updated 2/23/2006 10:59:18 AM ET 2006-02-23T15:59:18

Guest: Thomas Gilmour; Jay Ahern; Ed Rogers; Terry McAuliffe; David

Gergen; Pete King

CHRIS MATTHEWS, MSNBC ANCHOR:  Tonight on the Waterfront, why are the same politicians who bought all the Bush assertions about Saddam's nuclear weapons and mushroom clouds and missions accomplished and happy Iraqis and this war's going to pay for itself, now questioning him on home port security.  Let's play HARDBALL.

Good evening, I'm Chris Matthews.  What do you have here—what we have here is a failure to communicate.  Today the White House said President Bush did not know about the deal to hand over major port operations in America to a state-run Arab company until it was a done deal. 

This, one day after the president threatened to use his veto power to kill any congressional bid to stop the deal.  Whether an Arab country should be allowed to control American ports has sparked a national debate and has fueled a Republican revolt in Congress.  The big question is, can the Bush administration take a loss in the debate over national security? 

So why would the White House want to pit itself against congressional Republicans, especially in an election year?  In a moment we'll talk to New York Congressman Peter King and later, Pennsylvania Rick Santorum.  But first, HARDBALL's David Shuster has this report.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  In another case of President Bush being caught off base again, spokesman Scott McClellan acknowledged today, the president did not know about the sale of U.S. ports until after his administration had already approved it.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  The president learned of this recently, he became aware of it.  And there was no objection raised by any of the departments during the review process or any concerns expressed about potential national security threats.

SHUSTER:  McClellan referred to the group of senior government and White House officials who examined these transactions and are known as the Committee on Foreign Investment in the United States.  The committee is chaired by Treasury Department Secretary John Snow and includes officials from the departments of defense, justice, commerce, state and homeland security.

After the president was briefed on what his administration had already decided, and in the wake of objections by Congress, the president, according to McClellan, spoke with the cabinet secretary of every government agency involved and asked...

MCCLELLAN:  ... Are you comfortable with this transaction going forward?  And each and every one expressed that they were comfortable with this transaction going forward.

SHUSTER:  But when Secretary of Defense Donald Rumsfeld was asked about this issue, Rumsfeld said he didn't know anything about it until a few days ago.

DONALD RUMSFELD, SECRETARY OF DEFENSE:  I wasn't aware of this until this weekend, as I think is the case with Pete.

SHUSTER:  And opponents continue to arresting to argue the Bush administration has not done its due diligence.

SEN. CHARLES SCHUMER (D), NEW YORK:  The review has been casual and cursory.  And the bottom line is very simple.  When it comes to security, you can't be too careful.

SHUSTER:  Democrats regularly criticize the president, but now even top Republicans are against him.  House Speaker Dennis Hastert and Senate Majority Leader Bill Frist are promising to block the sale.  They maintain it is inappropriate to allow U.S. port facilities to be run by a state-owned company of the United Arab Emirates.

The conflict between top Republicans and the Bush White House, which is in the midst of negotiating a free trade deal with the UAE, has left bitter feelings all around.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  And it will send a terrible signal to friends and allies not to let this transaction go through.

SHUSTER:  The president's advisers are infuriated that Senate Majority Leader Frist only gave the White House an hour's notice this week before publicly opposing the president.  But what notice did White House staff give the president about the transaction?

TOM RIDGE, FORMER HOMELAND SECURITY SECRETARY:  I'm not sure who said what to whom and when they told the president.  But it's pretty clear, at least that someone may have underestimated the political fallout.

SHUSTER:  And top Republicans in Congress are apoplectic that White House officials didn't think about that possible fallout ahead of time.  Behind the scenes, GOP lawmakers today described intense efforts to negotiate a compromise with the White House and White House officials to help soothe members of Congress acknowledged making a mistake.

MCCLELLAN:  We probably should have briefed members of Congress about it sooner.  And we are talking with members of Congress about it.

SHUSTER:  Congress is also hearing from some high profile lobbyists, including Bob Dole.  NBC News has confirmed the former Senate majority leader and Republican presidential candidate has been retained by Dubai Ports World to help push for their transaction. 

Meanwhile, if D.P. World needs any strategic advice, the company has an existing consultant arrangement with Madeleine Albright, the former Clinton secretary of state. 

Against all of this, top congressional Republicans appear to be digging in their heels, promising not just to block the sale, but reform the way ports are operated and run. 

(END VIDEOTAPE)

SHUSTER:  As it stands, most U.S. port facilities are owned and operated by companies based overseas, including companies based in China.  But this transaction involving the Arab Emirates has touched a nerve across Capitol Hill.  And in a role reversal, it is now President Bush who is being lectured about this post-9/11 era.  I'm David Shuster for HARDBALL in Washington.

MATTHEWS:  Thank you David Shuster.  Republican Congressman Peter King of New York is chairman of the Homeland Security Committee.  He's been one of the loudest critics of this deal.  And when Congress reconvenes next week, he'll be introducing emergency legislation to suspend the ports deal and require a 45-day investigation into Dubai Ports World.

Also with us is U.S. former presidential adviser David Gergen, who is currently teaching at Harvard's Kennedy School of Government.  Congressman and David, let me ask you this question.  Were you both surprised?  You first, Congressman, to know that the secretary of defense had no idea that this deal had gone down even though his department is supposed to sign off for it.

