updated 3/10/2006 2:12:04 PM ET 2006-03-10T19:12:04

Guests: Margaret Carlson, Duncan Hunter, Jim Gilmore, Charles Schumer, Richard Wolffe, David Margolick

CHRIS MATTHEWS, HOST:  Good evening, I’m Chris Matthews.  Amid a revolt in Congress with Republicans openly defying the president on the ports deal, Senator John Warner dropped a bomb today. 

The Arab company, Dubai Ports World, had backed off the deal.  The company has agreed to transfer its North American operations to a U.S.  entity, still not named.

Congress appears to have gotten its way, but is the fight over? 

Here’s Senator John Warner announcing the death of the deal on the floor of the U.S. Senate today.

(BEGIN VIDEO CLIP)

SEN. JOHN WARNER ®, VIRGINIA:  Because of the strong relationship between the United Arab Emirates and the United States, and to preserve that relationship, D.P. World has decided to transfer fully the U.S.  operations of P&O Ports North America to a United States entity.

This decision is based on an understanding that D.P. World will have time to affect the transfer in an orderly fashion, and that D.P. World will not suffer economic loss.

(END VIDEO CLIP)

MATTHEWS:  In a moment, Republican Congressman Duncan Hunter of California, he’s been a vocal critic of the Dubai ports deal and he’s also chairman of the Armed Services Committee.  He was pushing legislation that would require all foreign companies to divest ownership of any domestic facilities deemed critical to our national security. 

Welcome to the show, let’s go to Margaret Carlson of Bloomberg.  Margaret, just when you think there’s only two choices here, override the veto or sustain the veto, we don’t have to have a veto.

MARGARET CARLSON, COLUMNIST, BLOOMBERG NEWS:  No.  It turns out Dubai ports is a better politician than the White House.  They figured out how to do it, and now it seems like this is now going to go forward in some way, where they bifurcate the contract, and the U.S. is not under the control of the Dubai ports.

MATTHEWS:  It’s hard to imagine this kind of a deal going the way it did, down and out.  A couple of years ago, even a year ago, the president was so preeminent on security matters, that he would have just said, “This is the way we’re going to do it.”  It seems like he’s lost control.

CARLSON:  Well he has, but I’m not sure that this particular one wouldn’t have gone down badly, even when he had higher ratings, in that the outpouring—some people on the Hill told me they hadn’t had this many calls since impeachment.  It really energized people and that might have even gone against a president at 49 percent.

MATTHEWS:  I guess you know that when you see a congressional congressman who’s running for the Senate named Harold Ford, who is very ambitious to win a Senate seat, from Tennessee, who is not on an ocean, last time I looked—go to New York and complain about this in one of his T.V. ads.

CARLSON:  That’s got a lot of lakes he’s got to worry about.  But it was—for everybody but the Bush White House, it was kind of a no-brainer politically, which is this is not going to fly with the American people.

MATTHEWS:  Let’s talk to politics.  It seems to me the president, his people in the White House now know who their enemies are and their legion.  There are people who are willing to exploit his mistakes and they include a lot of top Republicans.

CARLSON:  There are too many now to have an enemies list.  You’re just simply—the White House couldn’t do that.  They really actually need to bring some of them back.  I don’t think you’ll see a lot of retaliation, because why would you?

MATTHEWS:  I’ve never seen a speaker of the House stand up so boldly to a president of his own party.  Denny Hastert, who was basically a party man, a real Republican regular.

CARLSON:  Bill Frist.

MATTHEWS:  Bill Frist on the other side.  They came out a week or two ago, right out in the president’s face and said “Mr. President, you’re dead wrong, change the policy.”  And do we know whether the president talked the Dubai company into backing down?

CARLSON:  I don’t know that.  Maybe we’ll find out overnight, but I think Dubai saw that is it wasn’t going to fly.  And you know, the president had a chance, when he saw what Hastert and Frist were doing, to get right on this.  Instead, he immediately dug in and threatened to veto.  It’s as if he lost his ear.

MATTHEWS:  You know what I think?  I think it’s a big victory for the talk show hosts, too, on radio. 

CARLSON:  Congratulations.

MATTHEWS:  The ones who pushed this and pushed this and pushed this.  Michael Savage, who I rarely agree with, but he pushed this one hard.  He teamed up with Chuck Schumer on this one; he had him on his program on his West Coast national feed.  And of course you had Smerconish from Philadelphia on the other night; he’s the kind of guy that’s been riding this issue.  It seems like if it’s not grassroots, this kind of development, it’s clearly homegrown.  It’s not being born in Washington.

CARLSON:  Some of the people were different, but it was like Harriet Miers, where anybody with a good ear in the White House could see that that wasn’t going to work because you had your own people going against you.  In fact, Democrats ought to take a page and learn how to oppose the White House.  Republicans are pretty good at it.

MATTHEWS:  Well let’s go right now to a top smart Republican, Duncan Hunter, the chairman of the Armed Services Committee of the House of Representatives.  Congressman Hunter, Mr. Chairman, thank you for joining us.  What happened today?  Why did this happen the way it did?

