery here.  I guess he skipped Doug Feith and Richard Perle. 

But he certainly is getting into list making.  Do you think he‘s trying to divide this country by saying “Certain American hawks got us in this war and it‘s not your fault”?  Or what do you think he‘s up to? 

BIDEN:  That‘s exactly what I think he‘s up to. 

I think he‘s picking out the people who are kind of in the toughest shape right now politically about their lack of leadership or their bad advice on the war.  And I think he‘s—I think he‘s being very sophisticated in trying to, you know, divide the country.

But again, I think these have the exact opposite impact, these kinds of messages.  But it‘s basically the Muslim world where he‘s got a problem. 

MATTHEWS:  Like he didn‘t mention General Powell, former secretary Colin Powell, who was a moderate, and we were never quite sure what his view of the war was.  He was a good soldier, I guess is one way to put it. 

And he never mentioned Condoleezza Rice, the secretary of state, who in most countries—you know, the foreign minister would be one of the top people—he skipped her. 

You think he‘s—again, the same question.  Do you think he‘s trying to divide and conquer? 

BIDEN:  Yes.

Yes, he is.

And he hasn‘t mentioned any of our generals.  He hasn‘t mentioned any of the people in Iraq.  He didn‘t mention, you know, our ambassador.

I mean, so I think he‘s exactly—again, that part of the message is to the American people.  The other part of the message about a truce is to the Muslim world, I think, at least that‘s my view. 

MATTHEWS:  Are you any more worried as an American, and as a leader, that we might be hit now before this tape?  Do you think this tape is at all indicative of a danger coming to us? 

BIDEN:  I think there is a danger, period. 

I don‘t think whether he made this tape or not would escalate or diminish my concern about the danger.

And I am very concerned, Chris, as you know, that some very rudimentary things we‘ve not paid any attention to, we‘ve not done anything about—things that are not very hard to pull off, like the bombings that took place in railroads and in subways, in the tubes in England and the railway in Spain—so I think we—and we‘ve done precious little to deal with that. 

That‘s what worries me, not that he has some great cabal that‘s any different than he had before. 

I think he and others—and others—who may or may not be coordinating with what is becoming a fractured al Qaeda leadership, very much want to take action here in the United States. 

Whether it will be on the measure of the tubes in London or the towers in New York, I think it‘s much closer, in my concern, about the tubes in London level as opposed to a massive effort. 

MATTHEWS:  OK.

Senator Joe Biden of Delaware, ranking Democrat on the Foreign Relations Committee. 

Senator, thank you for joining us tonight.

When we return, what does the new bin Laden tape mean? 

We‘re going to go to some experts on that from the foreign affairs community as well. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re continuing to discuss the new bin Laden audiotape that came out today.  It was on Al-Jazeera. 

Roger Cressey served on the National Security Council under both President Bush and President Clinton, and worked in the White House situation room on the morning of 9/11. 

And joining us by phone right now is former CIA field officer Bob Baer, whose book “See No Evil” provided the inspiration for the George Clooney movie out right now, and I hear it‘s pretty good, “Syriana.” 

Let me go right now, first of all, to Roger, sitting with me. 

Roger, he‘s talking about an operation against the United States, it‘s going to hit American ground.  One of the translations said “the heart of America.” He talked about it in the context of the bombings in Madrid, the bombings in London, which he took credit for. 

Is that what he‘s talking about? 

ROGER CRESSEY, NBC NEWS COUNTERTERRORISM EXPERT:  I think so. 

He mentions in the most recent translations similar operations to what happened inside Europe.  So I take that to mean attacks against rail, transportation systems, subways.  But there‘s not a lot more specificity into it, so we have to try and divine it, reading between the words, if you will. 

MATTHEWS:  Well, how many subways do we have in the heartland?  That‘s the only thing I‘d check out.

CRESSEY:  Well, think of the most likely targets.

(CROSSTALK)

MATTHEWS:  Chicago, Detroit—how many big cities do we have to worry about?  It sounds like big city action, big part of the country, center part of the country maybe—who knows? 