REP. PETER KING ®, NEW YORK:  No, I wasn't, Chris.  This is handled by, for the most part, middle levels, under secretaries, assistant secretaries.  And they should have spotted to the significance of this.  When I started talking to them last week when I started on my own investigation, I realized that this was really under the radar screen and the people looking at it were looking upon it as a financial transaction, as a foreign investment and there was no investigation. 

Despite what any cabinet officials are saying, there was no real investigation at all as to terrorism or security.  That was not done.  This was looked upon as a financial deal.

MATTHEWS:  David Gergen, you're the political assessor here.  Is this another case of a surprise and a president who was surprised himself by what's going on?

DAVID GERGEN, FORMER WHITE HOUSE ADVISER:  Absolutely.  And what's a hugely surprising, Chris, is this is the second straight week after the Cheney flak last week consumed an entire week of political wrangling and now they have a second week lost in this presidency of such a pivotal time? 

I don't know why the president himself didn't say, “I didn't know about this.  I'm going to put it on hold.  I want to look at this further.  I want to consult with Congress, then we'll make a decision.”  So he left some control in the White House and lowered the temperature and told everybody he had a closer look.

MATTHEWS:  But the problem, it seems to me, Congressman King, is that the president came into this game late—it's not a game, obviously.  He came into this story late.  Here it is, with a deal already cut with our ally, Dubai, the United Arab Emirates.  And now he's got a croak the deal, he's got to kill a deal already made which humiliates the other side.  He wasn't warned in time to kill the deal before it was made, right?

KING:  Yes, that was a mistake made at the middle level.  But I agree with David.  Once the president did find out and this became known last Tuesday and Wednesday, I think what he should have done is said, “Listen, I understand there's a real concern and I'm going to invoke the 45-day rule.  We'll have a full investigation and I'm going to make senior members of Congress aware of what's going on, the speaker, the majority leader, the minority leader and get them all in the room because this does have real consequences.”

And if he had done that, it would have diffused it.  Even, for instance, when I did the news conference with Chuck Schumer.  He's obviously a partisan Democrat.  But I'll tell you, throughout the news conference, he kept saying, “I accept the fact the president may not have known about this.  But now it is time for him to put it on hold and conduct the investigation.”

If they had done that, this would have been diffused and we could have had a real investigation, because I do have very, real concerns about this company and about Dubai and about United Arab Emirates.  But again, perhaps with a full investigation, that could have been done.  The reason I spoke out so loudly over the weekend was, when I heard cabinet officials saying, there was a full investigation carried on, it was not.  I emphasized again, there was not.

MATTHEWS:  What do you make of Michael Chertoff, the secretary of homeland security's assertion, that he had security guarantees in this deal?

KING:  No.  First of all, they can't have it both ways.  They can't say there's no concerns but then say they insisted on guarantees.  These guarantees, and I've been told what they are—they only mean something if you can trust the good faith of the company carrying it out.

And that's the initial question.  The threshold question was, can we trust them?  And that was never examined, that was never investigated.  And that's where this went wrong.  It was a bureaucratic mistake.  It was a middle level management mistake made by people or operating under a pre-9/11 law.

They should have flagged it.  They didn't.  But once the White House found out about it, which would have been last Monday or Tuesday, they still had ample time to head this off by saying, “We're going to put it on hold and we're going to fully investigate it because we realize after 9/11, that the rules have changed.”

MATTHEWS:  Let me ask you, are there any Arab states who own companies that you would trust to do this deal?

KING:  Well certainly not the United Arab Emirates at this stage, or Dubai.  But again, maybe Jordan.  Obviously he's a good partner.  That's one I can think of off hand.  But again, Chris, it's not a question of Arab.  It's—I mean, UAE is different because they were one of only three governments to recognize the Taliban.  They were very reluctant to get involved in tracking down bin Laden's bank accounts. 

So there's a history there which we're very concerned about.  Maybe they've overcome it.  And I know they've done some cooperating.  But again, there's no investigation to prove that and I don't know who's the middle levels of this company.  I don't know what the hiring practices are.  I don't know, for instance, what they do when they manage the port in Dubai itself.  All of this has to be looked into.

Listen, I come from a district which lost so many people on 9/11.  I don't want any future 9/11 Commission asking me what I did when I found out about this company and just sat back and did nothing. 

MATTHEWS:  You have a staff on Capitol Hill.  You've been in politics a while, Congressman.  Do you think the president was properly staffed?  We just heard—we heard him last night, actually, Governor Ridge, the former Homeland Security Secretary, said he doesn't think the president got a proper heads-up on this about the heat level here that was going to go up.  Do you agree with him?

KING:  I agree with that completely.  I do.  I agree with Tom Ridge completely.  I have a great regard for the president.  He has not been well-served here, because I have never seen such a spontaneous, grassroots response arising as on this, and also, he has been ill-advised when he has been told that there was a full investigation carried out when there wasn't. 

So at every level, I think he's gotten very, very bad advice.  I still hope he can maybe call on the Dubai company itself to voluntary step aside for 45 days to have an investigation carried out. 

They can say we understand there's a controversy, we understand that, you know, the American people are concerned.  To show our good faith, we're going to step aside for 45 days and urge an investigation to carried out, in conjunction with Congress. 

MATTHEWS:  One of the advantages of Vice President Cheney, when he was selected for V.P., according to everything we've learned, is the president felt he had a strong relationship with Capitol Hill.  He would know about these hot buttons.  Has the vice president fallen down on the job here—

David. 

GERGEN:  Well, it is hard to know.  I don't see that.

MATTHEWS:  I mean, isn't this in his portfolio that he's responsible for Congressional relations? 

