updated 4/19/2006 11:35:11 AM ET 2006-04-19T15:35:11

Guests: Rosemary Palmer, Deborah Meyer, Norman Robinson, Tony Blankley, David Gergen, James Risen, Susan Schmidt

CHRIS MATTHEWS, MSNBC HOST:  Tonight, a game of Rummy.  Why is the president teasing a White House shakeup?  To diffuse the dump Rumsfeld demands or to distract us from whether the president himself is leading us in the right direction?  Let‘s play HARDBALL. 

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

Today, Defense Secretary Donald Rumsfeld faced more fierce attacks from retired generals, and tough questions from the Pentagon press corps.  Rummy said he would not resign and has not offered to resign to the president.  Would firing Rumsfeld admit that Iraq was a mistake?  And if Iraq was a mistake, was the Bush presidency‘s biggest decision a mistake? 

In a moment, two military families will debate over Rumsfeld‘s fate.  And later, two top journalists win Pulitzer Prizes for taking on Washington‘s power elite, exposing secrets of the Bush administration and Congress.  We‘ll talk to two of them about how they did it.  But first, HARDBALL‘s David Shuster has this report on the changes inside the Bush White House. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  In an effort to reenergize his administration and turn around low approval ratings, today President Bush personnel changes focused on his economic team. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I will nominate Rob Portman to be the director of the Office of Management and Budget.  Rob will replace Josh Bolten, who this week started in his new role as my chief of staff. 

SHUSTER:  Like Bolten, Rob Portman is a Washington insider and longtime friend of the president.  President Bush also nominated Susan Schwab, Portman‘s deputy, to move up to U.S. trade representative.  The appointments are the first changes since Bolten took over as chief of staff, and President Bush said other transitions are in the works. 

BUSH:  With a new man will come some changes and Josh has got all the rights to make those recommendations to me and, of course, I listen to, you know, advice as to my cabinet as well. 

SHUSTER:  But former Reagan political adviser Ed Rollins on the “Today Show” this morning said the president needs to be the one taking charge, not his new chief of staff. 

ED ROLLINS, REPUBLICAN STRATEGIST:  Bolten shouldn‘t be talking about changes.  It‘s the president‘s staff.  If he wants changes, he should make the changes.  He‘s got to get back in charge of his own administration. 

SHUSTER:  President Bush did make it clear today he is standing by his embattled Secretary of Defense Donald Rumsfeld, currently under fire for many of the problems in Iraq.  In the last week, half a dozen retired military commanders have called for his resignation. 

BUSH:  I hear the voices and I read the front page and I know the speculation, but I‘m the decider and I decide what‘s best.  And what‘s best is for Donald Rumsfeld to remain as the secretary of defense. 

SHUSTER:  And just hours later, there was Rumsfeld on television presiding over a Pentagon briefing. 

DONALD RUMSFELD, SECRETARY OF DEFENSE:  The president knows, as I know, that there are no indispensable men.  “The graveyards of the world are filled with indispensable people,” quote, unquote.  No.  He knows that I serve at his pleasure and that‘s that. 

SHUSTER:  President Bush has not been as quick to defend Treasury Secretary John Snow, who many believe is on his way out.  Republicans on Capitol Hill are also pushing for changes in the president‘s lobbying and communication offices. 

QUESTION:  Scott, you‘re one of the most visible members of the president‘s senior staff.  Do you plan to stay on? 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  Are you trying to tempt me here?  Look, I never speculate about personnel matters. 

SHUSTER:  But McClellan hinted that the changes ahead are going to happen soon.  Nicolle Wallace, who delivers the White House‘s position on shows like HARDBALL, is expected to announce her departure.  Her husband recently began working in New York for U.N. Ambassador John Bolton. 

Former Congressman Bill Paxon has been mentioned as a possible addition to the White House lobbying team.  Paxon is well-respected on Capitol Hill and could help ease the tensions between lawmakers and the White House. 

Still, Republicans outside the White House say the problems in the Bush administration go far deeper.  And the most controversial and powerful influences on the president are still around, including Vice President Cheney who pushed for the war in Iraq, Rumsfeld who has been overseeing it, and Homeland Security secretary Michael Chertoff, a central figure in the response to Hurricane Katrina. 

And the broad outlines of the president‘s foreign and domestic policies are not changing. 

(on camera):  So while a staff shakeup could repair damaged relationships with the Congress and the media, the president‘s second term may need more than a transfusion of new blood.

And with Iraq in turmoil, the budget deficit exploding, gas prices going higher, and hurricane season just around the corner, there may be limits as to what new White House aides or officials can do. 

I‘m David Shuster for HARDBALL, in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster. 

Secretary of Defense Donald Rumsfeld is feeling the heat from several retired generals who have called for him to be fired.  And the debate over his future is particularly resonant among families who have lost loved ones in Iraq. 

