updated 5/3/2006 3:56:43 PM ET 2006-05-03T19:56:43

Guests: Tyler Drumheller, Gary Berntsen, Dana Priest, Howard Fineman, Chuck Todd, Matthew Continetti

CHRIS MATTHEWS, MSNBC HOST:  Tonight, a HARDBALL SPECIAL REPORT. 

Finally, how we got to war.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to a HARDBALL SPECIAL REPORT on how we got to war.  Tonight, we have brought together two CIA veterans who just retired to answer the question, did President Bush lead out country to war based on faulty intelligence, or did his administration twist and cherry-pick the information for a war they had already decided to start? 

New polls out today show the president‘s approval rating has hit new low, 34 percent in the latest Gallup poll.  And just one-third of the country now approves of his handling of Iraq.

Plus, politicians, poker, and prostitutes.  We‘ll ask Howard Fineman and Chuck Todd to explain what that‘s all about. 

But let‘s begin with this question:  Were Americans misled by their elected leaders to this war of choice, where over 2,400 men and women have died and thousands of others wounded?  Or was it the intelligence community that should have be held responsible for pushing the case for war? 

Somebody is responsible for this war.  Is it the president, the politicians in Congress who voted to authorize the war, the military who saluted Bush three years ago when the war was popular who are now calling for Defense Secretary Rumsfeld‘s resignation, or it was cooked intelligence from the administration? 

Tonight, a HARDBALL investigation with high-ranking CIA operatives who were actively involved in the run-up to the war. 

But first, we have more information about the leak of the identity of a CIA operative, Valerie Wilson, and the damage it may have caused. 

HARDBALL correspondent David Shuster reports. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  While the heart of the CIA leak investigation is the Bush administration‘s aggressive defense of the WMD case for war in Iraq, there is new evidence now the defense may have undermined intelligence efforts on Iran. 

The key player in the CIA leak story is Valerie Wilson, a CIA operative whose identity was outed by White House officials.  As MSNBC first reporter yesterday, Wilson was not just undercover but, according to intelligence sources, was part of an effort three years ago to monitor the proliferation of nuclear weapons material into Iran. 

And the source has alleged that when Mrs. Wilson‘s cover was blown, part of the administration‘s ability to track Iran‘s ambitions was damaged as well.  There is no evidence that Vice President Cheney knew what Wilson was involved in when the vice president gave information to his now-indicted chief of staff, Scooter Libby. 

But intelligence experts say the vice president appears to have had indications that Wilson‘s responsibilities were sensitive.  The Libby indictment says, quote, “On or about June 12, 2003, Libby was advised by the vice president of the United States that Wilson‘s wife worked at the Central Intelligence Agency in the counterproliferation division.”

In the intelligence community, that means something special. 

RAND BEERS, FMR. NTL. SECURITY COUNCIL ADVISER:  You know for a fact that, firstly, the people who work there could be undercover agents working in that office or people who are on the agent‘s side of the CIA.  And, secondly, the issues were among the two most important issues that the CIA was working on. 

SHUSTER:  Vice President Cheney was no stranger to the CIA.  In the run-up to the Iraq war, he visited CIA headquarters on half a dozen occasions.  And Scooter Libby‘s, as chief of staff, was also well-versed on the intelligence community. 

But prosecution documents in the Libby case paint a picture of a White House so intent on undercutting Cheney critic Joe Wilson that officials failed to consider the possible harm to Wilson‘s wife or the possible damage to the CIA.  In other words, say intelligence experts, the White House‘s war on the Wilsons may have actually weakened the administration‘s war on terror. 

BEERS:  Even at the time of undermining in the summer of 2003, we were still deeply worried about what was happening in the Iranian nuclear program.  So why would you want to undermine that? 

SHUSTER:  Presidential adviser Karl Rove has told colleagues he had no idea Valerie Wilson‘s status was sensitive.  As for the vice president, the Libby indictment states that Cheney spoke to his chief of staff about Valerie Wilson on at least two occasions. 

One occasion was just hours before Libby allegedly disclosed information about Wilson to reporters Matt Cooper and Judith Miller.  What did the vice president tell Scooter Libby?  And did either official discuss checking with the CIA to determine if Valerie Wilson‘s identity and work were sensitive? 

Today, the intelligence community is split on whether Iran is close or not to developing a nuclear weapon.  And the CIA refuses to say anything about possible sources in Iran. 

(on camera):  But the White House has described Iran as one of the nation‘s biggest threats, and it‘s because of jobs like Agent Wilson‘s that President Bush‘s father, President George H. W. Bush, once declared that “those who expose CIA sources are the most insidious of traders.” 

I‘m David Shuster for HARDBALL, in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.

I should report now that New Jersey Senator Frank Lautenberg today asked the CIA for a damage report on the outing of Agent Valerie Wilson. 

Did the U.S., by the way, get pushed into war with Iraq by leaders using highly debatable intel? 

Tyler Drumheller was the CIA‘s chief of operations in Europe until he retired last year.  He says that the White House ignored warnings that Iraq did not have weapons of mass destruction. 

Gary Berntsen is a former CIA field officer who served on the ground in Afghanistan.  He says the military let Osama bin Laden get away because they didn‘t commit the right amount of forces to get him.  He‘s also the author of “Jawbreaker: The Attack on bin Laden and al Qaeda.”

Gentlemen, help me with something I care about a lot.  That is the connection between the case for war made before the war, and this whole CIA leak investigation. 

You start, Tyler.  Here is the question.  I want to ask you this question.  The case made by the president of the United States in his State of the Union in 2003, was that Saddam Hussein was purchasing uranium materials in Niger in order to build nuclear weapons to use against us. 

