updated 3/3/2006 10:53:14 AM ET 2006-03-03T15:53:14

Guests: Trent Duffy, Haley Barbour, Bennie Thompson, Frank Gaffney, Byron York

CHRIS MATTHEWS, MSNBC ANCHOR:  Who released the tape showing the president getting briefed before Katrina?  Didn‘t the president tell us after the levees broke that nobody anticipated it?  Tonight, the White House comes to HARDBALL to answer the question.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.

What took so long?  That‘s what the country‘s asking tonight after watching a videotape showing the president and his top advisers were warned about Katrina‘s catastrophic threat.  First aired on HARDBALL, the tape offers a rare glimpse into the president‘s inner circle as the storm barrelled through the Gulf Coast.  We‘ll show the tape in a moment and talk about why the government‘s response was a horrific failure. 

And looking for any port in the storm.  Under heavy criticism, the Bush administration is investigating a second Dubai firm, hoping to be in business with the United States. 

And is the port deal pitting bill against Hill?  We‘ll talk port politics later, but first, David Shuster with a tale of the Hurricane Katrina tapes. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  It‘s a videotape that seems to contradict what President Bush said about Katrina.  Four days after the storm hit, with most of New Orleans under water and thousands of people stranded at the convention center, the president scrambled to defend the federal government‘s response. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I don‘t think anybody anticipated the breach of the levees. 

SHUSTER:  But clearly, the president‘s team did anticipate the breach.  This teleconference video from the day before the storm reached New Orleans shows the president was warned the breach was possible, and the tape shows the president‘s team openly worried about the outcome. 

Max Mayfield, a leading hurricane expert, warned of massive devastation. 

MAX MAYFIELD, NATIONAL HURRICANE CENTER DIRECTOR:  As everybody knows (INAUDIBLE) hurricane.

SHUSTER:  Then, Mayfield directly addressed the reliability of the levees. 

MAYFIELD:  I don‘t think anyone can tell you with any competence right now whether the levees will be topped or not.  But that‘s obviously a very, very grave concern. 

SHUSTER:  From his Texas ranch, President Bush tried to reassure local officials that the federal government was ready. 

BUSH:  I want to assure the folks at the state level that we are fully prepared to not only help you during the storm, but we will move in whatever resources and assets we have at our disposal after the storm. 

SHUSTER:  The next day, on August 29, the day Katrina made landfall, it was the Department of Homeland Security that voiced concern about levees.  An e-mail from the Department of Homeland Security to the White House situation room warned that Katrina would, quote, “likely lead to severe flooding and/or levee breaching.”

In a transcript of a teleconference that day obtained by NBC News, FEMA Director Michael Brown talks of President Bush twice that morning.  According to Brown, the president is “very engaged and he‘s asking a lot of really good questions.”  Brown says the president specifically asked about the hospitals, the Superdome and the levees. 

New Orleans Mayor Ray Nagin, who has been under fire for his slow response to Katrina, has said that he believed the Bush administration did not know Katrina would be so devastating.  A claim at odds with this videotape. 

MAYOR RAY NAGIN (D), NEW ORLEANS:  I have kind of a sinking feeling right now in my gut.  I mean, I always listen to what people were saying, I always believe them that they didn‘t know, so therefore it was an issue of a learning curve, if you will.  And you know, from this tape, it looks like everybody was fully aware. 

SHUSTER:  Like Nagin, Democrats in Congress are hitting the president hard.  They point out that in light of the clear warning on the videotape released by the Associated Press, the president has little excuse for his administration‘s inadequate response. 

SEN. HARRY REID (D), MINORITY LEADER:  It confirms what we have suspected all along, that this administration is doing everything it can to hide what really happened with that violent storm. 

SHUSTER:  The White House says the main revelation from the tapes is that President Bush was engaged from the get-go. 

(on camera):  So what does all of this mean?  At the very least, it shows that six months after Hurricane Katrina, the White House is still under pressure to answer for its mistakes.  And with New Orleans still struggling to rebuild itself, polls show the dissatisfaction with the president‘s handling of Katrina keeps growing. 

I‘m David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.  White House Deputy Press Secretary Trent Duffy joins us now.

Trent, what‘s the president think of this tape coming out now?

TRENT DUFFY, WHITE HOUSE DEPUTY PRESS SECRETARY:  Well, the president was fully engaged, as David mentioned in his piece.  Now let‘s remember what happened pre-landfall.  Pre-landfall, the president took the extraordinary step of signing emergency declarations so we could get manpower and material pre-positioned. 

He also, August 28th, in a televised statement, urged people to move to safe ground, because he knew that this was going to be a devastating and deadly storm.  So everybody knew this was a big storm. 

Thirdly, he called Mayor Nagin and Governor Blanco to urge them to order a mandatory evacuation, because that‘s the single best thing you can in a storm situation like this, is move people to safe ground.  So he was acting on those fronts. 

But in the immediate aftermath of the landfall, the number one priority, because we were concerned about the levees, which is shown in other transcripts, was search and rescue and Coast Guard operations.  And that‘s one of the real success stories in all of Katrina was the Coast Guard.  They were called the New Orleans saints.  They saved 33,000 lives. 

MATTHEWS:  So are you folks saying that Mayor Nagin failed to get the people out of New Orleans.  It‘s his fault? 

