updated 4/10/2006 11:00:51 AM ET 2006-04-10T15:00:51

Guest: Bob Bennett, Ben Ginsberg, Mike Isikoff, Anne Kornblut, Rosie

O'Donnell

CHRIS MATTHEWS, MSNBC HOST:  Tonight, why did the president run a leak operation to undercut an Iraq war whistleblower?  To control the damage of a crumbling case for war, or both of the above?  And will he get away with it?  Let's play HARDBALL.

Good evening.  I'm Chris Matthews.  Scooter Libby's testimony that it was the president who authorized disclosing parts of a classified prewar intelligence report is yet another blow to a battered White House. 

And today, a new A.P. poll, Associated Press poll, has President Bush's job approval rating at just 36 percent, a new low in that poll, and a steady downward slope, and an eight point drop from a year ago. 

What's the damage assessment from the White House now and for the candidates in the midterm and '08 races?  Tonight we'll talk to the people who know the most about the CIA leak investigation.

And later, it's our Friday night special, the “HARDBALL Hotshots.”  Tucker Carlson, Rita Cosby and Ron Reagan will are all going to be here to be the hotshots, but we begin tonight with a report on the latest in the CIA leak investigation from HARDBALL's David Shuster. 

(BEGIN VIDEOTAPE)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Good morning. 

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  After learning that President Bush himself authorized leaks of classified intelligence information, today not a single Republican lawmakers defended the president. 

SEN. BILL FRIST (R-TN), MAJORITY LEADER:  Let's keep the questions on the immigration.  I know there are lots of other issues that are out there. 

SHUSTER:  Meanwhile, the White House was in full damage control mode. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  The president of the United States has the authority to declassify information. 

SHUSTER:  But the only officials aware of the authority given to Scooter Libby to release intelligence information to the “New York Times'” Judy Miller were the president, the vice president, and Libby.  Nobody else in the administration knew.  Even CIA director George Tenet who was responsible for the intelligence was kept in the dark. 

Despite it all, and the fact that Scooter Libby, while talking to miller, asked to be identified as a former Hill staffer, Scott McClellan today argued the Iraq disclosure was OK. 

MCCLELLAN:  There's a difference between providing declassified information to the public when it's in the public interest, and leaking classified information that involves sensitive, national intelligence regarding our security. 

SHUSTER:  The problem for the White House is that the stories revealing the National Security Agency's surveillance program came late last year.  Three years ago when the president was repeatedly condemning leaks, it was always if the context of the CIA leak scandal. 

BUSH:  I don't know of anybody in my administration who leaked classified information, if somebody did leak classified information, I'd like to know it, and we'll take the appropriate action. 

I'm going to tell you something, leaks of classified information are bad things. 

I'd like to know if somebody in my White House did leak sensitive information. 

SHUSTER:  Scott McClellan argued today the Iraq intelligence was publicly released.  But that didn't happen until July 18, 2003, and back then, McClellan said the documents had been officially declassified that day.  Libby's private disclosure to Miller, based on authority from the president and vice president, came 10 days earlier on July 8. 

MCCLELLAN:  Again, you're asking me to get into the timing.  I'm not backing away from anything that was said previously.  That's when the document was released.  So that's when it officially ...

QUESTION:  They say declassified. 

MCCLELLAN:  I know, Jim, let me tell you, that's when it was officially released, and so I think that's what I was referring to at the time. 

(END VIDEOTAPE)

SHUSTER:  Some Republicans in Congress are privately referring to this as the worst credibility crisis of the Bush presidency, and many White House supporters are urging the president to come out and explain his actions himself before the damage from all of this becomes permanent—

Chris. 

MATTHEWS:  Thank you, David Shuster.

We have with us Bob Bennett, who is representing Judy Miller, one of the people to whom it was leaked, I guess it's fair to say, whatever was leaked. 

Let me ask you, Bob, about the president's status right now.  The president of the United States has come out and through his spokesman, Scott McClellan, said basically when the president leaks something, that's called declassification.  Does that work? 

BOB BENNETT, ATTORNEY FOR JUDY MILLER:  Well, I don't think it works politically, and legally, I don't think the president is in jeopardy at all.  But to the man in the street and the man or woman in the street when they see his public statements ...

MATTHEWS:  Like we just showed.

BENNETT:  ... like you just showed and then it turns out, if it's accurate, what Mr. Fitzgerald filed, that he was a direct source of it, people have a lot of trouble with that. 

MATTHEWS:  I'm trying to figure out, and you're the attorney, you've been in the courtroom so many times, you've watched witnesses getting confused between each other.  We know that Scooter Libby faces possibly 30 years in jail for his problems regarding charges against him on perjury, obstruction of justice, lying to federal agents. 