We were warned by Condi Rice and others there would be a mushroom cloud if we waited around for a smoking gun.  The case was made to smart people in this country, and they bought the case.  We faced a nuclear threat.

Then afterwards, the administration outed Valerie Plame—Valerie Wilson, because they wanted to punish, apparently, Joe Wilson for coming out and outing them and saying there never was a deal with Niger.  Am I right on that? 

TYLER DRUMHELLER, FMR. CIA EUROPEAN OPS. CHIEF:  That‘s the way it appears.  You‘re certainly right on the fact that the information that was in the State of the Union Address was inaccurate, and that the yellowcake reporting from Niger, the reports that had come in on the issue of yellowcake were known—well-known—to have been discredited as far back as September and October. 

MATTHEWS:  When I asked the CIA director, the former director, George Tenet, this same question, I said, you know, if the vice president raised the question about a possible deal in Africa by Saddam Hussein to buy nuclear materials—uranium yellowcake, as you put it—and the report turned out that there wasn‘t such a deal and the report went back to the vice president, well, how could that have happened because the president subsequently gave a State of the Union Address?

And when I ask that—making that very point that there was a threat from a deal in Africa, you who know the former director said?  He said ask Vice President Cheney.  In other words, it‘s like high school, this circle that goes around.  Did we or did we not know at the highest levels of this government there was not a deal to buy uranium in Africa by Saddam Hussein? 

DRUMHELLER:  Oh absolutely.  They knew that that was not the truth. 

MATTHEWS:  But why did the president say so in his State of the Union to make the case for war? 

DRUMHELLER:  They were making the case for war.  There was a drive in the administration from the beginning to settle the issue of Iraq for a variety of reasons, which I think they were very sincere about. 

MATTHEWS:  So WMD was the case they made, but it wasn‘t the reason?

DRUMHELLER:  Right, no, because there was—there was—they knew by the fall of 2002, they had evidence from good reporting that both the yellowcake reporting was bad, that the reporting on the “Curveball” case, which was a big thing ... 

MATTHEWS:  That‘s the aluminum tubes.

DRUMHELLER:  That was bad, and that we had a good source that was telling us that they didn‘t have this.  

MATTHEWS:  OK.  Before we go to Gary—I see you want to talk, Gary.  Before we go further, Tyler, in other words, it‘s your belief that they misled the American people.  They gave us a case for WMD, especially nuclear, that wasn‘t honest? 

DRUMHELLER:  Right. 

MATTHEWS:  Let me to go Gary.  Your assessment is the same.  Go back again, before the war, the case they made about a nuclear threat from Iraq and later how they dealt with Valerie Wilson. 

GARY BERNTSEN, FMR. CIA OFFICER:  Well, clearly here, you know, the administration, you know, recognized that Iraq was a threat.  We all recognized that Iraq was a threat.  The question was how do we deal with it?  You know, Saddam himself was considered—you know, I personally considered him a weapon of mass destruction.  The point was, was they used intelligence to make the case for them.  You know, Paul Pillar ...

MATTHEWS:  Why?  Why did they do that? 

BERNTSEN:  ... rMD+IN_rMDNM_Paul Pillar has written in, you know, “Foreign Affairs” and he wrote in the “Harvard Review” recently, and he was the national intelligence officer for the Middle East.  He stated this all quite clearly, and he was the man that was probably closest to this in the agency that, you know, it‘s sort of—the administration turned this process on its head.

It‘s unfortunate.  I supported the administration‘s effort to remove Saddam, because I thought Saddam was that dangerous.  I‘m not happy with the way things have been handled since then. 

MATTHEWS:  Let‘s talk about the way they were handled.  As we know from the evidence here, the vice president and Scooter Libby, his chief of staff, made a half a dozen trips to Langley, the CIA headquarters, and pushed the case for a nuclear threat from Iraq, right?

DRUMHELLER:  Yes, they were trying to build public support, clearly.

BERNTSEN:  Right.

MATTHEWS:  And were they basing that upon on a clear, open-eyed look at the evidence available to them, or were they cherry-picking? 

DRUMHELLER:  I think they were cherry-picking, and then just what Gary was saying before, is that they recognized the long-term strategic threat of Iraq.  I don‘t believe they trust the American people to make that connection, so therefore, they were trying to make a case that would sell what they saw to deal with it.

MATTHEWS:  OK.  Many people in defending this administration, good thinking people, believe that we were misled by accident, that the administration made the same mistake that the French made, the Germans made, and other intelligence organizations, that there was, in fact, a nuclear threat from Iraq.  Is that a fair defense or is that covering up what was the intent to mislead? 

BERNTSEN:  I‘d like to jump in.  You have to remember that when the military was planning the invasion of Iraq, there were multiple plans, and some of those were—the one plan they came to was called Running Start, and the concern was from the military that they would be a attacked potentially with chemical weapons.  So there was a lot of people, not just in the agency, but within the intelligence community, down pretty deep, and the military as well, that saw this as a problem.  Remember, Saddam had beaten us in the 1990‘s.  We thought we had all of that in after 1991, and his son-in-law defects and we find out this large program exists. 

MATTHEWS:  Let‘s sharpen that point.  The DIA, Defense Intelligence Agency, we all know was way out in front in making the nuclear case, right? 

They weren‘t really joined, however, by state or energy or the combined intelligence services, right?  They were out there alone making this case.

Is that because of the civilian ideologues in the Defense Department, Wolfowitz, Feith and the others, who pushed that case? 

