updated 2/2/2006 10:31:10 AM ET 2006-02-02T15:31:10

Guest: Rahm Emanuel

CHRIS MATTHEWS, HOST:  Tonight, the president will make his case to the country that America needs to be the world‘s leader in fighting tyranny and in growing economically.  He will say this country needs to be the aggressor in both areas, security and economic strength.  According to a White House official, this is the first time a president has ever made this case, that the two are connected.  That‘s the scoop.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to this special edition of HARDBALL, previewing tonight‘s big State of the Union address by President Bush. 

Just two hours from now, the entire world will watch the president walk into the House of Representatives and deliver his most important speech of the year.  Unlike the thousands of speeches he gives every day in auditoriums, arenas and banquet halls, this one takes place in the people‘s chamber.  It‘s a chance for the president to tell us where we are, but even more important, more so a chance to tell us where we are headed. 

MSNBC will have continuing coverage of the president‘s speech all night tonight, before, during and after the speech. 

Tonight on this edition of HARDBALL, we will talk with our NBC News colleagues and Senate Majority Leader Bill Frist about what to expect tonight.  We will also talk with Democratic Congressman Rahm Emanuel about the state of the Democratic Party. 

But first, MSNBC‘s chief Washington correspondent Norah O‘Donnell has more on what President Bush has done and not done since his last State of the Union. 

NORAH O‘DONNELL, MSNBC CHIEF WASHINGTON CORRESPONDENT:  Chris, tonight the challenge for Mr. Bush is to turn around his troubled presidency.  He has just come off his worst year in office.  The domestic headlines tomorrow may focus on what the White House is calling the big four—budget cuts, health care, energy and education.  The global headline tomorrow is less clear, but the president is going to focus on a more aggressive stance in the world, because the president will say America cannot find security by, quote, “retreating within our borders.” 

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE:  Mr. Speaker, the president of the United States. 

O‘DONNELL (voice-over):  Advisers say tonight the president hopes in some ways to get a second chance to launch his second term. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I can‘t tell you how upbeat I am about our future, so long as we are willing to lead. 

O‘DONNELL:  Sources say he will offer new initiatives on health care, to deal with controlling skyrocketing costs.  On education, to improve math and science scores in high schools.  On energy, to combat the soaring costs of gas prices and heating oil, and on America‘s national security, to address rising concerns about Iraq and even Iran‘s nuclear ambitions. 

JOHN DICKERSON, SLATE CHIEF POLITICAL CORRESPONDENT:  The State of the Union speech can be kind of a silly speech.  Presidents talk about everything.  They throw in the kitchen sink. 

O‘DONNELL:  The president is also trying to regain his political standing.  His approval ratings are lower than any post-war president at the start of his sixth year in office, with the exception of Richard Nixon. 

The report card from last year‘s State of the Union address contains some low marks.  The president‘s top priority was remaking the Social Security system.  That failed.  Immigration reform is stalled after the president‘s guest worker plan drew fire from conservatives.  Mrs. Bush‘s tax reform proposal fell by the wayside.  His efforts to ban gay marriage failed, and his promise to control spending was destroyed by Hurricane Katrina.  The deficit is $400 billion, but the nonpartisan Congressional Budget Office saying Mr. Bush will not be able to cut the deficit in half by 2009, as he has repeatedly promised. 

DICKERSON:  He likes to speak in loud ways, and this is his best chance for the year.  And so, he may trim his sails a little bit, but the president still thinks a lot of what didn‘t happen.  It‘s still important that he said it out loud and in front of that big audience. 

(END VIDEOTAPE)

O‘DONNELL:  And tonight, the president will also say that the United States is addicted to oil.  And he‘s going to argue for new technology to combat that dependence. 

On Iraq, one White House adviser says Mr. Bush will acknowledge that some troops have already come home, and that more will follow, quote, “as conditions permit”—Chris. 

MATTHEWS:  Thank you, Norah O‘Donnell.  I am joined right now by NBC‘s chief White House correspondent, David Gregory; NBC‘s chief foreign affairs correspondent, Andrea Mitchell; and the host of “THE SITUATION” on MSNBC, Tucker Carlson. 

David, let‘s start with the big news tonight.  What is—what will be the headline out of the speech tonight?  

DAVID GREGORY, NBC CHIEF WHITE HOUSE CORRESPONDENT:  Well, I do think that a lot of the domestic push now will be the big headline.  We are seeing it already, this line about being addicted to oil.  A big energy push with rising gas prices.  We have heard this from the president before, but he is going to put new emphasis on it tonight, call for alternative fuel sources, talk about specific goals when it comes to weaning our dependence off of Middle Eastern oil.  So I think that will get a lot of attention. 

I don‘t think you are going to get a lot of breakthroughs when it comes to foreign policy on Iraq.  I think he will go out of his way to highlight the sacrifice of American troops as he—as he tries to deal with the anxiety of Americans who want our troops to come home, but he‘s going to make this broader argument, in a way that‘s different, White House advisers say, from past State of the Union addresses, to make sort of a philosophical defense of an aggressive American posture in the world.  It is something that creates a lot of anxiety for Americans.  And I think the White House feels like the president has to put this in some kind of context and explain why it‘s all necessary at this point. 