REP. DUNCAN HUNTER (R-CA), CHAIRMAN, ARMED SERVICES CMTE:  Well I’m glad it happened.  But on the other hand, it’s not over yet, it’s not over until there’s been a divestment.  Because as I understand, the deal went through, so we need to make sure that the ink is dry on this divestment of the ports that Dubai World put together.

But I’m glad this occurred.  Dubai has a bad record of trans-shipment of lots of things, including nuclear triggers, heavy water use for nuclear development, nerve gas precursors, all going to bad people. 

We have lots of information on that, and we gave that to the White House over the last several days incidentally, and this is good news, but it isn’t over until the documents are inked.

MATTHEWS:  Are you concerned, Mr. Chairman, that the Dubai Ports World people issued a statement that said they would transfer, that was the word they used, control of these ports, terminals, to an American entity?  They didn’t say sell.  Does that bother you?

HUNTER:  Well, this thing—I haven’t seen the deal closed yet, and until it closes and until we see the ink on the paper, then it’s not over.  And the devil is always in the details, so I’ve been in hearings all day, I just got a—we were doing a hearing on Iraq and we got word that this deal had been killed.  That’s good, but it’s not over until you see the papers.

MATTHEWS:  Is this better for President Bush, if he’s able to get by this issue without a veto that gets override by your House?

HUNTER:  Yes it’s good, but you know something, I don’t think the president would have overridden the veto and I think he would have, even though it would have been tough, when I saw him last in the White House, I said “Listen, we’ve got—here’s the court documents that evidence, the transfers of bad stuff through Dubai, with the Dubai customs director.  Letting this stuff go through, these nuclear triggers, even though the United States had protested.”

The president says we want to see that and we gave that to their people.  I don’t think—you know, and I think the Committee on Foreign Investment let the president down.  That’s his arm for investigation, and they waived this thing through.  They stamped it without doing an in-depth investigation. 

He’s going—he’s out trying to make this foreign policy—meet these challenges.  He’s not sitting in there trying to go over documents.  They did not do the investigation and this—this Committee on Foreign Investment is charged with that.  That was his arm, they let him down.

MATTHEWS:  Do you believe the president, just to clarify your thinking, do you believe, Congressman, that the president would have gone ahead and vetoed this bill?

HUNTER:  No, I don’t think he would have.  I think having the documents on these technology transfers, these weapons transfers, that Dubai allowed to take place, what he’s seeing is the good side of Dubai. 

He’s seen Dubai helping Tommy Franks in our operations in Iraq, he’s seen them helping American troop movements.  He hasn’t seen the other side, when they’re selling bad stuff or transshipping bad stuff to bad people.

MATTHEWS:  Well has Dubai been or been not a good ally in the war on terror? 

HUNTER:  They have been accommodating to American forces.  On the other hand, allowing these 66 high-speed electrical switches, which can be used to detonate nuclear weapons, allowing that transfer to Islamabad, even after the American customs agents standing there saying “Please don’t let this go through,” there’s no excuse for that.

And that’s being a bad ally, so some Americans like Tommy Franks, saw the good side when the UAE welcomed them and gave them logistical help.  But our customs guys saw the bad side with they moved this stuff to the wrong parties.

MATTHEWS:  There was some saber rattling in an economic sense yesterday, from Dubai.  Do you think they might kill some deals in terms of buying Boeing aircraft and American material?

HUNTER:  I hope so.  If they’re talking about—oh you’re talking about buying Boeing aircraft?  Listen, Chris, I think Dubai does what is right for their economic and their security interests.  And if they want to stiff the United States on some deals, so be it.

Americans ought to own, operate, and manage those ports, and not only those ports, but all critical infrastructure.  Infrastructure that is critical to national security should be owned and operated.  And you know something else, Chris?  There are a lot of great military guys coming back from those Afghan and Iraq theaters who are great on security, especially against the backdrop of the war against terror.  They’ll be able to run ports.  We’ve got lots of Americans who can do this stuff.

MATTHEWS:  Let me ask you about your legislation.  Where does it stand now that you—you may have won the victory in terms of stopping this deal from going through.  But you’re concerned about any ownership by foreign governments of any facility that’s critical to our national security.  How is that going to move in Congress?  Is it going to move?

HUNTER:  Well I’m going to do everything I can to make it go and I think there’s lots of residual momentum for that.  And certainly it also reforms this Committee on Foreign Investment, which right now is run by people who want to make deals happen, don’t want to stop deals.  But we’re on the other day with members of the Senate who think that CFIUS should be reformed, Committee on Foreign Investment. 

There also is vulnerability at our ports that we all understand and that is that we don’t check all the cargo coming in.

I think there’s great momentum for that, so it may not be my bill, but it may be or it may be somebody else’s, but I think we’re moving toward a greater control and a greater protection of American critical infrastructure. 

MATTHEWS:  Well, let’s talk about where we’re headed.  We’ll be right back with Congressman Duncan Hunter, Chairman of the House Armed Services Committee.  He’s from California.

And later, a key Democratic critic of the ports deal, Senator Chuck Schumer of New York. 