Deborah Meyer supports the defense secretary.  Her stepson, Private First Class Jason Meyer, was killed in Iraq three years ago, and her son, Private First Class Jonathan Meyer will be deployed to Iraq this fall.  She‘s a member of Families United for Our Troops, and their mission. 

And Rosemary Palmer thinks Secretary Rumsfeld should be replaced.  Her son, Lance Corporal Augie Schroeder, was killed in Iraq in August of last year.  She and her husband are co-founders of Families of the Fallen For Change, which is seeking a plan to exit Iraq. 

Let me go to Rosemary Palmer first.  Mrs. Palmer, thank you, and also Deborah Meyer in turn here.  What do you think about this fight over whether Rumsfeld should be canned?  Rosemary first. 

ROSEMARY PALMER, SON KILLED IN IRAQ:  Well, I would say that Bush‘s response to this point has been something to the order of heck of a job, Rummy and that ... 

MATTHEWS:  And your response is? 

PALMER:  My response is that it appears it is time for Rumsfeld to step down.  I thought last fall there were plans to replace him, but for some reason, those plans were scrapped.  So I think this is just a continuation what was seen last fall as something that needed to be done. 

MATTHEWS:  Do you think Rumsfeld is responsible for the policy of going to war in Iraq, or he‘s responsible for the difficult effort we‘ve had there? 

PALMER:  I think he‘s mainly responsible because the military attempted to give him suggestions for what was needed and he basically wasn‘t interested in listening at that time. 

MATTHEWS:  OK.  Let me go—I‘m sorry.  Continue, please. 

PALMER:  I was just going to say that he knew what he wanted, and it didn‘t really matter.  I think Newbold said that was a “flawed plan for an invented war.” 

MATTHEWS:  OK.  Let me go right now to Deborah Meyer.  Your view of the secretary of defense and this whole dispute over whether he should be fired or not? 

DEBORAH MEYER, SON KILLED IN IRAQ:  Well, I think Secretary Rumsfeld has served our country with incredible distinction and commitment to the defense of our country.  He‘s been confronted with some incredibly challenging circumstances, and he‘s met and continues to meet those challenges.  He has the full confidence of the president and his steady leadership is exactly what we need in Iraq right now. 

MATTHEWS:  Do you think America should have gone to Iraq? 

MEYER:  I think we didn‘t have a choice.  I believe that the Taliban and Saddam Hussein had power, and under Secretary Rumsfeld‘s leadership, our military have liberated millions of people.  There are many improvements happening in Iraq on a daily basis, and I don‘t feel that we had a choice, other than ... 

MATTHEWS:  Well, let me ask you this.  I don‘t want to play you like you‘re a political scientist, and I‘m a political scientist, you‘re a military expert, but a simple question.  Why did your son and all those hundreds of thousands of troops get sent to Iraq?  What was the reason for going to Iraq? 

MEYER:  We went to Iraq, in my estimation, to fight against the terrorism that is invading our country.  We were attacked.  It was on 9/11 and many times before that.  We needed to help the Iraqi people free themselves, and free themselves from Saddam Hussein‘s regime and the terrorism that we‘re living under.  I would rather be fighting them in their backyard than having them come to my backyard and fight here. 

MATTHEWS:  Let‘s go right now to something that both of you wonderful mothers—let‘s go to what Secretary Rumsfeld told us here on HARDBALL two years ago.  Let‘s listen to him. 

(BEGIN VIDEO CLIP)

MATTHEWS:  Did that level of hostility, generally across the board in the country, in the faces of mobs, surprise you? 

RUMSFELD:  I guess if you asked me a year ago, I would have expected that the word occupation and the negative aspects of that, would not have been assigned to us to the extent it has been. 

(END VIDEO CLIP)

MATTHEWS:  Rosemary Palmer, here‘s the secretary of defense, who we had a nice conversation with, very openly admitting that he was confounded by the fact that we were met with hostility in Iraq, that he thought, I guess, it would be like the end of World War II when the French women would all kiss the soldiers when they marched into Paris, or like the end of the Cold War where those governments were overthrown and the people were all very pro-American afterwards. 

What‘s your reaction to the fact that the secretary of defense did not know we would be facing an insurgency in Iraq? 

PALMER:  This was a gross miscalculation because Shinseki did warn him in advance that they would need—we would need more troops for after the war than actually during it, that we should expect a long occupation.

MATTHEWS:  Yes, well how about Mrs. Meyer, we‘ve suffered so many casualties since we invaded or liberated Iraq, we hardly took any casualties in the actual first coming in.  Does it bother you that the secretary of defense was caught off guard? 

MEYER:  I don‘t know that he was caught off guard.  Yes, there‘s been an insurgency, but for the most part, I believe the Iraqi people are appreciative of what we‘re doing over there.  There is so much happening right now that is positive for them, I can‘t imagine that they‘re not happy.  I know—

MATTHEWS:  What about this war?  What about the war that‘s going on and has been going on since we got there?  Who‘s fighting us if we‘re happy? 