GERGEN:  No, I know but—it is.  But you've got a full scale legislative team there.  You know, Chris, it was, you know, six or eight people who have professionally signed full-time to work with the Congress and here all these things.  They should have given the signal much earlier.  I wouldn't blame that on the vice president. 

What I do think, it is not surprising that the president didn't know about the transaction.  It was made at the middle levels, as the Congressman says.  What is surprising is when he was told about it, what they did about it.  And once they learned about it, they knew the heat was there.  Why did he make it—come out so strongly and said I threatened to veto it. 

Why did he box himself in?  He's left himself no options here.  And by taking strong stand in favor of this, without consulting Congress and understanding the political realities, he's boxed himself in.  It is a lose-lose for him now. 

MATTHEWS:  You know, remember, David ...

GERGEN:  He goes forward with the deal and Republicans get hit or hurt, or he cancels the deal and he gets hurt with the Arabs. 

MATTHEWS:  You know, this isn't the same, of course, in terms of the sensitivities, but remember when Ronald Reagan committed to Helmut Kohl that he would visit those cemeteries and then he got locked into the deal and he had to honor the deal? 

And, of course, it involved the embarrassment of having to go visit the cemetery with S.S. people.  And is this one of these things where you make a deal with a foreign leader or government and you really have to stick to it, even if it is a bad deal. 

GERGEN:  No, because the deal in the Bitburg situation, that deal was made by his own White House team.  Those were made by the people closest to him.  In this situation, as the Congressman King has out ...

MATTHEWS:  I see.

GERGEN:  ... it was made by others.  And I think at that point ...

MATTHEWS:  So he could have gotten out of this. 

GERGEN:  ... he could've gotten out of this.

KING:  Yes, I think he could have gotten out of it by saying listen, I appreciate this, but I'm president of the United States.  I want to review this on my own.  I want to be reassured, because this is a very sensitive issue, et cetera. 

MATTHEWS:  Do you have another shot at the bite of the apple here, Congressman King?  Do you think the president, after he thinks about this a bid and realizes the unanimity of opposition from your party as well as the other party, that he might say I don't want to go all the way with this.  I don't want to threaten to veto anymore. 

KING:  Chris, I certainly hope so.  And I hope he can find a way out of it.  Again, one way could be to persuade Dubai itself to ask to have the contract put on hold until the investigation is completed. 

But where the president really was given bad advice—you know, this wasn't just a few bomb throwers.  You're talking about Bill Frist and Denny Hastert.  I mean, these are the heart and soul of the Republican Party.  This is mainstream Republicanism. 

And for people like that to speak out as strongly as they did, and then for the president to come out and say he's going to veto whatever they do, that is just creating a needless war and, again, in time of foreign conflict, for us to get involved in this, to me, is very dangerous. 

But I have no choice.  I mean, if it comes to a vote, I'm going to vote for it and I'll vote to override the veto, because, again, this is really—and it's the president more than anyone who has said the rules changed on 9/11. 

MATTHEWS:  Would you exclude Senator Schumer from that list of bomb throwers? 

KING:  Actually, I'll tell you I would.  And I mean it seriously.  I mean, Chris, that's why this issue is different.  The Democrats are not being that partisan.  I mean, some will, I'm sure they'll jump in.  But Chuck Schumer was very careful in his press release and in his news conference to point out that he was not blaming the president for this and that he really thought that the president had a chance to correct him. 

MATTHEWS:  Hey, great.  Thank you very much for coming on, Congressman Peter King of New York and David Gergen of Harvard's Kennedy School of Government. 

KING:  Thank you, Chris.

MATTHEWS:  How much damage can the Democrats inflict?  Now we're talking partisan on President Bush for signing off on the Dubai Ports deal.  And will it be a winner in '06 and '08 for the Dems?  Former DNC chairman - - that's Democratic National Committee Chairman Terry McAuliffe—is going to join us in a minute.

And later, Senator Rick Santorum, a conservative Republican and key Bush ally who says the deal is just too risky.  You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Can the Democrats turn port security into a winning campaign issue in 2006 and perhaps in 2008?  Terry McAuliffe, of course, is the former chairman of the Democratic National Committee.  Terry, welcome. 

TERRY MCAULIFFE, FMR. DNC CHAIRMAN:  Hey, Chris.

MATTHEWS:  Is this a winner for Dems, that the president is now caught off base with his open party on this issue? 

MCAULIFFE:  Well, I think it goes to the point that George Bush, as I have consistently said for years, has made our nation less safe.  He lives in a pre-9/11 world and he has made the nation less safe.  We have chaos in Iraq today.  He hasn't given the body armor to our troops.  And then he says on this whole issue of port security, well, I didn't know anything about it. 

Well, this is the same president that didn't know when his vice president shot some guy in the face.  He said he didn't know about Katrina.  Now he found out that he did know about Katrina.  George Bush is not good for this country.  He's made our nation less safe.

MATTHEWS:  OK, narrow this down.  That's a broad, sweeping charge, a broadside I'd expect from you, sir. 

MCAULIFFE:  Yes, sir.

MATTHEWS:  Narrow this down.  What is wrong with his leadership?  Is it that he doesn't make the right decisions?  Is it that he is incompetent in executing his decisions?  He has a bad staff or what?  You don't think he doesn't care about protecting America.  You know he wants to protect America, right? 

MCAULIFFE:  He says he wants to be a CEO president.

MATTHEWS:  No, you accept the fact that he want to protect America? 

MCAULIFFE:  Everybody wants to protect America. 

