updated 5/10/2006 11:30:26 AM ET 2006-05-10T15:30:26

Guests: Saxby Chambliss, Kit Bond, Kate O‘Beirne, Eugene Robinson, Steve McMahon, Ed Rollins, Madeleine Albright

CHRIS MATTHEWS, MSNBC HOST:  Hill staffers ratting out their bosses.  Witnesses wearing wires.  Shoplifting charges at the White House.  A CIA biggie gets tied to that poker and prostitute ring.  Politicians on the police blotter.  Let‘s play HARDBALL.

Good evening, I‘m Chris Matthews.  Welcome to HARDBALL.  Tonight, putting on the squeeze, putting on the sleaze.  Another House aide cops a plea in the Abramoff case.  Is Congressman Ney next?

The CIA‘s Dusty Foggo quits over the pokers and prostitutes Duke Cunningham scam.  Democratic Congressman Bill Jefferson gets tagged by a witness wearing a wire.  Claude Allen, the president‘s top domestic kick gets nabbed for shoplifting.  David Safavian, his top personnel man, gets arrested. 

Then there are the Judge Judy level cases.  Cynthia McKinney, who punched a cop, and Patrick Kennedy who almost ran into one.  Is Washington losing its bearings?  HARDBALL‘s David Shuster will file his report later. 

First, the debate within the Republican Party over President Bush‘s nomination of General Michael Hayden as his new CIA director.  Are Republicans emboldened by the president‘s weakness in the polls or are they genuinely concerned about Hayden‘s credentials. 

Senators Kit Bond and Saxby Chambliss both sit on the Select Intelligence Committee and have both met with General Hayden himself within the past 24 hours.  Let me ask you first, Senator Bond, will you vote for or against General Hayden for CIA chief? 

SEN. KIT BOND (R-MO), SELECT INTELLIGENCE CMTE.:  I‘m going to vote for him.  I think he‘s extremely well qualified.  I‘ve had an opportunity to get to know him in our hearings in intel and had a very good conversation with him.  I think he‘ll be an outstanding leader to keep our country safe from terrorist attacks. 

MATTHEWS:  Senator Chambliss, will you vote for or against the nomination to be CIA chief of Michael Hayden. 

SAXBY CHAMBLISS (R-GA), SELECT INTELLIGENCE CMTE.:  Chris, the jury is still out with me.  I‘ve known Mike Hayden a long time, he is a very competent, intelligence individual.  But the fact is, the CIA is a civilian agency, and what the DNI has done is to select a person who has a longtime military intelligence background and put them over in a civilian position. 

We had language in the 2006 Intelligence Authorization Bill which said that that could not happen.  Now that bill never got passed, but there are reasons why we have to be very careful in injecting the military into a civilian spy operation. 

MATTHEWS:  Senator Bond, you don‘t agree with that, do you? 

BOND:  I think we want to have somebody who is—understands the role of the CIA it is a civilian agency.  It needs to be distinct from and separate from the Department of Defense.  General Hayden, when he worked at NSA, actually worked under the DCI.  And he has since—he‘s been deputy to the DNI, worked under the ambassador, who is obviously civilian.  And I believe that he understands based on our conversations, the real difference between the DOD tactical intelligence in the human field and the strategic human intelligence that he‘ll be responsible for in the agency. 

MATTHEWS:  Senator Chambliss, Dana Priest, who just won a Pulitzer Price at The Washington Post, today said that the intelligence community, and she has good ties into that community as a reporter, see this as a chance for the national intelligence director to get greater control over those military spies, not less.  In other words, this guy, General Hayden, could do a good job of pulling some of the power that‘s now under Rumsfeld over to Negroponte‘s operation at the top of intelligence. 

CHAMBLISS:  Well, we know that 80 percent of the defense budget is—

80 percent of the intelligence budget is controlled by the Defense Department.  The Defense Department is going to be hard to pull much power away unless you can pull that money away, Chris. 

But really, that‘s not the crux of this.  The crux of this matter is that at the DOD, the Department of Defense, in the intelligence world, they have a very specific role and a very specific mission.  It‘s to support the war fighter.  The role and the mission at the CIA is entirely different.  And General Hayden has done an outstanding job at NSA and he‘s under the Department of Defense, he‘s not under the DCI. 

But he‘s done a good job over there, but he‘s going to have to transition his mind, his intelligence mind from the military side to the civilian side, and it is dramatically different in a number of instances, so that‘s where the real crux of this issue goes.  And I hope at the end of the day, I‘m satisfied that General Hayden will do that, and we‘ve had some good conversation at this point and we‘re going to have some more, because really—he‘s a good man. 

MATTHEWS:  Senator Biden, some people think the president is pawing for a fight here.  He doesn‘t mind picking Hayden, who ran the NSA during the domestic, using the electronic capability program to find out what we‘re saying, Americans are saying to somebody on the other side of the world, perhaps in al Qaeda.  Do you think the president is confident he can win that argument against the Democrats?

BOND:  I think this is more an effort to strengthen the DNI.  Some people are claiming that the DNI is claiming power with this appointment.  I think that‘s precisely what he should do and I think General Hayden has worked under the DCI, when he was at NSA. 