Is he on the same page with the president?  Because the minute Scooter Libby came out with this court document the other day and said I was getting orders from of above, all the wave to the White House, the president immediately went along with him.  The White House said, yes, I was involved in that leaking. 

BENNETT:  I don't know, Chris.  There's so many things I don't understand.  I don't understand why Libby testified the way he did, I don't understand how this all—frankly, all came about.  He has very able lawyers now, but he probably should have had able lawyers at the front end and he might have had a defense more consistent with his grand jury testimony. 

MATTHEWS:  Well, one thing that doesn't make sense to me, following this story and trying to understand it and cover it, is that Scooter Libby was very particular to get the go ahead, not just from the vice president, but from the president himself on releasing classified information to Judy Miller.  And yet, did he not ask permission to release the identity of Valerie Plame, the agent involved? 

BENNETT:  You know, I just don't know, but it's very clear, as Judy said in her October piece in the “New York Times,” that the president, through Cheney—she had no idea whether this had been discussed with Cheney or the president, but she claims that Libby never told her that Valerie Plame was a covert agent.  The reference to her came up in a more generic way, so it's really quite confusing. 

MATTHEWS:  Were you surprised to learn that it was this week the fact that court filings showed that it was at least Scooter Libby's testimony, that he was instructed, authorized—whatever the right word is—by his boss on the basis of a previous authorization by the president to do whatever he did in terms of talking to your client? 

BENNETT:  Yes.  Certainly I was surprised, A, given what you played in the beginning, what the president said about leaking, even though technically, when the president does it, I suppose it's not leaking. 

But I think to the man or woman in the street, they say well, is this how classified information is declassified?  You know, you talk to a reporter.  You don't discuss it, it appears, with any of your intelligence chieftains.  I think people are going to have a lot of trouble with this. 

But one thing, Chris, that I find interesting is what impact, if any, this will have on the case against Scooter Libby.  One thing which I wonder about is, it may make it more difficult for Scooter Libby to get a pardon from the president because now that the president is involved, somebody is going to say, well, it's fair game to call him as a witness in the case. 

I mean, I'm just hypothesizing here, because I don't have any inside information, but as a defense lawyer, having gone through this with Cap Weinberger, the great American who just passed away, they now have a claim to say, well, we need the president of the United States a witness because the president has made himself a player here. 

MATTHEWS:  Yes. 

BENNETT:  And will that restrain him to give a pardon, because he's worried people will say, well, you only gave a pardon to protect yourself, or will that be an added incentive for him to give a pardon?  I'm not sure which way it will break, but it will have—you can be sure there will be discussions inside the White House about that issue. 

MATTHEWS:  But let's talk about what probably happened the last two days.  Once the court filing got out, that the president was the one who gave the authorization to the vice president, according to Scooter Libby's testimony, he then had to decide, am I going to admit I did it or not admit that I did it.  He's decided to admit that he did do it and that put himself in handcuffs, as you say. 

Now he's in the chain of responsibility for the leaking, and therefore he can be called as a witness by the defendant, Scooter Libby, and if he doesn't show up, if he refuses to testify, what does that do to the government's case? 

BENNETT:  Well, it could be harmful.  Now, we're making an assumption that the judge would require the president to testify.  I can hear the government's argument now that it's not relevant because the issue was whether Mr. Libby lied to the grand jury, and obstructed justice. 

It's not a leak prosecution, but there's a very good chance that the federal judge, Judge Walton, would say, well, it's all part of the picture, it's all part of the context of this. 

Why would he lie about something when the president of the United States is—has been involved, and has sort of given his approval to at least release the disclosure of this kind of information?  So I think this is potentially a very dangerous thing that the president has put himself into.

MATTHEWS:  Explain how the pardon would play a role here.

BENNETT:  Well, the president has the power of pardon.  I mean, there's just no question about it.  And normally, pardons come through a normal process after someone's convicted, but as certainly is true in my case, with former Secretary Weinberger, prior to trial—in fact, it was a week or so prior to trial—he received a full pardon from a president of the United States, President Bush. 

MATTHEWS:  So the president, you're saying, might now more likely pardon Scooter Libby to avoid having to testify.

BENNETT:  I don't know; it could cut the other way.  I have no doubt, without having any inside information, that there would be people who would be urging the president to pardon Scooter Libby, and it's—your know, not out of the question that he would do it. 

Now that the president is sort of in the middle of this case, it could cut either one of two ways.  You know, I would have to know the president a little bit better.  Is he going to grant the pardon now, because it eliminates his need for being called as a witness, or on the other hand, is it going to be an obstacle, where certain political advisers say, you know, you're worried about your place in history now, people aren't going to think you gave him a pardon because you're a good guy or because he's a good guy.  It's because you didn't want to be a witness in the case, you're protecting yourself. 

