updated 11/9/2006 1:09:29 PM ET 2006-11-09T18:09:29

Guests: Dianne Feinstein, Terry McAuliffe, Ed Gillespie, Chris Cillizza, Steny Hoyer, Mike Allen

CHRIS MATTHEWS, MSNBC HOST:  Hearing the voters, President Bush breaks with Cheney, dumping Rumsfeld, replacing him with Robert Gates, a decision Cheney opposes.  Will Bush go further and disregard Cheney on Iraq?  Let‘s play HARDBALL. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), CLINTON:  When I return to Washington next week, I do so knowing that we have made a statement here tonight. 

SEN. RICK SANTORUM ®, PENNSYLVANIA:  And as all the political pundits, maybe correctly now, were saying, why did you go out and talk about those unpopular things like the war?  And I did, and I‘m pretty proud.  I do not rescind a word.

(END VIDEO CLIP)

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

Last night, millions of Americans went to the polls and threw the bums out, you might say, fed up with corruption and scandal in the House, angry about the unpopular president‘s unpopular war.  Voters gave control of the House to the Democrats and maybe the Senate. 

Senator Rick Santorum, gone.  Senator Jim Talent, Senator Lincoln Chafee, gone.  Senator Conrad Burns, gone.  Senator Mike DeWine, gone.  And maybe Senator George Allen, gone. 

President Bush gave a press conference this morning congratulating Democrats and announcing that Defense Secretary Donald Rumsfeld is resigning.  The president is replacing Rumsfeld with one of his father‘s men, former CIA Director Robert Gates. 

More on this in a moment, but we begin with the senior senator from California who won big last night, Senator Dianne Feinstein. 

Congratulations on winning without anybody noticing.  You had it won so big, it didn‘t get any news.  I guess that‘s the way to get reelected, Senator. 

SEN. DIANNE FEINSTEIN (D), CALIFORNIA:  It‘s one way.  I like it. 

MATTHEWS:  Let me ask you about policy changes.  There‘s been a shift.  The president is getting rid or letting go—I‘m not sure the right protocol—but he‘s getting rid of his defense secretary.  He‘s bringing in Bob Gates.  What does that tell you about policy? 

FEINSTEIN:  Well, what it tells me about policy is that Mr. Gates will have to go through the confirmation process.  And I would anticipate difficult questions on the war before the Armed Services Committee.  I think that—I can only talk about my vote, Chris, because I‘ve been campaigning now. 

I think I know the vibrations of the West.  People are very upset with the war.  Stay the course doesn‘t do it.  And if this is going to be another stay the course secretary of defense, I think he‘ll run into trouble. 

This is the opportunity to really weigh in about the war.  And I feel very strongly, the president owes the American people a timeline.  This is not going to be anything but positive in my view.  And I think we need a new strategy.  We need a new team.  Perhaps this is the beginning of both.  We‘ll see. 

MATTHEWS:  What do you make of the president‘s defiant use of the term victory.  He says he‘ll accept bipartisan partnership, he‘ll accept anybody to come aboard, as long as they support victory?  What do you think he means by it?  Can you live with it?

FEINSTEIN:  Well, I don‘t know what he means by victory, but I‘ll tell you what I think victory is.  First of all, Americans are not welcome in Iraq.  Every poll has showed that.  The Iraqis want us out. 

And I think the Iraqis look at us as kind of buffering, in between a solution between Shia and Sunni.  If the military presence could solve the present violent insurrection between Shia and Sunni, that would be one thing.  But it can‘t.  Only political accommodation can do that. 

Therefore, we ought to have a timeline, a timeline for Maliki to step up and make the necessary political accommodations, a timeline when the army is fully stood up, such as it may be, and the police departments fully stood up, such as it may be and a timeline when we can begin redeploying our forces. 

I think this is what the American people want.  They don‘t this well, we may be in there for the next 10 years.  And stay the course simply hasn‘t cut the mustard in Iraq.  And I hope that this new secretary of defense will understand that. 

Let me make one other point.  I happen to be one that believes that the flag officers of the American military are bright, cogent people and they shouldn‘t be stepped on by a secretary of defense.  They should be able to speak their piece truthfully. 

And the fact of the matter is that they have been saying one thing in private when senators and others are in Iraq, another thing in public.  And there‘s been an aura of intimidation.  So I hope this will end.  I hope we will have a secretary of defense who has a new strategy, who will work with the Congress and we can put all of the kind of controversy about Mr.  Rumsfeld behind us. 

MATTHEWS:  If you read the Bob Woodward latest book, it seems to say

that Rumsfeld systematically cut off the communication between the officers

the command and field officers in the field and the president. 

He wanted to be the lynchpin of policy, the main way of communicating between the president, the commander in chief, and the soldiers in the field.  Do you think that the new secretary of defense will open that door again for communication—honest communication—between the generals and the president?

FEINSTEIN:  Well, I can only tell you that unless I feel that‘s going to happen, I‘m not going to vote for him.  I think it has to happen.  We cannot see the emasculation of the American military, and I think that is what has transpired.  I think all of the military newspapers coming out in opposition to Mr. Rumsfeld was a very single line of opposition. 

And it really had to be given heavy consideration, and I suspect that it was.  I suspect that the president had in mind that if the election went south on the Republicans, that this would be the case.  And I think the fact that Mr. Gates was submitted so quickly indicated that it was all planned prior to the election. 