MATTHEWS:  Andrea, isn‘t this the thing that the world fears most, that this president will continue on this kind of what they would see as a triumphalist course of exploiting American power in the world economically, politically, but most importantly, militarily? 

ANDREA MITCHELL, NBC NEWS CHIEF FOREIGN AFFAIRS CORRESPONDENT:  His real audience is a domestic audience.  Whereas he was addressing four years ago the rest of the world with the axis of evil reference, now he is really focused, from a defensive posture a bit, given the polls, on telling the American people why it is important.  And he will cast it in terms of the war on terror.  A very strong defense of domestic eavesdropping, which of course they call terrorism surveillance, trying to claim that they are only eavesdropping on people with connections to al Qaeda.  That is their main push in terms of defending that NSA eavesdropping. 

But also, on the domestic side, I think it was proved last year that the big Social Security push was, by Republican admissions, a waste of time, a waste of political energy and capital, and, again, he is going to focus now on what they are seeing in their polling is the top priorities of the American people, which is health care and high energy costs. 

GREGORY:  And you know, Chris, if I could just pick up on that, what‘s so important about that if you look at the emphasis, is that the president is trying to give Republicans who are trying after all to keep the majority in Congress something to run on, and not Iraq.  Republicans in Congress don‘t want to campaign on the Iraq war.  They want to campaign on the possibility to legislate to get something done on areas like health care and energy policy, pocketbook issues that Americans are really concerned about, and, again, because they don‘t want to have to focus on Iraq. 

MATTHEWS:  That surprises me, Tucker, if that is the goal tonight, to spread it around, sort of to diversify the president‘s political portfolio, as we say on Wall Street.  Because if you read the headlines coming out of Reuters, the international news agency from Britain, and the headline is that the president is out there saying I‘m right about going to Iraq.

TUCKER CARLSON, HOST, THE SITUATION:  Right.

MATTHEWS:  The critics who say it‘s hurt us in the world are wrong. 

He‘s taking them on.

CARLSON:  I think that is the overarching, the grander theme here.  I mean, the president‘s point, at the end of this speech, will be: America is good.  We are doing good things.  A lot of Americans feel like America is screwing up and has been for the last couple of years, and that‘s been at the center of the Democratic critique.  Bush‘s counterpoint is, no, we‘re on a mission, we‘re on a sacred mission.  He‘ll say tonight, our job is not simply to bring security to the world, but to end tyranny.  We‘re doing something grand, something that befits America‘s power and status in the world, and I think that is a winning political message.  You can argue about whether or not it is true, but it works. 

MATTHEWS:  OK, is it winning in this sense?  Our NBC-“Wall Street Journal” poll just out yesterday asked people, is the war in Iraq—which is the centerpiece of what we‘re talking about—worth it or not worth it?  Simple question; 48 percent say not worth it.  Is one of the purposes of tonight‘s speech to turn those numbers around? 

CARLSON:  There is no question.  I mean, those are the numbers that will define Bush‘s legacy, not just his presidency. 

I think there is another factor that we‘re forgetting, and that‘s Iran.  And that potentially could be the most interesting and newsworthy portion of this speech.  I think a lot of Americans are not aware that there‘s this brewing crisis in Iran, and they certainly have no clue as to what American policy towards Iran is.  We may get some sense from the president about that subject.

MATTHEWS:  In a 2002 speech, David, I want to show this piece of tape to remind everybody watching, that this discussion about Iran‘s nuclear threat does not begin tonight or even last month.  Here is the president, let‘s listen to him, in his 2002 -- that‘s four years ago—State of the Union address. 

(BEGIN VIDEO CLIP)

BUSH:  States like these and their terrorist allies constitute an axis of evil, arming to threaten the peace of the world. 

(END VIDEO CLIP)

MATTHEWS:  David, there he is, Iran, Iraq and North Korea.  Many of us thought that was simply a bodyguard to make the case for going to Iraq, but now he is confronting Iran and its nuclear potential.

GREGORY:  But there is an important distinction.  I think Tucker is right, that the president, if he wants to do anything tonight, is to try to put Iraq, which is controversial among Americans—two-thirds in our poll want troops to come home—he wants to put it into a greater context of America‘s mission in the world, to try to get a greater sense of commitment and perseverance on the part of the American people. 

But note the distinction on Iran.  What he will emphasize tonight is that the world, not just a coalition of the willing but a true coalition in many senses, is working to confront Iran.  And why?  Because the president said it before, the United States does not have much leverage against Iran.  So it must be a kind of team approach.  And so when it comes to North Korea and Iran, there is really an attempt to rally the world, which a lot of critics will pick up on and say it‘s a much different approach than they had with Iraq. 

MATTHEWS:  So, Andrea, what is it?  Are we going out there alone like we did largely with Iraq, or are we doing what the president says he wants to do generally now, lead the world?  Are we falling back in the pack and allowing ourselves to be simply part of the posse going after Iran?  Which is it?