MATTHEWS:  I want to ask you one question about this law.

BENNETT:  That's all hypothetical.

MATTHEWS:  I know.  Let me give you something we have on the table here.  Scooter Libby's defense is yes, I may have accidentally got it wrong about where I learned about the identity of Valerie Plame, the undercover agent at the CIA, the wife of Joe Wilson, because I was so busy with other things.  I might have forgotten and thought it was somebody else.  I thought it was Tim Russert—it was really somebody months before, weeks before.  Because I was so busy, this was small potatoes to me, this issue of Joe Wilson and Valerie Plame, his wife at the CIA. 

How can he claim it was small potatoes if we find out this week that the president of the United States and the vice president of the United States were running an operation with him to tell him how to leak something to bring down Joe Wilson and Valerie Plame?  How can he say it was small potatoes if they were all involved in it? 

BENNETT:  I think you're right, I think this certainly undercuts the small potatoes argument.  But also it raises a question, which I sort of alluded to earlier, if that's your defense now, why on earth didn't you say that when you were in the grand jury?  The problem that Libby got himself in is, I believe from reports, he was quite specific in the grand jury on certain things and, you know, and in a trial, if Libby testified and said what he said, the government is going to have his grand jury testimony, and the two better match.  The two better match, otherwise, the jury is going to be quite troubled. 

MATTHEWS:  It seems like they're throwing things against the wall to see what sticks. 

Anyway, we'll be back with more on the CIA leak investigation. 

Joining Bob Bennett in our next block, Republican attorney Ben Ginsberg.

You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We're back with Bob Bennett, the former attorney for Judith Miller.  And let me bring in Ben Ginsberg, counsel to the Bush-Cheney Reelection Campaign Committee. 

I know you heard that spooky music introducing you and it's brought out for a special occasion, a special edition of HARDBALL.  We're looking at what has reemerged in the country as a major issue, all over the news today, the CIA leak investigation, because now Scooter Libby, in sworn testimony to the grand jury, has brought the president into this and said it was the president, according to the vice-president's conversations with me, who authorized this leak of classified information to Judy Miller. 

BEN GINSBERG, FMR. BUSH-CHENEY '04 COUNSEL:  Well, as soon as the president says it's not classified anymore, it's not classified.  But this needs to be put in context.  Joe Wilson raised charges in his op-ed article in the “New York Times” that were serious policy issues about whether there was justification for the war.  There was a White House need and effort to rebut those serious charges.  That's what happens when charges are raised in a debate like that. 

Three things happen:  Number one, the president declassified the NIE, the National Intelligence Estimate.

MATTHEWS:  When did he do that? 

GINSBERG:  At some point before—

MATTHEWS:  Between July 6 and July 8. 

GINSBERG:  That will come out, but presumably that's the case.  Scooter Libby then did some background work with Judith Miller.  On Friday the 11th, CIA Director Tenet went out and talked about this issue and said that there was credible evidence that indeed Saddam Hussein was trying to get nuclear weapons of some sort.  And then on the 18th, the whole NIE is declassified.

And so because that is an issue that Wilson raised that needed to be talked about substantively, it is a disservice, I think, to mix the Valerie Plame issue in with the serious policy debate. 

MATTHEWS:  Your response? 

BENNETT:  I don't really have a response to it.  I understand that.  I think the president has real deep political problems on this one, not legal problems.  But you know, Chris, one thing I don't understand is, Joe Wilson -- your wife's a deep cover or whatever CIA agent and she has a role in your getting over there to do this, and then you come back and go as public as he—that's a piece that I've never quite understood.  Maybe it was indiscrete or maybe more.  I don't understand that.  That doesn't make a lot of sense.

But this president has certainly shot himself in the foot as a result of this. 

MATTHEWS:  Let's go back to this thing about the average person watching this, who's probably trained in the law to some extent.  The average person gets the sense of this thing.  Judy Miller, we find out, was briefed by Scooter Libby, under the instruction of the president and the vice-president.  They authorized, as you say, declassified information to give to her specifically under the table, on background, as we say in journalism. 

Then we find out, that same week, the president finds out, the vice president—it's all transparent.  They both find out that somebody's leaked the name of Valerie Plame and outed her as an agent of the CIA.  And sometime during all that, the president comes out, as if he knows nothing about the plan to authorize the leaking of information—you call it declassifying—to Judy Miller, acts like he knows nothing about the leaking of Valerie Plame's identity.  Is that being square with the American people, to say I don't know anything about it, if there's any leaking here, I know nothing about it, when in fact, he was the one who authorized the leak to the very reporter and then subsequent leaks by the vice president on July 12. 