DUFFY:  Of course not.  Of course not.  And the president was the first one to step up and take personal responsibilities for any perceived or real shortcomings of the federal response effort.  The president said he wasn‘t satisfied.  He said he wasn‘t satisfied a week ago when we did this comprehensive review.  He‘s not.  What he‘s focused on now is improving the federal response capability. 

Listen, there‘s enough blame to go around and the president is taking his fair share.  But all the blame gaming and finger pointing in the world isn‘t going to help a single person today that needs help with rebuilding and recovery. 

MATTHEWS:  We‘re all trying to put this together at a number of speeds.  The one speed was we got it at the time.  The president asked for a DVD to be produced to show him what was going on over a couple of days he wasn‘t watching television.

DUFFY:  Well, that‘s...

MATTHEWS:  Oh, that‘s not true?

DUFFY:  That is not true.  That is not true.  The president did not ask for a DVD.  As Mike Brown—you just mentioned...

MATTHEWS:  He never got a review of the TV coverage? 

DUFFY:  I didn‘t say he never—he did get a review.  But he didn‘t -

you said he asked for that.  That is not...

MATTHEWS:  OK, who asked for it?  Who produced it?

DUFFY:  That is not.  That‘s really secondary.  The president, as Mike Brown just mentioned in your piece, was watching television, was very engaged and was getting briefed when Hurricane Katrina was just a tropical storm off the coast of Florida.  So I completely reject this notion that the president was out of the loop.

MATTHEWS:  OK, let me ask the question.  Can I ask you a question?

DUFFY:  OK, sure.

MATTHEWS:  I‘m going to have interpretations.  I can interpretations, too.  Did the president sit and watch a review of all the TV highlights of the coverage at some point?  Like Thursday, that week after the break in the levees? 

DUFFY:  Yes, he was aware of the video coverage and he was watching it realtime and after the fact.  That is true.  I‘m not arguing that.  You just said he requested it.  That is not the case. 

MATTHEWS:  So who did? 

DUFFY:  The fact of the matter...

MATTHEWS:  Who requested that there be a production of TV coverage after the fact of what happened in New Orleans, for the president to view? 

DUFFY:  The president was well aware of what was going on, Chris.

MATTHEWS:  Well, why did he need a production of the TV that he apparently missed? 

DUFFY:  He didn‘t need a production.  He was well aware of the gravity of the storm.  That‘s why he took the actions that he did.  That‘s why he did the emergency disaster declarations, that‘s why he took part in the mandatory evacuations, that‘s why we had helicopters in the air rescuing people.  Now...

MATTHEWS:  OK, the reason I say this is because just the other day, I heard the president testify that he was not - did not have the situational awareness of what was going on the way that the TV networks did.  He said this.  I‘m not making this charge. 

The president has admitted—call it a confession or a public statement—but he admitted that he was not as good at covering—of knowing what was going on as the TV networks were good at getting it on the air.  He needed to catch up.  He admitted that, Trent.  I‘m not charging it.  He‘s admitted it.

DUFFY:  No, I understand what you‘re saying.  And I think there is a little confusion about what situational awareness is and isn‘t.  Now, what situational awareness that the president was referring to was the ability of state and local first responders to talk to each other on phones.  Cell towers were wiped out. 

Our ability to get good, hard, clear and accurate data was overwhelmed.  That was one of the top lessons learned.  That‘s what the president was referencing in terms of situational awareness.  He was saying to Elizabeth Vargas that there‘s no reason the media can send people in and get a bird‘s eye and an eyewitness view of what‘s going on and the federal government cannot.  That cannot continue.  So that‘s what the president was referring to in situational awareness, not news coverage.

And I think there‘s been a little bit of confusion of what that situational awareness is, versus the understanding of the gravity and the severity and the risk that this storm posed to the Gulf Coast.  There are two separate issues, but the situational awareness that the president was talking about was, you know, making sure that the next hurricane this sizes roars ahead, we have the ability to talk to people.  We have people on the ground...

MATTHEWS:  But just to put that in simple terms, wasn‘t the president saying that if he watched television, he could see what was happening on the ground.  With other networks, not ours.  All the networks were down there.  And he could get an appreciation of what was going on in a way that he couldn‘t get through the bureaucracy at that point? 

DUFFY:  No, and that is true.  And it...

MATTHEWS:  That‘s what I thought he meant. 

DUFFY:  No, and that‘s why I was saying—and I didn‘t mean to get into a side argument...

MATTHEWS:  Let me ask you about this, because I want to give you a chance to thank you for coming over here today.  One of the things that there‘s a correction about—and maybe we‘re being unfair about it, tell us if we are.  We saw those briefings going on in that package by David Shuster, where the president was being briefed by Michael Brown and everybody was doing it.  It looked like a sit room kind of a thing, and he was getting an input and he was congratulating and urging everybody to work.  Good leadership, I guess. 

But then we heard a tape of the president three days after Katrina hit where he said that no one anticipated that the levees would be breached.  How can it be that no one anticipated it, in his words, if he was warned that it might happen? 

DUFFY:  Well, again, he was warned and the White House was concerned about the integrity of the levees.  On the tapes and the transcripts...

MATTHEWS:  Right.

DUFFY:  You have Deputy Chief of Staff Joseph Hagin asking on August 29th what is the status of the levees?  And as of noon on the 29th, Governor Blanco is saying, we don‘t have any confirmation that the levees have been breached.  What the president said in the aftermath of the storm was he was reflecting the collective judgment and wisdom and sentiment of just about everybody on the morning of August 30th, when New Orleans had in fact—had dodged somewhat of a bullet in the fact that the storm had gone 15 miles to the east.