MEYER:  The insurgents.  I didn‘t say everyone is happy.  There is an insurgency.  But for the most part, the regular Iraqi citizen, they‘re glad that they‘re able to vote now.  They‘re having a say in what‘s going on in their country.  They didn‘t have that under Hussein. 

MATTHEWS:  But, did it surprise you that the secretary of defense in that clip that we just showed you wasn‘t aware that there‘s going to be a hostile reaction to our occupation?  He thought the word, he said it himself, that the word occupation would not even be used.  He was surprised that they would have any problem with us being in their country. 

Doesn‘t that surprise you?  He didn‘t know that people in that country would be shooting at us? 

MEYER:  Again, it‘s not called a war because you go in and everyone welcomes you with open arms.  The fact that he said he was surprised at the insurgency, I‘m not sure that that was exactly the words that he meant to use.  I don‘t know.  I did not see that piece.  I heard it just now, but I know that from what we heard from Jason, they were expecting to have opposition. 

You don‘t have a war with yourself. 

MATTHEWS:  I understand that, I get your point, but a lot of people were saying when we first went in there, a lot of soldiers heard this, that we would take over the country, it would be relatively peaceful once we had done that.  Whereas the secretary, I‘ll read his words to you again.  “I guess if you asked me a year ago, I would have expected that the word occupation and the negative aspects of that would not have been assigned to us to the extent it has been.” 

So he was being very honest with us and saying he didn‘t—I just wonder whether we can respect the judgment and the foresight of a secretary of defense who gets the war itself wrong, that doesn‘t know there‘s a war to come after we get in the country, who thought it was all going to be over except mopping up.  He got that wrong.  He admitted it. 

We‘ll be right back with Deborah Meyer and Rosemary Palmer. 

Later, can we expect more changes inside President Bush‘s inner circle?  David Gergen and Tony Blankley will be here.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RUMSFELD:  When you make a decision, you make a choice, somebody is not going to like it.  It‘s perfectly possible to come into this department and preside and not make choices, in which case people are not unhappy, until about five years later they find you hadn‘t done anything and the country isn‘t prepared. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That was Secretary of Defense Donald Rumsfeld, defending himself today.  We‘re back with Deborah Meyer who lost her stepson in Iraq and her other son is heading over there and Rosemary Palmer who lost her son as well in Iraq. 

Rosemary, let me ask you the same question.  I know you‘re a critic of the war and I want to hear your words and how you define that criticism.  Secretary Rumsfeld is an agent of the president, he carries out the president‘s policy.  The policy was to liberate Iraq.  What was wrong with that policy? 

PALMER:  First of all, we lost focus of what we were doing because we were chasing the Taliban in Afghanistan, and so we dropped the ball there to run over to Iraq, so we didn‘t finish either one.  I would think before we expanded the war that we should have taken care of business first in Afghanistan. 

And when we did go to Iraq, if we didn‘t expect an insurgency, there were about 5,000 people considered insurgents in December of 2003, and as of February, I think that figure was closer to 20,000 or 25,000.  So the number of insurgents is growing, so obviously we had it wrong. 

MATTHEWS:  Let me ask you, Mrs. Meyer, about the question of the number of troops over there.  One of the criticisms of the secretary of defense is that he rejected the idea of bringing in a larger compliment of troops to do the job.  He rejected the notion of overwhelming force, which is the doctrine of the former secretary of defense Cap Weinberger and General Colin Powell.  Do you think that was a smart decision on the part of the secretary of defense? 

MEYER:  It was a decision that he made.  I am not in his position for a reason, I don‘t want to be.  The number of troops that are on the ground there, I believe is what is necessary at the time.  Our men and women on the ground need to be able to make their own decisions and they shouldn‘t have to wait for total word from Washington before they make every move.  I would hate to see what would happen if every single move that they make had had to be cleared with Washington first. 

MATTHEWS:  Well, General Shinseki asked for more troops, he said it would take 200,000 more than we sent in and he was basically cashiered, he didn‘t get re-upped.  Do you think that was the price you pay for speaking up in the military?  Do you think they were allowed to speak honestly? 

MEYER:  Well the military is apolitical for a reason and they need to stay apolitical.  I‘m not sure why he wasn‘t reappointed.  Again, that‘s not my decision to make. 

MATTHEWS:  OK.  Well thank you for very much.  Very nice ladies.  Thank you for your sacrifices and thanks for coming on.  Your sacrifices are much bigger than most of us can imagine. 

Up next, fireworks from last night‘s mayoral debate down in New Orleans.  I‘m back today, obviously.  And later, more staff changes at the White House.  Let‘s see if they‘re real.  But is it time for the Bush administration to make serious policy changes.  That‘s the bigger question.  What they are going to do in the next couple of years.