MATTHEWS:  No, you accept that this president cares about America? 

MCAULIFFE:  Sure. 

MATTHEWS:  OK, and he cares about our security.  Right? 

MCAULIFFE:  Sure.  Absolutely.

MATTHEWS:  So what went wrong? 

MCAULIFFE:  I'm not sure he puts the time and effort in to truly understand what goes on in order to protect our nation.  He doesn't care.  He wants to be CEO.  He doesn't pay attention to the details.

MATTHEWS:  Was he asleep at the switch? 

MCAULIFFE:  Totally asleep at the switch on this one. 

MATTHEWS:  OK, the Democratic Party has had a hard time focusing on something everybody in the party can agree on.  There's division about whether to support the war in Iraq, generally.  There's generally division ideologically between the more hawkish Democrats and the more liberal Democrats, right?  Why are they all uniting on this one? 

MCAULIFFE:  When you think about it, he's got Hillary Clinton, Chuck Schumer, Bill Frist, Denny Hastert—everybody agrees that a foreign country should not own our ports.  Everybody is in agreement.  I would say to you and I ever Ireland can't own any of our ports.

MATTHEWS:  Why not? 

Britain—the British company has owned this. 

MCAULIFFE:  A British company.  Not the government.  A government should not have the rights to the blueprints, should not know the working hours. 

MATTHEWS:  Would you be sitting here if the Dutch got this deal? 

Honestly.  Would you be here if the Dutch, not the Emirates. 

MCAULIFFE:  The Dutch government?  Absolutely.  No government should own—what's next for us?  Venezuela going to buy Miami International Airport?  Rename it Hugo Chavez airport.

MATTHEWS:  Of course we don't want him around. 

MCAULIFFE:  Iran will buy Three Mile Island?  Where do we stop?  Foreign governments should not own parts of the United States of America that are critical to protecting our safety.  Allowing a foreign government to know our work schedules, our blueprint.  You remember Entebbe, you remember when the Israelis—

MATTHEWS:  The American government—

MCAULIFFE:  You know why they were successful.  They had the blueprints.  They built the airport.  And they were able to go in and do that assault.  We don't want foreign governments knowing all the blueprint of our port.  It is just plain wrong. 

He lives in a pre 9/11 world.  George Bush is asleep at the switch. 

He's made our nation less safe. 

MATTHEWS:  So we're over in Afghanistan running that country.  We're over in Iraq running that country, but we shouldn't even let a government run company have anything to do with us.  It all one-sided. 

MCAULIFFE:  Absolutely.  As it relates to our national security.  Ports, chemical plants, nuclear plants, airports, foreign governments should not own them. 

MATTHEWS:  Let me ask you this.  The president, this deal went down the 13th of February, right?  The president discovered it this past weekend.  About a week late.  Why do you think that happened? 

MCAULIFFE:  I think this is George Bush style.  I don't think he really cares.  He's off doing. 

MATTHEWS:  No one told him. 

MCAULIFFE:  What does that tell but the commander-in-chief?  George Bush ran for re-election saying, I will keep you safe.  Vote to reelect me.  We learned now in Katrina, he was asleep at the switch there even though he had been told ahead of time.  Now we find out on port security.  George Bush keeps saying I'll keep you safe and he is handing our port security over to a foreign government.  He is asleep at the switch. 

MATTHEWS:  I want a partisan analysis.  If the president vetoes this bill and permits the deal to go forward, so the Emirates company gets to run our ports, Philadelphia, new York, etc. all the way to New Orleans. 

Is that a win?  Or is it better to beat him?  What is better?  What would you rather see happen?  That this bill is vetoed and overridden?  That the president is beaten on this or the president changes his mind? 

What do you think is better?

MCAULIFFE:  As an American, if he vetoes it, I want to see the members of the House and Senate come together to override his veto.  As an American for the sake of our safety.   

MATTHEWS:  But doesn't that show the independence of the Republican leadership on the hill and make it harder to beat them. 

MCAULIFFE:  I think it's great.  I finally agree with Frist and Hastert. 

MATTHEWS:  I think harder to beat Hastert if he looks like he's not a rubber stamp, right?  He is tough and independent.  You turn the entire Congressional delegation on Capitol Hill into John McCain. 

MCAULIFFE:  Your hero, John McCain.  You love John McCain.  That's great.  Let me tell you this, John McCain first and foremost.

MATTHEWS:  Every one of these guys, including you, is a mixed bag. 

That's my view.  They're all a mixed bag. 

MCAULIFFE:  John McCain doesn't have a port in Arizona.  Second of all, he can't stand George Bush.  He remembers they did to him in the South Carolina primary.  This is about John McCain running for president.  This is presidential politics.  Hillary Clinton, Chuck Schumer, the Republican Governor of Maryland Ehrlich, Rendell. 

(CROSSTALK)

MATTHEWS:  He was almost John Kerry's running mate. 

MCAULIFFE:  He got very close.  I agree with you.

Any man who was tortured for five years deserved the respect. 

MATTHEWS:  He's not my guy. 

MCAULIFFE:  I don't agree with him on this issue but he's your guy. 

You're excited. 

MATTHEWS:  No.  I get very nervous in this country, you want an honest assessment of me.  I get very nervous when everybody like you and the Republicans agree on something.  Then I get nervous.  I like when you're fighting. 