BERNTSEN:  It was clear that they had a stronger role in pushing that.  But the agency doesn‘t make policy.  We provide information.  DOD, the secretary of defense, he provides policy. 

MATTHEWS:  Gary, you start.  I want to run down.  You start, Gary, then Tyler.  What‘s your response to the following question?  Was there an attempt by Saddam Hussein to develop, to purchase nuclear materials, uranium yellow cake, from the government of Niger?  Yes or no?  You first, Gary.

BERNTSEN:  I don‘t believe that was the case. 

MATTHEWS:  Tyler? 

DRUMHELLER:No

MATTHEWS:  Were there aluminum tubes that made the case, this Curveball character.  You first, Gary, was that in fact a hard case for nuclear buildup by Saddam? 

BERNTSEN:  It‘s clear now that those were incorrect. 

DRUMHELLER:  That‘s right.  They weren‘t the case for it.  They were probably rocket tubes or something. 

MATTHEWS:  Keep going.  Let me ask you about the mushroom cloud, argument .  You first, Gary.  Condi Rice and others said if you are waiting for a smoking gun from Saddam Hussein, you‘re going to get a mushroom cloud.  In other words, we‘re going to be hit here at home.  Did Saddam ever have a deliverable, either a vehicle or a weapon, a war head to use against the United States in our own country? 

BERNTSEN:  No, he didn‘t.  But what Saddam wanted to do, he wanted to convince people that he still had some type of capacity, because he saw the Iranians as a greater threat.  He believed that we didn‘t invade Baghdad in ‘91 because he thought we thought he had still had chemical weapons up there.  He saw that as a deterrent. 

MATTHEWS:  The smoke screen was helpful to him.  Your view? 

DRUMHELLER:  The smoke screen was helpful to Saddam, why Saddam did the things he did, it‘s always hard to judge.  Yes it was for local consumption, it was for the neighbors.

MATTHEWS:  Finally, I‘ve looked up the numbers, two thirds of the American believed at the time we were being building up to war in the Fall of 2002, it was really payback for what the Iraqis had done to us on 9/11.  Two thirds of the people believed that the Iraqis were involved in attacking us at The World Trade Center and at the Pentagon?  Was that true, Gary?

BERNTSEN:  I never believed that there were links between al Qaeda and Iraq? 

MATTHEWS:  Who was pushing it out of the administration, over and over again?  The president, vice president?  Listen to their speeches over and over again, they kept pounding it, especially the vice president. 

BERNTSEN:  I was in the field at that point, in another part of the world and was not part of that debate. 

DRUMHELLER:  I wasn‘t directly part of the debate, but I understand that it came from the office of the vice president, they picked up the report about the meeting between Atta and the Czech and the Iraqi intelligence officer in Prague, which wasn‘t true. 

MATTHEWS:  So the VP kept pushing it? 

DRUMHELLER:  Yes.  And another important thing that in the war on terror on this is that the resources that were taken out of Afghanistan, that guys like Gary needed, for Iraq, really did hurt. 

MATTHEWS:  Why is George Tenet so supportive of the Bush family and not supportive of the agency he was leading?  Why doesn‘t he admit that  he was given a report and the report was going back to the vice president after he triggered that inquiry about a deal with Niger to buy nuclear materials?  Why didn‘t that report go back to the vice president, the vice president tell the president you can‘t claim a nuclear threat from Iraq, we just found out from a former ambassador, Joe Wilson, that there is nothing to the case?  Why didn‘t that happen, the paper trail go to the president?

DRUMHELLER:  I think George Tenet was caught up in the march to war, just like everybody else.

MATTHEWS:  Was he under orders? 

DRUMHELLER:  No, I don‘t really think, I don‘t think they pressured intelligence.   They never came and said do this and do that.  It was very clear, the direction to go.

MATTHEWS:  What did he mean when I asked him why didn‘t the vice president get a report back from the trip to Africa by Joe Wilson, would  have cleared this whole thing up.  He said ask him.  What does that mean? 

DRUMHELLER:  I think it means that George didn‘t want to answer because he knew what the answer was.

MATTHEWS:  Which was he got a report. 

MATTHEWS:  Your thoughts, Gary?  Why didn‘t all of this intelligence work by you pros to try find out the threat about the real threat from Saddam Hussein, before, after, during the war, why didn‘t it get to the American people through the president and vice president?  Why was there a wall separating us from the truth? 

BERNTSEN:  I think that the agency was trying to provide the intelligence to policymakers, that‘s our role, to policymakers, not to the American public.  What the president does with that information is his business. 

MATTHEWS:  In this case, he didn‘t give us the full scoop, right? 

BERNTSEN:  Apparently. 

MATTHEWS:  We‘ll be right back.  When we return, we‘ll be joined by Pulitzer Prize winning reporter Dana Priest of The Washington Post, she will join us, and with our CIA veterans who come here, with more of our special report.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with former CIA officers Tyler Drumheller and Gary Berntsen.  We‘re joined right now by Dana Priest, national security reporter for The Washington Post, who just won a Pulitzer Prize for reporting on the CIA secret prisons in Europe.  Congratulations, Dana. 

You heard that conversation.  Anything to add? 

DANA PRIEST, THE WASHINGTON POST:  I think you are looking for one smoking gun that doesn‘t exist.  The White House didn‘t really trust the CIA.  The White House wanted to go to war, because they thought Saddam Hussein was bad, and the CIA didn‘t have great intelligence.  We know later.  So it‘s a basket of problems. 

MATTHEWS:  Let‘s try to sharpen that assessment by you.  Did the president, when he went on television and said British intelligence informs us that there‘s an attempt to buy uranium from Africa, was the president giving the best informed information he had, or was the V.P. feeding him something? 