CRESSEY:  And you think of potential threats, you think of the East Coast, the West Coast, major metropolitan areas in the heartland and critical infrastructure.  So you can put together a list of 50 to 100 large-scale targets that you would want to be worried about. 

MATTHEWS:  Where there‘s a lot of people. 

CRESSEY:  Absolutely.

MATTHEWS:  Rush hour kind of people.

CRESSEY:  Exactly.

MATTHEWS:  Let me go to Bob Baer.

Your sense of the wording—I mean, if we were doing a biblical scholarship of this tape, and that‘s probably overdoing it, what do you hear in it in terms of a danger to America right now? 

ROBERT BAER, FMR. CIA OFFICER:  I think, Chris, what he‘s doing is he‘s telling the faithful that he needs an attack in the United States now. 

He‘s not directly in control of these operations, but he‘s hoping that some networks in the United States will use some low-tech attack, as Roger said, against as many people as possible.

And...

MATTHEWS:  Is he triggering that in this speech? 

BAER:  Absolutely. 

This is a message, not to the administration, who‘s not going to pay any attention, but it‘s to the people, his followers, that we need to act now.

And another thing is he‘s...

MATTHEWS:  How do you know that? 

Help us out here.  Help me out here, Bob. 

You say he‘s talking to the sleeper cells in the U.S. proper.  How do you know that reading what he said? 

BAER:  He‘s—in the past, a long history of addressing his followers through the media, because that‘s his best means of communication. 

He‘s telling people by demanding we pull out of Afghanistan and Iraq -

he‘s not addressing this to the administration, but defining the goals of Qaeda to the followers.  And this is what he‘s really after and says, “We have a plan, this is it, and it‘s just not mass murder, it‘s political goals.”

And I think this is where he‘s going, as much as we can read it.  But then again, remember that bin Laden has always been fairly honest in the media.  I mean, he said he was going to attack the United States in the early ‘90s and did. 

MATTHEWS:  Yes. 

And he talks—you know, Peter Bergen was on the other night and he said he always talks in terms of political realities.  It‘s not this grand against freedom thing; it‘s about our role in the Middle East, it‘s about our putting up all those 10,000 troops in Saudi Arabia, his country.

And it‘s—so you believe—do you agree with that, what Bob just said, Roger, that this is about a positioning of himself as a person who‘s saying, I‘m only going to attack the United States because of what we‘re doing in Afghanistan and Iraq, and if we change our policies, he won‘t attack?

CRESSEY:  In all of bin Laden‘s messages, he tries to portray himself as a rational actor.  He has grievances against the West.

MATTHEWS:  Is he rational or is he crazy?  Is he a zealot?

CRESSEY:  Well, define zealotry here.  I mean, to his followers, he is rational and when you read his statements, he‘s articulating a very logical message.

MATTHEWS:  What I mean is his anger or whatever drives him into the caves an into killing so many thousands of people, including us, is it particular political acts by the United States or is it a general attitude toward the West?

CRESSEY:  If you look at his statements, it‘s specific policies that drive most of what he does.  He‘s arguing that the United States is at war with Islam, invasions of Afghanistan, invasions of Iraq, you know, turning a blind eye to the...

MATTHEWS:  If we hadn‘t put the 10,000 troops into Saudi Arabia during the course of the first Gulf War, would he have attacked us in New York and in New York?

CRESSEY:  That‘s a very good question.

MATTHEWS:  Well, tell me the answer if you can.

CRESSEY:  Well, if I knew that answer, Chris—there are parts of al Qaeda that believe that they should focus the fight on the near enemy.  The House of Saud, local governments and there were other parts of al Qaeda that believe they should fight the far enemy, which is the United States.  And ultimately bin Laden and his followers decided to go after the far enemy.

MATTHEWS:  Why do you think he‘s offered a truce, Bob, or said so?

BAER:  I don‘t think he‘s offered a truce, but I think he‘s trying to minimize the carnage in Iraq against the Shia—Sunni against the Shia, and by focusing the war on the United States rather than a civil war in Iraq.