MATTHEWS:  You sit on the Appropriations Committee.  You may well, by the end of the night, be headed towards sitting on the majority side of that committee.  It‘s very powerful.  Can you see the Senate using its purse strings power to influence policy in Iraq? 

FEINSTEIN:  Well, we have not.  We have given the Pentagon virtually everything they have asked for, so that has not been the past.  I cannot speculate whether it‘s the present or the future.  I will say this, that both Iraq and Afghanistan have cost about a half a trillion dollars now, unduly expensive. 

And the return on the money is not a great deal.  You know, Afghanistan is in some trouble and Iraq is in great disarray to put it mildly.  Unless we push for a political accommodation in Iraq, I do not believe the country can stay together as a united Iraq. 

MATTHEWS:  Let me ask to you respond to something.  We had Senator Biden on about an hour-and-a-half ago, and I asked the senator if he planned to conduct hearings like along the lines that Senator Fulbright did during the Vietnam War to illuminate the policy questions, to really let the country see what‘s going on over there.  Here‘s what he said. 

(BEGIN VIDEO CLIP)

MATTHEWS:  Will you hold Fulbright-style hearings on the war in Iraq? 

SEN. JOE BIDEN (D), DELAWARE:  Yes. 

MATTHEWS:  So that‘s news.

BIDEN:  Absolute answer.  I called Dick Lugar today and I said, Dick, if it turns out I am the chairman, I would look forward to you and I holding—I would start off in January the weeklong series of hearings, bringing in every responsible person, reflecting every point of view and have very methodical hearings. 

(END VIDEO CLIP)

MATTHEWS:  Well, there you have it, a bit of news made on HARDBALL an hour or so ago.  What do you think of that, Senator Feinstein? 

FEINSTEIN:  I think it‘s very good.  I think it‘s right.  I think Joe Biden will be an excellent chairman.  I happen to agree with his thinking on Iraq and I think he‘ll play a major role should it not be possible to maintain a unitary Iraq. 

MATTHEWS:  What do you think of California again?  You talked with me years ago about the sense of centrism in California when it came to picking governors.  It looks like Arnold Schwarzenegger, against all the odds, found that true north somehow.  I know you think about being a moderate and it could be either party, perhaps, but once again, the Republicans found the combination.  What do you think of that?  They‘ve got a moderate governor out there.  You do. 

FEINSTEIN:  Yes, I‘ll tell you what I think of it.  It‘s an enormous win for him.  Not only did he win, but he won with seven—a $40 billion infrastructure package.  Seven separate propositions, and every one of them won.  I think it was a substantial vote of confidence in the new Arnold Schwarzenegger. 

I tried to reach him this morning to say that I really want to work with him on water, on levees, on a whole host of issues and I hope he stays on his present course.  This is the great unknown.  Does he go back to the original Governor Schwarzenegger or this new one?  And I hope he stays with the new one. 

MATTHEWS:  I think he‘s trying to be the kind of governor you would have made.  Anyway, thank you, Senator Dianne Feinstein.

FEINSTEIN:  Thank you.

MATTHEWS:  It‘s great to have you on. 

FEINSTEIN:  Thanks.

MATTHEWS:  The senior senator from California.

FEINSTEIN:  Chris, good to talk to you.

MATTHEWS:  Ed Gillespie is the former chairman of the Republican National Committee.  God, you‘ve been up all night.  Ed Gillespie, you‘re hanging in.  And Terry, of course, played golf all night somewhere. 

Terry McAuliffe, the former—where were you when Ed was working?  We could get him all night, and you were out—what, were you feasting on a boat somewhere?

TERRY MCAULIFFE, FORMER DNC CHAIRMAN:  I was over at CNN with Larry King—I was with Larry King until 4:00 when you were sleeping, Chris.

MATTHEWS:  Who were you talking to, Rosemary Clooney‘s brother?  Who was the other guest? Just kidding.  Just kidding, Larry.  Let me—I‘m just kidding Larry, seriously.

Let me ask you about what your party‘s going to do with its new power.  The president was extremely gracious today.  He basically engineered what looked to be a strategic retreat and accepting the resignation of Rumsfeld and bringing in Gates.  Do you see this as a real shift, a real fluidity in our policy in Iraq for example?

MCAULIFFE:  I do.  I think it‘s a real opportunity, it was a big night for the Democrats, a win in the House, the Senate, six governorships and put the politics, the campaign behind us, we the Democrats, we‘ve got to start off, and a lot of things we‘ve got accomplished.

The burden is now on to us produce.  The American people are counting on us and we‘ve got to do it in a bipartisan way.  So I‘m excited as we go forward.  We‘ve got to work together on Iraq, health care, education.  So many issues.

MATTHEWS:  You said put the partisanship behind you and you just declared victory in Virginia.  The normal protocol is to let the guy who lost make a concession speech.  What do you mean?  You‘re pushing pretty hard here, aren‘t you?

MCAULIFFE:  Well, I‘m a Virginian.  Tomorrow the canvassing will be over.  I just think 7,000 votes is too many votes to make up.  I think it will be clear tomorrow after the canvassing.

MATTHEWS:  Would you quit?  Would you quit if you were advising the candidate who was short by those many votes?

MCAULIFFE:  I would wait until the canvassing was over tomorrow and if there‘s no abnormalities in any of that, then listen, it‘s time to move on.  But this is not Florida.  These are all optical scan machines.  So it‘s not like there are not bags of votes missing.

MATTHEWS:  The Old Dominion is so much better than the Sunshine State.  Let me go right now Ed Gillespie—Ed, what do you think?  Are you going to fight down the road through the whole process of recounting or give it a couple more days?