MITCHELL:  Well, in fact, being part of a posse is the default position because there is no military clear option.  Condoleezza Rice flew back from London today and will be at the State of the Union. 

What she marshalled was the best-case scenario, which is Russia, China, and the rest of the world lining up against Iran, agreeing that they should be taken to the Security Council for possible action, but delaying that action a month in deference to objections from Russia and China, to give at least another month to Iran to try to comply. 

We are facing a crisis with Iran and it will probably dominate the foreign policy, other than Iraq, for the next year.

Another point on the domestic agenda, he‘s focusing on health care and energy.  But watch it closely, because while trying to allay the fears of the American people, and as David said, give the Republicans something to run on on domestic issues in ‘06, there‘s no money in the budget to do anything about either.  It could be something of a shell game and we really have to look at the details. 

MATTHEWS:  I love the phrase they were using earlier today, visionary but not ambitious.  That‘s a tricky one.  We will be right back with David Gregory, Andrea Mitchell and Tucker Carlson.  You‘re watching HARDBALL‘s preview of the State of the Union tonight on MSNBC.

(BEGIN VIDEO CLIP)

ANNOUNCER:  In 2003, President Bush included a now-infamous sentence in his State of the Union.

BUSH:  The British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa. 

ANNOUNCER:  Those 16 words, later retracted, were openly challenged by former ambassador Joe Wilson, whose wife‘s covert CIA identity was revealed to the press, triggering Patrick Fitzgerald‘s ongoing CIA leak investigation. 

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, four years ago, it was the axis of evil.  Last year it was overhauling Social Security.  What will be the headline from tonight‘s State of the Union?  HARDBALL returns after this.

(COMMERCIAL BREAK)

MATTHEWS:  We are back with NBC News Chief White House Correspondent David Gregory, NBC News Chief Foreign Affairs Correspondent Andrea Mitchell and MSNBC‘s Tucker Carlson. 

Let me go to a question that we raised in our NBC poll raised yesterday and came back with a rather powerful answer.  We asked people, The Wall Street Journal and NBC poll, to name the one wish that would happen this year that we‘re in right now, 2006.  The overwhelming victor was bring the troops home by the end of the year.  David, you first, will the people of America feel like they have a better chance of having that wish filled after tonight than before tonight? 

GREGORY:  This is kind of a rolling announcement by the president.  He has already articulated the goal of bringing troops home, reducing the number to perhaps below 100,000, although he hasn‘t actually said that.  I don‘t think we will get any farther down that line.  I don‘t think the president wants to do that.  He wants to leave it in the hands of his commanders on the field. 

We know that there is such volatility in Iraq, that so much can change, so he doesn‘t want to make that kind of commitment.  I do think he wants to leave the impression that there is some kind of a turning point here, and that Americans in the course of this year can look for a smaller number of troops in Iraq. 

MATTHEWS:  Will this, Andrea, be like Nixon back in ‘69 and ‘70 saying I‘m not pulling out of Vietnam, I am beginning a slow Iraqification process here, and it‘s going to take a while? 

MITCHELL:  I think, he is trying to make Americans feel better about the war so there will be heroes from the war and, by doing that, he is trying to make people feel that it is worth it.  He knows full well from the poll numbers you see and that they see that the American people want the troops home. 

I don‘t know that I‘d compare it to Nixon, but it is certainly an attempt to show them light at the end of the tunnel.  And make people feel that at some point it will be better.  David correctly pointed out he will not be specific about numbers.  But all of the signals coming out of the Pentagon are that they are looking for ways to make the Iraq security forces stronger and give them more responsibility and as that happens, start drawing down American troops. 

MATTHEWS:  The president has always said, Tucker, you can‘t signal to the enemy what we are up to.  You can‘t let them know we are pulling out. 

But if he begins a process of pulling the troops out, which gets us below

the below 100,000 mark by the end of this year, the enemy—the

insurgents, the al Qaeda elements, the inside and the outside folks there -

will all get the message that we‘re leaving. 

CARLSON:  Of course.  And there‘s the counter-conservative argument that is people will never do for themselves what they think you will do for them.  Once we signal we are pulling our troops out it will be an inspiration...

MATTHEWS:  So this is a kick in the ass basically.  We are leaving, get your act together. 

CARLSON:  Everybody wants the troops home.  I‘ll tell you what people want even more is not to be humiliated, just to go with the Vietnam corollary.  Who remembers on what day we stopped sending troops to Vietnam.  What people remember, April, 1975.  The last helicopter lifting off the roof of the embassy in Saigon.  They hate that.  Americans hate being humiliated.  I think to the extent Bush gets up there and reassures people we are not going to be humiliated, we are not going to lose, that works. 

MATTHEWS:  That was long after our troops were out. 

CARLSON:  That‘s exactly my point.  People don‘t remember ‘73 as this triumphant year when our troops came home.  They remember ‘75 as this humiliating moment for the United States.  That‘s what they want to avoid. 

MITCHELL:  The other important thing is associating the Iraq war with our standing in the world and with the war against terror.  The president has been helped in that, by total coincidence, helped by these recent tapes from Osama bin Laden and Ayman al-Zawahiri, reinforcing the fact that we have to rally around the commander-in-chief.  That is the message.