MATTHEWS:  That‘s what Senator Biden said, that he‘s trying to mollify people who are really angry at al Qaeda in Iraq for all the killing they‘ve done of Shia, of the people who were in the majority and who will win the next government, will rule the next government.

So you think it‘s aimed at a number of audiences, one is us just to rattle our chain, to knock Bush in the world, make fun of him, make fun of his mission accomplished claim on that aircraft carrier.  But mainly to tell the Muslim world, “I‘m the good guy, I‘m looking out to get the U.S.  out of Iraq and Afghanistan, and don‘t blame me for the killing over there.”

BAER:  Exactly.  You know, he‘s worried about that he‘s going to be accused of causing what‘s in Arabic, is called a fitna (ph), is chaos.  And by refocusing the war on the United States or against the Saudi royal family, he hopes to get a propaganda victory.

MATTHEWS:  Where is he?  I‘m asking Roger now.  Roger, I don‘t know if you can tell by the sound.  Is he in the studio, there‘s no video, so we don‘t know if he‘s out near that babbling brook he likes to talk in front of.  What is it?  It‘s really his voice, no one has challenged that.

CRESSEY:  It‘s a very grainy tape and the initial analysis is that the quality of it is not as good as some of al-Zawahiri‘s tapes.  So perhaps he‘s in a location that is not as nice, if you will, as what al-Zawahiri has done with his tapes.

MATTHEWS:  But we know it‘s a recent tape, since December, right?

CRESSEY:  Yes.  We believe it‘s probably early December, so he is current enough on what‘s going on in the world to articulate a message that he is trying to come across as reasonable, as Bob said.  And he‘s trying to refocus the debate on the main issues as al Qaeda defines it.

MATTHEWS:  Well, this guy was supposed to be dead about two or three years ago and it was dead-or-alive, and he‘s up in the mountains, he apparently had dialysis, he was on a mule, he‘s about eight-feet tall, unusual for an Arab and we‘ve not been able to catch him.  I‘m going to ask why not when we get back.  More with Roger Cressey and Robert Baer, the tough question, how come we haven‘t caught this guy?

And later, we‘ll talk to one of the contenders in the race for Republican leader in the House.  We‘re going to come home for a big fight there.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with NBC News counter-terrorism analyst, expert Roger Cressey.  And with us by phone is former CIA field officer Bob Baer.  Bob, what‘s your reasoning or thinking about our failure to catch this guy, bin Laden, who‘s talking again today?

BAER:  He‘s in what we call, the denied area.  He‘s being protected by the people around him, whether it‘s a state, like Iran, or in the mountains of Pakistan, where the government can‘t go up into—where he feels secure.  And he figures if he doesn‘t use telephones, any sort of radio, sends messages up by courier, he‘s safe and he‘s proven to be safe.

MATTHEWS:  Listen to these words he uses.  These are perhaps vainglorius, whatever you want to call them, bellicose.  “I swear not to die but a free man, even if I taste the bitterness of death.”  So he‘s not planning to be in a war crimes trial any soon, because he‘s out there taking credit for all this killing.  He‘s killed our thousands of people in 9/11, he‘s killed us in the Pentagon, he‘s killed London—but he‘s taking credit for every crime, so he doesn‘t intend to give up ever.

CRESSEY:  No.  We knew before 9/11 that if he ever was going to be captured that the standing instructions were that his bodyguards were to kill him. 

MATTHEWS:  That they were to kill their own boss.

CRESSEY:  Yes.  He has no intention of being captured alive.

MATTHEWS:  So he‘s not going to find himself in Abu Ghraib or anywhere else, or Guantanamo?

CRESSEY:  No, highly unlikely.

MATTHEWS:  Dick Cheney is not going to get a shot at him?

CRESSEY:  Unfortunately not.

MATTHEWS:  What do you do if—let me go to Bob, you know you‘re right about these things, you‘re right about the high adventure of all this stuff.  And is there any way where a brighter administration, a shrewder campaign would have found this guy?  Have we failed to catch a guy we could have caught or should catch even now, bin Laden?

