updated 8/14/2006 11:34:31 AM ET 2006-08-14T15:34:31

Guests: Fran Townsend, Charles Rangel, Dan Lungren, Anne Kornblut, Terry Jeffrey, Roger Simon, Amy Goodman, Heidi Harris

CHRIS MATTHEWS, MSNBC HOST:  Debate in a time of war.  Who‘s telling the truth, the president who says his war in Iraq is killing the number of terrorists, or critics who say killing Arabs on worldwide television makes Arabs and other Islamic people hate us enough to die?  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews, and welcome to HARDBALL.

More details emerged today in the thwarted terrorist plot to kill thousands of people aboard airplanes headed for the U.S. over the Atlantic Ocean.  We now know the names of 19 of the men arrested, all British nationals. 

A Bush administration official tells NBC News that the mastermind of the plot was apprehended earlier in the week, and intelligence officials say the planned attack was set to happen just days from now.  Late today, I talked to Fran Townsend, who serves as assistant to President Bush for homeland security, and counterterrorism. 

(BEGIN VIDEOTAPE)

MATTHEWS:  Fran, thank you for joining us right now.  I can hear that construction going on, on the lawn right next to you, but we‘ll try to work beyond it. 

FRAN TOWNSEND, W.H. HOMELAND SECURITY ADVISOR:  OK.

MATTHEWS:  Let me ask you about this whole question of national security.  Does of the president feel that he has the weapons he needs, the instruments he needs, to protect the country? 

TOWNSEND:  Chris, he absolutely felt that he did and, in fact, we were asking that question as we were going along.  Did we have the tools we need and were we deploying them appropriately?

The fact is, you know, I‘ve been doing this for over 20 years, and it was amazing to watch the inter-agency coordination, our bilateral coordination with our British allies.  Without all those tools—the Patriot Act and all the tools we use—we couldn‘t have helped the British and helped to thwart this plot. 

MATTHEWS:  Well, the word swirling around—correct me if I‘m wrong -

well, I don‘t even know if I‘m right, that there was use of phone taps in Great Britain to capture these guys. 

TOWNSEND:  Chris, as you can well imagine I, for sensitivity, sources and methods reasons, I can‘t confirm or deny what sources, either the British or we, used.  I will tell you this.  We put every tool at our disposal into use to help our British colleagues. 

But this really was a British investigation for the longest time.  We didn‘t see an American threat.  It was only recently we developed the American angle working with our British colleagues, but this was really a British threat, and the British did an extraordinary, extraordinary job in investigating it. 

MATTHEWS:  The reason I ask this, is there seems to be this course, a political argument, that the people who‘ve opposed giving the president authority with regard to NSA surveillance or the SWIFT program, have hampered his ability to detect criminality or danger to our country in a way that the British are not hampered. 

TOWNSEND:  You know, Chris, I‘m not—I find given that we had thousands of Americans at risk when they‘re traveling from the U.K. to the United States, I‘m not going to get into a political discussion.  I just don‘t think for me it‘s appropriate. 

My job is to make sure that the inter-agency process here in the U.N.  government is working well, and that we are working to support our allies, and they are working to support us—our allies—around the world.  That‘s what we did here and it was successful. 

MATTHEWS:  What do we know that you can tell me about the plotters? 

TOWNSEND:  Well, what we know are these were British citizens, most of them, and we‘re looking at their contacts, both inside Great Britain and outside.  As you know, Director Mueller is running down leads in the United States.  We don‘t have any evidence that there was a cell—an operational cell here, but as you can imagine, we‘re running leads both here and with our allies around the world. 

MATTHEWS:  Many people suspect that bin Laden is hiding in Pakistan. 

Do we know of any connection between bin Laden and these plotters? 

TOWNSEND:  As you can imagine, Chris, that‘s the big question right now.  We know that the plot has a lot of hallmarks of al Qaeda:  multiple, simultaneous attacks, attacking the air sector, a big spectacular, lots of casualties, big economics consequences for the United States, and so it has all the hallmarks of it. 

What we‘re looking at now—we don‘t want to say that until we‘re sure and we‘re looking for those very ties as we speak.  We‘re looking at travel and finances, we‘re looking at communications and training, all those things will give us an indication of whether or not al Qaeda was behind this. 

MATTHEWS:  The other day, in the airports in America, the TSA began to check for different kinds of fluids people carry with them—jellies of all kinds, home products, disinfectants, perfumes, cosmetics, baby milk—all those were confiscated.  Why did we begin to do that now and not several weeks ago when we became aware of this plot? 

TOWNSEND:  Well, whenever you have an investigation going on, Chris, there‘s a constant balance between we want to get as much intelligence as we can without putting at risk American lives. 

And so what the problem there, the tension, the national tension there is, if we do things that are overt, we may tip to the bad guys our hand, that is, let me know we‘re investigating them, and by doing that, lose the investigative opportunity to understand how they‘re trying to hurt us.  It‘s a constant balance.  We never put safety at risk, but we‘re constantly evaluating that tension. 

MATTHEWS:  So the decision was made that it was better to allow the investigation to continue to catch these people than to possibly alert them that we knew what their M.O. was?   

TOWNSEND:  That‘s exactly right, and you can imagine, it‘s not as though we weren‘t doing any screenings.  We did—we were doing sort of the—we were screening hand baggage.  We were doing all the things we normally do to detect explosives and other materials. 