We talked specifically about a number of decisions he made at the NSA where the military wanted him to focus on one aspect, the Central Intelligence Agency wanted him to focus on the other, and he did what the Central Intelligence Agency wanted.  I think he understands that.  I think he has had—had the opportunity to work under civilian control.  And he was pretty clear with me in our discussions that he understood that the tactical intelligence was the military‘s but the strategic intelligence, particularly the human intelligence, can, should, and must be in the CIA.

MATTHEWS:  Let me ask Senator Chambliss, your concern about the man‘s uniform, haven‘t many people who have been in the service been in uniform at the field rank of the top rank of the Air Force, like he is, General Hayden, been able to make the transfer over to work for the White House?  I think General Haig, all kinds of people have been over there, Stansfield Turner went over to run CIA. 

Why can‘t a high ranking military person become head of CIA?  Does the culture of the military get in the way?  Are they bucking for a promotion from the secretary of defense?  What tangibly is wrong with this appointment? 

CHAMBLISS:  Well, there may not be anything wrong with it and that‘s the whole point.  I am not an adversary in this role, Chris.  What I‘m trying do is make sure the right questions are asked.  The very question that you present.  Can he make that transition, can he satisfy us that he can make that transition? 

I am confident that he is a good man when it comes to gathering intelligence.  Particularly at the NSA, where he‘s done an admirable job.    But at the CIA, the difference is that he‘s responsible for agents spread across the world.  And we know that one of the deficiencies at the CIA has been a lack of human intelligence gathering capability. 

His primary responsibility is going to be to rebuild that human intelligence capability as Porter Goss was doing.  Does he the ability to do that when he‘s been out of that realm for a decade or more?  That‘s the real question in my mind when it comes to transitioning, can you go from the military to the civilian side as, you indicate, these other men have done.  There‘s certainly nothing wrong with that, but the question is, can we do it?

MATTHEWS:  Let me ask you Senator Biden, you‘re president of the United States, at 2:00 in the morning you get a report that something is up in Pakistan, Musharraf and bin Laden are going at it.  Bin Laden is doing something to upset the rule of Musharraf, our friend over there.  Do you call the DCI or the DNI?  Who are you calling in the middle of the night? 

BOND:  The DNI should be the one to report to the president and this has not been clear, but I trust that Ambassador Negroponte will be the central focal point for contact, because the DCIA will have information from human sources, but Ambassador Negroponte should have the NSA reports and all the other reports as well. 

MATTHEWS:  Same question to you Senator Chambliss.  Who do you call in the middle of the night with a question about Pakistan?  Do you call the head of CIA or the head of the National Intelligence operation.

CHAMBLISS:  On the 1947 act, the director of central intelligence was designated as the chief intelligence officer of the United States.  Under our new reform act, Kit is exactly right, it‘s the DNI.  He‘s the guy that now has the responsibility to receive that phone call. 

MATTHEWS:  Doesn‘t he say let me get General Hayden on the phone? 

Doesn‘t it require a two step rather than a one step?  Doesn‘t it require a conference call when really you want to talk to one person?  I just wonder with this organization if it‘s more expeditious or just another layer on top of the CIA is my question. 

CHAMBLISS:  That‘s a good question and that‘s what we had a lot of discussion about during the debate on the Intelligence Reform Act.  The idea is that this one person will have all of the capability of making that decision, but I hope, Chris, that he gets not only the director of central intelligence, but he also gets the head of the NSO, the head of the NRO, and his whole team together in a matter of seconds to be able to deal with the critical issue as you just presented. 

MATTHEWS:  Thank you very much, gentlemen.  Both on the Intelligence Committee, both determining the success on the Intelligence Committee.  That‘s Senator Bond and Senator Chambliss.  When we return, the politics of the Hayden nomination.  We‘re talking about the politics.  Why are top House Republicans, who don‘t get to vote on this issue, coming out against the president‘s pick.  Big question. 

And later, former Clinton secretary of state Madeleine Albright‘s going to be here to talk about what needs to be done in Iraq and what should be done about Iran.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  People may disagree about the state of the economy, the war, or the president‘s job performance, but there is definitely one thing that seems to be on the rise in Washington—scandals.  From the CIA leak to the Abramoff mess to Watergate poker parties, complete with lobbyists, intelligence officials, lawmakers, and even prostitutes.  The Capitol is prime with crime.  HARDBALL‘s David Shuster has more.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  Even in a city not shocked by scandal and familiar with speculation, the atmosphere is now electric. 

One business day after Porter Goss left the CIA, a top deputy of his, Dusty Foggo has now resigned in the midst of a corruption investigation focused on defense contractors, poker parties and prostitutes. 

In the Jack Abramoff lobbying scandal, the noose is tightening around Republican Congressman Bob Ney.  His former chief-of-staff Neil Volz pleaded guilty Monday and is expected to incriminate Ney on bribery charges.

In the CIA leak investigation, lawyers for presidential adviser Karl Rove say they expect to find out any day now if Rove is going to face charges of perjury.  Former White House procurement chief David Safavian goes on trial at the end of the month on corruption charges. 

Democratic Congressman Bill Jefferson is facing potential bribery allegations in a case involving a witness who secretly taped their conversations.  And former White House domestic policy adviser Claude Allen is facing a trial in June for charges relating to shoplifting.