MATTHEWS:  So we‘re getting our foreign policy cues from al Qaeda as to what to do in Iraq.

MITCHELL:  Well they‘re the enemy.  They‘re the enemy against the United States and certainly there now is an acknowledgement that they‘re, by all experts, that there is a connection between al Qaeda and al-Zarqawi in Iraq.  There may not have been before the war, but now there is.

MATTHEWS:  Well the question we have to ask is, are they happier having us in Iraq, being pained and suffering and wounded and killed and hated in the world, or would they be happier for us to leave?  And that‘s a hard call to know what our enemy would like.  David Gregory?

GREGORY:  Well I think that‘s right and I think there‘s another aspect to this.  The president is in a much different political position now than when he first started making the argument about trying to put Iraq in the greater context of war on terror. 

This is now a 39 percent president in terms of his personal standing, his personal job approval.  And that really does matter, because trying to put it into the context of our standing in the world and Iraq being part of that is becoming a more difficult argument for him to make and our polling bears this out, that Americans may want him to stand tough on the war on terror, but are getting increasingly concerned about us staying in Iraq because they see it as so volatile.  So again, that‘s a huge challenge for him tonight.

MATTHEWS:  He‘s at 39 percent in the NBC/”Wall Street Journal” poll.  You first, Andrea, I want a numerical guess here, because it has to be a guess—what does he need to govern?  I mean, some people think he really needs to hold the Republican right and some of the center, about 40 some percent is fine for him.  Others might say he needs a majority of the American people behind him.  Does he think he needs a majority support behind him or can he run this war and run this country as a tough underdog?

MITCHELL:  I think he knows he‘s going to have to, but having a Republican Congress certainly helps.  If he can bump it up to 45 percent he can get through this year and not lose Congress because those Republican seats were so well gerrymandered that very few of them are vulnerable.

MATTHEWS:  Gotcha, can he make it with 45, is that a reasonable goal for the president?

CARLSON:  If he holds—look, if he loses the House of Representatives, the Democrats take it, that‘s a tragedy for this president and the Republican Party.

MATTHEWS:  They get the subpoena power. 

CARLSON:  Oh, it‘s a disaster.

MATTHEWS:  They can investigate him then.

CARLSON:  It‘s a disaster.  You‘re hearing talk...

MATTHEWS:  ... So he needs enough support to hold the Congress. 

CARLSON:  That‘s exactly right.

MATTHEWS:  Is that how you see it, is that how they see it at the White House, David Gregory?

GREGORY:  Well I won‘t put a number on it, but I think they recognize that it‘s not enough to try to have the base when it comes to the war, they need more than that, because guess what?  They don‘t even have the base solidly behind them on the war. 

MATTHEWS:  OK, thank you very much David Gregory.  We‘ll all be watching tonight and talking again.  Andrea Mitchell, chief foreign affairs correspondent, Tucker Carlson, my colleague here at MSNBC.  Tucker will be blogging live during the State of the Union, talk about excitement on HARDBALL.MSNBC.com.  He‘s going to be listening to your attacks on us. 

When we return, we will check in with HARDBALL correspondent David Shuster, staked out at one of Washington‘s hot spots.  This is going to be fun.  And the people over there at this saloon nearby here watch the State of the Union with David Gregory and show their reactions.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  This is going to be very interesting.  HARDBALL‘s David Shuster is doing double duty tonight, the State of the Union night.  He is at Bistro Bis, a popular Washington, D.C. restaurant, at least with us here at HARDBALL.  And political watering hole, as you can see, where he will be tracking the State of the Union by the numbers, and also monitoring real-time blogging on the Internet.  He‘s joined by MSNBC.com national affairs writer Tom Curry.  What do you got for us tonight, David?

DAVID SHUSTER, HARDBALL CORRESPONDENT:  Well Chris, we‘ll talk to Tom in just a second, but just a little bit about Bistro Bis.  Senator Ted Kennedy was here for breakfast.  Governor Tom Vilsack was here for lunch.  At the moment, we‘ve got a couple of lawyers from Minnesota who are in town to watch the State of the Union. 

We‘re going to get to everybody‘s reaction, we‘re going to do the live blogging as it happens.  We‘re also, of course, going to be working with Tom Curry, our esteemed colleague from MSNBC.com.  And Tom, you‘ve already got a fascinating story on the Web site tonight about Justice Alito.  Tell us about it.

TOM CURRY, MSNBC.COM NATIONAL AFFAIRS WRITER:  Well tonight is the first time a president, at least in the television era, a president walks into the chamber, the House chamber—the State of the Union address, and sitting in front of him in the front row is a justice who was sworn in only a few hours earlier.

This has never happened before, so he gets a chance to celebrate his victory, 58-42 in the Senate today.  And there were some of the liberal groups like People for the American Way, who oppose Justice Alito, who suggested that in order to demonstrate his independence from President Bush, that he not show up for the event tonight.

SHUSTER:  Now I understand that you then took that and went to Senator Specter and got a fairly colorful quote from him.