PRIEST:  He was trying to make a rhetorical point.  What you really need to look is at the national intelligence estimate, which we can now see.  We can see there were a lot of caveats in there, but they were buried.  And then, rhetorically, yes, they are cherry-picking and they are doing it because they wanted to invade Iraq.  George Tenet is not standing up.

MATTHEWS:  When the president was given that national intelligence estimate, it has a cover sheet that tells you what they‘ve all conceded and all agree on.  Among the things they agreed on was not the idea of a nuclear deal with Africa.

PRIEST:  Right.

MATTHEWS:  But the president made it seem to the American people like the consensus of his intelligence advisers was there was a nuclear threat from Saddam Hussein.  Right?

PRIEST:  Right, I think he believed there was a nuclear threat.

MATTHEWS:  Why?

PRIEST:  Because of all of the other intelligence that was nuanced and there was not a threat from al Qaeda, but you heard the vice president using that all the time on NBC and on any platform he could.

MATTHEWS:  Why did the vice president, who controls the paper flow like all vice presidents do through the White House and the State of the Union address—why didn‘t he say, “Mr. President, I‘ve got a report back  because I asked a question of a CIA briefer last February in 2002, and they came back and sent an African ambassador over there to check it out.  He had been serving over there, he knew the region, he came back and said there is no real evidence of a deal.”  Why didn‘t the vice president tell the president that?

PRIEST:  They didn‘t trust the CIA at that point.  It wasn‘t telling them exactly what they wanted.  They had another stream of intelligence, which wasn‘t, again, The Smoking Gun in the ...

MATTHEWS:  ... bogus stuff in the Italian documents.

PRIEST:  Yes and in the DOD, the Office of Special Plans, the people who thought like they did, who always thought there was a link with al Qaeda when they couldn‘t prove it, and he‘s got them talking to him too.

MATTHEWS:  So he bought the ideological over the evidentiary?

PRIEST:  And the evidence wasn‘t clear.  It was not black and white.

MATTHEWS:  OK, by the way, what I just said here, we all discussed, and you two who are fellows agreed upon in terms of what happened, was what we said on the air here on this program from this chair three years ago in June 2003.  And its why the White House complained about our coverage, which I‘m glad to say is getting closer to the truth every day.

Let me ask you, Gary, you‘re out there.  Let me ask you about—a lot of people say we should have been after al Qaeda from day one, especially after 9/11 when we lost 3,000 people.

And we shouldn‘t have been dispatched or hijacked in this other direction, heading off to Iraq.  How did that happen, from your perspective?  That diversion from the attack on al Qaeda that attacked is?

BERNTSEN:  Well, I mean, it was clear that we were facing a problem across the Middle East, that they sought  and this is more than just a problem with al Qaeda. 

And that—given the response of the U.S. after 11 September, the desire to be more aggressive in confronting this.  This was an opportunity to face down what they considered was a tough threat and they were going to use that opportunity to dispatch Saddam Hussein. 

And he was a horrible man.  We‘re better off for him being gone.  We‘re not better with the result now.  But I can understand why they would have gone after Saddam.  Had I been in the president‘s shoes, I would have been looking to go after him too.  The mistake was the argument that they made.

MATTHEWS:  Would you have made the decision to divert resources from the attempt to capture or kill bin Laden?

BERNTSEN:  No, but the point is this.  What we only needed to kill bin Laden was a battalion possibly at that point.  And they just didn‘t move fast enough.  There was a little bit of fog of war.  There was some risk aversion at that point and we were very, very close.  And it was very unfortunate that it didn‘t get finished positively.

MATTHEWS:  Tyler, you told me in the dressing room, I hope I‘m getting you into this, but you are here and I‘m going to ask you the question.  From the very beginning of this new administration in 2001, was the evidence coming to you at the CIA at the agency, they were heading for Iraq, with or without 9/11.

DRUMHELLER:  Well in February of 2001, we were told to start stepping up collection against Iraq and to start looking at Iraq.

MATTHEWS:  Rather than bin Laden?

DRUMHELLER:  Well yes, at the end of the Clinton administration, we had switched a lot of resources from Iraq in the middle of the ‘90s to terrorism, specifically bin Laden and Iran, which the Clinton administration was really worried about. 

And at the beginning of the Bush administration, a lot of those were switched back to Iraq.  And I think, even talking to people in any division at that time—near east division at that time—there was a steady progress towards some resolution. 

Gary‘s right.  I think they were looking to settle the whole problem in the Middle East, bin Laden being the symbol for all the things that are bad and maybe the easiest place to go.

MATTHEWS:  This square is exactly—it parallels what Bill Cohen told me and others.  It‘s been printed now that when he was turning over from the authority to the Defense Department, from the Defense Department to the new people coming in in the Bush-Cheney administration, Dick Cheney called him up personally and said “I don‘t want to hear anything about the world.  I don‘t want some tour of the horizon.  I want an update on one country, Iraq.  That‘s what I‘m focusing on.”

DRUMHELLER:  That‘s exactly the way it was.

MATTHEWS:  Is that your reporting, that we were going after Iraq before 9/11 and we were going to, if we had to, divert from our attempt to catch bin Laden?

PRIEST:  We saw the build up there, it became—Iraq did, the largest station the CIA has had, probably even larger than Vietnam, over 300 people.  So they just didn‘t have the resources.  I think the administration saw it as sort of an ideological lynch pin, if they could turn it into a democracy, which they thought was easy to do, they rest of the country would...