Terry McAuliffe, thanks for joining us.  When we return, the fight on the right as Republicans try to stop President Bush from allowing an Arab company to take control of American ports.  You're watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  There is a growing group of Congressional Republican that have been raging against the Bush administration's deal to give control of six U.S. ports to a Dubai-based company.  MSNBC's Chief Washington Correspondent Norah O'Donnell has been taking the political temperature up on Capitol Hill today.  Are they cooling off or staying hotter than ever? 

NORAH O'DONNELL, MSNBC CHIEF WASHINGTON CORRESPONDENT:  Hotter than ever.  You could you say it a powder keg about to blow.  There's a revolt going on in the Republican party.  I spent the day talking to many members on Capitol Hill. 

First, these Republicans were very angry they weren't consulted about this deal.  Then they were very angry because the president yesterday had this veto threat.  I heard from Republicans in both the House and the Senate that if the president vetoes this, they're going to override it. 

That's quite a threat coming back from members of congress.  The reason they say is because they've been hearing from constituents.  Not only email but on the phone, objecting to this deal.  That there would be a country that, where two of the 9/11 hijackers were from, could control these ports. 

I was stunned by this letter that Congresswoman Sue Myrick, a Republican from North Carolina, sent the president today.  It was short and sweet.  One sentence that said, in regard to selling American ports to the United Arab Emirates, not just no, but hell no.  That's the message from the Republicans to the White House.  And so there's a big rift right now for the president. 

There is going to be a legislative showdown next week up on Capitol Hill when they return unless the president backs down.  Given all of that anger that's going on, I think we saw a little bit of a recalibration by the White House today.  The White House putting out that the president didn't know about this deal until it was struck and days later. 

The White House spokesman, Scott McClellan, saying yes, in hindsight, there should have been more consultations with members of Congress. 

MATTHEWS:  Thank you very much, Norah O'Donnell up on Capitol Hill.  Later in the show, we'll be joined by Senator Rick Santorum, a key Republican, who is fighting to block the Dubai deal. 

And up next, why didn't President Bush know about the deal sooner? 

And how deep will the political damage go?

You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(NEWS BREAK)

(BEGIN VIDEO CLIP)

BUSH:  I think it sends a terrible signal to friends around the world that it is OK for a company from one country to manage the port, but not a country that plays by the rules and has a good track record from another part of the world, can't manage the port.

(END VIDEO CLIP)

MATTHEWS:  Well that was President Bush, of course, defending his decision to let an Arab state-owned company manage American ports.  Call it a political identity swap now.  Here we have the president looking like a Democrat in this debate over war and security and the Democrats looking like security-conscious Republicans.  Here to dig into this fight is HARDBALL political analyst Bob Shrum and former Bush 41 aide Ed Rogers.  Ed, you first.  Where are you on this?  Are you with the president or do you think he made a boo boo here?

ED ROGERS, REPUBLICAN STRATEGIST:  Absolutely with him.  Well, both.  I'm with the president, but yes, there's been some mistakes here.  But to quote James Carville, “I think this is a political kidney stone.  This, too, shall pass.”  There is no there, there.  This is not a security problem.

MATTHEWS:  But will it pass by the president buckling or sticking to his guns?

ROGERS:  I think what we're headed for now is something's got to happen.  We have too many Republicans that have left the president on this.  So we're going to have some sort of negotiation where Republicans will be able to walk away and say, “Well, these three things are happening now and they weren't before.  I'm happy.”

MATTHEWS:  But wait a minute, this is yes or no.  Either we let this company run our six ports on the East Coast or we don't.  What's the middle ground here?

ROGERS:  The short answer's going to be yes.  But now something's got to be negotiated in term of security requirements.

MATTHEWS:  I wonder, I think it's a question—doesn't, Bob, doesn't the president have to choose here to stick to his guns and keep the deal with Dubai or break the deal?

BOB SHRUM, HARDBALL POLITICAL ANALYST:  Well he sort of boxed himself in when he said he would veto any attempt to change this deal or look further into it.  I don't think it's going to stay there.  I think Bush is being hurt in the place where he's been strongest, the perception that he's there to protect our security.  I don't think that's true, by the way.  If the $1 trillion likely cost of the war in Iraq had been spent on port security, for example, and homeland security, we would be a lot safer today.

But you're seeing Republicans now, not wanting to run with the president but wanting to run away from him.  You're seeing it on the eavesdropping, where I think he's gotten in real trouble.

MATTHEWS:  OK, let's stick to this, Bob.  Do you think the Democratic Party can be fairly said to support having spent the money on homeland security rather than going to Iraq?  Is that a party position?  I haven't heard it.

SHRUM:  No, that's my position.  I think the Iraq war was a terrible mistake.  I think we should have spent the trillion dollars on homeland security and we would have had money left over for national health care.  But that's not...

MATTHEWS:  ... Well why didn't you tell that to John Kerry when you were whispering in his ear?

SHRUM:  Well, John Kerry knew what I thought, I know what he thinks.  John Kerry stood up and said we went to war.  And he was attacked for it by Republicans.  It was the wrong war in the wrong place at the wrong time.

MATTHEWS:  Do you think this deal should go through, Bob?

SHRUM:  I think this deal should not go through and it certainly should not go through without a 45-day period of review.  That's provided for in the law which was simply ignored here. 

MATTHEWS:  OK, Ed Rogers, let's get clarity here.  Do you believe the deal should go through?

ROGERS:  Absolutely, Dubai is not a problem.

MATTHEWS:  Let me just ask you about what you know about the United Arab Emirates.  You were seeking to do business over there like a lot of people.  It's a hell of a country.  Its got 13 percent of the cranes, the buildings, in the world operating in Dubai. 