CURRY:  Yes, Senator Specter said, “I think he ought to do what he damn well pleases.  He can take the night off if he wants to.”  But the protocol is justices, most of them, show up for the State of the Union and he said it doesn‘t mean they are beholden to the president.

SHUSTER:  So Tom, as we blog the State of the Union and as we talk about with people here about what they‘re looking at and as we‘re counting the number of times the president uses the world health care or reform or Iran, give us a sense about what the blogs are focused on right now, the Democrat and Republican blogs, going into State of the Union.

CURRY:  Well I took a look early at some of both the liberal and conservative blogs and one of the common features you see on both sides is suggestions for drinking games.

Every time that President Bush mentions a particular phrase, they go and get another drink.  On the other side, one of the conservative bloggers said every time “culture of corruption” is mentioned in Tim Kaine‘s rebuttal speech, go get another drink.  So they‘re already at that—engaged in that game.  One of the liberal blogs pointed out that President Bush has talked about ending our addiction to foreign oil, ending our dependence on foreign oil, in four previous State of the Union address.  So there‘s already prebuttal going on in these blogs.

SHUSTER:  And Chris, we will of course with Tom be keeping an eye on what the people here at Bistro Bis think tonight as the speech is given.  Chris?

MATTHEWS:  OK, thank you very much David Shuster and Tom Curry over at Bistro Bis, which is only about two blocks from here.  When we return we will check back in with Norah O‘Donnell at the Capitol.  Plus U.S.  Congressman Rahm Emanuel of Illinois, Pat Buchanan, Bob Shrum and Senators Bill Frist and Joe Biden.  That‘s all tonight, coming back after this commercial.  This is HARDBALL‘s preview of the State of the Union on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We are 90 minutes away right now from the president‘s State of the Union address, and MSNBC chief Washington correspondent Norah O‘Donnell is back with us from the Capitol itself.  Norah, give us some countdown sense of that place right now.

O‘DONNELL:  Well, clearly, the buzz, as many of the lawmakers are already filing in, getting their spots in the House chamber.  The big challenge for the president tonight in many ways is to restore credibility in his leadership, badly damaged by Katrina in the past year and growing doubt about the war in Iraq. 

This is the president‘s fifth State of the Union address, but he‘s just coming off his worst year in office.  Thirty-nine percent approval ratings, you‘ve talked about the NBC News-“Wall Street Journal” poll.  Two-thirds of the American people now want the troops to come home from Iraq.  A senior White House adviser saying the president will talk about Iraq, certainly draw out to the larger war on terror and our stakes over there, but in terms of troops coming home, the president will note that already the number of troops has been reduced to some degree, and that they will continue to come home, quote, “as conditions permit.” 

That being said, on the global headline, he will also talk about Iran and their nuclear ambitions.  He will talk about taking an aggressive stance in the world.  But the domestic headline are going to be about what they are calling the big four—education, energy, health care and budget cuts.  And so then the president is going to hit the road in the coming weeks and give four major policy addresses on each of those issues. 

On a larger sense, Chris, you can get a sense of what this president is trying to do.  He realizes this is a huge night.  The stakes are enormous.  Tens of millions of Americans are going to be watching, and we‘re all covering it and showing it on television.  So the president is going to use this opportunity to try and recalibrate his presidency to some degree, give something for the American people to take away.  And then he‘s going to hit the road.

I think in many ways too, this White House realizes that they had a really bad year last year because the president in many ways seemed isolated.  Of course, all the problems associated with Katrina.  So they are going to put him out on the road, have him return to being campaigner in chief, if you will, continue that dialogue with the American people. 

One other note, one Republican pollster, who deals with a lot of congressional candidates, has said the goal for the president tonight is to create a quote/unquote “positive environment” for all those Republicans who are facing a very tough reelection.  So the president has got to help his party tonight as well—Chris. 

MATTHEWS:  OK, thank you very much, Norah O‘Donnell. 

As House Republicans get ready to vote for new leaders this week, House Democrats are hoping to gain seats this year in 2006.  Today, the Democrats launched a new line of attack on Republicans, calling them the rubber-stamp Congress, beholden to President Bush.  And Tom DeLay—

Congressman Rahm Emanuel of Illinois is the chairman of the Democratic Congressional Campaign Committee.  Congressman, thank you.

Your job, in addition to being a representative of the people of Illinois, is to get the control of the Congress back for the Democrats.  You need 15 seats to do it.  How important is Bush‘s performance tonight? 

REP. RAHM EMANUEL (D), ILLINOIS:  Well, it‘s...

MATTHEWS:  If he does really well tonight, does it make it harder for you guys? 

EMANUEL:  Yes, but remember, it‘s not like people don‘t have lives that they lived, where they haven‘t experienced a 58 percent increase in premiums over the last five years in health care, they‘ve experienced a 78 percent increase in energy prices in the last two years alone.  Education is going up 38 percent in the last five years for college tuition, and median income has been flat.  It‘s not like he can wipe that away.  They know their lives, they know the context, and worst of all, they also know that the country, both here at home and overseas, is not heading in the right direction. 

And what the president is asking you to do is sign on for another two years of it.  And what Democrats are saying is this is an election about change.  You want the status quo, it‘s the Republican Party.  You want change, it‘s Democrats. 

