updated 11/13/2006 10:57:21 AM ET 2006-11-13T15:57:21

Guests: Marsha Blackburn, Jim Moran, Jim Gilmore, Steve Jarding, Chris Shays, Roger Simon, Jim Vandehei, Chuck Todd, Adam Zagorin

CHRIS MATTHEWS, MSNBC HOST:  The world turned upside-down.  Suddenly all the questions have changed, all the people who need to answer them have changed, except one, when do we leave in Iraq?  Let‘s play HARDBALL.

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

What a week this has been.  Tuesday night the Democrats won the House and Thursday the party took control of the Senate when Virginia Senator George Allen conceded defeat to his Democratic challenger, Jim Webb.  In less than a week, we have witnessed a seismic shift in political power as millions of Americans voted Republicans out and Democrats in. 

Over the past two days, President Bush has been on a charm offensive lunching with Democratic leaders in the House and the Senate.  With the Democrats taking control of Congress, some big changes are coming in terms of legislation, ideas and even the focus of congressional committees. 

HARDBALL‘s David Shuster what this report. 

(BEGIN VIDEOTAPE)

SEN. HARRY REID (D-NV), MINORITY LEADER:  The election is over, it‘s time for a change. 

(APPLAUSE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  As the new majority leader in the U.S. Senate, Nevada Democrat Harry Reid is now in overdrive, setting priorities and approving committee chairmen.  The most visible will be Joe Biden, who will run the Foreign Relations Committee.  Biden was a supporter of the Iraq war but has become a leading critic of the Bush administration‘s war strategy and management. 

SEN. JOE BIDEN (D), DELAWARE:  I would start off in January the week-long series of hearings.

SHUSTER:  Michigan‘s Carl Levin, who clashed repeatedly with outgoing Defense Secretary Donald Rumsfeld, will take over the Armed Services Committee.  Vermont‘s Patrick Leahy, who Vice President Cheney once told to blank himself, will run the Judiciary Committee and take charge of confirming or rejecting any nominees to the Supreme Court.

88-year-old Robert Byrd, for the third time in his career, will chair the Senate Appropriations Committee.  Over five decades, Byrd has funneled more than $1 billion to West Virginia and has long been recognized as a master of Senate rules. 

Another West Virginia Democrat, Jay Rockefeller, will chair Senate Intelligence Committee.  Joe Lieberman, who won his Senate race as an independent, has been assured he will chair the Homeland Security Committee.  And Montana‘s Max Baucus, a moderate who has often joined Republicans on issues like Social Security and taxes, will take over finance. 

In the House of Representatives, the next House speaker, Nancy Pelosi, as already started a dialogue with President Bush. 

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER:  We have our differences, and we will debate them, and that is what our founders intended.  But we will do so in a way that gets results for the American people. 

SHUSTER:  But if you wonder what the new Democratic Congress plans to do about your taxes, pay close attention to Charlie Rangel, the next chairman of the House Ways and Means Committee.  During the campaign, Republicans portrayed him as a symbol of tax-happy Democrats. 

UNIDENTIFIED MALE:  Raise taxes with New York liberal Charlie Rangel.

SHUSTER:  But Rangel says higher taxes will only hit the wealthiest Americans and many Americans, he says, will see tax cuts. 

REP. CHARLES RANGEL (D), NEW YORK:  Let‘s give a little relief to the working people, to those in the middle class. 

SHUSTER:  Wrangle has already infuriated Mississippi‘s congressional delegation by telling the “New York Times,” quote, “Mississippi gets more than their fair share back in federal money, but who the hell wants to live in Mississippi?”  Wrangle later said he did not intend to offend anyone. 

The House committee chair who may produce the most anxiety for the Bush administration is Henry Waxman, now in charge of government reform.  Waxman has long been one of the most aggressive investigators in Congress. 

Twelve years ago, he made a mockery of tobacco CEOs. 

REP. HENRY WAXMAN (D), CALIFORNIA:  How many smokers die each year from cigarettes. 

JAMES JOHNSTON, FMR. CHMN. & CEO, RJR TOBACCO COMPANY:  I will explain. 

WAXMAN:  No, I want you to answer.  We have a limited time. 