We just didn‘t want—if we did anything new that could be seen visibly by the public, we were afraid it would also be visible to the bad guys and we wouldn‘t learn more about what their plot was.   

MATTHEWS:  Could we find ourselves in a situation where it becomes infeasible to detect weaponry coming aboard planes? 

TOWNSEND:  Well, it‘s difficult to say.  What we try to do, Chris, is stay one step ahead of them.  That is, if they have adapt their weapons that they want to use against us, we adapt both our investigative tools and our screening methods at airports, and so far today, really this plot is an example of the success of our efforts. 

MATTHEWS:  Is it more important to continue to look, as we have done since 9/11, for metal objects or possibly dangerous liquid products that could be exploded when they‘re put together or do we have to begin to focus more on the people themselves and their motives? 

Can we find out when four or five people get on a plane who have this killer decision about the United States, that they want to die to kill us, is it important that we find out them before we find out what they‘re carrying aboard? 

TOWNSEND:  You know, it‘s not an either/or, I don‘t think.  I think we have got to try and find out both.  Sometimes, it‘s easier to uncover a plot by looking for the weapons, but we‘re every day looking to identify the individuals and the motives that they have in order to try and capture them. 

MATTHEWS:  The reason I ask that is because I know you have to make these decisions in the administration about whether nail cutters are a dangerous—you know, a regular butter knife, and yet in the hands of a pro, almost anything I think—could be a rope, a belt, you could strangle flight attendants, obviously with a belt.  I‘m not telling them anything.  How do you know where to draw the line between what could be used as a weapon and what is outright created as a weapon? 

TOWNSEND:  Well as you know, Chris, TSA has refined its screening methods over time, recognizing the very thing that you‘re saying.  We now allow people to take small pairs of scissors on or nail clippers, because we don‘t think that the risk is that great. 

We‘ve heard Secretary Chertoff talk, over time, about risk management.  And that‘s really what the heart of your question is about.  We have to manage the risks and understand what things really do pose a threat when they‘re in the hands of bad guys. 

Sometimes that means taking things away that are ordinary objects that are an inconvenience to average Americans, but we have to understand the protective value of doing that is most important, because we can‘t take the risk of another 9/11. 

I mean, let‘s be clear.  This plot emanating out of Great Britain was intended, by the bad guys, to be a second September 11, and we can‘t ever have ourselves in a position where that tragedy could happen a second time. 

MATTHEWS:  You‘re right.  It‘s truly horrible what they had in mind.

Let me ask you about the commercial possibilities.  Every time something goes wrong in the world, people say, well, at least there‘s a commercial opportunity here. 

Are we going to have a situation say in a few months from now or a year from now where you can go to an airplane, you can go through security and on the other side of security, if you‘re a mother feeding a child, an infant, you could get a $5 bottle of baby fluid or something like that or you could get a $5 water bottle that‘s already been cleared by security.

Are we going to be in the business of having to basically take—buy after we get it through with security, those products we often have carried in the past in carry-on? 

TOWNSEND:  You know, first we have to get through this initial period, and we‘ve taken very strong measures of that, not letting anything come through—liquids come through the security area.  And we don‘t even let things from the sterile area that you‘re in go onto the plane.  We‘re going to get past that, and we have to look at how we can refine the screening measures. 

I‘ll tell you, Chris, we‘ve already made exceptions for baby formula and medicine, so that people can bring those to the airport and get them prescreened, so they can get them on.  But we‘re also going to have to look at the practical aspects of is there way that we can further kind of refine our methods to allow a baby sippie cup—I mean, I have got two kids.  I know that they‘re not going to part with the sippie cup.  We have got to find a way to get that through. 

MATTHEWS:  Let me ask you about the hardest part of your business, and our concern as Americans and everybody in the world.  You know, when I‘ve flown a couple of times on Israeli airplanes, on El Al—and I talked about this last night—they are very thorough in interviewing you. 

They ask all about you.  They ask—as I said one time, they asked me when I was in Israel, 30 some years ago, why are you bringing a typewriter?  Are you writing something about us?  Are you going to write good stuff?  Very invasive questions, and obviously if you look Islamic or Arabic, they‘re going to be a lot tougher on you.  Will we get to the point where we have to go through interviews to try to establish our innocence? 

TOWNSEND:  Well you know, Chris, I think that there are measures short of that.  It‘s not clear to me that that‘s what we need to be doing.  I‘ll tell you, if I thought it was, I would be making the argument to you.  I don‘t see that.  There are all sorts of methods that are used by other governments around the world:  behavior recognition, and behavioral patterns.  We‘re training people at TSA to do that now.  So we‘re looking for people who are exhibiting suspicious signs and suspicious behavior, so we‘re focusing on those people and not on, as you point out, the children and the sippie cups. 

MATTHEWS:  The president was so clear the other day about Islamic fascism.  Fascism is an ideology, Islam is a religion.  Islam is also, to a large extent, as we all know, an ethnic background.  Are we going to have profiling, if that‘s going to be the new language of the president? 