They are going to be around for two more years and a half.  So let‘s see what the plans are at the White House.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Eight months after Katrina destroyed a great American city, New Orleans now gets to set pick a leader, someone to save a city still very much in need.  Last night I co-moderated the debate for mayor along with WDSU anchor, Norman Robinson, who joins us right now.

Norman, my new friend, sir, I flew all night to get back here.  Thank you, it‘s great to be here.  You got to go to bad at a decent hour after we were at dinner last night.  It was Kay Paul‘s? 

NORMAN ROBINSON, WDSU NEWS ANCHOR:  It was Kay Paul‘s. 

MATTHEWS:  You got no dinner out of it. 

ROBINSON:  We had no dinner, but we had a nice conversation.  It was just nice to relax and let our hair down after a very arduous task. 

MATTHEWS:  You were nice enough to take me around and show me the house you lived in for several years and the situation there.  I got a little introduction to your city from you.  Let‘s talk about what we saw last night.  I asked the candidates a simple question right from the NBC polling.  Here it is. 

(BEGIN VIDEO CLIP)

MATTHEWS:  Do you approve or disapprove of President Bush‘s job performance? 

There‘s two answers here. 

ROBINSON:  Yes or no. 

UNIDENTIFIED FEMALE:  Disapprove. 

MATTHEWS:  Rob? 

UNIDENTIFIED MALE:  Overall, approve. 

MATTHEWS:  Approve. 

UNIDENTIFIED MALE:  Approve. 

UNIDENTIFIED MALE:  Disapprove. 

UNIDENTIFIED MALE:  Disapprove. 

UNIDENTIFIED MALE:  Disapprove. 

UNIDENTIFIED FEMALE:  Approve. 

MATTHEWS:  So we have three approves.  Interesting. 

(END VIDEO CLIP)

MATTHEWS:  Did that surprise you, Norman, their reactions? 

ROBINSON:  Yes.  It did surprise me.  From the standpoint of nothing being done for the past eight months.  It surprise the me that the mayor said that he disapproved because he‘s been too—in the opinion of some, in the president‘s hip pocket. 

As you know, he backed off the president after initially going bonkers, telling the president to get off his expletive deleted, to get down here and that he was moving to slowly and then to say he disapproved and then when I questioned him about it, he said oh, the question was too general.  I thought you were talking about the war in Iraq and I thought you were talking about the economy when we all full well understood that the genesis of your question was, do you approve or disapprove of the president‘s performance in the recovery after Hurricane Katrina.  And the mayor said that he disapproved. 

I thought maybe he was kind of backing away from that, knowing that the White House might not look too kindly on it.  I really don‘t know whether he has given up on his relationship with the White House or not, especially after chocolate city and especially of after now, pandering to the African-American voting class. 

So one can only just imagine what‘s going on in the mayor‘s mind at this point, but that was the most surprising thing for me, to hear him say that he disapproved of the judge the president was doing. 

MATTHEWS:  Well, if he gets reelected, that‘s going to matter, you‘re right.  Here‘s Mayor Nagin‘s celebrated Martin Luther King day remark, followed by his defense of that remark in the debate last night.

(BEGIN VIDEO CLIP)

MAYOR RAY NAGIN (D), NEW ORLEANS:  It‘s time for us to rebuild a New Orleans, the one that should be a chocolate New Orleans.  And I don‘t care what people are saying uptown or wherever they are.  This city will be chocolate at the end he of the day. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MATTHEWS:  I live in Washington, D.C. and that phrase chocolate city used to be very positive term we used in Washington before I came there.  It wasn‘t negative, it wasn‘t positive, it was kind of celebrated for a city that was largely African-American.  It was in fact called chocolate city, not the chocolate city, C.C., like D.C.

NAGIN:  I know the song.

MATTHEWS:  So what‘s wrong with what you said then? 

NAGIN:  What‘s wrong with it?  It seemed to have generated an incredible backlash or outrage from certain people, and what I was trying to do at the time was to deal with the hopelessness of some of our citizens who are spread out all over the country.  And some people took that to mean that I‘m excluding other individuals. 

Chocolate is a term that I‘ve used throughout my term. 

MATTHEWS:  Why did you follow it up by saying I don‘t care what they say, uptown or anywhere else, you were talking in an adversarial term about one group against the other? 

NAGIN:  There was an article in the paper that certain leaders in this community were saying they did not want certain people back and that‘s what I was referring to. 

(END VIDEO CLIP)

MATTHEWS:  Norman, what do you make of that back and forth, did we progress at all in understanding his meaning or not? 

ROBINSON:  I think if you‘re able to read between the lines, you understood his meaning exactly, depending on what side of the fence you‘re on. 

To give you some context on that particular issue, Chris, the mayor at that point had understood that most of his uptown big business support had abandoned him at this point.  They were throwing their support behind Ron Foreman, who is the executive in charge of one of the biggest tourist attractions in the city of New Orleans, that being the Audubon Institute, which has the job of overseeing the aquarium and the big zoo. 