JOHNSTON:  I do not know. 

SHUSTER:  Recently, Waxman has had his eye on contracts in the Iraq war, especially Halliburton, the company Dick Cheney used to run. 

WAXMAN:  I was misled...

SHUSTER:  Waxman will now have vast investigation resources and the power to subpoena witnesses.  And as history has demonstrated from Vietnam to Watergate to Iran-Contra to the Clinton impeachment hearings, Congress is often at its most powerful when it is investigating the executive branch. 

Against all of this will be specter of the 2008 presidential campaign.  The political posturing in Congress will feature Republicans John McCain, Chuck Hagel and Duncan Hunter, and Democrats Hillary Clinton, Joe Biden, Evan Bayh and Barack Obama. 

(on camera):  Next week, the newest members of Congress—those just elected—will arrive for orientation, and although the official Congressional transition won‘t take place until January, Democrats are already making big plans to reshape Congress in a fashion that hasn‘t been seen on Capitol Hill for 12 years. 

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Thank you, David. 

Congressman Jim Moran is a Democrat from Virginia, and Congresswoman Marsha Blackburn is a Tennessee Republican. 

Congresswoman Blackburn, what message did you get out these elections? 

REP. MARSHA BLACKBURN ®, TENNESSEE:  Well, our message was that the American people want to see things change in Washington.  You have heard that.  We have to realize that they decided, that they gave us the House, the White House and the Senate.

And, Chris, we obviously overpromised and underdelivered for our constituents or for the voters in America.  They wanted to see aggressive action on reducing taxes, they wanted to see aggressive action on reducing what the federal government spends and we didn‘t get enough done for them. 

MATTHEWS:  You mean you weren‘t Republicans enough? 

BLACKBURN:  I guess you could say that we did not make the strides that they expected us to make once we had the House, the White House and the Senate in reforming the IRS, reforming federal agencies, securing the border.  And those are areas repeatedly that came back, wherever I was in the country, with different ones of my colleagues.  They wanted to see aggressive action on those items. 

MATTHEWS:  But the polling showed that the problem the people had with the administration and with the way things were going is Iraq and corruption.  You didn‘t mention those. 

BLACKBURN:  Yes, well, and, you know, when you talk about Iraq and you talk about the global war on terror, indeed people are very concerned about that.  And I have spent the past couple of days with many veterans of the Iraq war.  In my district, we have had Veterans Day celebrations and we have had a change of command at Fort Campbell. 

And when I talk with those veterans, they say, you know, we want to be certain that Congress doesn‘t get in here and try to set a timeline, and we want to be certain that we continue to listen to the commanders in the field when it comes to Iraq. 

And I hear a lot about that, Chris, but you‘re right.  The exit polling shows that Americans were very concerned about that, they were very concerned about what was happening with the Department of Defense.  Of course that‘s evident from Secretary Rumsfeld‘s resignation the day after the elections.  He was trying to do a lot of things at one time from dealing with Iraq to working with transformation to fighting a war. 

MATTHEWS:  Let me go to Congressman Jim Moran.  Congressman, this—how do you see things?  I think you‘re going to give me a different view here. 

REP. JIM MORAN (D), VIRGINIA:  Thanks—I would think.  Thanks for putting Marsha on, because there‘s someone I couldn‘t disagree more with.  We need a change of command at more than Fort Campbell.  We need a change of command at the White House. 

This election was about one person and one issue: George Bush and the Iraq war.  Corruption contributed to it, but it really was sending a message, and that message was sent as much by independents as it was by Democrats.  That‘s what the Congress needs to do, to show some checks and balances, to see to it that the administration comes up with some exit strategy sooner rather than later. 

MATTHEWS:  Well, I get the sense that some Democrats, including some of your leadership, are ready to deal with the president, they‘re ready to sign on to some new continuation of the Iraq war. 

MORAN:  Well, yes and... 

MATTHEWS:  What are they sitting down at the White House chatting with him about? 

MORAN:  Well, that‘s just pleasantries, you know.  Nancy can‘t refuse to meet with the president.  But this is really going to come down to the majority leader‘s race, Chris.  It‘s all about the war. 

MATTHEWS:  Would Steny sign on to the administration policy again, like he did last time? 