TOWNSEND:  You know, Chris, there are a lot of perfectly law-abiding citizens and we have to really look at how effective do we think profiling would be.  My concern about profiling is, the minute the bad guys understand what it is we‘re looking for, they move.  We know Khalid Sheikh Mohammed was concerned that after September 11, we would be giving extra scrutiny to young Arab males, and so what he was trying to do was recruit people from Asia, so they didn‘t match that profile. 

We‘ve got to be very careful.  There are limits to what even profiling, appropriately done, can produce and there‘s a real vulnerability for us. 

MATTHEWS:  Can you have maintain that discipline in the face of increasing evidence that the people who are committing these atrocities, or trying to commit them, are in fact from that background?  Can you just close your eyes to that fact and focus as much on the elderly lady from Omaha as you do on the young Islamic guy from Pakistan?  I mean, can you maintain that pretense that it isn‘t a danger that comes from another part of the world, and not from our own? 

TOWNSEND:  No.  It‘s not—it‘s not maintaining a pretense.  I don‘t worry about the little old lady from Omaha and I venture to say that if you were talking to TSA screeners and security professionals at airports, they would tell you the little old ladies from Omaha are not getting the same amount of attention as those we know are trying to do us harm. 

We do look at factors about travel and where people are coming from, where they‘ve been, to assess how much attention to be paying to them. 

MATTHEWS:  It‘s great—Fran, you‘ve been very cooperative coming on HARDBALL like this.  I know this is a very hard time, and it‘s great to have you on with all this information.  Our viewers, I know, are sucking it up right now.  It‘s great to know.  It‘s horrible, but it‘s necessary to know.  And you‘re great to come on, and I hope that tractor operator can start up now and get the job done. 

Thank you very much.

TOWNSEND:  Thank you, Chris.  Great to be with you. 

MATTHEWS:  Coming up, how does the foiled terror plot change the political debate over national security?  Can Republicans hold on to Congress by talking more about terrorism now and less about Iraq? 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  It didn‘t take long for political shots to be fired in the wake of the failed terror plot.  We go now to Democratic Congressman Charles Rangel of New York and Republican Congressman Dan Lungren of California.  Mr. Rangel and Mr. Lungren, the same question to both of you.  Are we reducing the threat of terrorism by fighting in Iraq or increasing it, Mr. Rangel? 

REP. CHARLIE RANGEL (D) NEW YORK:  I like to quote Rumsfeld, who said that he didn‘t know whether we were creating more terrorists than we‘re killing.   And I think that the terrible way in which we have gotten involved in Iraq, have no clue about how to get out, inability to have any diplomatic policy, that we got young people who are Islam but of course have now found that people are being killed, and they are being recruited to do this terrorist work. 

So we‘ve created an atmosphere, not of diplomatic resolution of this

problem, but thinking that we can bring peace and freedom at the end of a

rifle.  And it‘s not working,

MATTHEWS:  Your answer, Mr. Lungren?

REP. DAN LUNGREN ® CALIFORNIA:  Well, we weren‘t in Iraq when we lost 241 marines in Lebanon, Khobar Towers, U.S. Cole.  I don‘t think we need to do anything to radicalize these elements of Islamo-fascism, who are bent on killing Americans.  You can argue—

MATTHEWS:  In each case, Mr. Lungren—in each case, sir, we were in the country where we were killed.  You say it wasn‘t because we were in an Arab country, we were in Lebanon, we were killed by the Lebanese, we were in Saudi Arabia when we were attacked.  And Saudi Arabia, some believe, was the trigger to bin Laden, who was in Saudi Arabia when we had 10,000 troops there. 

LUNGREN:  If you‘re going to argue that we‘re the ones that are radicalizing the Muslim world, I happen to disagree with you. 

MATTHEWS:  What is radicalizing them? 

LUNGREN:  This has been a commitment on the part of these radical elements for some decades.  They don‘t need any excuse.  The Fatwa that was published in 1993, specifically called on them to kill Americans anywhere in the world. 

You know, I frankly—look, we can argue about whether we‘re in Iraq

I would just say this:  We argued about whether we should be in Vietnam. 

Huge difference between that and now is, when we left Vietnam, they didn‘t come after us.  We leave in Iraq in a way that indicates that, if they just stay a couple of years and do their best to try to kill as many Americans as possible, we will leave, I think that incites them, if anything does, to do even more than they‘ve already done. 

RANGEL:  Let‘s get out of Vietnam, Dan.  We‘re talking about Iraq, and we‘re talking about Osama bin Laden.  He was the one that was supposed to be connected with al Qaeda; it wasn‘t Saddam Hussein.  There was no weapons of mass destruction, there was no attack on 9/11, 15 out of 19 people came from Saudi Arabia.  And now we‘re asking you or the president the question, what the heck are we doing in Iraq?  What does it take to get us out?  And if these people have had differences for thousands of years, what makes Americans so capable of resolving a civil war?

Why isn‘t Egypt involved?  Why isn‘t Saudi Arabia involved, and Jordan and the rest of the Arab countries?  We have no clue as to what we‘re doing there. 

LUNGREN:  Why don‘t we look at what the people in al Qaeda have to say in the document of October, when we had the number two to Osama bin Laden writing to their number one guy in Iraq, indicating that the first direction that they wanted to go was defeat us in Iraq, and then they would move forward in their global commitment.  Now that‘s what they are saying. 

RANGEL:  Saddam Hussein—

LUNGREN:  That‘s what they are saying.  Listen to what they have to say. 