And starting tomorrow, HARDBALL has live coverage of the first big contest in the 2008 presidential race, the Southern Republican Leadership Conference in Memphis, Tennessee.  We’ll be talking to the top candidates for ‘08, to find out who has what it takes to win the White House.  You’re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We’re back with Congressman Duncan Hunter.  He’s a Republican from California and chairman of the House Armed Services Committee. 

Congressman, what do you feel about the fallout of this long siege that’s going on here for the last couple of weeks?  Is this going to undermine the president’s leadership on terrorism? 

HUNTER:  You know, I don’t think so, and I’ll tell you why.  When we did our seven hour hearing on this, we had Dubai World there, we had the corporate leadership there, and it was asked, have you got any political figures helping you?  And he said yes, and he said President Clinton was talking to the emir, recommending that they hire certain people to get this deal through. 

There was Senator Kerry’s staff member now brought on board, Senator Edwards, so I think it’s going to be tough, I think, for either—for the Democratic Party to say the Republicans are for this deal.  But the other thing is, I knew this deal was dead from the start, Chris. 

MATTHEWS:  But then you have—joining that cotillion, you had Vin Weber and Bob Dole as well, right?  It was kind of a bipartisan mix there on that lobbying front. 

HUNTER:  That’s true but it makes it very difficult for the Democrats to split off at this point.  But the other point is, I knew this deal was dead from the start for one reason.  Whether you had any publicity out in the country, and that’s the reason we’ve been able to stop all the tough technology transfer stuff, where they’ve tried to open up technology transfer.

That’s the reason we’ve added—always added $42 billion to the Clinton defense budget and that’s the one good landmark of national security, and that’s House Republicans.  I knew the House Republicans would not go with this, even if the president wanted it. 

And in the end, the president was ill-informed and I think the president, having the facts of the technology transfer, would come our way on this thing.  He’s a good guy on defense. 

MATTHEWS:  The president has had a pattern, unfortunately, of being criticized in the last several months now on Katrina, on Harriet Miers, on the ports deal.  I keep—I don’t remember everything, but there seems to be a pattern of him being criticized for being off base, maybe at the ranch or not being informed by staff.  Does he a staff problem?  Does he have an executive problem generally right now in the second term? 

HUNTER:  I think he’s just got a workload problem, Chris.  I mean, he came back; he gave us an in-depth briefing on India, Afghanistan, the nuke deal they’re trying to put together.  This is a guy that’s got literally the weight of the world on his shoulders.

And he had this group, this Committee on Foreign Investment, which is his arm for investigating foreign accusations, and they didn’t do their job.  They simply rubber stamped it and moved it on. 

If they would have done this in-depth analysis on these technology transfers, where Dubai shipped bad stuff to bad people, they would have recommended killing this deal, and that’s why we’ve got to reform those guys, but they didn’t serve the president well on this one. 

MATTHEWS:  Do you think Karl Rove is spending too much time thinking about how to nail Hillary and not enough time thinking about how to help the president do his job? 

HUNTER:  No, I think that Karl Rove is not on the Committee on Foreign Investment.  Those are the guys that are supposed to call down our intelligence guys and say tell us about Dubai.  Have they been transferring any bad stuff?  They didn’t do that. 

MATTHEWS:  Well, the funny case there was Robert Kimmitt, the top guy on that liaison team, and he said he didn’t see any political consequence in letting this be owned by the Emirates. 

HUNTER:  Well, the point is, he may have looked at political consequence, but he didn’t do any security research, and Dubai is a place where you go if you want to ship anything in the world, where you want both the seller and the buyer to be anonymous. 

It’s a port that masks.  It specializes in masking these transfers and, you know, we’re going of to get Dubai to reform, because the sale of these—or the transshipment of these electronic switches that can be used to detonate nuclear weapons, that happened in 2003, two years after 9/11, so they’re going to have to be reformed. 

MATTHEWS:  Well, you’re tough.  Congressman Duncan Hunter, Chairman of the Armed Services Committee at the House of Representatives. 

Coming up, Dubai Ports World agrees to sell its control of terminals at six American ports to an American company.  Let’s find out about it.  Is the showdown between the president and the Republicans in Congress over?  This is HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Congress stopped the president today from making good on his latest veto threat; they simply got what they wanted without him.  Dubai Ports World announced today that it plans to sell its stake in the American ports to an American bidder.

What does this mean for the remainder of the Bush presidency and what does it mean for Republicans trying to hold on to control of Congress this November.

Jim Gilmore is a former governor of Virginia and he’s former chairman of the Republican National Committee.  Margaret Carlson, who’s staying with us, is a columnist for Bloomberg News.  Governor, I have to ask you, were you surprised that your colleague down there in Virginia, John Warner, apparently was the one who was cooking this deal with Dubai Ports to get them to pull out of the deal?

JIM GILMORE, FORMER RNC CHAIRMAN:  Well I think that’s good for the senator and good for his leadership.  I think that it’s a surprise that they made that decision in light of everything that’s been going on.  I don’t think there are any political implications, although we can talk about this.

But I do think that there are administrative implications.  I’ve been through the CFIUS process, they’ve been pretty tough as far as I’ve seen, but apparently they missed some things this time and the real implication is that the Congress has taken a much more assertive role on this, both the House and the Senate.