MATTHEWS:  So he was talking about that moment of relief we all shared the morning of, that we had missed a bullet.

DUFFY:  That‘s exactly right.

MATTHEWS:  He was not saying, just to clarify the record, he was not saying that none of the experts thought that the levees might be breached.

DUFFY:  He did not mean to portray that, that‘s exactly right.

MATTHEWS:  See how much we get done when you come over here?

DUFFY:  Yes, absolutely.

MATTHEWS:  Isn‘t this great?

DUFFY:  But this really does go to the point is the reason that we knew that the levees were of issue—any time a storm of that size is headed to New Orleans, you‘re thinking levees.  And the White House was, and so was the president.  That‘s why search and rescue and airlift capacity and getting helicopters in the air was the No. 1 priority, whether the levees were breached, overtopped.

MATTHEWS:  I wish we had you every night.  It‘s great to have you, Trent Duffy, deputy press secretary to the president of the United States.

When we return, Trent Duffy, an Irishman—Democratic reaction from Mississippi Congressman Bennie Thompson, he‘s coming here.  Plus Mississippi Governor Haley Barbour, he‘s a Republican.  Lot of mixed views tonight.

And later, President Bush‘s pressing on with a visit to Pakistan after a suicide bombing there killed four people including a U.S. diplomat.  We‘ll get the latest on the president from NBC News chief White House correspondent David Gregory.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL, we‘re joined now by Mississippi Governor Haley Barbour.  Governor Barbour, here‘s the tape that the “Associated Press” released yesterday of a briefing from August 28th, the day before Hurricane Katrina hit.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Everyone, let‘s go ahead and get started.  It‘s noon, we have a lot of business to cover today.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I do want to thank the good folks and offices of Louisiana, Alabama and Mississippi for listening to these warnings and preparing your citizens for this huge storm.

I want to assure the folks at the state level that we are fully prepared to not only help you during the storm, but we will move in whatever resources and assets we have at our disposal after the storm to help you deal with the loss of property and we pray for no loss of life, of course. 

MAX MAYFIELD, NATL. HURRICANE CENTER:  So if the really strong winds clip Lake Pontchartrain, that‘s going to pile some of that water from Lake Pontchartrain over on the south side of the lake.  I don‘t think anyone can tell you with any confidence right now whether the levees will be topped or not, but there‘s obviously a very, very grave concern.

UNIDENTIFIED MALE:  My gut tells me, I told you guys—my gut was that this was a bad one and a big one and you heard Max‘s comments.  I still feel that way today.

(END VIDEO CLIP)

MATTHEWS:  Governor, I want you to look at this next piece of tape because I think it might contradict what we just heard.  Here‘s the president several days after Katrina hit.

(BEGIN VIDEO CLIP)

BUSH:  I don‘t think anybody anticipated the breach of the levees.  They did anticipate a serious storm, but these levees got breached and as a result, much of New Orleans is flooded and now we‘re having to deal with it and will.

(END VIDEO CLIP)

MATTHEWS:  Governor, do you think the president was square there with the facts, that he didn‘t think anybody had anticipated, based upon that briefing he was getting—do you that‘s a fair recollection of what happened?

GOV. HALEY BARBOUR ®, MISSISSIPPI:  Well, Chris, I don‘t know anything other than what you‘ve just said except Dr. Mayfield said that the levees may be topped.  That is, the waves may be high enough that they would go over the top.  He didn‘t say anything about the levees being breached and of course the amount of water that goes into the place, if the levee gets topped, is a tiny fraction of the amount of water that goes in if a tall levee actually breaks, which is what happened in New Orleans.  Now I don‘t want to hold myself out to know a lot about what happened in New Orleans.  I had something else to deal with while that was going on.

MATTHEWS:  Right, Mississippi.  Let me ask you about—the public now has a 64 percent disapproval rating of the way the government I guess, the federal government handled the Katrina mess.  I guess the question is, who were those 36 people that thought it was a job well done, but do you think that‘s a fair estimate of the damage here politically?

BARBOUR:  Well, I think this.  People who think that you‘re going to have a perfect response to the worst natural disaster in the history of America, just are unrealistic. 

All this 20/20 hindsight doesn‘t take into effect—if you exclude Mississippi and just talk about Louisiana, it would be the worst natural disaster in American history.  If you exclude Louisiana and talk about just Mississippi, it would be the worst natural disaster in American history. 

I don‘t know much about Louisiana.  We were obliterated, no communications, no roads, no water, no electricity, no nothing, and in the wake of that, things were going to go wrong.  I thought the federal government did a lot more right than wrong, but they sure did some things wrong.

There was this logistical system failed, but we adapted to that.  We didn‘t whine and mope about it, we went out and adapted.  We made due, adjusted and while there were days when we were running very tight on ice, on water, on fuel, on food, we made it through.  And you will find that—

I don‘t think there‘s one person who was damaged any worse because of our having to make those adjustments.

But I don‘t expect a perfect response.  We sure weren‘t perfect in Mississippi.  But I‘m very proud of the response we had of our first responders, of our local elected officials, state law enforcement and National Guard and everybody else.  But this was an incredible storm that obliterated 90 miles of our Gulf Coast, 90 miles.