RANGEL:  Saddam Hussein was on al Qaeda‘s hit list.  So what are you saying, Dan?  You know that Saddam Hussein was not a part of al Qaeda. 

LUNGREN:  No, here‘s what I‘m saying.  In 1993, we did not pay attention to the Fatwa that they delivered to the world, saying that they were declaring war on us.  Last October, we—

MATTHEWS:  Who is the they, sir?  Can you help us with the names?  Who issued this Fatwa? 

LUNGREN:  Osama bin Laden did. 

MATTHEWS:  Who is from, he‘s from Saudi Arabia, right? 

LUNGREN:  Osama bin Laden issued it.  It was not specific to a particular country.  It was a trans-national request for all of those that were committed to the radical view of Islam to kill Americans. 

RANGEL:  Get us back to Iraq.  What‘s that got to do with Iraq? 

LUNGREN:  Because the document that we captured from Osama bin Laden‘s number two guy to their number one guy in Iraq, specified exactly what they were going to do and they talked about a defeat for America in Iraq, being the number one step that they were going to take.  All I‘m saying is that we should listen to what they are saying and if someone tells you they‘re going to kill you, you ought to pay attention to it.  That‘s what I‘m saying.

MATTHEWS:  How do we defeat radical Islam?  So you called it Islamo-Fascism.  That‘s the new term the president began to use the other day.  What does that term mean exactly, Islamo-Fascism? 

LUNGREN:  Well, I‘ve been using it for six months or nine months.  I didn‘t wait for the president to use it.  It talks about the tactics that they are using.  This is not Islam, it is a radical form of Islam.  It is a minority of Islam.  But they are acting as if they are a nation religion in the effort to turn all of their activities towards the destruction of those who disagree with them.  They are against us because of the system that we have.  That‘s why I call it Islamo-Fascism.  It‘s not a war on terrorism. 

MATTHEWS:  Would you include Hezbollah in that group?  Would you include Hamas?  All the people who are enemies of Israel, are they also enemies of ours?  Are they also fascist because they have a dispute with Israel?  What are they, anyone against us is a fascist now? 

LUNGREN:  No, I didn‘t say that. 

MATTHEWS:  Well tell me who is and who isn‘t.

LUNGREN:  I would say Osama bin Laden is.  I would say that Hezbollah in their action against Americans in the past.  I would say others that are affiliates of Osama bin Laden‘s operations.  I don‘t have any problem, look, I have a problem with saying we have a war on terror.  Terror is a technique that is used.  It is not the enemy.  We ought to identify the enemy.  Who is out there killing us?  Who is out there with these plots? 

RANGEL:  Who‘s killing us?  You take Islamic and you call them fascist.  You call them radical.  You never called Hitler a Christian-Fascist.  You know, this is insulting to an entire religion. 

LUNGREN:  No it‘s not at all and that is absolute nonsense to say that. 

RANGEL:  The Islamic community ought to resent the fact that you can‘t talk about terrorist murders without identifying religion and an honorable religion.  We have Christian killers, we have Jewish killers and we never identify them by religion and this is wrong to do. 

MATTHEWS:  Gentlemen, I have to break.  When we come back, I want you to talk about this whole issue of whether the president has the power to fight terrorism or whether he needs more power to tap phones and things like that.  Apparently that‘s what the British did to crack this plot. 

Coming back, we‘re going to have more on how this heightened terror alert over terrorism could shape the midterm elections.  We‘ll talk the politics but also the safety questions about this country.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with Congressman Charles Rangel of New York and Congressman Dan Lungren of California.  Congressman Lungren, let me ask you to sort of elucidate what the president was talking about yesterday.  He talked the country being divided right now between those who see terrorism as a threat and those who don‘t.  I presume he‘s talking about these issues of surveillance, of wiretaps, of civil liberty objections to forceful efforts to try to protect this country.  What do you think he meant? 

LUNGREN:  Well, I think he was referring to the fact that it‘s difficult when you‘ve had a period of five years without a successful terrorist attack of any significance in the United States to continue the support for the efforts that are necessary to battle those.  And I think he‘s referring to the fact that it took us nearly 12 months to have an extension or to make permanent those provisions of the Patriot Act that were temporary.  If you‘ll recall, after our effort to do that initially was defeated in the you state Senate, the leader in the United States Senate on the Democratic side went out to a rally and gushed about how they had defeated the Patriot Act.  Now later we have came back and the Senate thought otherwise, and came back and supported that, but the fact of the matter that it took us that period of time to pass it, after we had had very, very intensive oversight, I think is one indication of that. 

MATTHEWS:  Mr. Rangel? 

RANGEL:  You would believe that with the president‘s complete disregard of the law, that the delay in approving the Patriot Act wouldn‘t have bothered him at all.  I think this administration wants to make certain that the executive branch of the government is superior not only to the Supreme Court, but more importantly, to the Congress.  And they‘re not satisfied with the laws that we have passed, that they‘re supposed to abide by.  The president says he‘s the commander-in-chief, he can do these things and he can‘t explain to us why he violated the Federal Intelligence Surveillance Act because that would then make our national security be threatened. 