Having abandoned the mayor, I think that the mayor understood at that point that his only chance of getting re-elected was to then embrace the predominantly large African-American voting class.  So I think that was a signal.  I read it that day when I heard that speech.  Yes.  I read that as a signal to the mayor that he was going to go all black at that point. 

MATTHEWS:  I get you.  Let‘s take a look at what the mayor said.  He was the focus in the debate of a lot of the other guy‘s attacks.  Let‘s listen to the strategy he used to respond to his adversary. 

(BEGIN VIDEOTAPE)

NAGIN:  Is this another tag question? 

ROBINSON:  Before we resume our questioning from the moderators, we noticed that the incumbent has accused Mr. Couhig of executing a tag team against him.  Mr. Mayor, would you like to respond?

NAGIN:  Would I like to respond to what? 

ROBINSON:  The tag team that you have accused Mr. Couhig of executing against you. 

NAGIN:  Oh, I think America saw it. 

(END VIDEO CLIP)

MATTHEWS:  He‘s a charmer, isn‘t he?  He‘s a politician? 

ROBINSON:  He says he‘s not a politician.  He‘s a very likable guy.  He understands the power of nuance, and he engages it very well.  But it was a—it was a subtle kind of job that the lieutenant governor used to get at Mr. Nagin.  And it was sleight of hand and it was something that has not been used up to this point.  Where the lieutenant governor used a question of Rob Couhig, one of the opponents, to get at weather the mayor was doing an efficient job or not, and it almost seemed that it was preordained or something that was pre-programmed, they talked about before they arrived. 

MATTHEWS:  Yes, it‘s like different card players playing into each other‘s hands.  You know what it reminded me of?  There were two real politicians in that room:  the mayor and Landrieu, the lieutenant governor, and everybody else was a businessman or an amateur.  You could see the difference.

Anyway, thank you very much, my partner last night, maybe again someday, Norman Robinson of WSDU. 

ROBINSON:  Hey.

MATTHEWS:  Yes, sir?

ROBINSON:  Enjoyed it. 

MATTHEWS:  I did too. 

ROBINSON:  Enjoyed it.  Looking forward to it.

MATTHEWS:  Up next, President Bush says he has strong confidence in Donald Rumsfeld after all this, but with pressure building for Rumsfeld‘s dismissal, will the president‘s popularity erode even further? 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.

Are big changes coming to the Bush White House?  And with the war still raging and gas prices spiking, can the president give his team a jolt of energy?  Will Donald Rumsfeld get the boot?  Who can of save a sinking second term? 

Here to dig into those hot questions are former White House adviser David Gergen and “Washington Times” editorial page editor Tony Blankley. 

Tony, you first.  Why is the president teasing us like Gypsy Rose Lee today, with this idea—I know you‘d like that, David—with this idea that he‘s going to move around the staff and let this new guy, Josh Bolten, do the work, the dirty work for him? 

TONY BLANKLEY, “THE WASHINGTON TIMES”:  Well, I don‘t know.  I mean, obviously, he sent a signal that there‘s going to be changes and cabinet changes when he says that Bolten had a brief to look at the cabinet, so obviously, we should expect changes. 

He always delegates a lot.  I agree with something Ed Rollins said earlier today, that if I were designing it as an image issue, I would have the president seeming to be in the grip of his own decisionmaking rather than having his assistant, who is an able fellow, making the decisions, but obviously, they‘re going to make changes. 

I don‘t know the changes are going to make that much difference unless the strategy of governance changes.  I mean, in Congressional relations—quick example—the president believes in letting Congress, which he considers to be part of his team, the Republicans at least, draft the actual legislation.  He‘s done that repeatedly. 

MATTHEWS:  That‘s what Clinton should have done. 

BLANKLEY:  Well, Clinton went the other way.  He did and Hillary did the whole thing in secret and tried to force it down Congress‘ throat.  Bush has—as often presidents after the former ones—do the opposite. 

He‘s one the opposite. 

And as a result, there‘s not much Congressional relations can do when they‘re not given a brief to push a particular set of legislative provisions, so it‘s—while I think there‘s some staff changes that would improve, until the theory of governance changes, I don‘t think it‘s going to make a lot of difference. 

MATTHEWS:  David, you helped out the president, the last president,

President Clinton, when he got into big trouble when he first came in here

I guess it was in the first half of the first term.  And you came in there and brought some adult leadership to that mess and, of course, you were punished for that by the insiders. 

They hated the fact that somebody with some brains came in there.  Is that the similar situation now with this president, or does he have a more mature problem here where it‘s his policy that‘s really the problem? 

DAVID GERGEN, FORMER WHITE HOUSE ADVISER:  I think you‘ve got a very different problem.  That was a very fresh president who was skidding and just needed to find himself again.  And, you know, he had to restore his self-confidence.  Once he did that, he got back on track. 