BAER:  I think, you know, in retrospect, 20/20 hindsight, if we had more troops in Afghanistan, and blocked those passes before we went in, we probably would have caught him or at least killed him.  We didn‘t send enough troops in...

MATTHEWS:  ... Well is the barn door closed now, I mean, or open.  In other words, I‘m trying to find the right metaphor, is the cow gone?  There‘s no way to catch him once he gets to Pakistan or Iran perhaps?

BAER:  I see no obvious way.  We could get lucky.  We‘re basically looking for a windfall on this one.  Someone is going to walk in for money, ideology or whatever reason, but you can‘t count on it.

MATTHEWS:  Well what about these earlier comic book, almost cartoon versions of the guy, he‘s six-foot something, incredibly tall for that part of the world, on dialysis, he had a kidney problem, he had to be treated with dialysis, he was on a mule.  I mean, everything was comical, it‘s almost, of course we‘re going to catch him.

CRESSEY:  You know, Chris, if I had a dollar for every bad medical report.  I mean, he suffered from everything except a bad pregnancy.  So you can‘t assume that he‘s going to die from a dialysis treatment or anything else.  If he—as Bob says, if he‘s not moving around a lot, if he‘s keeping himself in one place, it‘s very difficult for U.S.  intelligence or the packs to track him down.  So we‘ve got to lucky, absolutely.  You look at what we were doing in tracking al-Zawahiri, we were doing, very, very good work.

MATTHEWS:  He‘s No. 3, we think.

CRESSEY:  He‘s No. 2.

MATTHEWS:  No. 2.

CRESSEY:  No. 2, and we used a combination of Pakistan, our own assets and the U.S. military.

MATTHEWS:  That was a guess who‘s coming to dinner thing, we thought he was going to coming to dinner somewhere and we‘re going to nail him with dinner and then we killed everybody at the table.  What about this guy?  Is he calling the shots now?  He sounds like he‘s the boss.  Is he?

CRESSEY:  Well, so the $64,000 question is whether or not he has any operational control over the remnants of al Qaeda‘s organizations.  We simply don‘t know.  We should assume he does, because that‘s the prudent thing to do.

MATTHEWS:  Sounds like it.  What do you think, Bob?  Is he still calling the shots, bin Laden?

BAER:  He is the authority that commands the faithful as Roger says, and whether he‘s conducting every single operation, every detail, it doesn‘t really matter.  These people follow him and continue to follow him, that‘s the problem, we may get hit because of that. 

MATTHEWS:  I know one way to win the Medal of Freedom, catch this guy.  Thank you Roger Cressey and Bob Baer.  Big day, we‘re hearing from bin Laden on tape.  Thanks to al-Jazeera. 

Tomorrow night make sure to tune in for the HARDBALL hotshots, MSNBC‘s prime time hosts, they‘re all joining us:  Rita Cosby, Joe Scarborough, Tucker Carlson, they‘re all coming on the show to take on the week‘s best stories.  That‘s tomorrow night on HARDBALL.

Up next, the Republican battle for leadership in the House of Representatives.  We‘ll talk to one of the interesting contenders, a late joiner, Arizona‘s John Shadegg.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(MARKET WRAP)

MATTHEWS:  Welcome back to HARDBALL.  Congressman John Shadegg is fighting to replace embattled former House Majority Leader Tom DeLay, he won his seat in 1994.  Congressman Shadegg is part of the Republican revolution that won control of the house after a half-century.  He faces two opponents, Ohio Congressman John Boehner and acting House Majority Leader Roy Blunt.  Welcome Congressman.

I‘m looking at the numbers and you‘re not doing as well as these other two guys but you offer something different.  What is it.

REP. JOHN SHADEGG, ® ARIZONA:  First of all the numbers are not right.  We‘re not releasing our numbers.  Some members have come out and publicly said they‘re on my team.  Our list of numbers is way higher than the public list. 