MATTHEWS:  Margaret, that’s the issue here.  The president was at point, he’s still out on point, he’s our commander-in-chief.  But now you’re seeing open mutiny on an issue of vital national security, our ports and that mutiny succeeded.  The president’s not in the boat like Captain Bligh exactly, but Fletcher Christian on the Hill looked pretty good right now, the guys who challenged him.

CARLSON:  They’re wondering is he competent, which is different from partisan attacks on the president, which is despite what Congressman Hunter said, you know, the Committee on Foreign Investment, was not the—you know, the buck didn’t stop there.

Anyone, your daughter, my daughter, would have noticed that it’s the Dubai ports that we’re talking about here, and all the problems with them, and a red flag would have gone up.

And also the Coast Guard has already complained.  It wasn’t as if there were no red flags to see and the White House simply missed it.  They didn’t see it.  And then when they saw it, they reacted in entirely the wrong way.

MATTHEWS:  Governor, what do you think’s going to be the reaction over in that part of the world, to hear that a company was forced to back out of a deal they had already made.  It’s signed, sealed and delivered, the deal, they bought the rights to those ports, to those terminal operations in six American cities.  And then being told basically by the American people, get out of here.

GILMORE:  Yes, and I think that it does have serious commercial implications and diplomatic implications.  And the security of course of our ports and our country in a time of terrorism has in fact trumped all that.  I actually met with the head of the P&O when I was governor in London, and I think that this was a London company operating ports inside the United States and a transfer of title over here to Dubai has raised a whole new set of issues that now the Congress has uncovered, a lot of these kinds of issues.

But I think that’s right.  I think what the president initially was thinking was we need all the friends we can get in the Middle East and these could be friends that could help us out and that there was security considerations that the Committee on Foreign Investment in the United States had in fact vetted out, and so it looked like good diplomacy to him. 

But I think that the Congress has uncovered more facts and I want to say again that I think what we’re seeing here in the light of all the eavesdropping issues and everything else that’s going on is the Congress is reasserting itself as an institution.

MATTHEWS:  Let me ask you, Margaret, about how this is going to go down if the Arab world.  Neither one of us are Arabists, but the old argument about doing business in the Arab world was, you cut the deal, then they start debating.  You know, let’s start haggling now that we’ve cut the deal.  We now look like the people who operate like that.  We cut the deal, now we start haggling and we say, “By the way, no deal.”  That’s what happened here.  The deal was signed.

CARLSON:  It is what happened here.  However, when you’re dealing after 9/11, that’s not how you’re dealing anymore and that’s recognized.  Listen, usually in this country, and especially in a Republican administration, trade policy trumps foreign policy.  It does in China all the time, but in this case, foreign policy had to prevail, because it’s a 9/11 issue.

MATTHEWS:  Big winners here, Margaret, I would think Chuck Schumer won this argument, I would think that Denny Hastert, Bill Frist, all stood up to the president and got their way.  Peter King of New York, who was often times an ally of Bill Clinton and Duncan Hunter, of course, Governor.

Who were the losers here?  Who lost because of the way this deal went down and ultimately faltered?  Governor?

GILMORE:  Well I think that people in the bureaucracy are going to be losers, because it looks like the work that they did, which was considered a matter of routine, flopped.  And it was—and second of all, I think P.R. in the administration failed. 

I think that there was a sense that this was something that was not explained to the American people adequately and as a result the political consequences were just too great.  And then beyond that, I think that we now have to examine what the foreign policy and diplomatic complications and commercial implications are in the future.

MATTHEWS:  Do you really think, Governor, that this could have been sold, this deal?

GILMORE:  I think if they had gotten out in front of it and explained exactly what they were trying to do, at least they wouldn’t have looked as bad as they do.  Now once again...

MATTHEWS... See the vote last night, Governor, was so bad.  It was 62-2 on Appropriations Committee.  If you project that out to the 435 member House, that would be 15 votes for the president’s position for the sale, and 420 against it.  That’s not only veto-proof, it’s almost unanimous.

GILMORE:  You bet, but the P.R. argument has run on now for going on two weeks, but I think maybe the most important thing is that the system worked and members of the Congress uncovered some additional information that is legitimate, is a legitimate area of discussion.  I think the president’s acknowledging that.

MATTHEWS:  Last question, Margaret, will this encourage the Democrats to really come forward with a plan on Iraq now that they’ve challenged the president on domestic security?  Will they actually come out with this thing?  We’ve heard about this two-year plan to remove our troops from that field?

CARLSON:  Well already the plan to remove some troops is on the shelf now because of the insurgency and the potential for civil war.  The problem is so huge; it is hard for me to see how the Democrats come up with a coherent plan.  You know, you have the Murtha plan, which is “Let’s get out now.” 

MATTHEWS:  Six months.

CARLSON:  And then you have the Bush plan, which is, “Let’s draw down as the Iraqis stand up.  I mean, the Iraqis are not standing up.  That’s not a plan either.  But it is hard to find one, given how tough that situation is.

MATTHEWS:  Well it looks like the timetable is going to be 2008; the American people are going to have to decide on this war when they get the vote.  Anyway, thank you—Governor Gilmore, thank you very much, Sir.  Margaret Carlson will be with us a little larger in the program.