ROGERS:  It's a phenomenon.  Dubai looks like Singapore.

MATTHEWS:  It is an amazingly diversifying economy.  It's doing what we want the Arab countries to do, diversify, get out distilling oil—it's a success story.

ROGERS:  By any accounts, Dubai is a success story.  Dubai is part of the solution, not part of the problem.  But I'm not here to defend Dubai per se.  I mean, there is no rational reason for this deal not to go forward.  And that's why it will.  There is no security issue. 

MATTHEWS:  Do you trust them?

ROGERS:  I trust homeland security to protect our ports, that's for sure. 

MATTHEWS:  You're laughing, Bob.  Here's the question.  And we've been trying to figure this out for two days, it's a new topic for us.  From what I understand, check me on this if both of you know—either of you know this better—that the company that runs the ports may not handle the police force and all that.  That's local border control and that's—and that's of course, the Coast Guard.

But they do decide how to check on the cargo itself.  And you, Ed Rogers, trust this company owned by the government of the United Arab Emirates to check on what comes into Philadelphia, what comes into New Orleans, and Miami.  You trust them?

ROGERS:  I think whether or not anybody trusts them is no longer going to be the issue.  They are clearly going to make some comments.

MATTHEWS:  That is the issue.

ROGERS:  No, they're clearly—this has blown up so much politically, that they're probably—they're going to have to make some accommodations on security measures.

MATTHEWS:  How can they make accommodations?  It's their job to check what comes in.

ROGERS:  There is going to be some sort of accommodation, some sort of negotiation, where everybody rational is going to be reassured by this.  And it's probably going to be issues exactly like that.

MATTHEWS:  OK, Bob, it seems to me that what that's saying is basically we have a shadow watching every one of the decisions made by the government of Dubai about who to hire, who to promote, who to trust, and there's an American standing next to each guy as he pens each decision because if you don't trust them, you don't trust them.

SHRUM:  Well the White House said they weren't in charge of security.  That's not the issue.  The issue is whether this represents a threat to security.  The White House said the president didn't know about this and then gave the incredible reason that it doesn't rise to the presidential level.

What is more important?  What should take greater priority at the presidential level than protecting our ports and our home front from terrorist threats?  I think the president's lost the base of the base in the Republican Party here.  I think he is being badly hurt on the security issue and I think he is quickly turning himself into a lame duck.

MATTHEWS:  OK, quick analysis here, both of you gentlemen.  You're both political experts.  Try to pull back your partisan horns for a second here.  If you were secretly with the president right now, he called you up, he said, “Ed, you sound pretty smart on T.V. on tonight,” if he were watching. 

SHRUM:  He's more like to call Ed and say that.

MATTHEWS:  OK, Ed, he said, “Do you think I should pull the plug on this or stick with it?  Is it going to make me look weak if I pull back and let this deal go down?”

ROGERS:  You can't let this deal go down.  But you've got to—more of the same is undesirable.  You've got to get with Hastert, you've get with Frist, you've got to get them confident.  You've got to get them on board with something different.  There's got to be something new in the mix here.  More of the same won't work.

MATTHEWS:  I just don't see how you—I don't know how you split this down the middle.  Can you split it—either you trust this company to do the job, the state-owned company from Dubai or you don't trust them.  You can't say, “We're going to trust you, but everything you do, we're going to watch.”  One of the another.

ROGERS:  I mean, I don't know.  They're going to—but here again they're not going to just stiff arm the Congress now.  This has gone too far.

MATTHEWS:  Do you know what I want?

ROGERS:  So they're going to do something.  They're going to do something to accommodate the security questions of the Republican leadership has in Congress.  That's going to happen.

MATTHEWS:  Do you think there's a string here?  I want to ask you, the Republican, Ed—is there a series of problems here that looks like a bigger one, which is the president isn't being notified by staff of these things?  Katrina, we know, he was slow to get into.  The vice president, I think he was almost out of it.  He wasn't even involved in it.  The vice president never called him.  He was just so—irrelevance to that whole thing.  Do you have a sense there's a pattern now of perception that the president is always surprised by things, he's not on top of the game.

ROGERS:  I know that there is this pattern.  In politics, in Washington, generally, bad gets worse.  And when things are going bad, they can always get worse.  It is time to be sure footed.  It is time to not make any mistakes.  No more self-inflicted wounds when you've got the bad filter and every mistake become a metaphor.  That's the environment this president is in right now. 

And the unknowns, the weirdness of Cheney shooting somebody?  The fact that some port deal would blow up and become a big metaphor for the administration?  Be sure footed.  Do less.  Be careful.  Slow down.  Don't make any more mistakes. 

MATTHEWS:  Thank you very much.  Bob Shrum and Ed Rogers.  Especially Ed.  This guy was nonpartisan.  Bob, you've got to learn the lesson. 

SHRUM:  I was about to say I agreed with him. 

MATTHEWS:  Up next, I know you did. 

SHRUM:  I agree with him.  I had a Republican say to me, what shoe will drop next week?  They have to break this pattern. 

MATTHEWS:  Two weeks in a row bad news.  We'll talk more about this deal.  How could this deal to give control of the ports to a Dubai based company affect actual port security?  We're going to  hear from the Coast Guard and customs when we return about on the ground inspections. 

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Just how safe are America's ports right now?  And how safe would they be if major port operations are taken over by a state-run Arab company?   I'm here with Rear Admiral Thomas Gilmour of the U.S. Coast Guard and Jay Ahern with U.S. Customs and Border Protection. 