But I was surprised yesterday, Chris, when they first announced that Bolten had come in and has his—as chief of staff, had this meeting with his staff and he seemed to have this authority from the president, not only to change the whole White House, but also to take a fresh look at the cabinet.  It sounded like, in the early coverage, it sounded like we had President Bolten on our hands and that President Bush was receding. 

MATTHEWS:  Yes.

GERGEN:  I found it quite extraordinary.  And today, the president, I think, reasserted himself.  He said in his press conference, when he took questions, you know, I‘m the decider.  But, I mean, I think, reestablishing hey look, I‘m the guy who makes the decisions around here, I still think he‘s given Bolten a lot of latitude in the White House.

But what‘s really interesting to me, Chris, is that in the early changes so far, with the new chief of staff, with the new head of the Office of Management and Budget and with the new trade representative, they‘re all terrific people.  All of them, nonetheless, still come from inside.  There are no new faces from outside.

MATTHEWS:  And what does that tell you, David?

GERGEN:  And I think to go to Tony‘s point, that suggests there are not going to be new policies. 

MATTHEWS:  Does this president suffer, David, from an isolation not known to previous presidents? 

GERGEN:  I think he has suffered from isolation.  I think there has been a tendency, when he was not reading the press, he wasn‘t listening to people, and you got that from a lot of insiders in Washington, sort of the GOP heavyweights, if you would like, who were around the city who felt that they were not getting through to this White House. 

In recent weeks, it seems to me he‘s been listening a little more, but again to go back to Tony‘s point, he‘s not changing his real governance.  He may be changing his style, but I see no indication he‘s changing policy direction and I see no indication that he‘s really changed himself in any way. 

MATTHEWS:  You know, Tony, I don‘t think the American people give a rat‘s butt whether, you know, Pee Wee Herman is working in the White House, as long as the job is getting done.  This stuff about staff is just chairs on the Titanic, right?  They don‘t care. 

BLANKLEY:  Oh, not necessarily the Titanic. 

MATTHEWS:  Well, no, not ...

BLANKLEY:  It could be a pleasure cruise. 

MATTHEWS:  It could be a pleasure cruise.  They don‘t care about the chairs or who got the clipboard in hand.  They want to know what‘s going on with the following issues.  We have an economy which is perking along in terms of the big numbers.  I mean, there‘s growth. 

The market bopped up again today a couple of hundred points, a hundred and a half points.  The unemployment rate is pretty low.  And yet, people don‘t seem to like the economy.  For some reason.  Why are the polls coming back with we don‘t like the way things are going? 

BLANKLEY:  Well, I mean, it‘s fascinating.  I‘ve been looking at it for awhile, because the numbers are better today than they were for Reagan when David and I were working for Reagan moving up to the 1984 election and the public loved the economy then, they don‘t like it now.  I think something very substantial has happened and I don‘t think the old indicators of unemployment, interest rates, GDP growth are moving the public.  The public is concerned about other anxieties weather it‘s war on terror, trade.

I think they all relate to the economy.  I mean, there was—these numbers ought to be driving 55 percent, 60 percent job approval instead of 35 percent. 

MATTHEWS:  Right.  Let me throw some ideas out.  I‘ve seen a great number recently about what people worry about.  They worry about the big things of energy embargoes and all that.  They worry about their personal finances.  People out there right now when you go to bed at night, what you‘re really worried about, how much money are you going to have when you retire and how long will it last? 

GERGEN:  Chris, my sense is that the old numbers don‘t count as much as they once did, when you‘ve got a growth number, or productivity number, because we‘re really feeling the first waves of globalization and they‘re holding down wages.  They‘re holding down, for the middle class and the lower middle class, working people, you know, they‘re just not seeing the rise in income that goes along with the productivity because of the competitive pressures of globalization and the costs of health care and gasoline are going up.

So a lot of people are feeling much more of a squeeze now and I worry a lot that this is a precursor of what‘s coming as this global threat of competition grows much more serious in the years ahead. 

MATTHEWS:  Will that auger a fight between the upper class and the middle class, because the upper class gains globalization and the middle class gets squeezed? 

GERGEN:  Absolutely. 

BLANKLEY:  You‘re seeing that now.  The elites are profiting by globalization.  The blue collar workers are not profiting, going the other way.  It‘s clear we‘re moving towards a strong instinct for protectionism in this country.  It gets harder to pass a free trade bill every season. 

MATTHEWS:  It‘s harder to hold a Republican party of cloth coat and mink coat Republicans together when they have different economic interests. 

BLANKLEY:  I think it‘s only a matter of time before we see a person run for president successfully as a protectionist.  We‘ve never had that before in modern times.  I think we‘re moving towards that.  I wouldn‘t be surprised if the Democratic nominee, whoever he or she is in ‘08, runs as a protectionist. 