But up next, one of the president’s fiercest Democratic critics, Senator Chuck Schumer is going to be here and this weekend is the first big contest in the race for the White House.  The straw poll at the Southern Republican Leadership Conference, we’ll be there all weekend talking to the candidates, starting with live coverage right here on HARDBALL tomorrow at 5:00 p.m. and 7:00 p.m. Eastern.  I’m going to be down there.  You’re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.  Is the Dubai ports surrender enough to satisfy Democrats?  Senator Chuck Schumer of New York was one of the earliest opponents of the Dubai ports deal, and just yesterday, he surprised Republicans by introducing a measure that would ban the Dubai takeover. 

Senator Schumer, welcome.  What’s wrong with this deal, if anything, to sell off Dubai Ports World, to sell off the American terminal operations? 

SEN. CHARLES SCHUMER (D), NEW YORK:  Well, the devil is in the details, Chris.  If it’s a true sell-off, a spinoff, where the United Arab Emirates, who owns Dubai Ports World, will have no control, no say, no stock, no ability to make money, that’s fine. 

On the other hand, if they have any tentacles in the deal, it’s not fine at all.  And we’re not trying to be difficult here.  What we’re trying to do is make sure that security is number one. 

MATTHEWS:  Is it the word transfer that concerns you, transfer to an American entity? 

SCHUMER:  Yes. 

MATTHEWS:  Instead of sell? 

SCHUMER:  Well, two things concern me.  First, the wording there, which is reminiscent of their previous offers, which were not very good at all.  You need a wall that’s thick as could be, that nothing in the United Emirates could penetrate in terms of influencing the American operation.  Their previous proposals where they also talked about one kind of thing or another, didn’t have that.

And second, the other problem is, of course, that, you know, there were the votes in the House and the Senate to kill the deal outright, so it has to be something very close to that in order to meet the desires of the House, the Senate, and the American people. 

MATTHEWS:  Who do you think you’re dealing with here?  Are you dealing with John Warner, the chairman of the Armed Services Committee?  Are you dealing with the Dubai company, or the government of the United Arab Emirates?  Who is on the other side of it table? 

SCHUMER:  Yes, well, I am not dealing with the Dubai port company or the United Arab Emirates.  I don’t think that’s appropriate.  I’ve been dealing with Senator Warner and Senator Frist, but the real issue here is America’s interest. 

Dubai Ports World can do whatever it wants with taking over the British P&O Company and whatever else they do around the world, but we have say over what happens in American ports, so we’re going to say what should exist in American ports and they can do whatever they want in the rest of the world. 

MATTHEWS:  There was a lot of saber rattling from the other side yesterday about consequences, retaliation.  Do you see that on the horizon?

SCHUMER:  No.

MATTHEWS:  After this deal—if it goes through that they have to sell off their American port controls and your side wins this argument, do you think they might try to hit us some other way? 

SCHUMER:  No, I think that they understand.  I mean, the real thing that kept everybody scratching their heads is why it took the Senate much longer than the House to realize that the gig was up, and most of all, no one can understand why the president is sticking by this deal, either substantively or politically. 

If it’s just the idea, well, never to say those magic four words that are very good for politicians but they don’t like to say them—I made a mistake—that’s not good enough, and that’s what it seems to be. 

MATTHEWS:  If it does go down, if this deal is broken, basically, that Dubai ports has to sell off its American operations, is that better than having a veto and then a veto override for the country? 

SCHUMER:  Look, I want to settle this problem as quickly as possible and as you know, until we were getting nowhere in the Senate, we made this as bipartisan as possible.  Our original bill proposal, the letter we sent to both Senators Frist and Reid were five Democrats and five Republicans, so I’m not really looking for political advantage here. 

It’s very simply -- 9/11 occurred in my city, I lost people who I knew dearly and well and, you know, my job as senator is to make sure that we put security first.  The CFIUS committee never puts security first.  They were sort of set up as a cover to allow economic deals to go forward and say they’re OK in terms of security, but that was pre-9/11. 

And for the president not to step in and just undo this deal on his own left us no choice but to do it here.  The quickest, best way to get that undone is the one we’ll take, not the one that’s the longest or not the one that’s politically most advantageous. 

MATTHEWS:  If Dubai Ports ends up giving up its control, selling off its influence in the United States completely and you’re satisfied with that, on this particular question that’s been the issue here, are you going to push ahead with legislation to codify this responsibility that we not have any government—foreign government controlling something as vital as the ports? 

SCHUMER:  Yes, well, I think that’s an issue that is very important and has to be studied and is there a different between a foreign government and foreign companies that own it?  Are there gradations? 

Right now, about 90 percent of our terminals are owned by foreign companies.  Most of that happened of before 9/11.  Do we have to revisit it?  We have different rules for airports.  Should the same rules apply to the ports? 

The one good thing that will come out of this sorry mess, Chris, is that port security, something I’ve been talking about since November of 2001, is now going to get attention, and make no mistake about it, it’s not just the foreign companies.  The American government itself doesn’t do enough to make our ports secure. 