MATTHEWS:  Have you got the cavalry on the hill.

SHADEGG:  I think I have the cavalry on the hill. 

MATTHEWS:  Let me ask you about what you‘re different.  It seems to me that your party came in as a reform party in 1994, you were fiscal conservatives, you were hawks, you were going to cut the deficit. 

The deficit is now $400 billion.  You were going to get rid of all this loose spending.  The president hasn‘t vetoed a single bill in this presidency.  You‘re spending like Democrats at home and spending like Republicans abroad.  You‘ve got lower taxes, which is fine, except it adds up to big deficits.  You have money being earmarked for everybody‘s favorite hospital or college or wherever they went to school.  You‘re into all the old yuck that the Democrats were into over the years. 

What makes you guys reformers?

SHADEGG:  You‘ve given in part my campaign pitch.  We came in 1994 and made two promises.  We were going to shrink the size of government and make it smaller and tax less and regulate less. 

MATTHEWS:  Have you? 

SHADEGG:  And we were going to clean it up and I said we‘ve fallen substantially short of both of those claims.  We‘re spending in this Congress, and under this president, more than we did under the Clinton presidency. 

MATTHEWS:  Why did the appropriators take over for the reformers?  You guys run, all Republicans run, everywhere in the country, as people that are going to cut the size of the government waste and everything and thereby reduce taxes and have fiscal sanity and yet you have guys on appropriations who take pride in how much money they can spend. 

SHADEGG:  Absolutely.  In part, it‘s not a monolithic party, we have Republicans committed to that ‘94 agenda very aggressively and we have other Republicans who are old school and think spending is the way to get it done. 

In part also we‘ve not enacted reform.  We‘re still operating under the 1974 Budget Act, which drives spending, and we haven‘t done—

MATTHEWS:  How does it do that? 

SHADEGG:  It makes it almost difficult to cut spending.  We have a budget that‘s so complicated, numbers don‘t understand.  It‘s a budget that‘s not binding on it.  It has all kinds of loopholes in it where you can do off budget spending, so-called emergency spending.  In my state, they do forest fire funding.  Every year they lower the number and when the fires hit they go up.

MATTHEWS:  What‘s it like in the huddle when you meet at a caucus and cloak room and you try to meet what you say here on television, we have to cut the spending.  What do the old bulls say, the guys that run the subcommittees of appropriations, what do they say to you? 

SHADEGG:  They pat you on the head and say don‘t worry, kid, we‘ll get you through this.  We have to get reelected and that is not appropriate.  We‘re trying to do things better, but we are not really‘ aggressively going  after keeping either of the two promises we made in 1994 and I think that puts us in a crisis. 

It has created the air for the scandals that are going on right now to cause the American people to question whether we are any different than the team we replaced. 

MATTHEWS:  If you had to put in a newsletter which you all send home periodically to your voters, postal patron by address, would you rather put into it I just brought a big new bridge project or a new lake, whatever you need, I guess you could use a lake in Arizona, or would you rather say I cut spending by $10 billion thanks to an amendment I put in? 

SHADEGG:  I would much rather say I cut spending by $10 billion.  Quite frankly, I think that‘s true in most congressional districts.  What Congressmen will tell you about the earmark process is that some of them say look, I need that process at my level, relatively modest earmarks. 

MATTHEWS:  What‘s earmark? 

SHADEGG:  Earmark is designating spending in your district.  Some of them say I need that to override the bureaucracy in my district.  But they are all offended at the huge earmarks, at the ability of powerful members to seize vast amounts of money and to steer them to their friends or cronies. 

The Cunningham scandal is a perfect example of that.  Here was a guy who was in a powerful position and he steered money to people that are bribing him, in part because of the secrecy.  That‘s a part of not fulfilling the second promise, to clean up these practices, to make sure that nobody has disproportionate power. 

MATTHEWS:  Do the American people care that a Congressman goes into a subcommittee of appropriations and writes down, I will get $20 million for St. Mary‘s Hospital somewhere because it‘s in my district?  Does that bother anybody?