ED GILLESPIE, FORMER RNC CHAIRMAN:  Chris, the process that we‘re in now in the Commonwealth of Virginia is a process that‘s required by law.  The law says, the statute says that after the elections there will be a canvassing that takes place. 

And the fact is it is a very close contest.  I mean, the 7,000 votes Terry cited are out of two million cast.  It‘s three tenths of one percent difference that we‘re talking about.  This morning, there was a 1,500 vote shift in one precinct alone.  So we‘re watching carefully, a very orderly process that the commonwealth is going through right now.  And canvassing and making sure the votes are accurate.  Look, it‘s important that the votes are accurate.

MATTHEWS:  I agree.

GILLESPIE:  And so we‘ll know—we‘ll have a better read—I think Terry is right in terms of they‘re making fairly speedy progress.  It‘s not as long as it took last year in the attorney general‘s race.  I suspect by Friday we‘ll know what the more accurate count is, what the official ballot numbers are going to show.

MATTHEWS:  Is Virginia traditionally seen as one of the clean states in terms of counting?

GILLESPIE:  Yes, my recollection—in my experience, I‘m a Virginian

too, I‘ve not seen any real problems in terms of accusations of voter theft

sorry.  That‘s three hours sleep showing up.  So I think this is a process that at the end of the day, people are going to have confidence in.  And we‘ll know what the accurate vote is.  But let‘s let that process play out.

MATTHEWS:  OK, let me ask you Terry.  Are you satisfied that everybody who wanted to vote got to vote yesterday?  There wasn‘t any suppression of the vote in Virginia?

MCAULIFFE:  Absolutely.  There were certain instances around the country, but I think as a whole everybody who wanted to vote—I still do believe that as we head into the ‘08 presidential, we do need more machines.  There were instances where places were shut down, affecting both Democrats and Republicans.  And I hope both Nancy Pelosi and Harry Reid will take it on. 

We want—Ed and I will agree, we want every person in America who has the right to vote, be able to go and vote.  We need more machines, more equipment in there so that everybody can get in and it shouldn‘t be a two or three-hour process.  And we all need to come together, Democrats and Republicans in a bipartisan way to solve any voting issues out there.

MATTHEWS:  OK, we‘ll be right back with Ed Gillespie and Terry McAuliffe, both former chairs of their parties.  They‘re staying with us.  And later, House Minority Whip Steny Hoyer is going to be here.  He could be the next majority leader of the House.  We‘ll have to see whether he wants to fight it out with Jack Murtha and who‘s going to win that one if it comes to bear.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with Ed Gillespie and Terry McAuliffe.  Ed, I was surprised at the president‘s kind of towel snap at Karl Rove at the press conference.  It was a towel snap.  You can say friendly, but who wants to hear the president of the United States say you weren‘t doing your job?

GILLESPIE:  I thought it was funny.  I was listening to it as I was driving back from Richmond and Kathy and I were both driving back and we laughed out loud.  I just thought it was funny.  The president has a great sense of humor.  It showed today. 

I think that it was very positive and important for the president to demonstrate that as he said, the campaign is behind us, we need to move on to governing.  And he knows when the election is over, when the governing begins and reached out today, I thought, as you noted Chris, very graciously to try to say, let‘s work on things for the American people.

MATTHEWS:  Sure did.  What did you make of that offer, because it was a double-tinged offer.  He basically said to the Democrats, you‘ve won, I‘ve took a thumping and now you have a responsibility. 

And he basically said if you are willing to join with me on the general goal of my foreign policy, which is victory, I can deal with just about anybody except the cut and run crowd.  What do you make of that, Ed?

GILLESPIE:  Well, what I make of it Chris is what—I think what you heard a lot of people saying, including a lot of Republican candidates during the course of this election, as I have said there‘s not a single American who doesn‘t want our troops home from Iraq. 

The question is how and when?  When do we do that?  What does Iraq look like the day after we do that?  I agree with the president.  We need to make sure we do this in a way that that protects our national security.  And in a stable Iraq in the heart of the Middle East that is an ally in the war on terror. 

Now there are different ways you can accomplish this.  And there is a bipartisan commission that‘s looking at different options on reexamining our Iraq policy, clearly with different chairman in the House and potentially possibly a different chairman in the Senate, there are going to be people looking at different policy approaches to this, different ways to do this.

But look, I‘m one who believes we‘ve got to come together.  We can‘t have our troops in combat and not have a clear consensus and a bipartisan understanding of how we bring them home victorious and in a way that protects our national security and helps us win and advance in the war on terror.

MATTHEWS:  I think those words...

GILLESPIE:  ... and having a divided government will force us to do that.

MATTHEWS:  I think what you just said, I think makes sense as a

negotiating position.  Let me ask you, Terry, to get something you have to

give something?  You can‘t be just a critic of the president, expect him as

he put it, negotiate with himself. Somebody has to step up on behalf of

your party, probably Nancy Pelosi or maybe the new Senate Majority Leader

if that works out for you, and says, OK, if you agree to get out of there

and—officially or unofficially before the end of your term, for example

we will help you do that, we will back you, we will stop attacking you, we‘ll stop barking at your tires. 

You say, year and a half, it‘s a progressive effort, it doesn‘t have to be official.  Doesn‘t your party have to give something to get aboard here?  Or to get him to give away something? 