MATTHEWS:  How were you informed, by the way, just so we end this conversation with some clarity here?  How were you, the Democratic senator from New York, with all the influence you’ve had on this issue, how were you personally informed by anybody that the Dubai Ports World may be willing to sell off its operation? 

SCHUMER:  John Warner actually, when I spoke—I was speaking on the floor of the Senate.  He came over to me and said you might want to yield to me.  I have some information.  I did.  John Warner is always a gracious, courteous and fine senator.  Yielded to him. 

He announced it, sent me the one paragraph piece of paper that is issued by Dubai Ports World, but clearly—and so I said on the floor which I have feel, well, this has potential, this has promise, but the devil is if the details.  We still await the details. 

MATTHEWS:  Is this going to set a precedent for Congressional roles in deciding these national security questions with the president? 

SCHUMER:  Well, you know, truly, it’s the executive branch that should have first call on security.  And that’s been the story in lots of different areas.  They’ve claimed it, but when they’re totally not paying attention to security, when they don’t even try for a 45-day review when there are so many questions raised, obviously, it’s the Congress’s job to step in. 

That’s part of our oversight function, that’s how the founding fathers set up the country.  So do I think the Congress is going to become preeminent in security?  No, it can’t be.  That should be the executive branch, but are we going to be—even this Republican Congress, more careful now and more vigilant?  I think so and I hope so. 

MATTHEWS:  Are you on the road to being satisfied that we are doing enough to protect our ports?  You’re in New York.  New York is the first American port, the big one.  Are you satisfied that we have safe ports, even with this deal broken? 

SCHUMER:  No, even if this deal is broken, we have a long way to go.  Let me give you one example.  For four years I’ve been trying to get enough money in the budget to put nuclear detection devices on every crane that loads or unloads a container.  The technology is there.  If anything nuclear were in the container, it would go beep, beep, beep, beep.  It costs about a billion dollars to do. 

Two years ago, in a compromise, the Republican-controlled House and Senate put in $50 million.  They never say no, but they slow walk the process so that we’re wide open in ports. 

And we’re going to keep pushing on all of these port security amendments and I think we’ll have more success now that Dubai Ports World has shined the spotlight on how poor our port security is. 

MATTHEWS:  Well, it certainly has, Senator, and one of the numbers that keeps popping out is that we only check five to six percent of the cargo.

SCHUMER:  Exactly.

MATTHEWS:  Will that number go up?

SCHUMER:  It should, and there’s only one reason we don’t:  money. 

And the administration never wants to allocate enough money for homeland security. 

It’s sort of a dichotomy.  It’s sort of ironic.  They’ll put all the money we need to fight the war on terror overseas in Iraq, and as you know, I’ve been sympathetic to that, but when it comes to homeland security, they don’t put anything close to the money that we need.  Any good basketball coach knows you need a good offense and you need a good defense.  We have very little in the way of defense. 

MATTHEWS:  OK, thank you very much...

SCHUMER:  Take care, Chris.

MATTHEWS... Senator Chuck Schumer, the senior senator from New York who’s been leading this fight. 

Up next, what does the Dubai ports surrender—it’s a surrender now - mean for the relationship between President Bush and his Republican critics up on Capitol Hill?  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Dubai Ports World announced today that they will sell their interest in U.S. ports to an American bidder.  Did Congress get the best of the president in this fight?  Looks like it. 

Richard Wolffe is senior White House correspondent for “Newsweek” magazine.  And Bloomberg’s Margaret Carlson remains among us. 

Richard, how can you read this any other way that the president got taken down here? 

RICHARD WOLFFE, “NEWSWEEK”:  You can’t.  It’s totally right.  He stopped the bleeding, which is a good thing for them.  The White House aides tell me they now hope that Congress is going to take a deep breath and get involved in cleaning up this committee, this obscure committee, but it’s a bad deal.  Seventy percent of Americans were taking close attention to this and it was a bad story for the White House. 

MATTHEWS:  Margaret, I look at a pattern of events, and they come out of people’s mouths, conservatives or liberals or whatever.  Katrina, a competence question.  Miers—that nomination for the Supreme Court that was so bad we’ve almost forgotten it.  The Cheney weirdness of the guy not even checking in with the boss after something like that, and now the ports issue.  Is there a pattern of not being on base, as we say in baseball, being caught off base by the president? 

CARLSON:  And you forgot, Katrina. 

MATTHEWS:  I started with that. 

CARLSON:  Oh, sorry.  It took you so long I had forgotten what you first said.  Sorry.

MATTHEWS:  No one has ever asked me to speed up my talking, Margaret, until you came along.  Nobody, I can assure you.  Go ahead.

CARLSON:  Shorten it maybe?  The amount of incompetence that’s been displayed, whether or not you agree with Bush, you thought it’s a competent group.  These are adults.  They don’t stay up all night.  There aren’t pizza boxes all around.  They can get the job done even if you don’t agree with the job, but they can’t get the job done and is there anybody who feels safer with the Homeland Security Department? 

MATTHEWS:  I hear that down in—we’re all headed to Memphis, but—for the big Republican get together and the roll call down for the straw vote, but I’ve heard phrases already like, competent conservativism, rather than compassionate conservativism, that the focus now for Republicans is on finding a new president, after President Bush, who is clearly competent as well as compassionate, your old phrase. 