LUNGREN:  Chris, there could be no better example of what the president said than Charlie Rangel‘s comments just then.  The fact of the matter is, even when the Carter administration came before the Congress asking for the FISA Act, their attorney general at that time Griffin Bell said that this could not in any way compromise the power given to the president under the constitution to act in these areas.  To then say blithely, as Charlie does, that the president violated the law, shows a misunderstandings of the beginnings of that law and the constitution and the federalist papers when they talk about the powers of the president, vis-a-vis the Congress and the Supreme Court in matters of intelligence against a foreign enemy.  This nonsense about the president violating the law is nothing but nonsense.  And exactly what you said is what the president was talking about Charlie.

RANGEL:  Your interpretation of the president‘s powers means that he can do anything that he wants, and if the legislative branch was to ask him questions as they—as Attorney General Gonzales, the answer would be, we do have a reason why we didn‘t abide by the federal law, but we can‘t tell you because it would violate national security. 

And so that means that the president, as commander-in-chief, as you and he interpret it, can do anything, whether it‘s privacy, whether it deals with how you handle detainees ...

LUNGREN:  That‘s not true.

RANGEL:  ... whether you can just ignore the privacies, because Gonzales constantly says that he cannot give approval or clearance to the Justice Department. 

LUNGREN:  Well, first of all, that‘s not true.

MATTHEWS:  Gentlemen, we‘re out of time.  Gentlemen, I‘m sorry, we‘re out of time this weekend.  I hope you all enjoy the weekend.  I hope we all enjoy it knowing we‘re not going to see 2,000 people killed over the Atlantic this week.  Congressman Charles Rangel of New York ...

RANGEL:  Thank you.

MATTHEWS:  Congressman Dan Lungren of California, thank you gentlemen both for coming here. 

Up next, more on the politics of terrorism.  With the fifth anniversary of 9/11 coming up in September, how heavy does national security weigh in the minds of voters.  I would say a lot.

By the way, don‘t miss NBC‘s “Meet the Press” this Sunday with Homeland Security secretary Michael Chertoff, plus the chair and co-chair of the 9/11 Commission, former governor of New Jersey, Tom Kean, and former congressman from Indiana, Lee Hamilton. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re just 89 days left now until the midterm elections for the U.S.  Congress, and the debate over national security is getting louder.  Just this afternoon, Republican Congressman Tom Reynolds, who is in charge of getting Republicans elected and reelected to the House, has issued a statement, saying that Democrats are, quote, “stone cold guilty of neglecting security for Americans.” 

Roger Simon is a political correspondent for Bloomberg News, Terry Jeffrey is the editor of “Human Events” magazine, and Anne Kornblut is a reporter for the “New York Times.”

I want to start with Anne up in New York, ground zero, of course.  This language is getting hot.  I think it‘s not so much over Iraq as it is over surveillance questions, phone tapping, because the implication is—I guess we‘re getting from the news, is that the British were able to catch these bad guys by tapping.

ANNE KORNBLUT, THE “NEW YORK TIMES”:  Well, that‘s exactly right.  Of course, Republicans are going to point to Democrats who voted for greater restrictions on what the administration can do, and say that they are, as Boehner—Congressman Boehner called them yesterday, Defeatocrats. 

I think what some Democrats were saying to me today is that, you know, this wasn‘t the Bush administration that thwarted this plot, and they‘re going to use that as their counter to that, and we‘ll whether that works. 

MATTHEWS:  Well, as Jack Kennedy once said, “victory as 100 fathers,” so it has got at least two in this case.  Fair enough. 

Terry, is this what this is about, or is it about Iraq? 

TERRY JEFFREY, EDITOR, “HUMAN EVENTS”:  Yes.  No, there‘s no doubt about it.  I mean, Chris, I spent some time this afternoon reading the British papers and what they said about this episode and there are a lot of stories over there about how the British MI-5 put these guys under surveillance.  Some of these people were under surveillance for a year. 

There were some telephone calls in the United States, there was wire transfers out of Pakistan into England.  They had these guys, they were bugging them, they were wiretapping them, they were following them around.  When it came to crunch time, they were able to round up 24 people like that, and stop this attack. 

We just came out of a debate in the United States of America where Democrats were attacking the White House and President Bush for having a NSA surveillance program that was intended to intercept these kind of calls, and then you have the “New York Times” break this story about this program we had that was intercepting ...

MATTHEWS:  SWIFT.

JEFFREY:  ...international financial transactions, which is exactly

how these guys were being financed.  So you‘re either for those things or

against those things.  It‘s clear those instruments helped close down this

MATTHEWS:  Well, a lot of people would argue, Roger, that if we engaged ourselves in all those electronic surveillance opportunities, especially phone tapping, without regard to any kind of warrant, that we would, in fact, be another kind of fascist. 

ROGER SIMON, BLOOMBERG POLITICAL CORRESPONDENT:  Well, we‘re two different countries.  We‘re very close to the British, but let‘s not forget we fought a revolution, we got the Bill of Rights and they the official secrets, facts and wiretapping. 

The administration has implied, some say, that there was U.S.  surveillance that helped to thwart this plot.  You keep hearing about the Patriot Act and how it helped.  Harry Reid did a briefing with reporters today and said he‘s been through the security briefings and said there was no evidence of that.  The larger point is, though, if the U.S. tapped phones, would it be better prepared to thwart plots like that. 