MATTHEWS:  Well, one person paid right up front, that‘s Michael Brown, the head of FEMA and the president sacked him right away, lickety split.  And now we‘re getting all of this testimony from Michael Brown saying that there‘s a real organizational problem there that Michael Chertoff, head of Homeland Security, should not have been where he was.  He shouldn‘t have been in that job and that maybe FEMA shouldn‘t be in Homeland Security.  What‘s your judgment about the structural problem as well as the personnel charges being made back and forth here?

BARBOUR:  Well, some of my congressional delegation has introduced legislation to have FEMA not under Homeland Security, but to have it as an independent agency.

Back when I used to be in the government, Chris, we used to think that a lot of times those independent agencies didn‘t get as much attention as it would have got if they were under a department.  So I‘m—I don‘t think that was the big issue. 

You‘ve got to have strong leadership, no matter how you organize it.  And frankly, the one thing I don‘t want to see is the federalization of response to disasters.  If you look at Florida, Alabama, if you look at us, I think we‘ve shown that the right people to be in charge when we have a disaster, is the state, is the governor.  And if you try to militarize or nationalize, I think that is a step in the wrong direction regardless of how Homeland Security and FEMA are organized. 

MATTHEWS:  Let me bump along, if you don‘t mind, Governor, to the more recent topic and it has something to do with, you know, competence of the government.  That‘s the Dubai ports issue.  Would you be happy to know that Dubai Ports World, the Dubai-based, the United Arab Emirates port company that‘s owned by the government over there, were running the ports in Mississippi? 

BARBOUR:  Well, interestingly, Chris, P & O, the British company that is being bought or taken over by Dubai‘s company, actually runs the port of Gulfport, Mississippi, which is a state port under my jurisdiction.  We have a board that runs it.  So it appears to me that this Dubai company would take over our biggest port at Gulfport. 

But what I understand and I think the public needs to understand, P & O, the British company that runs it today, they got nothing to do with security.  Security is done by the Coast Guard, it‘s done by Customs, it‘s done by the Department of Homeland Security.  And whether it‘s a British company running the port of Gulfport or a Dubai company or a New York company, any foreign land, it really—it doesn‘t have anything to do with the security of the port of Gulfport. 

MATTHEWS:  What do you make of the fact that they do have ownership, however—rather, they have the control of the running of that port, that they really moved—they‘re the stevedore.  They moved the material in those containers, those giant containers, into the port, off the port.  They‘re responsible for what‘s in those containers.  That‘s the job—they‘re delivering like a bus driver or a truck driver delivers cargo.  That‘s what they‘re doing.  It doesn‘t bother you that they‘re basically the truck drivers bringing that stuff into your port and getting it off the port?

BARBOUR:  Well, Chris, of course the point is lots of the cargos that come into my port, the port of Gulfport, are shipped from ports like Hong Kong that are already managed by this Dubai company.  And those containers are packed over in Hong Kong or whatever Asian port or European port.  So if there is a danger about what got put in that container, we‘ve already got that danger, because this Dubai company is on the other end where these containers are being loaded. 

As far as my stevedores, my longshoremen, are concerned, whoever manages our port, they‘re stand-up guys and they‘ll do the job.  And there isn‘t going to be any security problem at our ports from our stevedores.

MATTHEWS:  So if you were voting in the United States Senate or the United States House of Representatives, you would vote against any measure that would stop this deal from going through? 

BARBOUR:  I don‘t see any problem with the deal.  I don‘t know all the details, all the business details.  But just having a company that is owned by the country—some business in Dubai, which is an ally of ours.  Remember in the Clinton administration, we sold Dubai F-16s.  It is not like Dubai is some enemy of ours.  They‘re not only allies in the war on terror, the Clinton administration thought that we could trust them with F-16s, our most advanced fighter plane.  So it doesn‘t bother me that a company there would replace a British company.  No. 

MATTHEWS:  OK, thank you.  It‘s great having you on always.  We hope to see you next week in Memphis.  Governor Haley Barbour of Mississippi. 

Up next, Democratic reaction from Governor Bennie Thompson of Mississippi.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Let‘s now get the response to the tape of the president‘s briefing the day before Hurricane Katrina hit from U.S. Congressman Bennie Thompson, who‘s a Democrat from Mississippi. 

You saw everything we‘ve been showing, the Governor Barbour, et cetera.  What‘s your—how do you put it together? 

REP. BENNIE THOMPSON (D), MISSISSIPPI:  Well, I think the president misled us.  He had the public believing he was not aware of the situation, he had not been briefed.  And we look at the video, and we receive clearly not only was he briefed by Michael Brown, but people from other agencies.  So I can‘t see why he wouldn‘t just tell the people that I missed the ball. 

MATTHEWS:  Well, what do you think really happened?  Was he asleep at the ranch?  I might, I don‘t want too irreverent here, but what is your accusation here, Congressman? 

THOMPSON:  Well, you know, he was on vacation.  He made some detours on his vacation.  He, as you know, flew over the area after the devastation and came back several days later.  But obviously, it just appeared that he nor the real leadership was really engaged in this hurricane effort.  The secretary, as you know, the day after the hurricane, went to Atlanta, spoke at an Asian flu event.  So you know...

MATTHEWS:  Well, in his defense, Max Mayfield is one of the people—he was actually the one briefing the president on that tape we saw, courtesy of the Associated Press.  He said that all I did was warn them that they might be topped.  I never said that they would be breached. 