MATTHEWS:  Change to what?

EMANUEL:  Change to priorities that put our fiscal house in order, and reinvest in America‘s future.  That is by making sure that if you work, you have health care.  In the 21st century, college education is universal, as high school was in the 20th century.  That—ensure that we create an institute for science and engineering to marvel the NIH for health care.  To make sure we create a hybrid economy for our energy and cut our dependency on foreign oil in half.  And to make sure that the next Congress, when the 9/11 Commission comes back, you don‘t get an F, the president of the United States and the Congress, for not implementing what should be done to protect Americans. 

That has been the record for the last six years, and we saw it on the last point, dramatically, in Katrina, down in Katrina, that this government wasn‘t ready to protect Americans. 

MATTHEWS:  You listed a lot of great goals there, health care for every American, everyone likes that.  Energy independence, all very costly programs.  You are already running in the Congress a $400 billion deficit.  Where are you going to get the money? 

EMANUEL:  We are going to do it by putting our fiscal house in order and making...

MATTHEWS:  What does that mean?

EMANUEL:  I think what we should do is a summit on the budget, to put us on a five-year path to balancing the budget.  Every year, this president for the last four years, has asked for an increase in the debt limit by over $800 billion, adding $2.9 trillion to the nation‘s debt, more than all of his predecessors, 42, combined.  They got us into this fiscal mess.  We‘re ready to work together to get rid us of this fiscal mess, and you cannot be competitive in the future with a $3 trillion tag on your neck. 

MATTHEWS:  The voters in our poll, NBC-“Wall Street Journal” poll, trust the Democrats on practically every issue.  They have a problem with your leadership.  They think the Republicans are stronger when it comes to leadership.  They particularly have a problem with one issue, taxes.  They believe the Democratic Party can‘t wait to get control again so it can raise taxes.  Are they wrong or right? 

EMANUEL:  No, we are not going to raise taxes.  In fact, you know, Senator Wyden and I...

MATTHEWS:  But when you say put your fiscal house in order, what do you mean by that, in English? 

EMANUEL:  What I am saying is, and I believe this, Senator Wyden and I have a comprehensive tax reform bill that in fact reduces—eliminates AMT, which is hitting a lot more middle-class families...

MATTHEWS:  Minimum tax. 

EMANUEL:  Yes, minimum tax.  It simplifies the code.  Eighty-five percent of Americans would actually get a tax cut, not an increase.  And in fact, it helps us put us on a path to actually reduce the deficit by $100 billion.  But you‘re going to have to deal with the comprehensive picture. 

But I‘ll tell you what we won‘t do.  We won‘t, when we say to America‘s future, cut assistance on college aid by $14 billion and you give ExxonMobil $14 billion to execute their business plan, which is drill for oil.  That‘s the wrong choices.

MATTHEWS:  If you were given...

EMANUEL:  We won‘t do a prescription drug bill that when before the ink is dry, it doesn‘t go—from 390, it goes up to $800 billion.  That has been—this crowd has been totally reckless with the taxpayers‘ dollars.  And Democrats have not only balanced the budget, we created three surpluses.  And they have nothing to show on that.

MATTHEWS:  Tonight, the Democrats have chosen as the respondent to the president Tim Kaine, the newly-elected governor of Virginia.  You have hundreds of congresspeople and senators in the Democratic Party who will be in that chamber tonight.  They have an institutional reason to respond to the president, because he‘s talking to them.  State of the Union address.  Why did you go outside that chamber to pick a new governor?

EMANUEL:  Well, because he represents, I think, a couple of things. 

One, fundamentally what we‘re about, change.  And a new direction.

MATTHEWS:  Change from you guys? 

EMANUEL:  No, but—no, but when he ran—let‘s go back to that campaign.  The Republican ran on basically George Bush‘s agenda.  Tim Kaine ran, Governor Kaine ran on what I just talked about, putting our fiscal order and our values and priorities into place, by investing in education and health care, making sure Americans can compete. 

He won in what is quote/unquote, “a red state,” because he talked about the future that we can succeed in.  And so we wanted a fresh face, somebody, a young face, who‘s outside of Washington.  Our policies reflect what Democratic governors are doing all over the country, like my governor in Illinois who‘s now got a universal children‘s health care package, more than what the country has done.  Here in the Congress tomorrow, the Republicans will vote to cut 6 million kids from kids‘ health care.  My governor is giving universal universal health care, a Democratic governor.  That‘s the type of investments that make sure Americans have a future that they can be proud of.

MATTHEWS:  I sense, listening to you, Ron, a congressman ...

EMANUEL:  Rahm.

MATTHEWS:  Rahm—and listening to Howard Dean, the chairman of your party, that you are trying to adjust the image people have of your party, correctly or not.  I mean, you‘re saying—first of all Howard Dean a couple of weeks ago on this program said we are not a pro-choice party. 

Well, we believe in individual decision-making in the household, but we don‘t like—that phrase doesn‘t work for us.  And now you are picking this guy who really ran on the fact that he was a religious kind of guy, a family guy, not a secular person at all.  Is your party trying to assume or to pick up some of that religious community vote? 