SCOTT FREDERICKSEN, FORMER FEDERAL PROSECUTOR:  I think we may be setting a new record here for all the possible scandals that are breaking out now, especially now with the rumors of the “Hookergate” scandal that are circulating around town as well.

SHUSTER:  It‘s called “Hookergate,” because it involves Washington-area prostitutes, who are allegedly meeting members of Congress at the famous Watergate complex. 

The investigation stems from a bribery case that landed Republican Duke Cunningham in jail.  Legal sources confirm that a government witness has told investigators with poker parties where defense contractors deliberately lost card games so the winners, members of Congress, had cash to spend on the prostitutes. 

The contractors were rewarded, one witness claims, with government deals.  Investigators have subpoenaed records from a limousine service involved, and subpoenas have also been issued to a hotel in the Watergate.  While “Hookergate” has been a source of intrigue and fear on Capitol Hill, the CIA leak investigation is the one that could cause the most damage to the White House.

UNIDENTIFIED MALE:  So how was it?

SHUSTER:  Karl Rove is known as President Bush‘s brain and Rove‘s own lawyers say he remains under investigation despite having testified two weeks ago and could still face charges of perjury. 

The lawyers say the key issue is Rove‘s failure for the first 10 months of the leak investigation, to acknowledge that he spoke with “Time” magazine‘s Matt Cooper about former CIA operative Valerie Wilson. 

A source close to rove said when he testified two weeks ago, he again blamed any misstatements on memory problems.  But according to other defense sources in the case, prosecutor Patrick Fitzgerald has collected evidence showing Rove discussed the Wilsons with several White House officials. 

The indictment of Vice President Dick Cheney‘s chief-of-staff Scooter Libby for example, refers to a Rove conversation with him.  If the issue was whether Rove misled the grand jury intentionally or accidentally, legal experts say a crucial question may be how deeply was Rove involved in trying to undercut the Wilsons.

FREDERICKSEN:  If Mr. Fitzgerald thinks that Karl Rove was heading this up, and especially if he has evidence from officials at the White House of conversations with Rove at the time that Rove had the conversation with the reporter in question, that‘s a bad development for Mr. Rove.

SHUSTER:  And if Rove were to get indicted, GOP lawmakers say that for the White House and the Republican Party already reeling, the ripple effects would be huge. 

(END VIDEOTAPE)

SHUSTER:  The grand jury handling the CIA leak investigation is scheduled to meet tomorrow and Friday.  However, the panel also handles other probes, and there is no indication what they will be focusing on. 

Still, the anticipation is building over the CIA leak case and half a dozen other investigations that have put political leaders across this city on edge.  I‘m David Shuster for HARDBALL in Washington.

MATTHEWS:  Thank you, David Shuster.  That was quite a round table of issues there. 

So what is it all about?  Business as usual or hell in a hand basket here in your nation‘s Capitol.  To answer that question, we welcome Kate O‘Beirne, HARDBALL political analyst and Washington editor “The National Review” and Eugene Robinson, columnist for “The Washington Post.”

Well you‘re two heavy weights.  Weigh deeply into this subject.  It‘s

a sundry list of things.  I mean, they don‘t all relate.  Abramoff and his

sleazy lobbying, all these staffers, people being wired, ratting out their

bosses like Jefferson in Louisiana.  The Safavian guy getting picked up for

some corruption.  You‘ve got the guy who‘s shoplifting at the White House -

or he worked at the White House, he was shoplifting somewhere else. 

Scooter Libby is facing 30 years and Karl Rove is on the block.  What do you make of it?

KATE O‘BEIRNE, NATIONAL REVIEW:  Well the latest of course is the prostitutes poker at all of places, Watergate Hotel. 

EUGENE ROBINSON, COLUMNIST, THE WASHINGTON POST:  Which is perfect.

O‘BEIRNE:  That one is going to, I think, really resonate, you know?  The media is going to love this one.  In fairness to people whose names have been thrown around, it appears that it might only be the late Duke Cunningham, late politically, who might have been directly involved.

MATTHEWS:  But what about this guy Foggo from the CIA?

O‘BEIRNE:  Well in fairness to him, he seemed to be an old high school pal of the contractor who‘s in the middle of things.  And—so the time came for him to leave the CIA, certainly don‘t want him there when any kind a cloud is over him and there are changes happening anyway. 

But I‘m surprised given all of the stuff swirling around, related to Abramoff, that the Republicans seem so unconcerned.  In fact, they came back from the Easter recess and reporting to each other that nobody back home was mentioning the scandals much at all, therefore maybe we don‘t have to do very much, maybe we‘ve overreacted. 

I think that‘s a mistake.  I don‘t think these scandals alone are souring the public mood, but I certainly think they‘re contributing to the discontent, including on the part of some of their conservative supporters. 

And polls are showing that the public by 2-1 trusts the Democrats more to deal with corruption, even though some Democrats have their own problems.  And trust the Democrats more to be the party of reform.  I think that spells trouble for the Republicans.

MATTHEWS:  Do you think, Eugene, that people discriminate among—through these various crimes, they see one guy basically selling out defense contracts, you know, inside influence so he can get some money for his family, a couple million—well, in the case of Duke Cunningham—and maybe score some night with some hooker I guess, it‘s pretty sleazy stuff.  It‘s hard to say it in a nice way.