THOMPSON:  Well, you know, Washington is good for reinventing the definition of words.  If I were someone involved in a hurricane and I was told that the levees would be topped, I‘d be very concerned.  So topped meant over the top, but it means also it could be breached. So I just think, again, we were not engaged, the president missed the opportunity.  And basically what we have, Chris, is again an administration that really wasn‘t prepared for the devastation of Katrina. 

MATTHEWS:  Let me ask you about another issue.  I just found out today, as you did—you told me before we went on the air, Congressman that Mississippi ports are also going to be under the control of this Dubai-owned firm.  What‘s your feeling about that, your position? 

THOMPSON:  Well, Peter King and I have introduced a bill asking for a 45-day review process.

MATTHEWS:  But doesn‘t that just kick the can down the road? 

THOMPSON:  Well, no, it kicks it down the road, but it also says that it has to come back to Congress to be approved. 

MATTHEWS:  OK, final approval by you folks. 

THOMPSON:  Final approval by Congress, so...

MATTHEWS:  And do you think it would be approved? 

THOMPSON:  I think given what I have learned over the last two days, it could go either way. 

(CROSSTALK)

MATTHEWS:  ... override? 

THOMPSON:  Right.  I‘ve had some discussions with individuals that cause me real concern.  It was put on fast track.  The Coast Guard had some concerns, DHS had some concerns.  But basically it was at a level where they could be easily influenced to change their opinion.  So...

MATTHEWS:  Out of time.  Please come back, sir. 

THOMPSON:  Thank you.

MATTHEWS:  It‘s nice to have you.  A very important time.  Thank you, Congressman Bennie Thompson of Mississippi. 

On the eve of President Bush‘s trip to Pakistan, an American diplomat there is killed in a suicide bombing.  Is Pakistan doing enough to fight terrorism and can President Bush stay safe there?  We‘ll get a report from NBC News chief White House correspondent David Gregory, who‘s on the plane with the president.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(STOCK MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.  India and the United States sealed a landmark nuclear cooperation agreement today, the centerpiece of President Bush‘s first visit to south Asia.  Now the president‘s heading to Pakistan, where an American diplomat and three others were killed in a suicide bombing.  NBC News chief White House correspondent David Gregory is traveling with the president and has this report from New Delhi.

DAVID GREGORY, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  Hi, Chris.  The bombing in Karachi, Pakistan certainly raised a lot of eyebrows here, terrible loss of life, an American diplomat killed as well as three others.  The diplomat sitting in his car when a suicide attacker rammed into it with a car full of explosives.  Again, four total killed.  This was news that the president got before his meeting with Indian Prime Minister Singh today.

And when the two came out for a press conference, the president addressed it right away, saying, when questioned about it, that terrorists and killers will not keep him from going to Pakistan. 

His first trip to Pakistan, the president said, “Look, this is an important trip.”  He and President Musharraf have a lot to discuss.  They are both into this war on terror pretty deeply and the United States relies heavily on Pakistan.

But this was a fresh reminder, the president said, of how dangerous things are there and the fact that the war on terror goes on.  It tended to overshadow what was a pretty important meeting today between the United States and Indian leaders.

Today a landmark nuclear energy deal was penned between the two countries.  It has to be approved of course by Congress and that may not be an easy thing because the deal is essentially this: that the United States will make available to India, nuclear fuel and know-how for a civilian nuclear energy program.

This is a huge country, 1.1 billion people, they don‘t have nearly enough energy to go around, to keep growing economically.  We‘ve got a huge economic engine, a middle class of some 300 million people, 54 percent of the country under the age of 25.  So if they‘re going to continue to grow, they need additional sources of energy and nuclear energy would be a big part of that. 

The reason this is all significant is because for years, United States would not transfer this kind of technology, would not offer this kind of fuel and infrastructure because India is a nuclear power that has refused to sign the Nuclear Non-Proliferation Treaty, certainly angered the United States back in 1998 when it tested nuclear weapons.

And there were even sanctions against India by the United States for a brief period of time at that point, but now they have come to the conclusion in the Bush administration that because India has been a trustworthy ally, that they have not in the words of U.S. officials, proliferated at all.

They‘ve kept their nuclear technology in their own hands.  They haven‘t let it slip out or given it away or sold it to so-called bad nuclear actors on the world scene, be it North Korea or Iran, that they can be trusted with having this nuclear technology.

But just to be safe, India has agreed to a couple of things.  They‘ll separate their civilian and nuclear programs and they will allow international inspectors to kind of look over their shoulder to make sure that this nuclear technology and the nuclear fuel stays in their hands and doesn‘t fall into the wrong hands.

So certainly a big deal.  A lot of opportunity for American business in this deal as well.  And it was something that the president was here to tout.  One kind of funny note today, the president is here in India and he‘ll leave, he‘ll go to Pakistan, without going to the Taj Mahal and Prime Minister Singh of India brought up that up today, saying to Mrs. Bush that “Perhaps your husband will be more chivalrous the next time he comes.”  The Taj Mahal, of course, being the monument to love.  The president joked back saying “I‘m kind of sorry you brought that up, it‘s been a bit of a sore topic between me and Mrs. Bush as soon as I told her we weren‘t going.” That‘s the latest from New Delhi.  Chris, back to you.