SHADEGG:  I don‘t know that it bothers enough people back home.  They‘ve been taught that this is the culture.  There‘s been an explosion in earmarks from 1400 in 1995 --

MATTHEWS:  Don‘t you have a lobbying firm (inaudible) that does this for a living, that wins these earmarks?

SHADEGG:  There is an explosion in lobbyists because we‘ve now sent the message that if you want something out of Washington, come ask for an earmark. 

That is not the culture we needed to create and that‘s why we need reform of the earmark process.  We need to be—it‘s driving spending, it‘s driving spending out of control. 

(CROSSTALK)

MATTHEWS:  If you had to take a lie detector test right now, could you say the Republican Party, of which you‘re a proud member, is for cutting spending? 

SHADEGG:  I believe it is a basic tenet of the Republican Party that we‘re for smaller government, including cutting spending. 

(CROSSTALK)

MATTHEWS:  ... president of the United States, George W. Bush has never vetoed a spending bill.  In the six—five years he‘s been in, he‘s never said, “Too much, no mas, I‘m vetoing it.  It‘s too much money.”  Never done it.

SHADEGG:  I‘m deeply disappointed in him and I‘m deeply disappointed that we haven‘t stood up to him as a Congress. 

He early on told me he understood it was the executive‘s role to rein in spending because the legislative... 

(CROSSTALK)

MATTHEWS:  Why doesn‘t he do it?

SHADEGG:  I don‘t know the answer to that question, but...

MATTHEWS:  Is Karl Rove telling him there‘s more votes and big spending; that the Democrats were right; that‘s how it works, you spend like hell, tax and spend, tax and spend, it works? 

SHADEGG:  I‘m going to defend George Bush. 

I think his agenda has been a national agenda.  He said we‘ve got to go after terrorists, and he‘s been extending democracy throughout the world. 

I think perhaps he‘s decided, “If I‘m taking that big bite there, I‘m not going to take a big bite on spending.”  That‘s the best defense I can give to you.

And I think the war on terror is a critically important fight. 

MATTHEWS:  OK. 

Are you going to win this thing? 

SHADEGG:  Yes. 

MATTHEWS:  Are you going to bring back the zeal of 1994? 

SHADEGG:  I‘ve got the zeal of 1994. 

MATTHEWS:  Was Newt Gingrich a reformer or a problem for the Republicans?

SHADEGG:  Well, Newt Gingrich...

(CROSSTALK)

SHADEGG:  Newt Gingrich was a reformer when he took power. 

MATTHEWS:  How about now? 

SHADEGG:  I, quite frankly, don‘t listen a lot to Newt Gingrich right now. 

He‘s a very bright guy. 

MATTHEWS:  Hedging...

(CROSSTALK)

MATTHEWS:  You‘re afraid of the guy, aren‘t you? 

SHADEGG:  No.  Let me make a point...

MATTHEWS:  He‘s trouble, isn‘t he? 

SHADEGG:  We need an idea guy in our leadership...

MATTHEWS:  Right.

SHADEGG:  ... and neither of my opponents are idea guys.

(CROSSTALK)

SHADEGG:  We had an idea guy in Newt Gingrich.  We had an idea guy in Dick Armey. 

I happen to disagree with Newt on some of the positions he‘s taken lately.

MATTHEWS:  You know what‘s funny in Washington?  There are some people who are really smart about advising other people and they‘re no good at advising themselves. 

SHADEGG:  That might be Newt Gingrich.

MATTHEWS:  I think so.

Anyway, thank you very much, Congressman John Shadegg, running for—a candidate for House majority leader, an old zealous guy from 1994.  Bring back the compact.

We‘ll have much more on the GOP leadership fight as the weeks go on. 

Plus, that tiff right now between first lady Laura Bush and former first lady Hillary Clinton.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

For more on the GOP leadership fight and the reaction to today‘s bin Laden tape, we‘re joined by Byron York, White House correspondent for the “National Review” magazine, and the “New York Times” columnist Bob Herbert. 