ROBINSON:  He didn‘t even notice that woman standing on the corner. 

MATTHEWS:  And this guy—this poor guy is obviously sick at the White House, this Claude Allen ...

ROBINSON:  Exactly.

MATTHEWS:  ... who‘s out with this scam at Wal-Mart or someplace like that, where he‘s learned how to turn in stuff he didn‘t buy and get the money back, some sick use of a high I.Q., it looks like to me. 

Then you‘ve got Safavian who‘s the personnel director of the White House.  He‘s arrested practically on the lawn of the White House.  He got Scooter for the big time stuff.

And then you have sort of the street crimes of Cynthia—what‘s her name—McKinney, maybe slamming a cop, and poor Patrick Kennedy maybe slamming into a cop almost.  Do people distinguish among these things? 

ROBINSON:  Well, you know, I think the totality of the scandals—I don‘t know if this is, you know, an all-time record for a number of scandals going on at once, but it‘s probably fairly close.  The totality creates this image of bad behavior in Washington, which I think would tend to sour voters. 

(CROSSTALK)

MATTHEWS:  Absolute power corrupts absolutely?  Do people get to that depth of understanding?  Do these guys have too much power? 

O‘BEIRNE:  Do you know what I think people get?  I think people read about the private planes, the golf outings ...

ROBINSON:  Exactly.  Exactly.

O‘BEIRNE:  ... and the sky boxes and special treatment for a Congressmen, you know, who might be drinking and driving and it contributes to the lifestyles of the rich and famous. 

MATTHEWS:  But 400 U.S. Congressmen and women live in English basement apartments on Capitol Hill, they go home to see their wives either every night or every Thursday night they head home after three days in Washington.  They don‘t live very glamorous lives, do they?  That I know of they don‘t.

ROBINSON:  Duke Cunningham did. 

MATTHEWS:  That‘s why he‘s going to jail for 20 years. 

O‘BEIRNE:  Well, I think there are some number who—some number of them who aren‘t content to live the kind of life that the Congressional salary supports, thus they think, I think, that they think they deserve the hotel suites and golf outings. 

MATTHEWS:  Because they hack around people making more then them.

O‘BEIRNE:  I think there‘s some frustration that they all know 30-year-olds downtown making more money than they are. 

MATTHEWS:  Yes.  Is it partisan? 

O‘BEIRNE:  Oh, it‘s totally bipartisan. 

MATTHEWS:  Do you agree with that?  That‘s a big issue.

(CROSSTALK)

ROBINSON:  I think it is.

MATTHEWS:  Every time I say on this show that it‘s bipartisan, liberal bloggers and other people say wait a minute, the preponderance of evidence here—and I believe it is true—is that the Republicans have abused power more recently. 

ROBINSON:  That‘s true.  The Republicans are in power. 

O‘BEIRNE:  They‘re in power.

ROBINSON:  Therefore, who are you going to bribe?  You‘re going to bribe the Republicans.  You know, they‘re the ones in the position to abuse power, but I think the resentment goes toward ...

O‘BEIRNE:  Yes, it‘s bipartisan.

ROBINSON:  Well, it‘s bipartisan, but I think it naturally, you know, just as bribe money, will go toward the party in power.  So will the resentment.

MATTHEWS:  Here‘s George W. Bush.  No aspersions with him in terms of his personal ethics.  He has a rather, you know, quiet lifestyle.  He goes to bed at 9:30, but he must pick up the newspaper in the morning and say what has my crowd been up to last night, right?  You‘re smiling sort of. 

O‘BEIRNE:  Your point is well-taken.  Now, the vast majority of them know, but it doesn‘t take very many of them to paint Congressional—members of Congress as people who think the world owes them a living and they somehow deserve this. 

MATTHEWS:  This Patrick Kennedy thing is a sad case.  Look, it is a sad case. 

ROBINSON:  It‘s very sad.

MATTHEWS:  And it‘s all over the place as if it‘s some sort of demonstration.  It‘s probably the usual addiction problems a lot of people we know have, too many have. 

We‘ll be right back with Kate O‘Beirne and Eugene Robinson.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘ll back with “Washington Post” columnist Eugene Robinson, and HARDBALL political analyst and “National Review” editor Kate O‘Beirne.

Breaking news by the way now from the chairman of Senate Select Intelligence Committee, Pat Roberts of Kansas.  Senator Roberts says he‘s hoping now to hold confirmation hearings for General Michael Hayden to head the CIA next week. 

He also left open the possibility that General Hayden could be confirmed by the full Senate before the next Congressional recess.  That‘s in late May.  Well, it sounds like that guy is getting very bullish and he‘s the chairman of the committee.  It sounds like this thing is moving in Hayden‘s direction. 

ROBINSON:  Well, yes.  I mean, I see no reason why Hayden won‘t be confirmed despite, you know, what you‘ve heard the last couple of days.  And a lot of it has been coming from the House, so they don‘t get a vote, and, you know, I think he‘ll get through. 

MATTHEWS:  You know, the funny thing is Eugene, your newspaper, the recent Pulitzer Prize-winning Dana Priest reports today that the Intelligence Committee, the spooks on the inside, see this as a scam to get power away from the military, whereas some people were thinking this is going to help Rumsfeld, they think it will pull the rug out from under him.  What do you think? 