MATTHEWS:  ... but hard to sell, that‘s why they used WMD.

PRIEST:  But hard to sell.

MATTHEWS:  We‘re going on nation build, but it‘s easier to sell they‘re coming at us with a mushroom cloud.  We‘ll be right back with Dana Priest, Tyler Drumheller and Gary Berntsen.  This is a HARDBALL special report on the CIA and the run up to war, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with a former top CIA official in Europe, Tyler Drumheller; former CIA field commander Gary Berntsen and Pulitzer Prize winner Dana Priest of “The Washington Post.”

We only have a couple of minutes, Tyler.  I want you to sum up, was there a clear indication to the president and the vice president before we went to war with Iraq that he didn‘t have a WMD threat against us.

DRUMHELLER:  Up until September, no it wasn‘t clear because we didn‘t have enough good sources.  The NIE was drawn on that bad reporting.  The best reporting at that time were the inspectors, but we didn‘t believe them. 

After September, we acquired a high-level source in the Iraqi government that was in Saddam‘s inner circle, that told us they had no nuclear weapons, rudimentary biological weapons, and sort of chemical—poison gas.

MATTHEWS:  Who got that report, the president?

DRUMHELLER:  Yes, the president did.

MATTHEWS:  So he ignored it?

DRUMHELLER:  Yes. 

MATTHEWS:  Because he went on television and told the American people in the State of the Union that was in fact the threat we faced over there.

DRUMHELLER:  Well at the end of the day, they weren‘t really interested in the intel after it came out.  They wanted the guy to defect as a propaganda.

MATTHEWS:  Gary, your thoughts on this subject, and it gets back to the question of whether we went into this war with bad intel or bogus intel. 

BERNTSEN:  Well I think that the strategic intelligence over time was that Iraq was a gigantic problem.  Specifically whether or not he had those things or not at that point, you know, of course it‘s clear he didn‘t have them now. 

There would have been great dangers had those psychopath sons of his had taken power eventually there.  And from all of the reporting and all the things I‘ve read so far, shows that Uday and Qusay were ascending in power and a lot of the generals were working kind of like servants to those guy.

They would have been a problem in the end.  We had to face Iraq at some point.  The way it‘s been handled after the invasion has been a major problem.

MATTHEWS:  Well, it‘s hard to argue that crazy sons are a cause for war, though. 

BERNTSEN:  No.  No. 

MATTHEWS:  That‘s a very preemptive argument, isn‘t it?

BERNTSEN:  No, but there was a lot of other things.  Look, these guys were killing and murdering en masse in that country. 

MATTHEWS:  And they were doing it since the 1980s. 

BERNTSEN:  Yes, a terrible problem for all of us.

PRIEST:  The lesson to be drawn is really a lesson now, I think, for Iran, which is we know that this is potentially a target of the administration.  How good is the intelligence?  The fact is, it‘s not that good and people are willing to admit that. 

MATTHEWS:  Is there going to be an ideological thumb on the scale this time pushing for war or for military action against Iran like there was last time? 

PRIEST:  Yes, there definitely is, or you wouldn‘t—I don‘t think you‘d have gotten to this point already. 

MATTHEWS:  So the drum beating is purposeful. 

PRIEST:  It‘s purposeful, and I think on the other side, you have more people now saying wait a minute, let‘s look at the cost of doing this because it‘s really complicated. 

MATTHEWS:  Congratulations on the Pulitzer Prize.  You‘re the best. 

Thank you Dana Priest, Tyler Drumheller, and Gary Berntsen. 

Tomorrow on HARDBALL, we‘ll hear from the military side with generals Bernard Trainor—Nick Trainor, and William Odom, another general.

Up next, with President Bush‘s polls hitting new lows, are the Republicans in deepening trouble in this year‘s midterm elections? 

Plus, Rudy Giuliani campaigns in that all-important state of Iowa, but says he‘s not sure he‘s running for president.  He‘s certainly looking out there, though. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.

With President Bush‘s approval rating at an all-time low of 32 percent

it keeps going down in the 30s—just how low can it go?  Is there any good news for him on the horizon?

And what about Rudy Giuliani‘s big play in Iowa the other day?  Is he running? 

To answer these big questions and more, we turn to MSNBC‘s political analyst and “Newsweek‘s” chief political correspondent Howard Fineman, and Chuck Todd, the editor in chief of “The Hotline” which tells us everything every day.  God, I can‘t beat you guys. 

First of all, I‘d like to have your overview of what you just heard from those two CIA guys? 

HOWARD FINEMAN, “NEWSWEEK”:  Well, I think it‘s powerful, and I think it‘s one reason why George Bush‘s approval rating is where it is because within that approval rating is a sharp drop in people‘s willingness to trust in him, to think he‘s honest and straightforward.  That was his rock in the storm.  Now it‘s falling apart, this is the reason why. 

MATTHEWS:  What I heard from those guys, Chuck, was that the WMD was the label on the can, but inside was something altogether different, the case for nation-building. 

CHUCK TODD, EDITOR IN CHIEF, “THE HOTLINE”:  Right.  Well, and that‘s what is so different from, you know, the whole thing was always bizarre because that‘s not the way George Bush ran. 

We weren‘t going to be nation builders and then that‘s all we did was just get into nation building.  This had nothing to do with the global war on terror.  Nothing to do—and it ends up making you wonder well, why did we do this if we‘re fighting a war on terror?  It‘s starting to make less sense the more we learn. 

MATTHEWS:  Let‘s talk about the future, Howard.  I know you talked to some people about it and I‘ve heard these conversations, your early reporting got into me, that you don‘t see anything around the corner over the next two-and-a-half years for the president that will say here‘s your upticks, Mr. President. 