MORAN:  I think he—oh, I think he would.  I mean, I respect Steny.  He‘s a friend, but he has supported the Iraq war from the very beginning, still does.  Jack Murtha, obviously, doesn‘t, and that‘s what that race is going to be about, whether you have Nancy Pelosi versus Steny Hoyer and nuancing every position on the war, or whether you‘re going to have Nancy Pelosi and Jack Murtha insisting upon a different course in Iraq. 

MATTHEWS:  Let me go to Congresswoman Blackburn.  What do you think the president should give to the Democrats in terms of Iraq policy to forge a coalition?  What‘s his piece of this? 

BLACKBURN:  Well, you know, Chris, I think that the president made the right move.  He made a rational, practical decision when he accepted Secretary Rumsfeld‘s resignation, because he had to make a choice.  Was he going to put the focus on being certain that we finish our work in Iraq and finding a way to work with the Democrats on this, or was he going to sit there and have the bickering over Secretary Rumsfeld and how he had gone about handling the issues in Iraq? 

And when I talked to so many people and a lot of women, they say, you know, we understand why we have to fight the global war on terror.  Did America make mistakes in Iraq and did we do everything right?  You know, are there things that should be done differently? 

We can sit there and debate all of those nuances and quite frankly, Chris, I think it‘s very good that the American people are engaged in that debate.  And we have to accept the fact that, yes, indeed, they have spoken.  Now I thought it was very interesting today that Iraqi President Talabani came out and said that when he visited Washington last month, he was assured by the Democratic leaders that they were not going to push for a hasty and quick exit from Iraq.

MATTHEWS:  But do you think we should have entered Iraq?

BLACKBURN:  Do I think we should have entered Iraq?

MATTHEWS:  Yes.

BLACKBURN:  Well, you know, you go back and you look at what we knew then and the decisions, the matrix that you have for making that decision at that point.  And if I were there—I would...

MATTHEWS:  ... Do you really believe—I‘m sorry, do you really believe that we went into Iraq because we thought they might have a nuclear device they could deliver across the Atlantic Ocean from around the world on some sort of glider plane or whatever they were talking about?  Do you really think they had the ability to hit the United States with a nuclear weapon?

BLACKBURN:  Chris, I can tell you right now that one of the things that went into that decision matrix for so many members of Congress, and had I been there, I certainly believe I would have felt the same way—we have to look at our national security, protecting our people, looking at what happened to us on September 11, and not forgetting that on September 11, we stopped responding to acts of terrorism as acts of civil disobedience, which had been done through Republican and Democrat administrations going back to 1978.

MATTHEWS:  I‘m just asking you a fundamental question.  Do you believe we should have—before we talk about exit strategies, did you believe we should have entered Iraq?  Do you think knowing what you know now, knowing everything you know now, would you have voted with the president to go into Iraq?

BLACKBURN:  Chris, but you‘re asking for something—you‘re asking for different decision matrixes.  Going back then, of course, when you look at what was on the table then, Chris, and the decisions that were made, and look at the concerns over security of this great nation, going into Iraq was the right thing to do.

MATTHEWS:  I‘m asking you would you have voted for knowing all you know now—in other words, you haven‘t answered me.  You said that knowing all that you know now, you would have gone into Iraq.  Why is it funny?  It‘s not funny, it‘s a war.

BLACKBURN:  I don‘t find it funny, it is very, very serious.

MATTHEWS:  But why don‘t you answer my question?  Should we have gone into Iraq?

BLACKBURN:  I have answered your question. 

MATTHEWS:  What‘s the answer, yes or no?

BLACKBURN:  Going into Iraq, yes, you go into Iraq because you have a situation there that has to be addressed.  You have a situation in the Middle East that is going to be address it.  As one of my constituents said last week, you know, you‘ve got to be certain that we‘re not fighting the war on terrorism here in America.

MATTHEWS:  OK.

BLACKBURN:  And you‘ve got to fight that.  They have had a 20-year head start.

MATTHEWS:  OK, let me get back to Congressman Moran.  I‘m sorry to browbeat you, but it‘s hard to me...

BLACKBURN:  ... Chris, that‘s fine.