O‘BEIRNE:  Well, the experience with the general is that he is an independent thinker, he hasn‘t worked at the Pentagon for years.  If people are looking for a more coordinated, more seamless, intelligence community to take someone who has worked for the director of National Intelligence and move him over to the CIA, it seems to me you‘d be getting that.  He happens to be very well thought of on Capitol Hill. 

MATTHEWS:  OK, let me ask you a final question, perhaps my favorite of the year, certainly this week.  Karl Rove, if he gets indicted for perjury, obstruction, or anything like that this week, is this a big problem for the president? 

ROBINSON:  I think so.  He‘s the person politically most closely allied with the president, identified as the architect of his two victories for the White House.  So I think ...

MATTHEWS:  Does it undercut the president‘s liability?  This is a lying charge if it comes.  That‘s probably what it‘s going to be, a lying charge. 

ROBINSON:  Does it undercut the president‘s personal credibility?  I‘m not sure, but it hurts him. 

MATTHEWS:  Kate O‘Beirne for the defense. 

O‘BEIRNE:  If Karl Rove were indicted, it would be a major problem for the White House, both because it would contribute to this culture of corruption line the president‘s political opponents love.

MATTHEWS:  Wouldn‘t you?

O‘BEIRNE:  ... and it would be a huge loss in an election year, given the enormous role Karl Rove has. 

MATTHEWS:  Because he would be taken out of action? 

O‘BEIRNE:  Right.  It would be a huge problem.  Terribly demoralizing for the White House staff, a big problem. 

MATTHEWS:  It might raise questions about the president‘s own problem with the truth.  Thank you, Kate O‘Beirne.  Thank you Eugene Robinson—if it happens.  We don‘t know. 

Up next, with six months to go to the midterm elections, we‘ll take a closer look at some of the HARDBALL hot races to keep an eye on as Democrats try to win control of the House and Senate. 

Plus, why is Rupert Murdoch hosting a fund-raiser for Hillary Clinton? 

I know.  This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

(MARKET WRAP)

MATTHEWS:  Welcome back to HARDBALL.  There are a lot of hot midterm elections cooking around the country and a lot of potential presidential candidates maneuvering around.  Let‘s break it down with Ed Rollins, Republican strategist and former political adviser to Ronald Reagan and Steve McMahon, a Democratic strategist and adviser to Governor Howard Dean.  Is that your new sort of deal here, you‘re with Dean? 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  I‘ve been with Dean since before it was cool. 

MATTHEWS:  He‘s calmed down lately.  I think you‘ve got something going there.  Let me ask you, why is Hillary in bed with Rupert Murdoch, the head of FOX?  What‘s that deal all about.  He‘s holding a fund raiser for her?  What‘s the deal here?

MCMAHON:  She said yes.  Rupert Murdoch met her, he was so impressed that he came up and asked if he could do a fund-raiser.

MATTHEWS:  He‘s a far right wing Republican, an immigrant from Australia, whose politics are way to the right, he brings the newspapers and TV stations to the right.  Why is he dealing with Hillary who is a woman of the left?  What is it about? 

MCMAHON:  He has significant interest in New York State.  I think it‘s a business proposition for him.  He‘s indicated—

MATTHEWS:  What is she going to throw his way. 

MCMAHON:  I think it never hurts to know the United States senator in your state. 

MATTHEWS:  To what effect? 

MCMAHON:  Well, he‘s got business interests in New York and she doesn‘t have a race and she‘s, you know, she could use his help and obviously she want his help. 

MATTHEWS:  You think it‘s OK? 

MCMAHON:  Senator Clinton has been working across the aisle on issues of common concern with a number of Republican senators who you wouldn‘t expect her to work with.  I don‘t know what the situation is with Rupert Murdoch. 

MATTHEWS:  It‘s clear to me that Murdoch thought up this scam, he did the same thing with Tony Blair.  He loves to cherry pick a lefty once in a while to build his stature.  What‘s going on here?  Is that the way you see it?

ED ROLLINS, FMR. REAGAN WHITE HOUSE ADVISER:  She desperately needs the money.  That‘s why he‘s doing a fund raiser for her.  She only has $40 million in the bank.  The bottom line, it‘s totally irrelevant.  You know, obviously, it‘s just one more businessman who basically is willing to play whatever side they think is going to win and I think that‘s, you know, if that‘s what side he wants to play, so be it. 

MATTHEWS:  Is he going to start serving up the Kool Aid over at Fox? 

ROLLINS:  That will be a tougher sell to his analysts over there.

MATTHEWS:  I think Roger Ailes may choke on any of the Kool Aid over there. 

ROLLINS:  I can‘t imagine Roger wearing an I Love Hillary button. 

MATTHEWS:  Do you think this may turn the conservative network? 

MCMAHON:  I never thought that Rupert Murdoch would be doing a fund raiser for Hillary.  But strange things happen in politics.

MATTHEWS:  He did the same thing with Tony Blair in Britain, he took a liberal who was moving to the center and endorsed him in the way that suggests he was a king maker.  Does he think Hillary is going to win? 

MCMAHON:  Absolutely.  Everybody thinks Hillary is going to win.  I don‘t think most people can name Hillary‘s opponent.  People who live in New York State. 