WOLFFE:  I don’t know that, as Margaret Thatcher would say, people would march under the banner of competence.  I mean, what this story says…

MATTHEWS:  Competent conservativism. 

WOLFFE:  Yes.  But, you know, it’s not a great thing to sell to a nation, look, I can do my job.  People are looking for a different kind of leadership and what’s interesting here with this story is that, basically, congressional Republicans thought their interests lay in a different direction, that they were running for reelection and the president wasn’t.

And that’s the sort of leadership vacuum that we’re seeing, which is why ‘08 is so much on people’s minds, people are getting peeled off in different directions.  It’s the kind of chaos that I’m afraid the Republicans haven’t experienced for a long time. 

MATTHEWS:  Well, the Republican Party, Margaret, unlike the Democratic Party, is known for its discipline, for its regularity, for waiting your turn, all the good values of middle America and here they are.  They were running for cover, every man for himself on this one. 

CARLSON:  If you say competent conservative, you’re raising it as a question mark.  It’s an assumption that somebody who is running for office is competent to handle it for the most part. 

MATTHEWS:  I know.  If you fail a competency test, they put you in a home.  I know that.  I realize that, but not in that sense.

CARLSON:  Right.

MATTHEWS:  Competent executive, good handling of crises, being on top of things, on the ball—those are phrases you don’t hear about this administration right now. 

CARLSON:  You don’t hear it, and it’s the things that people did think they had, including fiscal competence which has totally gone out the window, so that they’ve lost a certain segment of the party that cared about spending and fiscal responsibility.  That’s all gone too. 

MATTHEWS:  And the trade deficit.  Boom.  Let me ask you, could the law of unintended consequences yield the following.  Dubai Ports World has issued a statement today that they’re going to transfer U.S. assets, their six ports, those terminals to an American—a U.S. entity. 

From what we know, there are few American entities capable of buying them, buying those port operations.  Could it be that after all the criticism by Democrats, that our ports fall into the hands of a corporation, familiar to many Democrats in a negative way, Halliburton? 

WOLFFE:  You bet it’s possible.  I mean, you know, one of the erroneous things people threw out there was that we don’t outsource national security.  Well, actually, Halliburton is Exhibit A in the outsourcing of national security.  So, yes, it could go to one of those.  It could go to venture capital groups.  There are plenty of people who have been sniffing around these kind of assets. 

The harder principle here is that Congress has drawn a line in the sand and said we want to have the final say in these corporate deals.  There’s a reason why elected officials don’t get a say, because everything can be political whether it’s your telecoms company, cable company.  Everything is critical infrastructure for Duncan Hunter.

MATTHEWS:  So everything they do with airports, trains?

WOLFFE:  Airports, airlines, you name it.

MATTHEWS:  Automobiles, now everything?

WOLFFE:  You name it. Anything can be defined as critical infrastructure in these terms.

CARLSON:  What Congress is working on now is to find a way that it doesn’t look like a fire sale so that Halliburton gets to scoop it up at an extraordinarily low price.

MATTHEWS:  Yes, like $700 million, but it would be a big price, would be low for the market value and you have to ask yourself, if somebody else was bidding for a better deal here, why didn’t they get it?  Why did it fall to Dubai Ports World if somebody else wanted it?

WOLFFE:  They did bid. One of the reasons people didn’t see this coming was there was a bidding war, a Singapore company came very close, but Dubai just put more money on the table.

MATTHEWS:  Does that Singapore money—no, I’m sorry, the new rule is they’ve got to be American. 

WOLFFE:  Right.

MATTHEWS:  They’re out of business too.  Are the Chinese going to be out of business out in Longport?

WOLFFE:  Well you know, these aren’t—they’re not buying physical stuff.

MATTHEWS:  Long Beach.

WOLFFE:  They’re buying leases and those leases can be taken away so that you could argue that the value for Dubai Ports World is pretty much zero now, because they’re going to lose our leases.

MATTHEWS:  And I wonder about these Chinese companies because my notion of Red China, of Communist China is everybody works for the government.  There’s no such thing as a private company and therefore that operation they run out in Long Beach, right, you’ve got to inspect that and scrutinize that and see if that isn’t a state-run operation, don’t you?

CARLSON:  Chris, you’re a 1950’s guy calling it Red China.

MATTHEWS:  Some things are valuable to remember.  It’s not a free country.

CARLSON:  Well, right, and in order for it not to look like it’s anti-Arab, all of them are going to have to be eliminated.

WOLFFE:  Right, and this is where it becomes a political football.  People have tried to use this committee for these kinds of things before on defense details, there’s another Dubai company trying to buy a piece of the defense industry.  This isn’t going to stop here.

MATTHEWS:  Is the president happy tonight, Margaret Carlson?

CARLSON:  He may be relieved it’s over, but he shouldn’t be happy. 

It’s not been a good couple of weeks.

MATTHEWS:  You mean that whole thing about why are you hitting your head with a hammer, because it feels so good when I stop?

CARLSON:  Yes, he stopped.