EMANUEL:  Yes, well, I mean ...

MATTHEWS:  Is that what you‘re trying to do.

EMANUEL:  No.  We are a party, individuals of faith and we‘ve also got to be respectful of people of faith.  And, yes, we did pick somebody who ran—didn‘t run on his faith as a tactical way, but said that what he believes in, both as a government and the policies, are very much influenced by his faith. 

MATTHEWS:  Right, he did.

EMANUEL:  And that, to me—Democrats all across this country at all levels of office are committed to that.  He is an exemplification of a—not just electoral success of that, but also somebody who fundamentally has said—and he‘s took for it on certain policies—but this is my core values.  And yes, we are trying to say we are Democrats have core values and that‘s what we need to do.

MATTHEWS:  Great to have you here.  Congressman Rahm Emanuel of Illinois.  Thank you very much.

EMANUEL:  Thanks.

MATTHEWS:  Chairman of the Democratic Congressional Campaign Committee. 

When we return, Patrick J. Buchanan and Robert Shrum, and Joe Scarborough.  Big three coming here.  This is HARDBALL‘s preview of the State of the Union, only on MSNBC.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  In 1995, President Bill Clinton faced the first Republican-controlled Congress in decades, led by new House Speaker Newt Gingrich. 

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES:  If we agree on nothing else tonight, we must agree that the American people certainly voted for change in 1992 and in 1994.  And as I look out at you, I know how some of you must have felt in 1992. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  Let‘s bring in the heavy hitters now, MSNBC political analyst Patrick J. Buchanan—you know him from presidential history; HARDBALL political analyst Bob Shrum—you know him from not winning presidential elections; and Joe Scarborough, host of “SCARBOROUGH COUNTRY.” 

Shrum, you‘ve got a great sense of humor. 

BOB SHRUM, HARDBALL POLITICAL ANALYST:  You know, I mean, that‘s terrific.

MATTHEWS:  It‘s even better than your political knowledge.  Look, I got to ask you, start tonight, Bob.  I‘ll put you on offense to give you the joy of life here.  Do you think there is a way that President Bush can say something tonight that you‘ll like? 

SHRUM:  Sure.  I mean, he could present, for example, a real program on energy alternatives that was financed, for example, by going after these huge profits that the oil companies are making right now. 

He could endorse Senator Kennedy‘s bill of Medicare for all so that we could actually get health care that people could afford to everyone in this country. 

He could admit that on Iraq, he has made a series of mistakes and that he‘s going to try and move in a different direction.  I‘d like that.

MATTHEWS:  And you would say afterwards he apologized, we got him. 

SHRUM:  No, actually I‘d say—listen.  I think Democrats were prepared, when he came in in 2000, despite a very bitter election, to work with him.  And they worked with him on No Child Left Behind, and the deal was you pass the reforms, then you get the resources.  What happened?

We passed the reforms, and we were denied the resources.  In fact, last year‘s budget cut education, and now we hear the president is going to come up there tonight and say one of his top priorities is education.  You know how to show it, invest in it. 

MATTHEWS:  OK, Patrick and Joe.  So what do you expect he will say, Joe?  You first.  What will be the headline tonight?

JOE SCARBOROUGH, HOST, “SCARBOROUGH COUNTRY”:  Well ...

MATTHEWS:  It‘s not going to be those things.  That‘s too complimentary to the Democrats. 

SCARBOROUGH:  He‘s obviously going to talk about moving forward in the right direction on Iraq.  He‘s going to talk about national security.  But Chris, all of this—I mean, this is just gibberish.  It‘s all footnotes. 

Conservatives don‘t care if he goes out tonight and says he wants to socialize medicine and makes Shrum his vice president because history was made today with Alito going on the court. 

Listen -- 30 years from now people are going to be talking about Alito and John Roberts—who are far more conservative than even Shrum could imagine—how these two justices are going to be seen as a counterweight to who Eisenhower picked, Warren and Brennan.

These two guys are going to change the Supreme Court for the next 50 years.  Today is a remarkable day for conservatives.  They really don‘t care.  Democrats can say whatever they want to say. 

I cannot overstate this too much.  This is a historic day, and for Democrats and for the ACLU and for groups that want to uphold Roe v. Wade, they will look back today as the day that began the unraveling of a lot of things that began with the Warren court that has shaped Washington‘s culture. 

MATTHEWS:  Pat, can tonight be more important than the confirmation of Judge Alito to the Supreme Court? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  No, it can‘t.  Judge Alito—

I think Judge Alito brings us one step away from what Joe is talking about, the great counter-revolution we‘ve been working on for—ever since Nixon came to office. 

MATTHEWS:  So you‘ve got he and Roberts and Scalia and Thomas as a faction.  Do you think they need one more vote to make this change.

BUCHANAN:  I think they need one more vote to really—to win every single decision, because I think Kennedy is very much a swing man and he‘s affected by The Washington Post and has been played up and he is going to take over for Sandra Day O‘Connor and get all that good ink so I think we need one more. 