So the vice president at least was totally aware of this leaking campaign.  He was on top of it, and for him to say, “I didn't know about this,” and not tell the president, is that being forth right?

GINSBERG:  Well, I think that Special Prosecutor Fitzgerald addresses that on page 27 of his court papers and said that the president did not know anything at all about the way that this information was disseminated.  There's no allegation in this case that any of it was part of the Valerie Plame issue and nobody has been indicted on the Valerie Plame issue.

MATTHEWS:  We do have new information though subsequent to that finding by the special prosecutor.  Just yesterday, Wednesday night, we found out that the vice president told Scooter Libby, that he was concerned that this story was getting out.  He was concerned that the story that was getting out was suggestive of the fact that Joe Wilson was sent on a junket by his wife, Valerie Plame.  And he was concerned about that.  That word concerned probably means mad as hell, that a trip that was put together by Valerie Plame was being blamed on him by Joe Wilson. That's when those guys went into action, Bob, on the leaking campaign.

BENNETT:  I want to be sure we don't make a mistake here though.  Judy Miller wrote in “The New York Times” what she testified to to the grand jury over my objection.  She has publicly stated and I will confirm, but Scooter Libby never told Judy Miller that Valerie Plame was an undercover agent at the CIA, so I don't want that misimpression to be left.  That was not part of any discussion.

MATTHEWS:  How did she get the name Plame in her notebook?

BENNETT:  Well, we don't know.

MATTHEWS:  In that part of the notebook dealing with that interview.

BENNETT:  No, it was not in that part of the notebook.  It was in a much later part and there is no context to it and Judy did not remember it. 

He did, he did mention her by reference and generically to working at the bureau or something like that.  But Judy Miller...

MATTHEWS:  ... To make the case that the vice president wanted made that Joe Wilson was sent on a junket by his wife who worked at the CIA.  That was what he wanted to get out, wasn't it?  According to the testimony that came out yesterday?

GINSBERG:  No, I think much more than that.  It says that what they wanted to do was refute the notion in Wilson's op/ed article that there wasn't cause—that there was no evidence that Saddam actually had nuclear material.

MATTHEWS:  The papers suggests both purposes, one what was you say.  The other one dealing with the yellow cake, the uranium.  But the other purpose that the vice president expressed or attitude he expressed to Scooter Libby was, “I am concerned that this looks like a junket.  It wasn't something I authorized, it's something that the guy's wife put together.”

GINSBERG:  The whole things goes to the credibility of what the administration said about Iraq, granted.  But you have Joe Wilson making a charge, a guy who goes on a secret mission and then talks about it in the newspaper, by the way—makes a change and there is an NIE that directly contracts that.  You want to get that information out.

MATTHEWS:  OK, we've come a long way in three years from a president who said he wants to find a leaker, to the fact that we know he's authorized a leak.  That's a lot of information, and the role of the vice president, this was never clear until recently.  He expressed an attitude about this whole question that suggested deep anger and his guy operated on it, perhaps.  And we'll find out as this picture, this Polaroid picture continues to develop with the help of gentlemen like yourself.  Thank you Bob Bennett, thank you Ben Ginsberg.

Up next, one of the lead reporters in the CIA leak investigation, “Newsweek's” Mike Isikoff.  And later, the “HARDBALL Hot Shots.”  It's Friday and you're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  What does Scooter Libby's claim that the president cleared him to leak intel mean for the White House?  Michael Isikoff is an investigative reporter for “Newsweek” and Anne Kornblut is with “The New York Times.”  Let me go to Anne first.  What does this mean to people's public attitudes as they swirl about the question of why we went to war and the evidence given and whether it's valid or not?

ANNE KORNBLUT, THE NEW YORK TIMES:  Well if you look at the polling number, there was a new A.P/Ipsos poll that came out today that showed 70 percent of the country thinks that it was going on the wrong direction, 36 percent approve of the job that Bush is doing.  So it's impossible to really parse out how much of this has to do with the CIA case, how much of its the war.  But it's certainly  been downhill for quite some time now.

MATTHEWS:  What does it say about Joe Wilson's argument from the beginning, that was right, that he came back from his trip to Niger.  And he came back and said, that he discovered there was no deal and the administration ignored that and in subsequent statements by the vice president and the State of the Union address by the president?

MICHAEL ISIKOFF, NEWSWEEK:  Well, I don't think this says anything one way or the other about Wilson.  What it does say is it is only one indicator of how much selective leaking has been going on. 