Admiral, a question to you.  How are we doing right now without any changes in protecting our ports? 

REAR ADM. THOMAS GILMOUR, U.S. COAST GUARD:  Well, I would say since 9/11, we've come a long way.  We've added a number of authorities.  We had the Marine Transportation Security Act of 2000.  We also have the International Port Ship and Facility Code passed.  We've added a number of capabilities and people and vessels.  We've certainly come a long way.  But I think we have a long way to go. 

MATTHEWS:  What's the worst-case scenario?  That somebody would sneak in some sort of explosive device that would blow up with heat or movement or something like that in a big container? 

GILMOUR:  Well, we've looked at it.  We've looked at a number of scenarios throughout the port and tried to build our capabilities to address those different scenarios.  Certainly those are scenarios we have.  There's also the Cole style attack. 

MATTHEWS:  A what? 

GILMOUR:  A Cole style attack.  A small vessel running into a ship that we've also tried to address. 

MATTHEWS:  Mr. Ahern, let me ask you, we've argued on this show many times, what percentage of our containers, those big containers that come to the ports, that get checked inside. 

JAY AHERN, ASST. CMSR, CUSTOMS & BORDER PROTECTION:  Last fiscal year, 11 million containers came in and we looked at about 5 percent of those containers. 

MATTHEWS:  How did you pick them? 

AHERN:  We have a risk based system.  We go ahead and screen 100 percent of all the manifest information for every cargo container coming in to the United States.  Based on information and intelligence and a risk based algorithm set, we screen them for risk at our national targeting center here in the D.C. Area, and make a determination of those risks.  And that's how we focus our resources and our technology. 

MATTHEWS:  If a container like we're looking at comes from an Arab country, an Islamic country, is it more likely to be checked? 

AHERN:  It would be on the totality of the risk factors.  We would take a look at all the parties involved in that transaction, nut just solely the country of origin or the port of final departure.   

MATTHEWS:  Let me ask you, Admiral, about the possibility that military equipment, dangerous equipment, could come into our country.  People could bring in launchers.  All kinds of things are possible coming. 

How do we make sure they don't get in? 

GILMOUR:  Again as Mr. Ahern said, the job of the CBP is to look at

the cargo that comes in.  The Coast Guard really looks at the port.  We are

in charge of the port security.  We look at the vessels.  We inspect the

vessels for security.  And we also look at the facilities themselves.  So -

-

MATTHEWS:  Excuse me.  I don't have much time.  What happens if you hear there's a big shipment of U.S—not materiel but heavy military equipment coming in?  Artillery, armor, that kind of thing.  How do you check on that? 

GILMOUR:  Well, we have a layer -- 

MATTHEWS:  Make sure nobody sabotages it. 

GILMOUR:  We have a layer of defense.  If we had a cargo that was a risky cargo, we would try to board that as far offshore as we possibly can. 

MATTHEWS:  Mr. Ahern, let's get to the question.  There's been a lot of argument about what security means.  There's security like cops and guys in uniforms standing around to make sure nobody comes and sabotages port cargo.  But there's also the cargo that comes in these big container. 

I read about this guy who went around from New York to Dallas, hiding in one of these containers.  He obviously wasn't checked.  He may have been caught on arrival.  Who checks to see what is in the containers?  The U.S.  Customs?  Coast Guard?  Or the company that runs the port? 

AHERN:  That is a responsibility of the United States Customs and Border Protection. 

MATTHEWS:  The company in this case, the company Dubai Ports World, which has just taken over this British company, they would not be the ones checking into containers? 

AHERN:  Absolutely not. 

MATTHEWS:  Really? 

AHERN:  That's one of the distinctions we need to make sure as the viewers understand.  That the Department of Homeland Security, Customs and Border Protection, has a responsible for inspecting containers coming in from foreign to make sure that they don't contain any weapons of mass destruction or any contraband of any kind. 

I think it is important to know the ports in the United States are not just the first time we encounter this cargo.  We have in 42 ports throughout the world Custom Border Protection officers, screening before they get put on the ship. 

MATTHEWS:  So it doesn't matter whether an Arab government-owned company buys a British company in a take-over.  It doesn't matter to our security, you're saying. 

AHERN:  I'm saying as far as this transaction that has been in the media in the last few days, it does not change the operational protocols or increase the risks in our securities. 

MATTHEWS:  So you think it is a tempest in a tea pot. 

AHERN:  I think it hasn't changed any of the security in this country.  I think that certainly this government, this administration, this Secretary of the Department of Homeland Security or our agencies would not have endorsed something.

MATTHEWS:  Do you think this is an ethnic feud?  We're just going after Arabs.

AHERN:  I wouldn't say that.  I think certainly there's just a lot of, you know, interesting issues that are being discussed openly in this.  And I think, again, the security of the company is not compromised by this process. 

MATTHEWS:  Admiral, I know you're a serving office and you can't really express politics, but are you worried about this or not? 

GILMOUR:  Well, certainly, to follow onto Mr. Ahern, we would inspect the facilities the same regardless of which company owns the facilities, foreign or domestic. 

MATTHEWS:  So you'd trust but verify. 

GILMOUR:  And I would also add the fact that these are facilities that P&O currently owns that would be taken over. 

MATTHEWS:  The British company. 

GILMOUR:  For instance, in the port of New York, there are 182 regulated facilities.  And P&O currently runs, operates or owns two of those facilities. 

MATTHEWS:  That's all. 

GILMOUR:  Yes, sir. 