MATTHEWS:  You‘re talking about the Senate race. 

MCMAHON:  He‘s indicated that this is a fund raiser for her Senate race and not an indication of support for any presidential campaign. 

MATTHEWS:  Let me ask Ed, you follow politics.  Ronald Reagan had a bad run with the recession back in 1982, 1983, and came back like gang busters in 1984 to win.  I think he gave Mondale Minnesota, right?

ROLLINS:  They stole it, 3200 votes, they stole it, I‘m not bitter. 

MATTHEWS:  This president seems like he‘s—I don‘t want to say point of no return, because just when you predict American politics, it has a wonderful way of flipping back on you.  Do you think the president has a problem now he just can‘t resolve, 31 percent in the polls?

ROLLINS:  And dropping.  The sad part is, there‘s now conservatives and Republicans are moving away from Democrats who have obviously been polarized against him from day one, but you‘re now starting to see an erosion among Republicans and I think that makes it extremely difficult to get back up.  Any president in modern times, and there‘s only been one other two term president who has ever gone this low and that‘s Nixon, you just don‘t get back up. 

MATTHEWS:  Steve? 

MCMAHON:  I think Ed is right. 

MATTHEWS:  You don‘t think he can go back? 

MCMAHON:  Absolutely not. 

MATTHEWS:  If we get attacked again, or something really bad.  He handles it well. 

MCMAHON:  If there‘s a terrible catastrophe like that, then perhaps there‘s a chance, but I‘m talking about if you just look out at the political landscape today and you look at the summertime that‘s coming, gas prices are likely to go up as they do every summer and you can track a lot of this recent decline to gas prices and to the general state of the economy, which the Republicans keep saying is doing really well, but most Americans feel like it‘s not really effecting them or benefiting them very much. 

ROLLINS:  Everybody in New York is sitting around today talking about

re going to break 1200 in the market and the vast majority of blue collar

workers out there is worrying about gas hitting $3.50 a gallon.  To a certain extent, even though the economy is booming, this president is not getting credit for it. 

The sad part for this president is this now comes down to a question of competence, and I think people, because of Katrina, because of the unpopularity of the war, don‘t think they can get their act together. 

Republicans are going to run away from him in this election and go out try to do every man for themselves and I‘m not quite willing to predict that it‘s going to be quite the disaster that everybody thinks it is. 

MATTHEWS:  Who gets the Reagan Democrats, because you championed those people in the 1980‘s?  Who gets the Reagan Democrats this time, Ed?

ROLLINS:  A lot of the Reagan Democrats have become Republicans and to a certain extent, particularly the Southern ones.  The critical test in a midterm election like this is does your side turn out and vote?  Are Republicans, you know, 10 percent, 15 percent kind of disgusted with the fiscal policies of the House Republicans, Senate Republicans and say why bother?  Certainly Democrats are going to turn out in intense numbers, so we have to basically get our base back motivated again.  Historically, independents have not participated in the same number they do in presidential. 

MATTHEWS:  I agree.  I grew up in a cloth cut Republican family, and they voted Republican because they believed in fiscal responsibility.  They believed in the government, they believed—not in the government, they believed in the country, very patriotic obviously, and I got the feeling—you must say that those people must be wondering why are the stock market values going so high and I don‘t have much in the market and my gas prices keep getting higher and I‘m commuting 50 miles a day and I‘m paying a lot of money out. 

MCMAHON:  That‘s exactly what‘s going on. 

MATTHEWS:  The cloth cut Republican must be really depressed. 

MCMAHON:  The Republicans have taken the Reagan Democrats and made them Republicans on the strength of these kinds of economic issues and the perception that cutting taxes is going to grow the economy where they live.

MATTHEWS:  But your party hasn‘t done jack. 

MCMAHON:  Come on, Chris.  That‘s not true. 

MATTHEWS:  What have they done?

MCMAHON:  Our party first of all doesn‘t control any branch of government and the Republicans in Congress won‘t let any of the Democratic alternatives come up for a vote.  So regardless of whether it‘s health care for every American, which there are bills in congress to do or actions that might result in lower gas prices faster than what the president and Republicans are talking about, the Republicans in Congress simply won‘t let it come forward.  And the message the Democrats have to carry is, we have the alternatives, the Republicans are blocking them and if you want to get those alternatives heard and voted on, you‘re going to have to send a Democratic Congress to Washington in January.

ROLLINS:  The problem the Democrats have is they have no charismatic leader and every time I look at Nancy Pelosi and watch Denny Hoyer (sic) --

Steny Hoyer sitting next to her, I‘m grateful that she‘s in the chair and not him.  He‘s a very smart, articulate Democrat, but I think the problem is with Reid and Pelosi, they can‘t articulate a message.  And even if they had one, they can‘t go to the public and convince people.

MATTHEWS:  You know, Ed, I agree with that in a sense, I think.  Who would you, in your party, if you had 15 minutes on Jay Leno, a regular public—not a public affairs, but a regular entertainment show, put a person on that show for 15 minutes to say what the Democrats stand for.  I want you to think about that during the break, who you‘d put on. 