Look, in my mind, this is, you know, we may be making—we may be losing the big picture here.  Yes, the president did authorize this leak selectively.  But compared to the other selective leaking that the president has done, read Bob Woodward's books.  They are loaded with authorized leaks from the president of much more sensitive, highly classified information than was involved here, and they're all over the place.  I mean...

MATTHEWS:  ... Is that for history?

(CROSSTALK)

MATTHEWS:  What came out after the war?

ISIKOFF:  Well there was one that came out before the war, and another came out after the war.  But you know, one could argue that it was for history and critics have argued they were sort of selectively choosing what they were going to provide or now.  But what I'm saying is, to put it in context, you know, I think it makes this particular leak rather small potatoes.

MATTHEWS:  And let me ask you about this, because we're trying to find out—let's go back to the Scooter Libby case, that's the only active case here on perjury and obstruction of justice and lying to agents. 

Why would a guy who was getting almost hour to hour instruction from the president and at least by the vice president on what exactly to put out to Judy Miller and others in the press, and then on the issue of giving away the identity of Valerie Plame, which is being charged—it's not being charged but is against the law, why would he just go of on his own.  Are we to believe he was ever on his hone? 

KORNBLUT:  Well, I mean, that's the question.  Was he, at some certain stage here, freelancing?  And I mean, Michael can probably speak to this better than I can, but this is what he have with what we have ...

MATTHEWS:  Here's a suggestion why he's not freelancing.  June 12, the

·         according to the indictment, he was instructed by the vice president who Valerie Plame was, her role.  Then on—sometime right before July 8, after the article was run by Joe Wilson, he was told the vice president isn't happy with the image this creates of a junket. 

He thinks it looks like a junket put together by the guy's wife, Valerie Plame at the CIA.  And then we find out he says—released some of this other information to debunk Joe Wilson, so we know he's put out a lot of efforts and a lot of feelers out to his chief of staff like I don't like it guy, I don't like his trip, it looks to me like a fraudulent thing. 

I deny it has anything to do with questions I raised with the CIA.  He's not—that trip had nothing to do with me.  At least they were saying that, and then we're supposed to believe that Scooter didn't leak because the vice president wanted him to leak. 

ISIKOFF:  Well, look.  It was clear that they were trying to rebut Wilson, discredit Wilson.  I mean, that's the—it failed by the way.  Judy Miller never wrote a story about it, which is kind interesting.  Here, you know, We're getting all excited about this ...

MATTHEWS:  About the president of the United States.

ISIKOFF:  ... about a leak that never led to anything.  Right, yes.

(CROSSTALK)

MATTHEWS:  Well, have you ever heard the president of the United States and the vice president agree, let's get this story out.  Let's give it to someone who's been right in the way, we liked on the right.  Let's give it to Judy Miller.  She'll put it out the right way.  And you think they would have said, Judy, we need this in print. 

ISIKOFF:  Right, right, or when it didn't appear the next day, say, OK, if you're not going to run it, we're going to give this to somebody else, right? 

MATTHEWS:  Yes, well what happened?

(CROSSTALK)

ISIKOFF:  Well, we have no indication that that happened. 

MATTHEWS:  But how do we believe—this is a great inquiry more than a question.  Maybe there's more of a—the president of the United States is watching all of this with perfect transparency.  He watches the leak operation, he's part of it with the vice president. 

They give it to Scooter to give to Judy Miller, I'm sure more came on the July 12 missive in the vice president to Libby.  And all of a sudden, they see these flower's been blooming out there of all these leaks, you know, the Novak column, the Matt Cooper column.  Didn't the president know that he was involved in the effort to leak all this stuff?  And then to say if there were any leaks around here, I didn't know about it? 

KORNBLUT:  But this is the great opening that Democrats have been handed here, is that they can now say to the president, they can call for him to come out and explain everything. 

I would expect the next two, three weeks, that's all we're going to hear coming out of the mouths—well, when they're not complaining about immigration, this is all we're going to hear out of the mouths of Democrats, is for the president to come clean. 

MATTHEWS:  How about the vice president say whether he asked the president for help on this one or not.  You know, it's like—isn't that like what Shimon Peres said about the Palestinians, they never miss an opportunity to miss an opportunity. 

KORNBLUT:  That's pretty good. 

ISIKOFF:  It is worth noting that neither the White House nor the vice president's office has contradicted what was in Fitzgerald's statement. 

MATTHEWS:  And what does that tell you?  And what does that tell you?

ISIKOFF:  Well, you know, I would think that if there was a conflict in testimony, they would have an interest in getting that out. 

MATTHEWS:  Is Scooter still in bed with the White House?  Are they still all working together? 