MATTHEWS:  Maybe it has been overblown.  Thank you very much, Rear Admiral Thomas Gilmour and Jason Ahern.  Thank you, sir. 

Up next, Senator Rick Santorum, a big time Bush ally who says the port deal is too risky and that the president should call it off right now.  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Pennsylvania Senator Rick Santorum is chairman of the Senate Republican Conference.  He joins us tonight from Philadelphia, one of the cities involved in this port fight. 

Senator, thank you much for joining us.  We just heard from Jay Ahern, a top official at U.S. Customs who says it is U.S. Customs that checks on the content of these big containers that come into the country, not the company that is the stevedore? 

SEN. RICK SANTORUM ®, PENNSYLVANIA:  Well, that's right.  And I don't think anyone has claimed—at least I haven't—that the security at ports is under the operation of the stevedore.  But, in fact, the stevedore does load and off load and does contract with folks to carry this cargo.   

And so there is a concern as to what is going to be going in this and who these people are that are going to be doing this activity.  And I think it's a legitimate thing for us to look at given the nature of the country involved. 

MATTHEWS:  Worst case scenario, Senator? 

SANTORUM:  Well, the worst case scenario is I think what everyone fierce is that something is loaded onto a ship and is not caught or screened by the Coast Guard folks or the folks at Homeland Security.  You heard that they can only inspect, I think they said, roughly five percent of the material that's coming through. 

MATTHEWS:  That's right.

SANTORUM:  And so, you know, the worst case scenario is that you have got to trust 95 percent to folks who are hopefully doing things in good faith when they are moving things into this country. 

And, look, what I'm looking for, and—the people of Philadelphia and the Port of Philadelphia contacted me early last week, expressed concern about this when they heard about this transaction and asked me to look into it. 

I did, and I really didn't feel that the review that was done—at least from everything I was told—was adequate enough to ensure that this company and that this transaction was really vetted thoroughly from a national security point of view, and that was my concern and that's why I wrote the letter. 

MATTHEWS:  Michael Chertoff, the secretary of Homeland Security, says that there are guarantees in place which will protect U.S. security in this deal with the United Arab Emirates company.  What's your problem?  You don't trust Chertoff?  You don't trust the president who's backing him up? 

SANTORUM:  Well, again, everything that I have been able to find out

and the review that I did—and again, you know, this was in response to

the situation in Philadelphia—was that there had not been the kind of

rigorous review that was necessary, A; and, B, I mean, this is a situation

·         again, I—you know, as you said, I'm a supporter of the administration. 

This is a situation where the administration, I think, should have known that once this became an issue or this became public and that there could be problems associated with this transaction and public concern, I think they should have gone to the extra extent beyond the CFIUS, which is the board that actually reviewed this—beyond that to do a little bit more when it came to looking at the judiciousness of this transaction. 

MATTHEWS:  We just had Michael Smerconish or Philadelphia on last night—he's a very popular talk show host and highly outrageous at times.  He says his problem is they are Arabs.  Would you have the same complaint about this letting of this contract or allowing this takeover to occur of the British Company by the Emirates company if it were Dutch, or German or Belgian? 

SANTORUM:  Well, the problem is not that they are Arabs.  The problem is that the UAE has had a mixed past with respect to, you know, the war on terror.  And so any country, whether they were Arab or there was a country that also had—you know, we also had problems with, with respect to the involvement as the UAE did with the events of 9/11, I would be concerned about any of those countries being involved in commerce, particularly at our ports. 

I mean, I think what you heard from your previous guests was that while we have made improvements in support security, it probably is our still most vulnerable area.  And so I think many of us believe that we have to be a little more cautious in this area then we would be certainly with other areas of transport. 

And by the way, I mean, the UAE does business on a lot of fronts in the United States of America, which I certainly don't and I think most Americans don't have a problem with.  It's the particular concern about our vulnerability to the ports that has raised this issue. 

MATTHEWS:  Do you have any problem with former members of Congress,

Republicans as well as Democrats, senators like Senator Bob Dole defending

the Dubai deal for money, in other words, lobbying for foreign governments

so that they can do something that you guys—I shouldn't be disrespectful

·         as members of the Senate and the Congress are saying is a danger to America?  Are you happy to see former colleagues getting paid to take the other side of an argument that you say endangers the United States? 

SANTORUM:  Well, I mean, the president says it doesn't.  So I mean, there are two points of view here and I respect, as I do on every issue, I respect people's right to argue that and to put forth evidence. 

And look, I come at this with saying that I think this is a problem and that we need to do something about it.  You know, I would support a cooling off period here for a period of days, you know, maybe a couple of months for us to take a more intense look at this, maybe have the Congress commission some folks to look at this more thoroughly. 

I'm not saying that this is a transaction that—you can't prove it to me that it's not going to be safe, but right now, you certainly have not. 

MATTHEWS:  OK, very much thank you for having you tonight, Senator Rick Santorum of Pennsylvania.

And finally tonight, the world of politics lost a real winner on Monday.  A friend of mine, Eli Segal, the Clinton advisor responsible for creating the Americorps service program passed away this week.  His passion and commitment to public service will long be remembered by people in both parties.

Join me again tomorrow night at 5:00 and 7:00 Eastern for more

HARDBALL. 

“COUNTDOWN” with Keith Olbermann starts right now.

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

END   

Content and programming copyright 2006 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2006 Voxant, Inc. (www.voxant.com) ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.'s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

Watch Hardball with Chris Matthews each weeknight at 5 & 7 p.m. ET

Discuss:

Discussion comments

,