MATTHEWS:  Thank you, David Gregory.  Now the Dubai ports deal, of course, the hot issue of the week.  The Bush administration has triggered a national security investigation of another Dubai-based company with plans to buy U.S. plants that manufacture military parts for defense contractors. 

Are we becoming too dependent on overseas companies to provide services that are critical to our national security.  And would the Dubai ports deal make us less safe? 

Frank Gaffney is a former assistant secretary of defense during the Reagan administration.  He‘s now the president of the Center for Security Policy.  And Lieutenant Colonel Rick Francona served as the defense attache at the U.S. embassy in the United Arab Emirates.  He was there when the emir was the defense minister.  Colonel Francona is now an MSNBC military analyst.  Colonel Francona, you‘re on a lot of security matters, so let‘s ask you on this one.  Is it OK by your security instincts to allow the UAE to control our ports?

LT. COL. RICK FRANCONA, MSNBC MILITARY ANALYST:  On the surface of it, Chris, I don‘t have a problem with the UAE running our ports.  Dubai has been a terrific ally of ours.  We‘ve got a lot of defense cooperation, they understand our security interests, so I don‘t have a problem with a Dubai company running any of our ports.

MATTHEWS:  Frank Gaffney, do you?

FRANK GAFFNEY, PRESIDENT, CENTER FOR SECURITY POLICY:  I do.  I think that we‘ve got already too many vulnerabilities associated with these ports.  I‘ve just come from a hearing with the House Armed Services Committee.

The testimony from some of my colleagues about how serious those problems are, just reinforce my belief that we don‘t want to do anything, even that might marginally make matters worse and I think this would at least make things marginally worse in three senses.  One, there would be personnel hiring decisions made by this company.  There will be some involvement with cargo and management of cargo. 

And at the very least, there‘s going to be—some of the employees are going to be let in on security plans of the ports, each of which create, what I think is—as the lawyers would call an attractive nuisance.  It‘s like having a swimming pool without a fence around it.  Somebody is going to get in there and get in trouble. 

MATTHEWS:  Colonel Francona, Duncan Hunter, who chairs the Armed Services Committee in the House, he‘s a real tough soldiers kind of guy, he doesn‘t want to do it.  He said that the problem with Dubai is not just that it‘s a state-owned operation here, which some people are against if principle.  He says Dubai, the UAErMDNM_, has had a bad track record. 

He talks about high-speed electrical switches being sent through there, other materials that might be helpful to a nuclear program whizzing through the UAE‘s ports thanks to this company.  Does that concern you? 

FRANCONA:  Well, yes, it concerns me, but I think you have to separate out all these incidents and look at them each.  You know, is this the government doing this?  Is there government complicity in this, or are the companies in the UAE being used either with or without knowledge?  So I mean saying that something is happening in the UAE doesn‘t mean that the UAE government is doing it.  So I think we have to be a little circumspect in how we look at these incidents. 

MATTHEWS:  Frank, if this was an Egyptian company or a Jordanian company, would you have the same concern? 

GAFFNEY:  I would.  Frankly, I have the same concern about the fact that many of our ports are run by Chinese communists. 

MATTHEWS:  No, would you be coming on television to concern—show your concern? 

GAFFNEY:  I would be—I would be probably be raising the same kinds of alarms. 

MATTHEWS:  Even if it were Dutch or Belgian?

GAFFNEY:  This is particularly worrying, Chris, because not only do you have the track record that Duncan Hunter was talking about, but we also know that this isn‘t necessarily a wrap on the government or even the company, but we also know the territory of the United Arab Emirates was where most of the operational planing and financing of the 9/11 attacks took place.  So whether the government is complicit or simply missing the boat...

MATTHEWS:  Well, so is Germany, if you want to get into that.  Btu that‘s where a lot of these guys came from. 

GAFFNEY:  That‘s true.  All of these raise questions, which is why I think the American public is so alive to this problem about whether we want to have control in other people hand‘s.

MATTHEWS:  That‘s a cost.  Risk is a cost, right?  What are benefits, Colonel, and the costs of not doing this deal?  Let‘s flip it around and look at the other side. 

FRANCONA:  OK.

MATTHEWS:  What is the advantage of doing this deal, sticking with it in terms of helping our relationship with Dubai?  And what are the costs if we drop the deal, if we dump it? 

FRANCONA:  Yes, assuming you‘re going to allow foreigners to run our port, you can‘t cut out the UAE, because that would defend Dubai.  Dubai has been a great ally for two decades.  Look at the strategic position they occupy on the Arabian peninsula.  They straddle the Straits of Hormuz.  They have ports not only in the Persian Gulf, but on the Gulf of Oman.

I mean, this is a critical operational location for the U.S. Navy.  Sixty-five port visits a month.  There‘s no place else in the area that gives us that kind of access.  We need those ports to project power, not only in the Persian Gulf, but into the Gulf of Oman. 

MATTHEWS:  React to that. 

GAFFNEY:  Well, I‘m willing to stipulate to all of that.  I think that‘s true and it‘s why it‘s regrettable...

MATTHEWS:  But you‘d pay the cost of dumping this deal?

GAFFNEY:  It‘s why it‘s regrettable that this deal has been allowed to come to this.  It should have been turned off.  But the defective process by which it was evaluated put us in this position where we have...

MATTHEWS:  What happened in this administration?  You‘re politically conscious.  What happened to this administration‘s nervous system?  Why did didn‘t they pick up on this? 