We‘ll be right back with Ed Rollins and Steve McMahon.  We‘ll have Ed McMahon in a minute.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Republican strategist Ed Rollins and Democratic strategist Steve McMahon.  The whole question of the two parties right now going in to this election, but first of all I want to have some fun here before we get to the big picture stuff of where they really do disagree about foreign policy and other issues.  Katharine Harris, what do you make of her, Ed Rollins?  Is she a person—you worked for her down there for awhile, can she win that election against Bill Nelson and win that Senate seat down there?

ROLLINS:  Unfortunately, Katharine can‘t and I don‘t say that because I worked for her and to longer work for her.  She‘s gone backwards in the last six months, where she was 1.9 points behind, she‘s 30 points plus behind. 

The governor is against her now, the White House wants someone else and I think there will be another candidate in there by the end of the week and then I think it becomes a competitive race.  If she‘s in the race, it‘s not a competitive race.

MATTHEWS:  Is she all right?

ROLLINS:  I don‘t think so, Chris, being perfectly honest.  And I‘m not a psychiatrist, but you know, her father, who she was very close to passed away in February.  I think she had higher expectations that people would come out and support her, that didn‘t occur and I think she‘s been kind of in melt down for a three or four month period.  She‘s a very nice person, but I think to a certain extent, I‘ve seen a real destructive process in which she got rid of most of her congressional staff and campaign staff and a lot of turmoil.

MATTHEWS:  How did she get elected to the House if she‘s out of it?

ROLLINS:  Well, it was a district that was drafted for her and she barely won it and I think at the end of the day, you know, she thought about running two years ago.  She thought some promises had been made to her when she stepped aside.  And I think she had great expectations. 

I just want to say one thing to Steve, who didn‘t know who Hillary‘s opponent was and I say this because I‘m involved.  There‘s a great candidate named K.T. McFarland who was a Defense Department expert during the Reagan area.  And if she gets in this race and wins sufficient to be the primary opponent, it will be a very interesting race. 

(CROSSTALK)

ROLLINS:  Well, it doesn‘t matter.  It would be a very interesting race.  New York, it‘s a media state and she‘s extremely articulate on armed services and terrorism issues and it will be an interesting debate.

MATTHEWS:  OK, I‘ve got to ask the question I promised to ask.  First, Ed, you‘ve teased me here.  What‘s the one line you would say why K.T. is better than Hillary for New York?

ROLLINS:  Well she understands the homeland security, she clearly understands the issues that matter to New Yorkers today.  And I think she would be extremely effective.

MATTHEWS:  She‘s smarter than Hillary, you‘re saying?

ROLLINS:  Well I‘m not saying—Hillary‘s pretty smart, but this woman went to Oxford, studied nuclear weapons at MIT, was very much an architect—part of the Weinberger team, architect of the message that sold the Cold War.

MATTHEWS:  Steve McMahon, who would you put on national television.  Let‘s say Jay Leno, just to be an NBC person—would you put on just to have a casual conversation with the American people about why they should vote Democrat this fall, one name?

MCMAHON:  Bill Clinton.  I mean, anytime I hear Bill Clinton articulate the meaning of being a Democrat, I wonder why every Democrat in America doesn‘t articulate the same way he does. 

Nobody ever did it better.  It‘s possible that nobody ever will do it better.  But there are a lot of good spokespeople in the Democratic Party who could sit down on that couch, I could name a number of them for you.

MATTHEWS:  I don‘t want to hear that list, because I think it‘s shorter than you think.

MCMAHON:  But you have to admit that Bill Clinton could do it better than anybody in the whole world.

MATTHEWS:  I agree he‘s a charmer, of course Jay Leno would make jokes about his past with Monica and everything else and it would all come up with it.

MCMAHON:  He would laugh right along with Jay Leno.

MATTHEWS:  About Monica?

MCMAHON:  He would bring it right back to the message of what it means to be a Democrat and why it‘s so important for people to send a new Congress next January to Washington.

MATTHEWS:  What‘s Monica got to do with being a Democrat?

ROLLINS:  Steve, unfortunately we don‘t get to live in the past and Bill Clinton is the past, as is Carter, as is Reagan.  And I think to a certain extent, we have to pick new leaders who can articulate the message.

MATTHEWS:  Who is the future of the Republican Party, Ed Rollins?

ROLLINS:  I beg your pardon?

MATTHEWS:  Who is the future of the Republican Party?  Give me a name.

ROLLINS:  I think like young John Sununu, I think Chuck Hagel, I think Senator Coleman from Minnesota.

MATTHEWS:  OK, how about the near future?

ROLLINS:  Well, you know, obviously, the two parties have front-runners, Hillary Clinton is the front-runner according to polls, we have McCain and we have Giuliani.

MATTHEWS:  You think McCain is—is McCain seen as a Republican by Republicans?

ROLLINS:  More and more so, but I think the bottom line on that and  the point I raise is all three are leading in the polls, can raise tremendous sums of money, but all three have to go win this thing and that‘s a big hurdle.

MATTHEWS:  What would excite you again about politics like the way you were when you were a kid, would it be Giuliani being president?

ROLLINS:  I think Giuliani—if it‘s about leadership, I think he could be a very tough, effective leader.

MATTHEWS:  OK, I love to excite people with Giuliani just for the hell of it.

MCMAHON:  How much trouble do you think he‘d have in a Republican Primary dominated by conservatives when supports gay marriage or when he supports gay rights and he‘s pro-choice.