FINEMAN:  I don‘t see it immediately on the horizon.  Are oil prices going to fall precipitously?  No.  Is the war in Iraq and the situation there suddenly going to turn all rosy with the smiley—you know, the happy Iraqis we talked about years ago? 

(CROSSTALK)

FINEMAN:  No.  Are the people suddenly going to decide that George Bush, is he going to be able to put that toothpaste back in the tube and everybody is going to trust him again?  No.  Is George Bush the kind of guy who changes his theory of life or politics?  No.  I mean, Chuck and I know this from the campaign season.  He kept straight on, and he‘s going to keep straight on because ... 

MATTHEWS:  No big changes in personnel? 

FINEMAN:  I don‘t see big changes in theories of the war on terrorism or on tax policy.  Those are the twin pillars of his presidency.  He may change players, as we‘ve said here before.  I don‘t see him suddenly saying you know what?  I‘m going to start all over again. 

MATTHEWS:  The president entrusted the vice president, another oil patcher, with energy policy.  We don‘t know what the energy policy is, except gas prices are going up.  And they don‘t believe—as he said, if you want to do conservation, that‘s a moral issue.  He sort of poo-rMD+IN_rMDNM_pooed that.  So we don‘t really have an energy policy.  We‘ve got an Iraq policy.

TODD:  Dennis Hastert bought an E85 ethanol car today though, so ...

MATTHEWS:  OK, we‘re moving.  Chuck, Howard, was he right when saying there‘s not going to be any greener pastures?

TODD:  Look, I think the only thing I believe is out there for him

that can actually make things better is a natural disaster, and I say that

MATTHEWS:  Would that help?

TODD:  And here is how it could help.  The assumption is the government could do nothing.  But if it is—I believe the hurricane season is like this—sort of the unknown factor of 2006.  If it looks like the federal government actually learned something from Katrina, and if they somehow do it right—I‘m not saying that this is something they should wish for. 

But if you are looking for a moment that they could actually change course, that‘s what it‘s going to take.  And if you think about it, that shows you how bad it is, that you need a state of emergency. 

(CROSSTALK)

MATTHEWS:  Giant fans, coming up the Gulf of Mexico with Karl Rove at the helm.  We know ...

TODD:  We know that they think—and only hitting—by the way, only hitting the Carolinas, because that‘s sort of the least competitive ...

FINEMAN:  The cloud seeding precedes ...

(CROSSTALK)

MATTHEWS:  I just heard the macroreport from Howard about there‘s no real change in the wind, nothing new down the line.  What does that mean to the Congressional elections this November? 

FINEMAN:  I think it really puts the Senate in—very much in play.  The House, you know, I still go back and forth on the House.  I think the Senate ...

MATTHEWS:  You think the Senate is more likely. 

TODD:  Because it‘s the easier one to nationalize.  It is the one that voters will go into the booth and say I want to send a message.  They are going to send it at the top of the ticket.  They‘re less likely to send it down at the House level.

MATTHEWS:  So if you don‘t like the president, you vote against Rick Santorum.  If you don‘t like the president, you vote against Mike DeWine. 

TODD:  That‘s right.

MATTHEWS:  But nonetheless, Mike DeWine, Conrad Burns ...

TODD:  Mike DeWine, Conrad Burns, Jim Talent, Jim Peterson ...

MATTHEWS:  Is there enough on that list?

TODD:  And go ahead and do Tennessee.  You vote for Harold Ford. 

There‘s your six.  That could happen.

MATTHEWS:  That‘s a reach though, isn‘t it?

TODD:  In a nationalized election it doesn‘t become a reach.  This is how these things happen.  It‘s the last seat that nobody expected always ends up going.  You can go every election. 

FINEMAN:  The one good thing the president and the Republicans have going for them as far as mid terms are concerned, it‘s still only May 2nd.  There are still six months until Election Day.  Things can happen.  Perhaps things will turn more positive in Iraq.  Perhaps oil prices will moderate.  Perhaps the stock market will continue to rise.  There are things that can happen. 

It‘s just hard to see what‘s going to change the overall picture of the country.  And the amazing thing is that the economy is going along fairly well.  Not evenly distributed in terms of benefits, but pretty strong, yet, people feel that the bottom is about to fall out.  The right direction, wrong track number is always the most important one. 

MATTHEWS:  I worry what this gas price story is going to do to jobs, the stock market.  The market went up again today, but I keep thinking at some point this squeeze, which is really a higher tax.  We don‘t get the money, the money goes to the oil producers, it really takes money out of our economy. 

FINEMAN:  It also binds George W. Bush, it hampers him, it shackles him.  Oil prices being what they are, serious talk about going to Iran.  Oil prices continue to go up.  Any military action whatsoever, oil prices really go up. 

MATTHEWS:  You mentioned a natural disaster coming our way handled well by the president might enhance his political chances in November.  Not to be ghoulish about it, but if he were to attack Iran, would that bring him up as well?  I‘m not saying wag the dog.  I‘m saying if he does for strategic reasons, does that bring him back? 

FINEMAN:  I talked to several Republicans, and this made an impression on me, who have been sticking with George Bush through thick and thin.  These are working people.  These are not fancy Republicans, and they are saying if he goes to Iran, I‘m worried about what happens to the economy, what it does for oil prices.  I‘m scared.  I don‘t think it works politically this time with a president with a 32 percent approval rating. 

MATTHEWS:  Does he know it‘s a jack in the box?  That he doesn‘t know what‘s going to come up?  Does he know that? 