GAFFNEY:  I‘m going to take that as a compliment, I think.

MATTHEWS:  I think I am.

GAFFNEY:  It‘s because the process, this so-called Committee on Foreign Investment in the United States, is a black box.  The president didn‘t know what was going on until it was a done deal.  The secretary of defense didn‘t know what was going on...

MATTHEWS:  He said he didn‘t know. 

GAFFNEY:  ... until it was a done deal.

MATTHEWS:  You really think Rummy know about this at all? 

GAFFNEY:  Because it was done at a very low level.  That‘s the way these things have been run by a Treasury Department-led effort when the Treasury Department is responsible for promoting foreign investment in the United States.  It‘s designed to give rise to these kinds of outcomes. 

MATTHEWS:  Why didn‘t somebody say to Rummy, hey, boss, I think we got a problem here? 

GAFFNEY:  I think partly because he‘s missing some middle level management that can‘t get through Carl Levin in the Senate.  We‘ve got serious problems with the process.  We‘ve got some I think legitimate concerns about how this plays out in a post 9-11 world.  And I think at this moment, it‘s very healthy to have a debate, as we did in the Armed Services Committee. 

MATTHEWS:  Well, we‘re having one here.

(CROSSTALK)

MATTHEWS:  A little late, but we‘re having one here.  Thank you, Colonel Francona and Frank Gaffney.  Thanks for—both of you for joining us. 

Up next, why didn‘t President Bush tell the country that no one expected a levee breach in New Orleans after he was warned about the possibility of it being topped by Katrina?  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH:  I don‘t think anybody anticipated the breach of the levees.  They did anticipate a serious storm.  But these levees got breached, and as a result, much of New Orleans is flooded, and now we‘re having to deal with it and will. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That was President Bush defending his response to Hurricane Katrina just days after the storm hit.  But newly surfaced video, as we saw, of presidential briefings, may tell a different story. 

I‘m joined now by MSNBC political analyst Ron Reagan, who‘s out in Seattle and the “National Review”‘s White House correspondent Byron York. 

Byron, this question of Katrina and the stories that are coming in this week, thanks to videotape.  Is it different than the story we got from the president before? 

BYRON YORK, “NATIONAL REVIEW”:  Not really.  I think the president has pretty much absorbed all of the Katrina damage that he‘s going to absorb.  Now, the White House people are pointing out, by the way, that the video of bush in this teleconference was public at the time.  I mean—and if you listen to what Bush is saying—and I just want to ensure everybody we‘re fully prepared—it was very a public sort of statement.  The president is not like that in private when there aren‘t cameras around.  So, you know, I think he‘s taking the most of the hit that he‘s going to take for this. 

MATTHEWS:  But doesn‘t this provide another dot on the line of problems?

YORK:  Oh it does.  It does.  And he‘s...

MATTHEWS:  You know, Harriet Miers, Katrina, this port issue we‘ll talk about.  Where it seems like he‘s a couple days or a couple weeks off our schedule and the schedule of events. 

YORK:  Right.  Right.  And the worst thing for him is that it‘s hurting him with his own party.  If you look at these recent polls, you get a significant decline in Republican support for Bush.  You got that after Harriet Miers, a little bit after Katrina, and now you‘re getting it in the ports thing.  So yes, it‘s—you put it all together, and it‘s bad news. 

MATTHEWS:  Let‘s take a look at how the country‘s sense of how Katrina was handled in the new CBS/”New York Times” poll.  Thirty-two percent approve of President Bush‘s response to the needs of Katrina victims.  Double that number, 64 disapprove. 

But the president may not be taking all the heat.  When asked who was most to blame for the situation in New Orleans, 14 percent said former FEMA Director Michael Brown; 13 percent said the federal government; 11 percent blame the residents themselves; 11 say all levels of government, and 11 say President Bush.

You know, I just don‘t believe these polls sometimes.  I think you hear more about the president than you hear about the residents. 

Anyway, your thoughts on this, Ron Reagan? 

RON REAGAN, MSNBC ANALYST:  Well, you know, I think when we get to a safe distance away from the Bush administration in years from now, we‘re going to look back and we‘re going to realize that Katrina was really their jump-the-shark moment.  It combined a whole lot of issues—national security, the environment, among others—wrapped them all up in a big woolly blanket of incompetence, and people woke up after Katrina.  They picked their heads up from their computers, turned off their iPods, and they realized, hey, wait a minute, these guys don‘t know what the hell they‘re doing. 

MATTHEWS:  You mean the president did not have situational awareness? 

REAGAN:  That‘s—to put it mildly.

MATTHEWS:  That‘s his term. 

REAGAN:  The idea about the levees and nobody could have anticipated the breach of the levees—we can talk about overtopping versus breaching, but that‘s sort of a what is is argument. 

The fact of the matter is that for years, for years, people anticipated those levees being overwhelmed.  FEMA‘s No. 1 nightmare scenario for years in terms of a domestic natural catastrophe was a hurricane hitting New Orleans and the levees being overwhelmed.  Everybody anticipated this if they had given it a moment‘s thought. 

YORK:  Overtopping versus breaching is not an is-is situation.  They are two separate words with hugely different effects, as we all learned when we studied this stuff when Katrina came out.  Max Mayfield came out and said that he was talking about overtopping.  That is quite different. 

MATTHEWS:  But isn‘t water fungible? 