MATTHEWS:  I saw Pat Buchanan buying a number of new suits the other day.  Gergen, do you think he‘s coming back? 

GERGEN:  Would Gypsy Rose and Pee Wee Reese and Pat Buchanan all here on the show. 

MATTHEWS:  Pee Wee Reese is your guy, I‘m talking about Pee Wee Herman.  Thank you very much, David Gergen, up at Harvard, and Tony Blankley down with us. 

Up next, two journalists awarded the Pulitzer prize for taking on power here in Washington.  They‘re coming on.  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  “The Washington Post” won four Pulitzer prizes and the New York times won three of them on Monday for excellence on reporting on topics like the Abramoff scandal, the NSA‘s once-secret domestic spying program, and the CIA secret overseas prisons.

Those last two topics were stories that President Bush himself asked “The Post” and “Times” editors not to print.  Tonight we‘re joined by two of the big winners, Pulitzer prize winners for life.  Susan Schmidt chronicled the fall of Republican lobbyist Jack Abramoff and “The New York Times”‘s James Risen alerted us to the NSA‘s warrantless surveillance program. 

Lifetime achievements.  You‘re smiling.  I love the fact, print people never smile or show any emotion.  They‘re always so stolid.  You do have reactions to this.  How do you feel winning a Pulitzer prize? 

SUSAN SCHMIDT, THE WASHINGTON POST:  Just absolutely thrilled.  It‘s the most amazing thing that‘s happened in my career. 

MATTHEWS:  How many years did it take you to develop the investigative skills and trade craft to be able to break that story? 

SCHMIDT:  Well, you know, it‘s a story that‘s still unfolding. 

MATTHEWS:  No, back to you for a second.  I want people out there to hear this.  How many years does it take to develop the trade craft to know how to do it? 

SCHMIDT:  Many.  I‘ve been at “The Post” for 23 years and I worked at other papers before I got to “The Post” and most that time I‘ve been doing investigating reporting. 

MATTHEWS:  Would you have been able to do the Abramoff break if you hadn‘t been doing that training? 

SCHMIDT:  No, definitely not. 

MATTHEWS:  James, how long did it take you to get to the position where you had the contacts among the spooks, the people that you have to deal with.  Very responsible Americans you deal with, but obviously have to talk to you on background.  how long did it take you to develop that set of sources? 

JAMES RISEN, THE NEW YORK TIMES:  Well, I‘ve been covering intelligence issues since 1995, so it‘s been about 10 or 11 years. 

MATTHEWS:  To develop that capability? 

RISEN:  Yes. 

MATTHEWS:  Let me ask you about what it‘s like to go face the lions.  You had to not only sell these stories to the editor because you wanted them in the newspaper, you had to sell them against the resistance of the government, right, Susan? 

SCHMIDT:  In my case, I‘m OK. 

MATTHEWS:  You broke it.  Let‘s go to James on the question what it‘s like to have to go when the people behind the doors don‘t want you to write it and they go to the people behind the executive branch, a part of your newspaper and they go to the very top, what‘s that like. 

RISEN:  Well, it‘s, you know, it‘s difficult, it makes it very difficult for the newspaper, because the government argues that there‘s national security concerns involved, and the paper has to make a very difficult calculation about balancing national security against the public‘s right to know.  And in this case, balancing national security against civil liberties concerns.

I think that in the end of this process, Arthur Sulzberger, Bill Keller and Jill Abramson, managing editor, showed amazing courage in publishing the story in the face of—

MATTHEWS:  Why do you think they chose not to break the story or allow you to break the story before the election?

RISEN:  Well, I think we got a lot more information eventually over the course of the last year in terms of, you know, finding out new aspects of the program, and the level of concern within the government that we found was an important factor.  We found that there was a lot of people within the government who were deeply concerned about the nature of this program, and the fact that they were skirting the law. 

MATTHEWS:  OK.  We‘ll be back with this pair of Pulitzer Prize winners, Susan Schmidt of the “Washington Post, and James Risen of the “New York Times.”  Back in a moment. 

This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re back with two Pulitzer Prize winners.  That‘s Susan Schmidt of the “Washington Post” and James Risen of the “New York Times.”

Susan, I want to go to you about this question, because it is developing, this story.  Jack Abramoff, just take a hunch.  How long is it going to take for this flower to bloom?  How many more people are going down? 

SCHMIDT:  Well, it‘s going to take awhile for this flower to bloom, probably a year and a half maybe.  It takes awhile to move from staffer to member of Congress, and that‘s what the Justice Department is doing now. 

They‘ve gotten four people to plead guilty, and they‘re going to those people and then they‘re going to staffers who are close to members of Congress and finding out from those staffers what exactly members of Congress knew about legislation and favors and gifts.  And then they‘ll start going to those members.  So I think it may take awhile to fully unwind. 

MATTHEWS:  And it is a process of squeezing people to give away people above them? 