MCAULIFFE:  Sure you do.  Listen, in order to get legislation passed, you‘re going to have to compromise.  Bill Clinton did it with Newt Gingrich, Speaker O‘Neill did it with Ronald Reagan, as you know.  And Bush 41 did it with Speaker Foley.  I mean, you have come together and work together.  You don‘t always get everything that you want. 

And our problem, let‘s be honest, with the Bush administration, with the president for the last six years, is the president hasn‘t been willing to work with any of the Democrats.  He got a strong message yesterday that the public doesn‘t like the direction that this country‘s going and they want a change.  And that‘s why voted the way they did in record numbers. 

And we have a responsibility also.  I think a big burden is now on the Democrats to show that we can lead, we can put legislation out that‘s good for all Americans. 

So the burden is on both sides.  And if the president‘s willing to work with us, so be it.  Let‘s do it.  Let‘s work together.  Let‘s accomplish some great things on health care, on immigration reform, on education, and the war in Iraq. 

I think this is an opportunity for a lot of the Democrats in the House and the Senate, who will work with the Democrats now, that will make 2007 a huge transition year, as it relates to Iraq. 

MATTHEWS:  Let‘s look what incoming Speaker of the House Nancy Pelosi had to say in an interview with NBC‘s Brian Williams. 

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC CORRESPONDENT:  Leader, what does “drain the swamp” mean? 

REP. NANCY PELOSI, (D-CA) HOUSE MINORITY LEADER:  “Drain the swamp” means to turn this Congress into the most honest and open Congress in history.  That is my pledge.  That is what I intend to do. 

WILLIAMS:  What about last night‘s result that gives you a mandate to do it? 

PELOSI:  One of the reasons people gave when they exited the polls yesterday, but more importantly, one of the sentiments that I think in a bipartisan way is shared across our country, is a need for more honesty and integrity in government, also more civility and bipartisanship.  And that, again, is part of our way that we would go forward.  With civility, with honesty, with integrity, and with fiscal discipline.  Now new deficit spending, no more bridges to nowhere heaping mountains of debt on our children. 

(END VIDEO CLIP)

MATTHEWS:  Let me get back to Ed and Terry.

Ed, you first.

You worked in the leadership.  We were together up there for awhile, as I recall. 

GILLESPIE:  You were in the leadership.  I wasn‘t.  You were...

MATTHEWS:  Well, you were close enough to watch, anyway.

Let me ask you about this.  Is it possible for Ms. Nancy Pelosi, who is so politically sharp, obviously, based again upon what happened yesterday.  Is she able to play the role of Leader of the House and also political leader of the Democrats?  Can she play both roles? 

GILLESPIE:  It‘s hard.  I think that it can be done, and should be done.  Look, I think that we did take some hits yesterday on the Republican side because of wrongdoing on the part of Republicans.  That‘s not a uniquely Republican trait.  There are Democrats who have done bad things, too.  But when you‘re in the majority, you bear the burden for that. 

And the voters, I do think, help clean out some folks that, you know, needed to get that message.  But I do think it sent a message to the entire body.  And it would be healthy for everyone to respond to that.  And as leader of the whole House, if Nancy Pelosi wants to do some reforms that make the place more—inspire more confidence, that‘s great. 

MATTHEWS:  Terry, are you going to be the head of the page school? 

MCAULIFFE:  No.  I have no interest in being the head of the page school.  I think that we got other people (INAUDIBLE) a lot more qualifications to do that.

MATTHEWS:  I‘m just kidding. 

But how do you keep—that‘s one of the responsibilities you get if you take over the House.  You have to be responsible for these sort of ministerial duties, like making sure these kids are protected from any problems in the House membership. 

MCAULIFFE:  Well, sure.  And it goes to the broader issue, Chris.  We had the whole page scandal with Foley.  We had the, you know, Congressman Ney and Congressman Cunningham, and all those issues you had out there.  It‘s an important lesson for all of us to learn, especially those that are in Congress, that Americans expect a lot more of the people in elected office. 

I think this is a huge opportunity for the Democratic Party.  This would be a transitional moment for us.  And a lot of people came over to us last night, some of them reluctantly.  They had fired the Bush administration and they had tentatively interviewed the Democrats. 

And if we do our job over the next couple of years, I think we can bring back a lot of those Reagan Democrats who left us.  If they show us, like Nancy talked about, fiscal responsibility, showing leadership on all these key domestic issues, I think we‘ll bring a lot of people back to our party. 

So it‘s a real opportunity.  And if we want to win in 2008, we‘ve got to do a good job in 2007 in highlighting the Democratic Party. 

MATTHEWS:  Right.  So in NFL political terms, it‘s better to receive than to kick.  You want the ball. 

MCAULIFFE:  You bet.

MATTHEWS:  Thank you very much.

MCAULIFFE:  Better to have the ball and you can run and pass. 

MATTHEWS:  OK.  Thank you very much.

Ed Gillespie, thanks for staying up last night, Ed.  You were here—so many good times throughout the evening.  And it was almost like the Garden of Gethsemane for you last night.  I appreciate you putting up with us.

MCAULIFFE:  What, You couldn‘t get on “LARRY KING” last night? 

MATTHEWS:  No, Rosemary Clooney‘s brother was on. 

Up next, we‘ll talk about more election results with Washingtonpost.com‘s Chris Cillizza.

And later Democratic Congressman Steny Hoyer. 

I didn‘t mean it, Larry. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

There‘ll be a lot of new faces in Congress come this year.  And a lot of them replacing very familiar faces, people that have been on this show a lot, by the way. 