FINEMAN:  I don‘t know. 

MATTHEWS:  But politically, you say there‘s some people that won‘t follow him down the line. 

FINEMAN:  And I think the fact that Josh Bolten is in there as chief of staff makes a difference, because he‘s more of a realist and more of a player than Andy Card was. 

MATTHEWS:  And he could actually desist the president. 

FINEMAN:  He won‘t be cheering in the corner, he won‘t be saying it‘s a slam dunk, Mr. President. 

MATTHEWS:  Interesting reporting.  We‘ll be right back with Howard Fineman and Chuck Todd.  Sobering thought.  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with “Newsweek”‘s chief political correspondent and MSNBC political analyst Howard Fineman and Chuck Todd, editor in chief of “The Hotline.”

Rudy Giuliani was in Iowa campaigning for congressional candidates the other day, and he answered some questions about weather he will run for president in 2008. 

(BEGIN VIDEO CLIP)

RUDY GIULIANI ®, FMR. NEW YORK MAYOR:  I have a lot of places to go and a lot of people to talk to, and a long process of figuring out whether it makes sense to run for president in 2008.  I don‘t know the answer to that yet. 

(END VIDEO CLIP)

MATTHEWS:  He looks like a president to me, Chuck. 

TODD:  I have been in his camp, they say there‘s no way he‘s going to run.  This has been a marketing campaign to help his businesses. 

MATTHEWS:  Who says that, it‘s all for coin? 

TODD:  It‘s all for coin.  I‘ve been in that camp.  I‘ve talked to people in New York. 

(CROSSTALK)

I‘ll be honest.  This trip has softened me up in my hardline stance of saying Rudy won‘t run.  He changed his tone.  First of all, he‘s trying to address the moderate issue.  He gave a speech, talked about that the Republican party needs to be a big tent.  He is just dipping his toe to see.  Iowa is the toughest play to play that card, and, you know, using the word tolerant isn‘t necessarily a smart word to use with the Republican base.  They hate when they hear a Republican lecture them about tolerance.

MATTHEWS:  Because it makes them sound like they are intolerant. 

TODD:  That‘s right. 

He‘s trying to see what is the real reaction going to be for the grassroots?  Iowa is the best place to test that. 

MATTHEWS:  Let me give the Democrats at home something to worry about, including the moderate Democrats, the conservative Democrats and the liberals, of course.  McCain-Giuliani, the ticket? 

FINEMAN:  Starsky and Hutch. 

MATTHEWS:  That may carry Pennsylvania, New York and California, that ticket. 

FINEMAN: It‘s culturally diverse, but tough on the war and they are both hawks, but one is a cop and one is a military guy.  Not quite the same thing.  But the way George Bush and Karl Rove have defined the presidency, they have defined it as a war commander tough cop and the world presidency, ironically, these two guys fit it best. 

My theory is that Rudy will do everything he can up to running, up to jumping in the squad car and running, it‘s going to be dependent on what happens with McCain.  My sense from some of the people around Rudy that I know, and some of the McCain people, is that they both think there isn‘t enough shelf space for both of them as presidential candidates.  And I think Rudy will look to see if McCain stumbles.  If he doesn‘t, I don‘t think Rudy will run. 

MATTHEWS:  How about the veep? 

FINEMAN:  That is a separate question.  That comes later. 

MATTHEWS:  It‘s an attractive position. 

FINEMAN:  He could say, I‘m not going to run and how are you going to decorate the mahogany for my not-running?

MATTHEWS:  What‘s that mean?

FINEMAN:  That means putting the money on the table.  That‘s an old Bronx term.

(CROSSTALK)

TODD:  Two words, Bernie Kerik.  How many Bernie Keriks does Rudy Giuliani have to go through?

MATTHEWS:  I think the guy he put up for the homeland security, turns out they had a little love nest going on near the World Trade Center.  But you know, that‘s proof of how enduring he is because that didn‘t hurt him.

FINEMAN:  There‘s a whole documentary about Rudy that‘s dynamite, it‘s going to get a lot of airtime.

TODD:  Rudy was the most hated man in New York City on September 10th.

FINEMAN:  It‘s just the whole picture of the rest of Rudy Giuliani.

MATTHEWS:  Remember the great Churchill speech, “we‘ll fight them in the air.  We will fight them in the streets.”  You can do it with McCain in the air and Giuliani in the streets.

Anyway, thank you, Howard Fineman and Chuck Todd.  When we return, House Democrats are calling for an investigation to whether lobbyists involved in the infamous Duke Cunningham bribery scandal supplied the U.S.  congressman and other members of Congress with prostitutes.  We‘ll get the latest on that story, we saved it to last, and lift the veil on corrupt lobbyists and the author of a new book called “The K Street Gang.”  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  It‘s springtime in Washington, but the chill of corruption is still in the air.  Here to talk about payoffs, poker, prostitutes and politicians is the “Weekly Standard‘s” Matthew Continetti.  He‘s the author of the new book “The K Street Gang:

The Rise and Fall of the Republican Machine.”

First of all, what is this thing about prostitutes and Duke Cunningham?

MATTHEW CONTINETTI, AUTHOR:  Well, it reported today in the “Wall Street Journal” that the top three guy in the CIA, purportedly attended a suite that a defense contractor, Mitchell Wade, had set up for Duke Cunningham and other of his friends in Congress and the government, at which point allegedly again prostitutes may or may not have attended the suite.

MATTHEWS:  So it‘s an evening of prostitution and poker, I don‘t know how to fits together.  Usually some people play poker and others do the other thing. 