Bob, I want to start with you. 

This is a big story.  New York was hit on 9/11.  I‘m sure your paper is going to build this story up, bin Laden‘s latest message to us.  Does this guy know what‘s going on in this country politically?  Is he trying to work us?  What do you think he‘s trying to do here besides scare us? 

BOB HERBERT, “NEW YORK TIMES”:  Yes, I think he‘s aware of what‘s going on in this country politically.

But I think the big story here is that we missed the boat, that bin Laden and al Qaeda are the real enemies of the United States.  We should have gone after them hook, line and sinker right after September 11th and not let up until we had destroyed the organization, and instead we diverted the bulk of our resources into Iraq. 

MATTHEWS:  Do you agree with him that Iraq has cost us in terms of recruitment by terrorists like him; they‘ve been able to exploit our war in Iraq to win more converts, more recruits? 

HERBERT:  Well, I‘m not going to say that I agree with him, but I‘ll make...

MATTHEWS:  I‘m trying to get you to do that because then I can make hay out of it. 

(LAUGHTER)

HERBERT:  No, no, no. 

I mean, bin Laden is an evil guy and he and his organization need to be destroyed. 

But I think even at the beginning of the war in Iraq, just before the invasion, there were already front page stories in the major newspapers saying that the war was likely to recruit jihadists.  I mean, I just think that it was a terrible and tragic mistake. 

MATTHEWS:  Byron, your take on the memo. 

I read the whole thing.  Lots of stuff in there, he goes after Wolfowitz, he goes after Rumsfeld by name.  He talk about—he takes credit for the attacks in London and Madrid and 9/11.  He‘s not looking toward a war crimes trial, this guy.  This guy takes credit for everything evil. 

BYRON YORK, “NATIONAL REVIEW”:  Not at all. 

But you don‘t get the sense reading it that he‘s really dealing from a position of strength here.  I mean, he‘s careful to say that “Just because there hasn‘t been an attack in the United States since 9/11 doesn‘t mean that your—any—all of your preventive measures have done any good.  It means that we‘re still preparing and you‘ll see.” 

But this criticism of Bush about this—you know, all during the 2004 campaign, John Kerry and others said George W. Bush was so obsessed with Iraq that he took his eye off the ball of the real thing, which was al Qaeda...

MATTHEWS:  That‘s what Bob Herbert just said.

YORK:  Exactly.

And now we find in the NSA, al Qaeda surveillance thing that Bush has had his eye very closely on al Qaeda and his ear very closely to al Qaeda...

MATTHEWS:  To what effect, though?

YORK:  ... and they want to impeach him. 

MATTHEWS:  But he hasn‘t caught the guy. 

YORK:  Well, he has not caught the guy.  But the government at least says that the surveillance has resulted...

(CROSSTALK)

MATTHEWS:  Do you believe, Bob, if we had not pulled our troops out, some of the troops out of Afghanistan, if we had kept our main complement of force there, that we would have caught the guy? 

HERBERT:  I think it‘s likely that we would have caught them. 

I mean, I thought we needed a lot more troops in Afghanistan, and  think we needed to continue to press the fight with the idea that al Qaeda was the enemy and needed to be destroyed, and that we needed to do whatever it took to destroy that organization. 

(CROSSTALK)

MATTHEWS:  At the time, did you—in the days before we went to Afghanistan, did you support the decision by President Bush to take over Afghanistan, to knock off the Taliban? 

HERBERT:  Yes, I did, because, I mean, the Taliban clearly had sheltered al Qaeda. 

I mean, I can‘t think of anything that was more clear when you start talking about war and peace.  I mean, for us here in New York, the attack on the trade center was like an attack on the neighborhood. 

I mean, I‘m not a pacifist.  You go after these guys.  And I felt that we didn‘t go after them with everything we had, and I always thought from the beginning that that‘s what we should have done.

MATTHEWS:  Let me ask you this. 

The White House had a quick reaction, which is almost a conditioned response in the West, which is we don‘t negotiate.

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

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