MATTHEWS:  Is that what it’s like?  Who won, is the president relieved tonight it’s not going to go to a veto and then an override?

WOLFFE:  Well, yes there’s some relief for that, but it’s not been a deal, not been a good period.

MATTHEWS:  Who is he mad at?

WOLFFE:  Leadership, Republican leadership.

MATTHEWS:  Oh, he’s not mad at his own staff people for missing...

CARLSON...he could be mad at the Treasury.

MATTHEWS:  I think he may be wondering about his own household and wondering why nobody tells him the bad things before they break, anyway, like Katrina and all the other stuff.  Anyway, think you Richard Wolffe.

WOLFFE:  Anytime.

MATTHEWS:  Thank you my friend Margaret, everybody knows she’s friendly with me because look what she gets away with here.  When we return, fallen super-lobbyist Jack Abramoff tells “Vanity Fair” magazine that any big-name Republican who says they don’t know him is lying.  We’ll get to the scoop from “Vanity Fair’s” David Margolick.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Jack Abramoff is probably the only lobbyist who’s ever come close to being a household name and he gives his first interview in the April issue of “Vanity Fair” to contributing editor David Margolick, who’s right on the show right now.  We have got ahead of the time, what’s the biggest break you got in this story?

DAVID MARGOLICK, VANITY FAIR MAGAZINE:  Well I think the biggest break is just that Jack Abramoff talked.  He’d been taking a battering in the press and taking the fifth and saying nothing for weeks and months on end and all of the sudden, he opened up to me, and I think that was an enormous break.

MATTHEWS:  Who did he finger?

MARGOLICK:  Well, you know, he didn’t really finger anybody because he’s being very, very careful.  I mean, he’s playing not only to me and to the press but he’s playing to a judge and to the Justice Department.

So he measured his words very carefully and he didn’t finger anybody exactly.  The only people he really fingered were the people who’d forgotten him, and that really got under his skin and he unloaded on all of them.

MATTHEWS:  You mean, he doesn’t mind going to prison for five or six years but he minds that people have forgot meeting him.

MARGOLICK:  I think that’s right.  I think he’s reconciled to his fate and to what he did and he’s pleaded guilty in all of that.  But he’s somebody who’s craved recognition for many years and all of a sudden these people are pretending that he didn’t exist and he’s been airbrushed out of Washington.  And I think that really annoys him.

MATTHEWS:  That reminds me of a great old expression a friend of mine uses which is “people don’t mind being used, they mind being discarded.”

MARGOLICK:  Right and I think that’s exactly right.

MATTHEWS:  Let me ask you about the people that he is angry with.  Is he angry with John McCain in any way because of the way he went down, the way he’s been disgraced?

MARGOLICK:  Yes, well, it’s clear that McCain is somebody for whom he has very harsh words.  He doesn’t like McCain.  You know, McCain opposed Bush, he was a Bush guy in 2000.  And McCain and he have a history, at least according to Abramoff, McCain and he have a history.  McCain says that he doesn’t remember the guy.  And that got Abramoff going all over again.

MATTHEWS:  Was their history friendly or cooperative or was it nasty?

MARGOLICK:  No, their history has always been unfriendly.  I think that Jack Abramoff considers John McCain an unreliable conservative.

MATTHEWS:  Well that’s an ideological judgment.

MARGOLICK:  Yes, it’s an ideological judgment and Jack Abramoff is a very ideological guy.

MATTHEWS:  And well probably John McCain would like to have him come out and campaign against him.  That might be helpful.

MARGOLICK:  Well at this point, that may be true.

MATTHEWS:  Let me ask about you Ken Mehlman, who’s been on this program a number of times, he’s a smart political leader of the Republican National Committee.  What was his role, with regard, if any, to Jack Abramoff? 

MARGOLICK:  Well again, Ken Mehlman probably said more than he should have.  He said he didn’t really know anything about Abramoff and what he was learning about him, he was learning in the press. 

And then all of a sudden these e-mails surface where Abramoff and he are exchanging pleasantries and Abramoff is inviting him to his restaurant and Mehlman is offering to treat Abramoff to a meal at Abramoff’s own restaurant and they’re having Shabbat dinner together at Abramoff’s house.  So all of these guys are saying more than they have to about how they don’t know Abramoff, when there is a paper trial suggesting or proving that they do.

MATTHEWS:  Is there anything more, David, that he can be squeezed to give up?  Is he holding on to any sugar plums about his relationships in Washington, legal or political, that might be of value to the prosecution?

MARGOLICK:  He would be very foolish to and I’m sure he’s not.  I’m sure that he has—he has become a veritable geyser at this point.  It’s his own hope.  I mean, he is now playing to the sentencing judge and the Justice Department.  And there’s no virtue in holding anything back.

MATTHEWS:  David, thank you very much.  David Margolick, who wrote this big story, this breaking story about Jack Abramoff for “Vanity Fair.”

Join us again tomorrow night at 5:00 and 7:00 Eastern for live coverage of the Republican, the Southern Republican Leadership Conference down in Memphis.  I’ll be there.  We’ll hear from the top Republican contenders for the ‘08 presidential race and find out who has the right stuff to take on Hillary.

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