Let me say, I am a little disappointed in what I have seen of the president‘s State of the Union so far, Chris.  He says we can‘t hide within our borders.  Conservatives would like him to defend the borders.  He is attacking isolationism and protectionism.  Look, it‘s free trade that gave us a $780 billion trade deficit.  It is not isolationism that got us into Iraq, which is pretty much a mess. 

I think the president, from what I‘ve seen, it sounds defensive.  I was expecting to come here and see the president stand up and really go all out instead of attacking Buchananism, if you will, which is not exactly in power right now. 

MATTHEWS:  So you‘re saying this president is not a true conservative. 

He is a neo-conservative or he is something else.

BUCHANAN:  He is a great society Republican.  He is Woodrow Wilson in foreign policy, FDR in trade policy, he‘s LBJ on immigration, but he‘s Reagan on judges.

MATTHEWS:  Why did you vote for him twice? 

BUCHANAN:  I voted for him once.  He is Reagan on judges. 

SCARBOROUGH:  He is also Reagan on tax cuts, Reagan on tone.  You are going to see a dramatic shift.  I hate to keep going back to the Supreme Court, but that is what matters today. 

Kennedy, who was offended sometimes by Thomas and Scalia‘s heavy-handedness, is going to be swayed by Roberts, a real shmoozer, by Alito.  You will see a dramatic change in this court. 

BUCHANAN:  Get the camera to focus on Teddy Kennedy when the president points out Alito and maybe Mrs. Alito.  See if he stands up and applauds. 

SHRUM:  I don‘t think he should stand up and applaud.  Let me tell you, we should have had Joe and Pat testify before the Judiciary Committee and tell the truth about the consequences of nominating—

(CROSSTALK)

MATTHEWS:  And a reminder, all night long tonight we‘ll have live blogs from MSNBC‘s Joe Scarborough, Tucker Carlson, MSNBC.com‘s Tom Curry and the hardblogger college all-stars, just go to our Web site, HARDBALL.msnbc.com.  Big night on all media tonight.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Pat Buchanan, Joe Scarborough and Bob Shrum.  That‘s the old hall of the House of Representatives.  All the Democrats will be out there afterwards saying what the president should have said. 

Bob Shrum, the president of the United States is running at 39 percent approval right now.  The American people in every kind question of question we asked them said bring the troops home.  The war isn‘t worth it.  Why then does the president win on every question having to do, who will best protect us? 

SHRUM:  I think, first of all, they have spent all the time since 9/11 trying to make 9/11 Bush‘s heat shield.  It‘s what he used in the 2002 elections.  It‘s what he used in 2004 and barely won with.  I don‘t think it‘s going to work in 2006. 

I think people are going to decouple 9/11 from the Iraq war and these other issues that concern them.  I think Bush is going to be held to account and, by the way, if my two friends get their way and the Supreme Court overturns Roe v. Wade, it‘s going to be the Republican party that pays a huge price either in 2006 or 2008 because that‘s not where the country is at. 

MATTHEWS:  Joe, stay on that point there, I think.  The question—it is interesting, the president tends to lose on particular questions about the NSA.  People do worry about it.  They don‘t like Iraq in particular.  But when you put the whole grab bag together, they trust something about him. 

Is it the 9/14 experience down at the rubble when the president was so strong or something he has done lately that made people say he is the guy I want in the subway in the middle of the night when it‘s dangerous.  I may not like his policies but I want that strength.  What is it people like about him? 

SCARBOROUGH:  I always gave this test to voters.  I said, if you were out in the woods and you got called away and you were camping with your son or daughter and you got called away, who would you want on the front porch protecting your kid until you came back the next morning with a shotgun on their lap?  George Bush or John Kerry.  Everybody laughed, they said George Bush because he would shoot first and ask questions later.  John Kerry would try to nuances the situation.  People love Bush because he says this is who I am. 

SHRUM:  Joe? 

SCARBOROUGH:  I‘m a common plan from Midland, Texas.  Hold on, Joey, you will get your chance. 

SHRUM:  Don‘t you think he would ask for a deferment so he wouldn‘t have to sit on the porch with a gun or go into the national guard? 

SCARBOROUGH:  Exactly.  George Bush though knows exactly. 

(CROSSTALK)

BUCHANAN:  It goes all the way back to Vietnam.  The Democrats marched us in and then they called it a dirty, immoral war.  Ronald Reagan came in and said it was a noble cause.  The years on “Platoon” went out, what came back was “Rambo.”  We were soldiers once and young.  People believed the Democratic party.  I think they lost it all, Chris, in Vietnam. 

(CROSSTALK)

MATTHEWS:  Thank you Pat Buchanan and thank you Joe Scarborough and Bob Shrum.  At the top of the hour live coverage of the president‘s State of the Union address.  I‘ll be here.  And afterwards we will be on till 1:00 a.m. eastern time with reaction from guests including former New York Mayor Rudy Giuliani talking about terrorism and Senator Jon McCain talk about the presidency, plus NBC Nightly News anchor Brian Williams and the moderator of “Meet the Press,” Tim Russert.

Right now it‘s time for “THE COUNTDOWN” with Keith Olbermann.

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

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