ISIKOFF:  You know, I think it's a little bit dicey.  I thought what Bob Bennett before about this could complicate a pardon is very interesting, because I always thought that's the end game.  You know, You fight, assuming Scooter Libby is going to fight this to the end, and you know, the main goal is to, if he gets convicted, stay out of jail until January 2009 when he goes full-blown for a pardon.  I mean, that was always the end game.

MATTHEWS:  Right, leverage because the vice president squeezes the president to do it.

ISIKOFF:  Well, certainly one could imagine that happening, yes. 

MATTHEWS:  Soldier's pay, right? 

ISIKOFF:  OK.  Fine. 

(CROSSTALK)

MATTHEWS:  OK, thank you, Michael Isikoff and Anne Kornblut. 

When we return, the all CIA leak case, the edition of HARDBALL, that's what we're doing tonight.  “Hotshots” with Tucker Carlson and Rita Cosby and Ron Reagan.  We're going to talk about this case with the political guys. 

You're watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.

The CIA leak case could end up being the biggest crisis in George Bush's presidency, so tonight, we bring you a special CIA leak edition of “HARDBALL Hotshots.”  My MSNBC colleagues are joining us, Tucker Carlson, Rita Cosby and Ron Reagan.  Thank you for joining us. 

First up, busted, new court papers this week put the CIA leak scandal smack in the president's lap.  Did George Bush green light Dick Cheney?  Did Dick Cheney green light Scooter Libby?  Even the “New York Times” is calling it hardball. 

Their editorial today called “Playing Hardball With Secrets,” says “The evidence has steadily mounted that President Bush and his team not only manipulated intelligence to exaggerate the threat posed by Saddam Hussein before the war, but kept right on doing it after the invasion.”

Our question for the “Hotshots,” is George Bush more worried about the media than he lets on.  Let's go to Tucker.

TUCKER CARLSON, HOST, “THE SITUATION”:  Well, of course, the president despises the media and you can see it everything he does and doesn't do and hasn't done for the past six years, mainly give press conferences very often.  I think one of the remarkable events of this story, which at its core I don't think is as big as people are saying it is. 

I mean, I actually don't think the leaking of Valerie Plame's name is such a big deal, one way or the other.  I'm alone in that.  But what's interesting in this story is, here you have evidence that the president himself is thinking about a specific “New York Times” reporter to whom to leak the material.  Does the president get involved at that micro level of press management?  I had no idea that he did.  It seems like he did though, in this case, which is very odd.

MATTHEWS:  And Rita, at the very time he was so involved in engineering this leak, he was denying he knew about any leaks.

RITA COSBY, MSNBC ANCHOR:  Well and that's the problem too, because this president also, Chris, has come out and blasted people who have been leaking.  So they're claiming obviously there's this clear sort of hypocrisy that people are possibly looking at in this case.  So that doesn't help him one bit. 

The other thing too is the timing of it too.  It just doesn't look good.  No matter how this all washes out in the end, the timing, morally, ethically, for a president who has been so steadfast about anybody leaking anything, whether it's public interest or national security, to come out and play some sort of role.  It's unseemly on the surface and I think it's going to be a little tough for this president.

MATTHEWS:  Ron, I noticed there's a tremendous deafening silence out there among Republicans, especially in Congress.  Nobody is stepping up to defend the president on this.

RON REAGAN, MSNBC POLITICAL ANALYST:  Yes, it's true.  Maybe John McCain will jump in and be on his side.  He seems to be doing it.  He'll cement his maverick reputation by adhering to President Bush on this one. 

You know, this has become the do as we say, not as we do administration.  Leaks, bad.  Threat to national security, want to get to the bottom of it, unless of course we're doing the leaking. 

I disagree a little bit with Tucker, you know, maybe—well, in a way, the particulars of this case aren't really all that important.  Valerie Plame's name being leaked in and of itself, not of great moment perhaps.  But it's because it's connected to the war in Iraq that this is of course a big deal.  It's all about Iraq and how we got there.

CARLSON:  But you do wish people would take that on directly.  I mean, if you believe as I do that the war in Iraq was a mistake, say so.  I think that Bush deserves to have to face the consequences of that decision, being the invasion of Iraq. 

But it's a shame to see that important conversation lost in the series of kind of dumb, unimportant conversations and moreover, leaking is good.  Leaking is good for America, it's good for us the press, people have a right to know why their government does the things it does.  And to see members of the press corps saying leaking is bad.  Really?  When did we adopt that attitude?

MATTHEWS:  You know when I don't like leaking?  When I'm trying to sleep at night.  Anyway, you have to go to the bathroom, there's a leaking sound that drives you crazy.  I'll be right back with Rita and everyone else.  Much more, you're watching HARDBALL “Hot Shots” only on HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to a special CIA leak edition of HARDBALL's “Hot Shots” with Tucker Carlson, Rita Cosby and Ron Reagan.