MATTHEWS:  Well, let me just ask you all—I mean, I can even ask this to a straight journalist like Anne.  Let me ask you the question, what do you think the American reaction would be if the British had decided not to thwart that attack because they were squeamish about phone tapping, and we ended up watching nine planes drop slowly over the Atlantic with a couple of hundred people aboard each one?

KORNBLUT:  Well, I mean, obviously, there‘s no one who would have

wanted that.  I think, you know, the interesting political question here is

the questions that the Democrats are asking today—is whether the administration knew that this plot was about to be thwarted at the time that Joe Lieberman was—lost his primary on Tuesday and whether in implying that the Democratic Party equals Ned Lamont, equals a vote for al Qaeda, was something that they knew that the groundwork was being laid and they were trying to use that to their advantage. 

MATTHEWS:  Well, do you think that you could also argue, perhaps, with a little more liberty that had they wanted to save Joe Lieberman, they would have broken this story—had the Brits break the story two or three days ago, if you want to go all the way with this theory? 

KORNBLUT:  Well, I certainly ...

MATTHEWS:  Because he might have done it.  He was catching up with the guy, he was 14 back, he caught up within four, he pick up 10 points in about four days over the weekend, picking up working class guys, and I think, in a lot of cases, ethnic people that weren‘t exactly country club types.  So he was bringing back the regular Democratic vote by the fact that he‘s a regular guy.  Suppose he had this story on his back working for him?

KORNBLUT:  There were certainly some Lieberman supporters.

MATTHEWS:  This is a power pack for a conservative, this one.

KORNBLUT:  There were certainly some Lieberman supporters who wondered aloud whether, if this had happened two days earlier, it could have helped him. 

MATTHEWS:  Yes, I think that election up there, having been up there, was very volatile and every day would have been a different result.  Roger you‘re saying in your head? 

SIMON:  No I agree.  Lieberman intends to use it in the general.  I mean, the toughest statement today, the toughest Republican statement came from a Democrat, Joe Lieberman.  It‘s worth reading.  If we just pick up like Ned Lamont wants us to do, get out by a date certain, it will be taken as a tremendous victory by the same people who wanted to blow up these planes. 

MATTHEWS:  So Joe is running as a Republican now?  The second half of this football game he‘s describing, he‘s changed uniforms, because he‘s gotten all his Democratic people, Stanley Greenberg is out, and Carter Rescue (ph), his media guy, they are all gone.  I think maybe Sean Smith might be gone too.  All the people working for him are gone and now he says he‘s got to get 70 percent of the Republican vote.  It sounds like he‘s changing uniforms to do that. 

SIMON:  It‘s the best issue for the Republicans.  It‘s the best issue for Joe Lieberman. 

MATTHEWS:  Let me ask you, Terry, this issue of, let‘s talk about Iraq for a moment.  The president is excellent at conflating the issue of Iraq with al Qaeda, with facing the threats we face like this that are much closer to home.  Everybody imagines, even if they don‘t do it every day, getting on an airplane.  Everybody can imagine dropping into the Atlantic ocean at 39,000 feet, having just a few minutes to think about this.  Right?  So everybody thinks about the heart of this.  Is this a bigger grabber for the election coming up for the Republicans and is it a stronger trump card than the war in Iraq? 

JEFFREY:  Well it‘s a better issue for the Republicans.  There‘s no doubt that if the election were purely a referendum on Iraq, it would be bad for Republicans and be bad for the president.  To the degree that people understand their security issues involving terrorism that transcend Iraq, I think that helps the president and it helps Republicans, particularly because of the surveillance issue.  There is a clear partisan divide there. 

MATTHEWS:  If you‘re a Republican strategist right now, how do you make the Democrats stand up and make the case for more restrictions on surveillance, at this point in our history, when we‘ve just seen this thing thwarted. 

JEFFREY:  Well Jim Hayden, who actually was overseeing this surveillance program at the NSA went up for the CIA confirmations, the Democrats didn‘t go after him that hard because they knew it was a loser issue.  Chris, if I were a Republican candidate running against a Democrat who had spoken out against the N.S.A. surveillance program, I would get videotape of that, and the last week of the election I‘d run it on the local TV constantly, this guy going after the president for trying to wiretap al Qaeda guys.  I‘d kill them with it. 

MATTHEWS:  Roger, is he right, is that a great Republican hammer right now? 

SIMON:  Yes, it would be a very effective hammer if the election were next Tuesday instead of in November. 

MATTHEWS:  And why is it different.

SIMON:  These things tend to be short-lived.  Americans have a tremendous capacity to adapt and even forget. 

MATTHEWS:  So the continuing casualty rate out of Iraq would trump it? 

SIMON:  Oh, I think so, by November, because it‘s not going to go down. 

MATTHEWS:  If we don‘t get hit again, or almost get hit again between now and November.

SIMON:  Unless there‘s another plot to thwart, or we thwart one in the U.S.  After hall, there‘s not even a widespread cancellation of flights in the U.S.  People are turning in their shampoo.  They‘re still flying. 

MATTHEWS:  Let me ask you, what‘s the bigger story, Ann, the one we‘ve just been through the last two days or the war in Iraq? 

KORNBLUT:  Well, I mean, I would agree with Roger that at this particular moment right now the terror plot obviously is grabbing all the headlines, but up until that moment, Iraq had been incredibly bad news for the Republicans, and as this subsides, if there were no other terror attacks, you know, the 9-11 anniversary comes and goes, it would not at all be surprising to see Iraq take the foreground once again. 