I‘m going to miss a lot of them, Anne Northup, Jim Leach, a lot of good people that have been sent out to pasture early in life because of this political wave. 

Chris Cillizza is a reporter for the “Washington Post” and author of “The Fix” from the Washington post.com. 

Well, let‘s figure out how we‘re going to fix this thing of the Senate control.   We‘re all waiting for the “Associated Press” as of this moment, to make a call. 

What do you hear about how the recount, whatever, is going to happen in Virginia, so we know who controls the Senate? 

CHRIS CILLIZZA, REPORTER, THE “WASHINGTON POST”:  I think what‘s happening right is they are doing a canvassing, making sure all the votes got counted.  I heard that the Fairfax County canvass is either done or about to be done.  That‘s one that took a long time the last time Virginia was a recount.

I think we‘re going to know something by the end of the week, one way or another.  And my sense, in talking to Allen people and Ed Gillespie said this earlier and other people have echoed this, I don‘t think that George Allen is bracing for a long, protracted fight.  If the votes simply aren‘t there, I think he‘s going to bow out gracefully. 

MATTHEWS:  So if it‘s about 7,000 votes separating the candidates, that‘s a—I was trying to learn—I‘m always trying to learn in this business of covering elections—that‘s a hard number to reverse, even with an extensive recount, right? 

CILLIZZA:  Yes.  You know, it‘s hard to think of, because people say, well, several million votes have been cast, so 7,000 or 8,000 doesn‘t seem like much.  But remember, in order for George Allen to go ahead, he‘d have to find 7,001 George Allen votes without a single Jim Webb vote.  It‘s very unlikely.  You know, in most of these places, even if George Allen wins the rest of the votes 60-40, it‘s still not enough.  He would need to win 100-0, and that‘s just very unlikely.

MATTHEWS:  You mean, you likely to find as many going the other way as going your way?

CILLIZZA:  Exactly what I mean.  The margin may sort of narrow somewhat, but it very rarely overturns when you see a several thousand vote difference between the two sides. 

MATTHEWS:  Well, we‘re rather blithe about this because it‘s not our career at stake.  I mean, let‘s talk about George Allen, a man who was headed toward the presidency just a few months ago.  He‘s got a beautiful wife, he‘s got great kids, he‘s a cool guy in many ways, a very whole person, it seemed, going into this race. 

And here he is with all this ripped out of him, his heart ripped out of him over this macaca comment.  I said it last night.  He would have been better off going to Barbados for six months than going into this campaign.  He would have probably won. 

CILLIZZA:  Well, two things.  One, I don‘t think we should begrudge—and I don‘t even hear Democrats begrudging George Allen, his right to have it recanvassed and sort of recounted, and make sure all of the votes are counted. 

MATTHEWS:  Right.

CILLIZZA:  Secondly, I think that George Allen‘s story is so compelling from a journalistic point of view because of the fall.  We were talking about George Allen in 2008.  We weren‘t even talking about this 2006 race a year ago. 

MATTHEWS:  I know.

CILLIZZA:  All of a sudden, he‘s gone from someone who was looked at as the co-frontrunner along with Senator McCain and maybe Governor Romney in the 2008 race to someone who looks likely to not even be in the Senate. 

MATTHEWS:  Exactly my thoughts.  When we went down to Memphis to cover that Republican get together, that leadership get together, just a few months ago, I thought he was one of the guys who could unite the Republican Christian conservatives with the more suburban people, and here he is on his way to losing everything politically. 

CILLIZZA:  Right.  I mean, you know, it‘s your classic fall from grace.  I think those are the stories that we find the most sort of alluring.  It‘s someone who was up so high, and like you said, Chris, this is somebody who looked to be the heir to the Reagan legacy in the Republican Party, looked to be positioning himself as the anti-John McCain in this race.

And now we‘re looking at somebody who looks like he‘s going to have lost to someone who never—remember, Jim Webb never ran for office before, and was a Republican until about two or three years ago.  I mean, this is a colossal turn of events that I don‘t think anyone expected six months ago. 

MATTHEWS:  I know.  As someone said over the assignment we just broadcast, you‘re always within a nanosecond of complete catastrophe.  Anyway, thank you very much Chris Cillizza. 

CILLIZZA:  Thanks, Chris.

MATTHEWS:  You‘re always great.

Up next, Maryland Congressman Steny Hoyer.  What‘s the fight going on?  Is he going to hang in and win this majority leader fight, or is he going to crumble to Jack Murtha?  Or is Murtha going to crumble to him?  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET REPORT)

MATTHEWS:  Welcome back to HARDBALL.  We‘ve got David Shuster in Virginia.  After 12 years in the minority, House Democrats are back in charge right now.  Maryland‘s Steny Hoyer was elected to his 13th full term last night.  He‘s currently the minority whip and expected to run for majority leader.  But will he have the fight to do it?  We‘ll have to ask him right now. 

Steny Hoyer, thank you, sir.

REP. STENY HOYER (D-MD), MINORITY WHIP:  Hi there, Chris.  How are you?

MATTHEWS:  What do you know?  What do you think?  Duking it out with Jack Murtha.  He‘s a bit to your left, you‘re a bit to his right.  Who‘s the true center of the Democratic Party?

HOYER:  Well, I don‘t know the answer to that question, but I think I‘m going to win the race.  I think I‘ll be the majority leader.  I think my colleagues will be supporting me for the work that we‘ve done in the past with Nancy Pelosi, who will be our next speaker, creating the kind of unity and consensus within our party that has led us to be the most unified we‘ve been in a half a century, as you know, Chris.  So I‘m very confident.