Next up, sound and fury.  Let's talk about this.  I want to talk about the vice president, Tucker.  It's very important.  The vice president seemed to cut Scooter Libby loose when this thing was first hitting.  He was prosecuted for perjury and obstruction of justice.  Is the vice president now back in the frying pan here?

CARLSON:  I think the vice president ought to be pretty concerned.  I mean, I think he did cut Scooter Libby loose a little bit.  I don't think he called him for a couple of days.  You don't want to fool around with Scooter Libby though if you're the vice president.  I mean, Scooter Libby has two small children, he's facing real hard time in prison.  Patrick Fitzgerald has said as much.

And if you're Scooter Libby, you've got to ask yourself, do I want to spend the rest of my active life behind bars away from my kids or do I want to defend the Bush administration?  I mean, you could see the temptation.  And I have no knowledge of this beyond what I'm saying.  But you could see the temptation.

So if you're in the White House, boy, you want to be really nice to Scooter Libby and yesterday's story raises the question, is Scooter Libby triangulating here?  Is he setting himself up in opposition to the White House?  I don't know the answer, but it's kind of scary.

MATTHEWS:  Rita, it seems like that may be one reason why the president and vice president both jumped aboard the latest testimony from Scooter, to be on his side on thing.

COSBY:  Clearly, I mean, you look at the timing, exactly as Tucker was saying.  And I was surprised because right after this whole ordeal happened, they didn't want to touch Scooter Libby.  And I remember, I mean, from my days in Washington, he was so close to this White House.

And it was very blatant that they didn't want to have anything to do with them and I really thought that would come maybe back to bite them.  And again, I have no inside knowledge in this case, but that may indeed be the case.  Now he's saying, look, as Tucker says, I've got kids, I'm looking at this as pretty serious.  It's gone a lot further along than I think Scooter Libby and his attorneys thought it would.  And now he's saying, “Look, I maybe have to look out for myself.”

MATTHEWS:  Ron, it looks like—according to Bob Bennett, who was just here, a pretty smart attorney, who's represented a lot of people in this city—he thinks it may be that they're stringing out the possibility of a pardon here, that by bringing the president into the testimony, they're saying, “OK guys, if you want the president testifying in court about this, don't give me a pardon or else promise me one down the road somehow.”

REAGAN:  The president can't pardon him right now.  That would look terrible, of course.  I think when you look at the whole thing in totality, I think the impression you get though is that the nexus of this whole operation, if you want to call it that, is in the vice president's office.  It's not with the president.  He was probably brought in a little bit later.  It's all about Dick Cheney and if I were Dick Cheney, I'd be real worried, as our other two panelists had said.

MATTHEWS:  Well the question then obtains about the war—I want to go back over and I'm going to give a free fire zone for all of you right now.  The significance of this story in terms of the war in Iraq, the case made for the war.  The significance in terms of the way they tried to bring down Joe Wilson for whistleblowing, and the significance to the Scooter Libby trial, what do you each think of this?  Who starts?  You go first, Tucker. 

CARLSON:  Well, I mean, I'm not sure Joe Wilson was a whistleblower.  I mean, he is a blow hard in my view, and I say that, again, as someone who is opposed to the war and has been from day one. 

Joe Wilson is not a credible person at all.  That doesn't mean that the bush Administration is the right in the way they treated him.  I think you can make a case for, look, they're trying to defend what they did.  That's what the president is supposed to do.  But look, it's all about the hostility and how people feel about the Iraq war. 

MATTHEWS:  I wish I had more time for everybody else.  I'm getting called.  We've got to go.  Have a nice weekend Rita, as always, Tucker Carlson.  Thank you, Ron Reagan.  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Here's more of my interview with Rosie O'Donnell. 

(BEGIN VIDEOTAPE)

MATTHEWS:  I know you are politically interested and passionate.  I'm just going to go to a particular thing that happened in the last election, Ohio decided the election.  Fairly or not, it was the key state that decided it.

And we know that there was a high percentage of African-Americans who voted unusually Republican -- 17 percent—up in Cuyahoga County and Cleveland, because Don King, the fight promoter, working with Karl Rove contacted a whole number of African-American ministers and got the congregations very concerned about this issue to the point where people who had normally voted Democrat voted Republican to stop this issue from going anywhere.

Are you worried that that kind of smart Karl Rove politics can be used again to thwart Hillary Clinton's chances if she's the nominee? 

ROSIE O'DONNELL, “ALL ABOARD!  ROSIE'S FAMILY CRUISE”:  Well, I don't think that Karl Rove has the political power that he used to.  And, you know, we've all seen the man behind the curtain, and, you know, he doesn't have the power that he thinks he had, you know, especially in light of the recent accusations against him and crumbling of the current administration and people fleeing the sinking ship. 