But let me ask but the K Street gang.  Tell me what K Street is and what you mean by it.  Is it like Hollywood?  There‘s no actual—there‘s a place called Hollywood, but Hollywood means L.A. and movie making.  What is K Street—is it a place in Washington, it‘s called K Street.  What does it mean?

CONTINETTI:  Well K Street of course is the street in downtown D.C.  where traditionally lobbyists had their main firms there.  But of course the lobbying industry has exploded to such an extent, Chris, that it‘s spilled over not only to the other alphabet streets in Washington, but also in the Virginia suburbs, the Maryland suburbs.  So it has come to mean an entire industry, more than just a geographic location.

MATTHEWS:  Are lobbyists guys that spend their evenings hanging around with congressman or staffers or government officials, eating prime rib or steak and enjoying their life together?  Is that what lobbying is?

CONTINETTI:  In a way, yes.  No, that‘s one of the tools in the lobbyist tool kit that I write about in “The K Street Gang.”  Jack Abramoff of course owned two restaurants before his fall from grace.  And he would entertain congressmen there, often put it on his tab, his private tab, pick up the meals.  And he would also host...

MATTHEWS:  ... But they were breaking their own rules when they did that? 

CONTINETTI:  In many cases, yes, they failed to disclose that.  And he also would fund fund-raisers, he‘d host fund-raisers.

MATTHEWS:  So that‘s the iron triangle, whereby the lobbyists lobbies people and in order to get in the door, he raises money for them.

CONTINETTI:  That‘s right.  Lobbyists provide a useful service for congressmen, because they‘re kind of the gatekeepers between the corporate fund-raisers and the elected officials.  And so they‘re the go-betweens and that‘s how Jack Abramoff worked.  That‘s how our friend Mitchell Wade, the defense contractor in the Duke Cunningham scandal worked.

MATTHEWS:  So a guy goes out and bundles a bunch of trial lawyers, gives them all the money to their Democratic senator, because trial lawyers is the only industry the Democrats control.  And they kick it in for that whenever they call down and say, “Would you see Joe Schmoe or Jimmy McGee, they‘ll let him in and talk to him.”  That‘s the deal?

CONTINETTI:  More or less, you know.  I think most elected officials do have the best of intentions.  But this is the way that Washington works.  I mean there is this culture—it‘s a parasitic culture, it‘s an insider culture that we see bubble up in the headlines.

MATTHEWS:  I asked Republicans, when they came on the show in the midst of these various episodes, do you believe that Republicans are more honest than Democrats?  To their credit I think, they say there is no moral distinction between individuals in either party, that the problems are endemic.

CONTINETTI:  No I agree with that.  I mean, you have to judge these things on a case-by-case basis.  And of course the cast of characters that I write about on “The K Street Gang,” some of them were dishonest and others of course are going to jail.

MATTHEWS:  How could Tom DeLay, who‘s apparently a really good politician, have so many people working for him either he couldn‘t control or they didn‘t advise him to stay out of some of this crap, to use a good word?  All the corruptive roles they were playing, all the deals with Abramoff, all that stuff and—was he controlling it or was he letting them do their thing?

CONTINETTI:  Of course he denies any involvement in the case, he says he was unaware of it.

MATTHEWS:  What do you think?

CONTINETTI:  I don‘t know.  I only know what the investigators have come up with, what‘s being reported.  And it‘s true that Tom DeLay hasn‘t been accused of any wrongdoing in the case.  Now we don‘t know what the people who have pleaded guilty, including two of his former aides Michael Scanlon and Tony Rudy are telling investigators.  We don‘t know, we‘re going to have to wait and see.

MATTHEWS:  Well he says he made a mistake of trusting junior aides to use their positions for the general political cause or—and they ended up using it for their own causes.

CONTINETTI:  That‘s right and of course anything is possible.  But you do see the links between Tom DeLay and his former staff members.  And of course Tom DeLay and Jack Abramoff, who he once called one of his closest and dearest friends in Washington.

MATTHEWS:  Why is this guy Robert Ney, the Republican from Ohio—why was he putting things in the “Congressional Record,” advocating some obscure business cause involving casinos down in Florida?  And didn‘t the people from his district or somebody in the newspaper notice this guy‘s putting basically—he‘s like a Tokyo Rose, putting out this propaganda.  Why didn‘t anybody notice that?

CONTINETTI:  Well I guess the “Congressional Record” is so large and government is so complex, that it‘s hard to detect these things until it‘s too late.  And of course there was an example where Ney inserted comments favorable to Abramoff and Abramoff‘s business partners right before Abramoff and his partner got a casino deal.  So that has been proved.

MATTHEWS:  Is that new, to use the “Congressional Record” as somebody‘s P.R. operation?

CONTINETTI:  If you talk to people on Capitol Hill, Chris, they say there‘s nothing new to it.  In fact, it happens all the time.

MATTHEWS:  Really? 

CONTINETTI:  Yes.

MATTHEWS:  Well there‘s also a couple of guys that got killed in that deal.

CONTINETTI:  At least one, yes.

MATTHEWS:  Interesting stuff.  Matthew Continetti, you‘re a great reporter.  I‘ve been following you for years and congratulation—you‘re with a conservative organization, it‘s called the “Weekly Standard,” but you don‘t let ideology get in your way, is that right?

CONTINETTI:  I try not to.

MATTHEWS:  The book is called “The K Street Gang.”  It gives you an inside smell of this city.

Tomorrow on HARDBALL, former secretary of state Madeleine Albright will be us.  Right now, it‘s time for “THE ABRAMS REPORT” with Dan.

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

END   

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

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