MATTHEWS:  Who‘s going to call the agenda, you or the speaker?

HOYER:  Well, I think the speaker will call the agenda, but as she did as minority leader, she will call the agenda in conjunction with all of the other members.  She meets regularly with large groups of members, committee chairs, committee members, people who have specific interests, and she‘s going to call the agenda.

And of course we have an agenda, Chris, as you know, the Six for ‘06.

MATTHEWS:  Sure.

HOYER:  The Republicans made some fun of it, but in fact the American people voted for change.  They voted for action on issues of great concern to them.  And I can go through it. 

As you know, the real security, the implementation of the 9/11 Commission, which we think is critically important, meeting our promises to our veterans, making sure that we‘re not shipping jobs overseas because of tax benefits, and making sure that the minimum wage is raised so that you‘re not working 40 hours and living in poverty, and college expenses, we‘re going to be dealing with that during the first 100 hours of the next session of Congress. 

We‘re going to make sure that interest rates are halved and Pell Grants are increased.  And then we‘re going to really focus, which will take a significantly longer time, but we‘re going to immediately focus on energy independence, which we think is critical.  It‘s critical from a national security standpoint, critical from an economic standpoint, and critical, as well, from an environmental standpoint. 

And then the next thing we‘re going to address is 46 million Americans uninsured.  We need to address that issue and ensure that health care is affordable and accessible to our people.  We want to address the prescription drug.  We think that prohibiting the federal government from negotiating prices was a mistake, and we can bring prices down for seniors, and we‘re going to do that.  And stem cell research we think is critically important.  So we‘re going to pursue that.

And lastly, as you know, we didn‘t agree with the president on his Social Security proposal.  We want to make sure that it‘s financially secure, but we also want to make sure it‘s going to be guaranteed.

So those are the items we‘re going to work on initially.

MATTHEWS:  Well, it‘s a pretty comprehensive agenda.  I‘ve been studying it.  It really does deal with people at every stage of their life, children, having children, trying to get them through college that you can afford.  And as you get older in life you need health care more dramatically.  You need it all your life.  Medicare, the Social Security position you‘ve taken. 

How do you balance that...

HOYER:  Those were all our thoughts, Chris.

MATTHEWS:  I know.  They‘re great thoughts.  I think they meet every constituency I can think of in the country.  But the question is:  How do you balance that with the use of the subpoena power in trying to find out what happened to the energy policy of this administration?  How‘d we get in this war in Iraq—the kind of intelligence questions that have always been raised.

How do you balance the need to give bread and butter solutions to problems and also make sure you‘re using your oversight weapon to get the truth of what‘s going on in the executive?

HOYER:  Chris, I think we can do both.  I think our committees have the ability to do that. 

Obviously, some will be overseers and some will be implementers of policy. 

But as you know, I‘ve referred to this Congress and previous Congresses under this president as complacent and complicit.  No oversight.  No checks and balances.  No accountability. 

And we think that the American public voted not only for change but also for accountability.  They‘ve seen things going on and they don‘t know why they‘re going on.  They think they‘re wrong.  And they think there needs to be accountability and oversight.

And certainly, one of our responsibilities is to exercise that oversight.  And we‘re going to that. 

MATTHEWS:  OK.  I can‘t wait to see the vote as you win the majority leadership of the House of Representatives or if you lose it. I mean, I think Murtha could be a difficult challenger, but you seem to have the numbers now. 

Good luck so far.  Thank you very much.

HOYER:  Thanks a lot, Chris.  Good to be with you.

MATTHEWS:  Thank you.

Now to Virginia in the remaining Senate race yet to be called, that could—it is going to decide who controls the Senate.  David Shuster is in Richmond.  David, give us a sense if you were on a scale of one to 10, how many of those items, one to 10, of those numbers does Senator George Allen still have a chance?  Has he got a two chance out of 10 right now to pull this out?  One chance out of 10?  Where would you put it right now?

DAVID SHUSTER, HARDBALL CORRESPONDENT:  First of all Chris, let me say great job last night from start to finish.  The coverage was magnificent. 

As far as Virginia‘s concerned and George Allen, I would say Chris maybe about a three or a four out of 10.  And here‘s the reason why.  Even though the vote differential is about 7,000, what George Allen is looking for is he‘s looking for his votes that were given to Webb and vice versa in his strong districts.

And they‘ve already found one precinct today, for example, Hampton Roads, where George Allen won the precinct, 1,900 to 400, but the numbers were switched.  And when you change that to the vote total, it automatically will take the margin from 7,000 down to about 4,000. 

Now the question is can George Allen find other instances of that in other places across the state?  That‘s what these canvassing boards are trying to do.  They‘re trying to determine whether there were computer glitches, whether the numbers that were called in to state officials were called in wrong, whether there were arithmetic errors.  That‘s the sort of thing they are looking for.  And the key point is this will take a couple of days.  And remember, this is not Florida 2000.  You‘re not going to have hanging chads.  This is all essentially computer equipment and optical scan.  They should know within a couple of days.

MATTHEWS:  Do you have a sense the news organizations, including our own, might jump the gun on this and not wait out this canvassing as long as George Allen would like to wait it out?

SHUSTER:  They might, Chris, if we start hearing from the canvassing boards.  And I know there are a lot of efforts to try to keep track of what these canvassing teams are doing.  But I think one of the things that‘s holding news organizations back is you‘ve got more than 2,000 precincts across the state of Virginia.