So, I think that whoever the Democratic nominee is, I hope that they are able to be boisterous, and not pander to some sort so of centrist, you know, opinion.  I mean, I remember Kerry during the last election.  He was taken off the mic, and he said, this is the most criminal administration that ever was, and people only heard part of it.

And then he went the next day and said, oh I didn't mean that.  I thought, you know, he had his chance right there.  You know, where's the guts?  Where is someone who is going to stand up and say—you know, the president's approval rating is in the 30s, if not the 20s. 

You know, look at—there are 500,000 people in the streets of Los Angeles.  That's more than the Vietnam War.  We have had enough, you know, I think that America's is ready for a change no matter who the Democratic nominee will be.  I think that we will prevail in 2008. 

MATTHEWS:  Are you afraid that really strong language like that won't turn off the middle? 

O'DONNELL:  You know, I don't think that the middle is ever anything to shoot for.  You know, I mean, if you took a focus group, and you listened to a focus group, you would ruin any piece of art or any movie that's ever made.  You know, they go to a focus group of they test it and try to get how many people are not going to be offended. 

You know, someone stands up and says the truth and people rally around them.  I have to tell you, and especially in this day and age, when, you know, illusion is kind of taken as reality. 

It made me laugh that in the middle of a war the president could go on a national television press conference and denounce 10 percent of the population is somehow unworthy of constitutional protection, you know, that we could invade a sovereign nation in defiance of the U.N. and yet he's not held to any kind of war criminal standards. 

I mean, if another nation's leader did that, they would be tried at The Hague.  So I don't know.  I think that President Bush is a dangerous man and this administration has done very bad things not just for our country, but the world. 

MATTHEWS:  You know, I think you have a kernel of truth there about the focus groups.  I think nobody in the world of television, whether it's public affairs like I'm doing or pure comedy or something like Bill O'Reilly or something, would ever have gotten a job if we had gone to a focus group. 

O'DONNELL:  Exactly. 

MATTHEWS:  Because Seinfeld wouldn't have been on the air. 

O'DONNELL:  It's true. 

MATTHEWS:  They'd get the dullest people to come up with the dullest observations that they know are triggered by conventional wisdom and what people are supposed to say. 

O'DONNELL:  Well, and they get who are people willing to sit there for five hours for $50.  You know, to sit there and to tell them their opinions on—you know, you can never pander to the middle, in my opinion. 

You have to really be passionate about what you believe.  And I think that that's dangerous now that Hillary Clinton is getting into sort of the gray area of becoming so much of a politician that she merges into the rest.  And you have to stand up.

MATTHEWS:  Not completely.  Well, not completely.  What did you think of her move to gun control the other day, calling for—supporting Bob Menendez of New Jersey's proposal for a national database on guns used illegally or purchased illegally.  I mean, you know all about the gun control issue.  You had a big argument with Tom Selleck about it on your program.  And don't you—well, you know from experience how hot that issue is. 

O'DONNELL:  Yes, I do.  But I also know that, you know, look at the murder rate and the gun violence rate in the national versus any other civilized nation.  It's like absurd.  You combine every other country in the world, we have 10 times more gun deaths and gun violence in this nation. 

And, you know, it's very sad that it's like a multibillion dollar industry, and at the end of the day, it's all about money.  And the same thing with this war in Iraq.  You know, the only thing that's has doubled in the last year is the amount of casualties in the war and Halliburton's stock price.  You know, and if you don't think the two are correlated, you know, you need to wake up.

MATTHEWS:  Do you think Hillary Clinton has given away her soul by going to what you call the centrist position, the gray area? 

O'DONNELL:  I don't think she's given away her soul.  But I think she's not really in the ring yet.  You know, she hasn't declared and she's not, you know, really—she's sort of testing the waters, I think, in some way and seeing what the response is when she goes a little to the left, a little to the right. 

But innately I hope that she follows, you know, the example set by her husband who was passionate, emotional, articulate and knew what he believed and what he didn't.  And there was no sort of way around that.  And no matter how you judge him as a man or, you know, a mortal human, what he did, he as a president was phenomenal.  What an amazing legacy, you know?

MATTHEWS:  Rosie O'Donnell.  The program is called “All Aboard!  Rosie's Family Cruise.”  It's on HBO.  Rose, thank you for coming on HARDBALL.

O'DONNELL:  Thank you, Chris.

(END VIDEOTAPE)

MATTHEWS:  All next week, the 9th anniversary of HARDBALL.  Among our guests, General Tommy Franks.

The “ABRAMS REPORT” starts now. 

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

END   

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