ROLLINS:  If that‘s the issue, Steve, just as—when you try to find a centrist and that‘s a tough...

MCMAHON:  ... Ed, your party has made it the issue.

MATTHEWS:  OK, you know what the best case for Giuliani is?  Hillary.

Thank you and thank you, Ed Rollins.  Thank you, Steve McMahon.  Coming up, former secretary of state Madeleine Albright is coming here and she admits now she underestimated the role of religion.  We talk about Islam, Christianity, Judaism, she‘ll be here to talk to you about that, next.  Plus, how she would handle the war in Iraq and nuclear ambitions over there in Iran right now.  Tricky questions coming back.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

With U.S. troops still stuck in Iraq, with the Bush administration putting pressure on Iran and with genocide still rampant in Darfur, the United States faces big decisions of war and peace.  But can a country of crusaders, so-called, mend the Middle East?  Do Arabs believe the U.S. is on a mission to spread a western way of life? 

Here to answer some tough questions is former secretary of state Madeleine Albright.  She‘s the author of the new book, “The Mighty and the Almighty: Reflections on America, God and World Affairs.”   

Madame Secretary, thank you very much for joining us.  Is this getting worse?  I remember hitchhiking around the Middle East and Egypt and the with West Bank of Israel—of the Palestinian Territories—and back 30-some years ago I didn‘t feel any animosity, any problem with the Arab world as an American.  Is it getting worse? 

MADELINE ALBRIGHT, FRM. SECRETARY OF STATE:  I think it is getting worse, because we are viewed as occupiers or purveyors of a sense of modernism that is seen as vulgar and intrusive upon culture and religion.  I think the unintended consequences of Iraq is something we will be living with for a very long time. 

MATTHEWS:  What about the cultural front, the religious front.  As I was hitchhiking around, not with much money coming back from Africa in the Peace Corps, people would say, you know John Wayne, kids on the street, they loved our culture, the kids did.  How does that work against us now over there, movies and things like that? 

ALBRIGHT:  Because they‘re seen as violent and very vulgar and they are viewed as an imposition of a foreign alien kind of society and culture on people who want to push back.  And also because I think that what is viewed more and more is as if Muslim religion and Arab culture is not afforded any kind of respect and dignity.  Then it goes along with the idea we are now an occupying power. 

So all these things going together, plus the kinds of things that happened in Abu Ghraib and happening in Guantanamo are really very difficult in terms of the way America‘s is being viewed in the Middle East. 

MATTHEWS:  Are the other people on the other side right.  If you look at a map of the Middle East, we‘re in Afghanistan, we‘re in Iraq.  We‘re looking out for Israel all the time.  If you look at the map, and some of the more conservative Arab countries like Saudi and Jordan, if you look at a map of the Middle East, it looks like we‘re owning the territory and we are a threat if you look at it from their perspective. 

ALBRIGHT:  That‘s what they see.  And they see as democracy as being imposed as something that is alien.  While I happen to believe that the area is certainly can and should be Democratic, it has to be done in a way where we are supporting what‘s going on internally, rather than having an American perspective of how this should be done. 

I hate to keep returning to the same thing, but I think Iraq is incredibly damaging to our reputation and I have said in my new book that I think it may end up being the worst disaster in American foreign policy. 

MATTHEWS:  Why did we go into Iraq? 

ALBRIGHT:  I don‘t know.  I think that‘s the question.  I mean, it is unsubstantiated intelligence and now we‘re dealing with unintended consequences.  So we have very serious problems of trying to explain why we went there.  And the fact that there was no really effective post-planning.  And what worries me the most is that the country that has gained a lot out of all this is Iran. 

MATTHEWS:  You know, growing up we‘ve all watched the decolonization of the world, you and I, we saw it through the 1950‘s and 1960‘s, where the British and French and everybody else, the Ottomans before them, became hated by people who were colonized by them.  Why did we think we wouldn‘t be hated after we invaded a country like Iraq? 

ALBRIGHT:  Because I think people were into circular discussions, saying we are saving Iraq and we would be welcomed as liberators, without understanding fully the cultural and religious aspects of what was going on there.  And that the way we did it was something that engendered animosity. 

I find it very peculiar that we were not able to get assumptions on the table that might have questioned the certainty with which this administration thought they were going to be rewarded for going into Iraq. 

MATTHEWS:  Did anyone in this administration know what you know now about an understanding of about why the Islamic world may hate the invader, seeing us as crusaders, European colonists?  Was there anybody in the administration who could say to the president, the problem with your idealism, Mr. President, is it‘s misplaced.  You‘ll be idealistic in your heart.  What they‘ll see over there is just another western invader? 

ALBRIGHT:  I think the question is who actually would have said something like that.  Because I do think the president, after 9/11, was very careful in his vocabulary.  I think a couple times he said something about crusades but he was careful, went to a mosque, tried to be respectful of Islam.  And then I think there began to be a circular belief that what he wanted to do was the right thing to do.  That they were the evildoers and I think it was self-reinforcing assumptions.

MATTHEWS:  It‘s great having you on.  Madeline Albright, former Secretary of State, your new book is called, “The Mighty and the Almighty.”  It‘s about religion in the world.  It‘s getting more important.

Right now it‘s time for “THE ABRAMS REPORT.”

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

END   

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