SCHMIDT:  Yes, although it‘s taken a little bit of an unorthodox course in that you have some big people pleading guilty first, and then they‘re going to maybe go to some smaller staff people who are closer, though, to the members of Congress. 

MATTHEWS:  I see.  So Abramoff goes down and takes, what, five years 10 months, and then he‘s going to face another charge up here, and he‘s pleading these cases and then there‘s going to be Scanlon and these other guys? 

SCHMIDT:  They‘ve all pled.  And they‘re right now downloading to the Justice Department everything they know. 

MATTHEWS:  Out of fear? 

SCHMIDT:  Well, that‘s part of their deal, that they‘ve gotten—negotiated plea agreements, and they have to provide information.  If they don‘t provide information, then they‘re going to get much longer sentences when they‘re sentenced, say, a year from now. 

MATTHEWS:  And their lawyers are telling them if you don‘t—you have to choose between cooperating with the prosecution or going to jail for more than 10 years maybe. 

SCHMIDT:  Oh, yes.  In Abramoff‘s case, he could go for as long as 30 years if he does not live up to his cooperation agreement. 

MATTHEWS:  How would you like to be between him and his purposes in life?  I wouldn‘t want to get between him and his rat hole. 

SCHMIDT:  Yes.

MATTHEWS:  Anyway, I mean, I‘m thinking about DeLay and those guys. 

They know he‘s after them.  He has to feed DeLay, right, so he gets out? 

SCHMIDT:  Well, so far we don‘t have any indication that he‘s giving anything incriminating about DeLay, but other DeLay aides have come in—

Tony Rudy has pled guilty and he‘s providing information.  There are other

Scanlon.  There are other people that are expected to come in. 

MATTHEWS:  And they may come in and say, the boss knew I was doing this stuff. 

SCHMIDT:  They may. 

MATTHEWS:  Yes, that‘s what I would think, because he claims he had nothing to do with all this stuff. 

SCHMIDT:  Or other members of Congress. 

MATTHEWS:  All right.  Let me go right now to James Risen.  Your story, if you nailed it down, is this story now for the ages that the United States has conducted a surveillance program, which at this end, American end, does include Americans? 

RISEN:  Well, it‘s—I think that our story has—I mean, the Bush administration has confirmed the accuracy of the story.  The president—the day after our story ran, the president came out and essentially announced to the world that the story was right, and the administration is now in the process of working out with Congress some oversight procedures for the first time. 

To begin, they‘ve set up a special subcommittee of the Senate Intelligence Committee to provide some more organized oversight of the program.  And so the program is ongoing as best I know, and the Congress is beginning to do a more formalized form of oversight. 

MATTHEWS:  So who on the American side of these communications is being spied upon right now? 

RISEN:  We don‘t know exactly, and that‘s one of the issues that was of concern, I think, was the degree to which there was—since there was no independent oversight, it was difficult, and since they were not getting court-ordered, or court-approved search warrants, it was difficult to tell who they had chosen to conduct surveillance on.  And so that was one of the issues that led—raised some concerns.  How do we know who you‘re really listening to? 

MATTHEWS:  Were you surprised that the Senator Russ Feingold has called for a censuring of the president, a formal censuring of the president based upon your reporting? 

RISEN:  Yes.  I mean, I had no idea that that was going to happen.  I

you know, with the way I look at this story, my job was to really just lay out the story and then let everyone else have a debate about what to do about it.  I figured that, you know, once we wrote the story, you know, my job was kind of done in terms of providing, you know, a vehicle for a public debate. 

MATTHEWS:  I know that‘s your role.  Thank you.  Congratulations, again, Jim Risen for winning a Pulitzer Prize for this reporting on the NSA political programming. 

A little political question.  I have to ask you the latest thinking at the “Washington Post.”  Are you amazed that Rudy Giuliani is out there campaigning for Ralph Reed? 

SCHMIDT:  I am amazed. 

MATTHEWS:  Hasn‘t Ralph Reed got problems down there? 

SCHMIDT:  Well, he‘s certainly heavily implicated in the whole Abramoff scandal.  He got loads of money from Abramoff, which Abramoff got from gambling casinos running his Indian tribes, and gave it to Reed who was running around as an anti-gambling advocate.  So the hypocrisy factor is stunningly high. 

MATTHEWS:  We‘re now taking the temperature of Rudy Giuliani‘s heat to run for president.  He‘s an equal opportunity endorser.  Anyway, Rudy Giuliani with Arnold Schwarzenegger—everybody this week.  He‘s running, I‘m telling you.  Anyway, Susan Schmidt, congratulations. 

SCHMIDT:  Thanks so much.

MATTHEWS:  What a prize for life.  Good work.  Lots of work, 20 some years.  People watching hear, 20 some years to win these prizes.  Anyway, James Risen, the same with you. 

RISEN:  Thank you.

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

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

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