And I think what news organizations are doing, they‘re wanting to give these canvassing boards an opportunity to first check and see were there any major mistakes or glitches?  At a certain point, maybe in the next couple of days, it‘s going to become abundantly clear whether there were mistakes that were worth several hundred or several thousand votes.  And I at that point, news organizations ought to jump in.  But until we get to that point, I think news organizations are going to be careful.

MATTHEWS:  Thanks for that great report.  We‘re all going to be watching, all eyes are going to be on Richmond.  Thank you, David Shuster.

Up next, we‘ll bring in our panel for more on Rumsfeld and the election results.  It just keeps getting bigger, the news of these last two days.  I haven‘t seen too much stunning pop in a long time.  This foreign policy in this administration may well be cracking under the president‘s feet.  He may be doing the cracking.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Does Rumsfeld‘s resignation signal a shift of power at the White House?  Let‘s bring in our panel, MSNBC chief Washington correspondent Norah O‘Donnell, MSNBC political analyst Craig Crawford of the “Congressional Quarterly,” MSNBC political analyst Pat Buchanan and “Time” magazine White House correspondent Mike Allen, wherever you are.  Oh there you are, Mike.

It‘s like the Latin American army here.  Everybody is a general.  These titles are outrageous and you‘re going to have them as long as you‘re here, I guess.

Pat Buchanan, I have learned something from you.  Election night brings out the real intellectual power that you possess in your heart and brain.  You do get non-political around 3:00 in the morning and you begin to look analytically at these things.  I want you to look at the Old Dominion right now.  Just quickly before we get back to the presidential questions and the war, do you think George Allen will fight this out like a Scots Irishman like yourself and stonewall this thing to the end, or is he going to be a gent and give it up?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well I mean, I had thought that he would take a hard look at it, but the numbers didn‘t change in the day just in the recounts, he would give it up.  But from what I just heard from you, that somehow this has narrowed from 7,000 to 4,000.

MATTHEWS:  Yes, there‘s all kind of possibilities now according to David Shuster that we didn‘t even realize.

BUCHANAN:  If that‘s the case, then things can change of that magnitude and I think you go down and look as hard as you can for as long as you can, and you do it.

MATTHEWS:  Why didn‘t you ever run for senator from Virginia?

BUCHANAN:  It‘s a long story but I moved over there to make it available, but I just decided I didn‘t want to do that.

MATTHEWS:  You didn‘t want to be a senator or didn‘t want to lose?

BUCHANAN:  Didn‘t want to be a senator.

MATTHEWS:  Really?  You‘d be a hell of a senator.  Let‘s bring in everybody here about this interesting macro question today.

BUCHANAN:  Also I wouldn‘t have won.

MATTHEWS:  Nobody—Mike Allen—thank you for that.  That‘s like George Will at Maryland.  You know, you have all the talents you don‘t need to be a senator and all the talents you do need.

CRAIG CRAWFORD, MSNBC POLITICAL ANALYST:  I want him to run for president again.

MATTHEWS:  Let me bring in Mike Allen here, he‘s a student of this White House as well as anybody here.  Mike Allen, it seems to me that there was a real thunder cloud today.  Not only did the president come over and offer up a real, kind of almost humble acknowledgment that the American people had whacked him on Tuesday.  And I really liked that. 

I love to see politicians perform to the top and I think he was

performing to his best today under terrible circumstances.          But when he

said he had picked a replacement on the same day he basically accepted the

resignation of Rumsfeld—and then to get the word, as we did through NBC

people who have got good at contacts—that he did this over the objection of the vice-president, who has been such a powerful partner with him. 

What do you think, is this an existential shift in the president, willingness to pull from his moorings and be his own man? 

MIKE ALLEN, TIME MAGAZINE WHITE HOUSE CORRESPONDENT:  Well, Chris, they‘ve always told us that the president has last word, and that the president is the president, that in the first months, he was very grateful to have the vice president sitting at the big table with him.  But he very quickly didn‘t need that anymore, and the vice president shifted more to an advisory role.  And...

MATTHEWS:  Do you believe that?  Or do you believe that the vice president is the rock who brought in himself, and that vice presidential selection committee that he headed up, and all of a sudden, he‘s the selectee, and then he brings in Cheney, along with all those neocon undersecretaries and deputy secretaries—didn‘t Cheney begin to really sort of organically grab more power, bureaucratically, than the president was able to grab? 

ALLEN:  Well, you‘re right about the fact that I think the president was a very willing audience for the points that the vice president had long wanted to make about going to war with Iraq. 

But as far as who‘s really in charge, don‘t forget, Chris, and we‘ve talked about this, that one of the first signs that the vice-president was not running the government, as maybe some people thought he has, was when the president called him and told him that Harriet Miers was his pick for the Supreme Court. 

MATTHEWS:  OK.  Here‘s what I would worry about.  If I‘m lost somewhere out in the middle of nowhere, and my wife‘s with me.  And she says, go to the right at this corner.  I can be the decider, I guess, in some theoretical sense.  I can say, no, I‘m not going to make a right.  But if I don‘t know where the hell I am, I‘m likely to say, OK, you say go right, I might as well go right. 

Is that the relationship between Cheney and Bush?  He knows this stuff.  He‘s been secretary of defense a generation.  He‘s on top of the Middle East fight Saddam Hussein.  He‘s been in that fight.  Bush takes his advice because he doesn‘t have any other basis to judge? 