REAGAN:  The end result is the same.

MATTHEWS:  We‘ll be right back with Byron York and Ron Reagan. 

REAGAN:  The Ninth Ward...

MATTHEWS:  I‘m asking is water fungible.  If it comes over or through, what difference if it comes in enough to drown people.

REAGAN:  Exactly.

MATTHEWS:  This is HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  I have no idea how this argument‘s going to go.  We‘re back with MSNBC political analyst Ron Reagan, who‘s out in Seattle, and “National Review” White House correspondent Byron York.  By the way, Bill Buckley the other day came out and said the war in Iraq has been a failure.  Did that surprise you? 

YORK:  No.  Because he has expressed a lot of skepticism about the war almost from the very beginning.  So this was—the editors did an editorial about it, and took issue with what he said, but no, it wasn‘t a real surprise. 

MATTHEWS:  Isn‘t that like biting the hand that feeds you?  Let me ask you, Ron.  Ron Reagan...

YORK:  You have diversity of opinion in (INAUDIBLE). 

MATTHEWS:  Well, apparently.  I like his.  Anyway, let‘s go to—as I always have on many issues—let‘s go back. 

Ron Reagan, this issue of the ports now has been joined from another -

another front here.  The stories keep developing here, and they‘re all going in one direction, I think, with some exceptions.  Like, Governor Barbour was very strong today saying our ports down in Mississippi are going to be run by this company, by the Dubai-based company, the state-owned company.  Doesn‘t bother me; I think they‘re safe.  We also heard from Colonel Francona tonight, who‘s our expert here on MSNBC, and he said it‘s a safe situation. 

But then we get this report from a real powerful man here, Duncan Hunter, a real tough guy, a hawk, chairman of the Armed Services Committee of the House of Representatives.  He said he‘s completely against the deal because Dubai has been involved in shipment of high-speed electrical switches and other materials that are used for when developing nuclear weaponry.  He doesn‘t think it‘s a safe company to do business with.  Your thoughts.

REAGAN:  Well, listen, there‘s a sophisticated, sensible discussion that we can have here about whether or not this Dubai company ought to be running these ports.  Unfortunately for the Bush administration, over the last few years, they‘ve conditioned their supporters in particular to accept their trump card all the time, which is national security.  We should torture people because of national security.  We should spy on American without a warrant because of national security. 

And now, this deal comes up, and most American people say, oh, you know, Dubai, the United Arab Emirates running ports on the East Coast?  It sounds like a national security issue, and they say, wow, wow, wow, no, no, there is no problem here. 

Well, all you have to do is go to the American people—say you‘re a Democrat running for office—and say, the Bush administration wants to turn the operation of our ports over to one of three nations on Earth who extended diplomatic recognition to the Taliban, and the discussion is over. 

MATTHEWS:  Byron, I want you to retort to that.

YORK:  Well, I don‘t have a retort to it.  I mean, this is polling about 70 percent against George W. Bush, and a lot of his supporters... 

MATTHEWS:  Should the president cut and run on this issue? 

YORK:  Well, you know, if he believes what he believes, I think that there are—there needs to be...

MATTHEWS:  But I think he got stuck with this thing.  He didn‘t think about this.  This happened by the bureaucrats, and he gets stuck with defending it.

YORK:  Yeah, but you know, I just did a story on this, and I talked to a lot of Republicans on the Hill who are madder than I even thought they were.  And one of the things I asked, I asked this to a strategist.  I said, would this reaction be happening if the president were at 60 percent?  And he said you‘re not looking at it the right way.  Presidents at 60 percent don‘t make these kinds of mistakes.  So no, George W. Bush did not personally do this, but Republicans are really blaming his bureaucracy and essentially his control over it, or lack of control over it, for letting this happen. 

MATTHEWS:  Would he have done it knowing him as you do, if he had had the chance to make the decision?

YORK:  I think there certainly would have been a lot more review than there was.  I can‘t say.

MATTHEWS:  But would he have come down on letting the UAE, a Dubai-based, state-owned company run our ports? 

YORK:  Well, if there‘s a good case to be made for it, and I have to tell you, I think...

MATTHEWS:  You think he would have said yes? 

YORK:  I don‘t know.  I can‘t say.

MATTHEWS:  Here‘s the question: I think the president, who‘s always in campaign mode when he‘s out giving speeches.  And to make our ports really safe, I‘m going to turn them over to Dubai as an applause line, people—their mouths would drop. 

YORK:  Yes, but you have to understand, he‘s also wanting to find any friends we can in the Middle East.  And these people do service American naval ships and things like that. 

MATTHEWS:  Ron Reagan, do you feel at all embarrassed to be on the same side as Michael Savage and some of the more far-out people on the right on issues like this?  On an issue like this, do you feel a little uncomfortable, a little queasy that you‘re on the same side as Michael Savage, Michael Smerconish and some of these guys who don‘t share your political sensibility on other matters? 

REAGAN:  Hey, I‘m a flexible kind of guy.  Listen, I will say one thing, though, the argument that we shouldn‘t have any foreign companies running our ports is a little ridiculous.  Almost all our major ports, as I understand it, are run by foreign companies. 

MATTHEWS:  That‘s right.  Thank you very much, Byron York.  Thank you, Ron.

Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  “Hot Shots” tomorrow night.  Right now, it‘s time for “THE ABRAMS REPORT” with Dan.

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

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