MATTHEWS:  I tell you it, it‘s so volatile, the American public, I guess we would all agree.  I‘m going to ask you all, had this story broken last weekend rather than this, would Joe Lieberman be the Democratic nominee for Senate from Connecticut, Ann. 

KORNBLUT:  You know I don‘t do hypotheticals, to quote the White House. .

MATTHEWS:  Does anybody do hypotheticals here?  Roger Simon, you‘re a beautiful writer, you must do hypotheticals. 

SIMON:  I do hypotheticals, but I just can‘t figure that one. 

JEFFREY:  Well I was here Monday and I predicted Lieberman was going to lose, but clearly he had momentum going through the weekend.  I think if something like this happened, it clearly would have given him more of a boost. 

MATTHEWS:  All it took was four points.  Any way, thank you Ann Kornblut, thank you Roger Simon and thank you Terry Jeffrey.  Up next, our HARDBALLers tonight will debate the politics of terror and tell us what they are hearing about it on their talk radio show.  Amy Goodman, Heidi Harris oppose when we come back.  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Does this foiled terrorism plot out of London help Republicans by refocusing the country on national security issues?  Or will Democrats hammer home that the Bush administration‘s policy over in Iraq is encouraging hatred and terrorism?  Our HARDBALLers tonight are here to answer those questions.  Amy Goodman is the host of Democracy Now on the radio and it‘s on Pacifica, and on television, also the author of “Static Government: Liars, Media Cheerleaders and the People Who Fight Back” and Heidi Harris is a radio talk show host with no book out right now.  Heidi you start, who wins this discussion as to the object lesson of catching those bad guys over in Britain? 

HEIDI HARRIS, RADIO TALK SHOW HOST:  I think the Republicans do, and frankly I think it‘s a good thing  some people have not forgotten about our national security, thanks to MI5, working in conjunction with America, we were able to catch these people before thousands of innocent people were killed. 

MATTHEWS:  Who has forgotten about our national security? 

HARRIS:  There are a lot of people who have, like those who want to see us pull out of Iraq instantly.  They have forgotten about the fact that we‘ve still go the terrorists on the run and that‘s the objective.  You‘re not going to make people like us, but ultimately we can keep them on the run and keep them off-balance and try to protect ourselves. 

MATTHEWS:  So Iraq is making us safer? 

HARRIS:  Well I think it is because we‘ve got them on the run.  We‘ve caught people like Zarqawi.  They hated us before we went there so the argument they only dislike Americans because of George Bush and because of we‘re over if Iraq, that‘s a lie.  They attacked us.  We weren‘t in Iraq. 

MATTHEWS:  OK, we were in Saudi Arabia however when bin Laden actually from Saudi Arabia decided he hated us, we were in Lebanon when we got blown up last time.  There is a connection between our location and the anger that it causes, isn‘t there? 

HARRIS:  Well there‘s a connection between our location and where they can below us up.  You don‘t see them blowing us up here since 9-11, because they would to come over here, but we have to be vigilant.  So they blow us up in Lebanon because it‘s easier than trying to come over here, that‘s why we have to be vigilant and stay on top of them.  They‘re not going to like us no matter what we do. 

MATTHEWS:  Who‘s they? 

HARRIS:  The terrorists.  The Islamic Fascists that President Bush is talking about and I‘m glad he‘s finally saying that, because he‘s trying to say that Islam is a religion of peace, which is not true. 

MATTHEWS:  OK, good.  We‘re getting a lot on the record there.  Let‘s go back to Amy Goodman, do you want to respond to that?

AMY GOODMAN, HOST “DEMOCRACY NOW”:  To smear a whole religion is racist and it‘s disgusting and I think Muslims around this country are very insulted, and not only Muslims, but people who care about equality.  There are a lot of Muslims who are standing up right now and saying that they don‘t believe in violence, as many other people are. 

We have to stop terrorism, whether it‘s in Britain to bring down planes that are coming here, or whether it‘s unfortunately the U.S.  military in Iraq, that has been involved in what the military is admitting are some terrible crimes from Haditha to Mahmoudiyah. 

Killing civilians is absolutely unacceptable, and to smear an entire religion—I just would like to know if Heidi smeared Christians when Timothy McVeigh blew up the Oklahoma City building?  Of course not.  That would be ridiculous to pick up every white man in America because he‘s white man or he‘s a Christian. 

MATTHEWS:  OK.  You really think that‘s what she‘s saying, Amy?  Are you really saying that she‘s saying that? 

GOODMAN:  Well, I‘m absolutely saying that when she says that Islam is not a religion of peace, it‘s ignorant and it‘s unacceptable. 

MATTHEWS:  OK.  Except that Islam is used as a rationale by these people to commit suicide in attacking us.  It‘s obviously part of their motive.  They‘re killing themselves because of their religious belief.  And you‘re saying that religion is not relevant. 

GOODMAN:  How people use a religion or an ideology is not an indication of what that entire religion represents. 

MATTHEWS:  OK, I think Heidi can handle this.  Go ahead, Heidi.  I‘m sorry.