ALLEN:  Well, I don‘t agree with that.  But Chris..

MATTHEWS:  OK.  Why not? 

ALLEN:  Chris, one way to look at this is, Secretary Rumsfeld had his chance.  And, Chris, I will tell you that I‘ve been shocked in the last week or so, as I‘ve done some plumbing on this topic, getting ready for the Baker Commission report about the enmity toward Secretary Rumsfeld in this west wing. 

I always figured he was their sort of guy, right?  Because he, like the president, didn‘t really care about his public perception and that sort of thing.  But people in there think that he‘s done the president a horrible disservice.  They feel that by testing his theories about a lighter military, in this context...

MATTHEWS:  OK.

ALLEN:  ... where they obviously did not belong—one person, who‘s extremely loyal, said to me, he has screwed the president.  This is someone who rarely speaks in such graphic language. 

And Chris, of course there‘s an element of that to saying, let‘s blame Secretary Rumsfeld, so we don‘t have to blame the president. 

MATTHEWS:  OK.  We‘re come back with that, Mike.  We‘re going to come back, because I want to talk about this because it seems like you‘re saying that—Bob Woodward in his book, who said that there was a move by Andy Card, the former chief of staff, to use Laura Bush and others to lever the president‘s power against Rumsfeld—is now reaching fruition today. 

What had begun, under a previous chief of staff, has been carried forward by Josh Bolton and the other people.  And we‘re going to talk to Norah O‘Donnell and the others when we come back, and Craig Crawford and Pat Buchanan.

Well be right back and find out more truth on HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re back with our panel led by Norah O‘Donnell to my left, Craig Crawford and Pat Buchanan.  It‘s led by your because you‘ve got a thought here about what‘s going on.  You cover the White House, you cover Washington.  What is going on with the president saying I want a new secretary of defense and I‘m taking him right now, and I‘m doing it by myself and Rumsfeld is gone and I want to talk to the Democrats now? 

NORAH O‘DONNELL, MSNBC CHIEF WASHINGTON CORRESPONDENT:  Well, Mike Allen is exactly right.  There‘s been building anger toward Secretary Rumsfeld for the failures in Iraq.  And what sources are saying is this happened over the—this has been happening for at least the past week.  Well, we know for the past several years, we know ... 

MATTHEWS:  White House sources?  Can I ask you White House sources?

O‘DONNELL:  We know—no, they‘re not White House sources.  We know that for the past couple of years according to Bob Woodward there have been different efforts by—whether it was—Secretary Card—White House chief of staff Card and Laura Bush as others to try and push him out.  But this past week, that it was White House chief of staff Bolten on one side and that it was Cheney on the other side who ...

MATTHEWS:  Fighting with each other? 

O‘DONNELL:  Well, or having a disagreement about whether Secretary Rumsfeld should stay or go.  I think you only have to look at the body language and the language in the Oval Office today...

MATTHEWS:  Wasn‘t that curt? 

O‘DONNELL:  ... to get a sense that Secretary Rumsfeld, had it been his choice, would not have cared to leave and he has always said I serve at the pleasure of the president and the president did not pleasure to have him anymore. 

MATTHEWS:  So it looked like a bum‘s rush? 

O‘DONNELL:  Yes. 

BUCHANAN:  Well, it has to be a bum‘s rush, it seems to me.  If Cheney is fighting for Rumsfeld, Cheney was a deputy to Rumsfeld 35 years ago, he considers him the man most influential in his life.  If Cheney is fighting for Rumsfeld, Rumsfeld doesn‘t want to go. 

MATTHEWS:  Wow. 

BUCHANAN:  I mean, that‘s my way I‘d look at it.

MATTHEWS:  But didn‘t this break the power vortex in the White House between Cheney and Rumsfeld?  I sometimes wonder if the president gets outnumbered by those guys. 

BUCHANAN:  Cheney becomes an enormously powerful dissident in this whole circle now with Gates and Condi. 

MATTHEWS:  He‘s now Colin Powell. 

BUCHANAN:  Well, yes, exactly.  But he‘s still got great influence on the president.

MATTHEWS:  OK, the reason I keep going back to Cheney is, people I talk to basically accept the fact that if this president did not have Dick Cheney as a strong partner in the argument to go to war with Iraq, we wouldn‘t have gone.  If he had said don‘t go, we wouldn‘t have gone.

O‘DONNELL:  Except that—my only thing is that may be true, except that the president says I accept responsibility.  And ultimately he does take—the buck stops with him.

MATTHEWS:  Ultimately, yes.  But the germination of this policy of going to Iraq—Mike.

ALLEN:  Chris, this was a way for the president to have the element of surprise, to come out and look strong at a time when he could have been at his politically weakest.

MATTHEWS:  Right, that‘s true. 

ALLEN:  Chris, look at the contrast between President Clinton in April ‘95 who came out and said I‘m relevant.  The Constitution makes me relevant. 

(CROSSTALK)

MATTHEWS:  Still calling the shots even though it was his worst day. 

ALLEN:  The phrase we‘re not hearing today is lame duck, and I think we would have heard that phrase today. 

BUCHANAN:  It‘s a very big move.

MATTHEWS:  We heard it last night from Tom DeLay.  He was talking about a lame duck majority.  That was before he realized what the numbers were going to say.  Get out of our way, Tom DeLay.  That was an amazing development between early last night and late last night. 

Anyway, join us again for one hour—in one hour at 7:00 Eastern for more HARDBALL.  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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