HARRIS:  Listen, nobody has ever said that every person who is a Muslim is a terrorist.  Nobody is asserting that.  But the fact of the matter is, these people are committing these crimes against innocent people in the name of Islam, and not only that, the planes that were going to be flying out of Heathrow could have had people from all religions on them.  They don‘t care who they kill.  They‘re going after non-combatants, and anybody who goes after non-combatants is a terrorist.  And if they do it in the name of Allah, sorry, they‘re not doing it in the name of Christ.  I‘m not saying that Christians have never committed crimes—and by the way, I am a Christian—not saying that, but the point is, we see the same terrorism over and over again committed by the same people who claim to have the same ideology. 

MATTHEWS:  I want to come back to this chicken and egg problem, and I want you each to answer it.  Who started the fight in the Middle East?  Was it our actions over there whether in support of Israel, or in fact our engagement in places like Lebanon?  The deal we have—I would call it a somewhat sordid deal—with the Saudi Arabian government to get the oil out of that country at the expense of democracy?  Our deal with Mubarak, where we give him a couple of billion a year to keep peace over there?  Or our deal with all those countries and our troops in those countries—

10,000 troops in Saudi Arabia for those 10 years?  Were those actions contributory to the anger of the Islamic world against us, or did they start hating us and killing us, and then we simply put troops in?  Get the history straight.  I need your help.

Amy Goodman, Heidi Harris, I want the chicken and egg problem solved when we get back.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with radio talk show hosts Amy Goodman and Heidi Harris.  Heidi, who started this war between us and the east? 

HARRIS:  You‘re talking about recently? 

(CROSSTALK)

MATTHEWS:  Well, no, this has been going on—Bobby Kennedy was killed by a Palestinian because he supported Israel in the ‘68 debate.  We had the hostage taking and we had the Beirut bombing, we had the barracks blown up, we had Khobar Towers.  The things seemed to have started in the ‘60s or ‘70s.  Who started it?  Was it our exploitation of oil in that part of the world?  Our support of Israel?  What triggered all this hatred of us? 

HARRIS:  It started a few years actually after Mohammed died, if you want to get real specific.  I mean, this has been going on a long time.  The crusades were nothing but an answer to Islamic aggression. 

I have no problem with people who are Muslims.  You want to come to America?  You want to be free to worship in your mosque?  Fine.  There is no freedom in Islamic countries, and people who are Islamic fascists, as President Bush describes them, want to take my freedom away.  And that is something I‘m not going to stand for, and we as a nation have to stand against us. 

They hated us before Israel was a nation again in 1948.  Come on, this has been going on, you know, like I said, started after Mohammed died.  And it‘s just going to continue. 

We can‘t stop people from hating us, but we can try to stop them at the gates and try to protect our nation and keep the freedom that we so much appreciate. 

MATTHEWS:  Amy Goodman, give me the same kind of narrative, if we can. 

GOODMAN:  People don‘t like to be occupied, whether it‘s Americans throwing out the British in the American Revolution.  Palestinians don‘t want their lands occupied.  The Lebanese don‘t want their land occupied right now by Israel.  And the Iraqis don‘t want the Americans in Iraq right now. 

And I think that that‘s what we have to look at, if we‘re talking about peace.  There‘s not going to be peace until the Palestine-Israel conflict is resolved.  There is not going to be peace in Lebanon until Israel stops bombing Lebanon right now, and the latest breaking news is the possibility that Ehud Olmert, the Israeli prime minister, may be accepting the cease-fire, no word yet from Lebanon, but it an extremely significant move forward, because I think we‘re talking about at this point in Lebanon about 1,000 people, overwhelmingly civilian, who have been killed.  This is what breeds national insecurity in this country, when the U.S. is involved in supporting that kind—that level of killing of civilians. 

MATTHEWS:  Do any of these approaches—the hardline approach that you mentioned there, Heidi, the sort of the hawkish view and the more dovish view, do either one of them promises us deliverance from this growing hatred of us, that leads to suicidal behavior?  People who want to kill themselves over the Atlantic, so they can kill a bunch of us.  What would stop that growth in recruitment?  Would anything stop the recruitment? 

HARRIS:  I don‘t know if anything will stop the recruitment, but ultimately, we‘ve got to stop them.  You‘re not going to stop them from hating us.  All we can do is try to show them that freedom is the way to live.  That‘s why so many Muslims come here from all over the country so they can have the freedom that we have, freedom to worship.

MATTHEWS:  But what about these Muslims—but the problem with that -

and I love that argument.  I love to think that if they saw how we lived, they‘d say these guys are pretty good, we want to live like them.  These are Muslims living in London.  From the looks of the houses they were living in, they were not impoverished.  They probably lived in better houses than the cops who caught them.  And yet they want to kill.

HARRIS:  And that‘s exactly right.  But here‘s the thing, their first allegiance is to Islam, not to their nation.  And they will tell you that.

GOODMAN:  I‘m thinking right now about Sergeant Ricky Klausing (ph), who is a young American soldier, who is an Army interrogator, who is right now turning himself in at Fort Lewis.  He has been AWOL, on the run, for a year, because he believed what‘s happening in Iraq does not represent the best of America.

MATTHEWS:  OK, thank you very much, Amy Goodman.  Thank you, Heidi Harris.  Play HARDBALL with us again next week.  It will be 12 weeks and counting until election day.  Right now, it‘s time for “TUCKER.”

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

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