MATTHEWS:  I‘m just trying to get answers.  It‘s hard on this show sometimes.

BLACKBURN:  This is a great decision.  You know, it‘s a great discussion for our nation to have.  And being serious about the war on terror is where we ought to be because it is a very serious issue and it‘s a war we have to win.

MATTHEWS:  We agree on that.  Mr. Moran, how do we get out of Iraq?

MORAN:  Well first of all, the people that took us into Iraq are not the ones who are going to get us out of Iraq.  Secondly, there wasn‘t any senior military officer who thought that Saddam Hussein had anything to do with this global war on terrorism, nor was he any threat to the United States.

The way we get out of Iraq is to make it clear to the Iraqis that they‘re not responsible for their own future.  If they‘re going to have a civil war, then they‘re going to be the ones that are going to bear the brunt of the casualties, not American soldiers. 

We put advisers in there and make sure we‘re able to keep foreign terrorists out.  But they‘re going to have to determine their own fate.  And we look back at the history, when the British withdrew from Iraq, and we understand that when the British withdrew, they went after all of the Iraqi leaders who had corroborated with the British.  They executed most of them, dismembered.  In fact, and then they went about getting rid of all the foreign terrorists.  History is likely to repeat itself.  The problem is unless we seize the initiative now, it‘s going to happen later rather than sooner.

MATTHEWS:  Do you believe that President Bush will reach an agreement with the majority of Democratic congresspeople?

MORAN:  No, but I think President Bush is now marginalized.  I think things are going to...

MATTHEWS:  ... Congresswoman Blackburn, do you believe that the president will be able to reach an accord with most Democrats on an exit strategy? 

BLACKBURN:  Well, I certainly think that he is, and what we‘re going to see—Peter King, my good friend, was on your show yesterday and had some good things to say about this issue and looking at the next year and what takes place.

And Chris, what we have to realize is the Iraqi people have been working and trying to take control of their government and we—the 101st airborne has come back, they have been turning over areas of Iraq for the Iraqi civilian and military forces to take charge of. 

That‘s what should be happening.  Is it happening fast enough for most of us?  Probably not.  Do we want our troops home?  Absolutely we do want those men and women home.  Do we want to stabilize Iraq?  But I think it‘s interesting that President Talabani has gone in.  He‘s talked about the foreign invasion that is taking place in Iraq and their frustration with Syria, with not blocking foreign troops from coming into that country and then we hear from one of the al Qaeda organizations that they have lost 4,000 fighters that are foreign fighters going into Iraq. 

So we need to be certain that the Iraqis are moving forward, that that government is standing up, that the civil society is standing up, that they are taking control so that we are able to see the type—you know, the type steps forward that we‘re wanting to see there.

MATTHEWS:  Thank you very much for joining us, Congresswoman Marsha Blackburn—last point Congressman, do you think there will be a deal?

MORAN:  There has to be a deal, but there are only two options.  It‘s Jack Murtha‘s option or it‘s George Bush‘s option.  Jack Murtha is going to take us out of the war.  He has a plan to do that.  And I think the American people have said this is the plan they want their government to follow, not George Bush‘s approach because George Bush is going to leave us in there indefinitely trying to save face for a decision that he shouldn‘t have made in the first place.

MATTHEWS:  Do you fear a bunch of Democrats might get suckered in to signing on again the way Lieberman and Gephardt and the others did before?

MORAN:  Yes, I do.  Well, of course, because there are a lot of things at play here.  But we ought to be focusing on Iran more than Iraq.  We have got to get Iraq off the table and the Iraqis are going to have to take control of their own country.  But the initiative has to be seized right now, and this is the message the American people have sent to us, let‘s follow it.

MATTHEWS:  Congressman Moran, Congresswoman Blackburn.  I think we know where the debate is right now.

Coming up, we‘re going to talk about the new party in power and how it all came down to Virginia with two men who know it well, Webb campaign adviser Steve Jarding and former Virginia governor Jim Gilmore.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The new majority was decided in the Old Dominion, Virginia, so let‘s bring in a couple of fellows who know a lot about that state and what it could mean for the future.

Steve Jarding is a Democratic strategist who helped guide Jim Webb to victory over Senator George Allen.  And one of the great men of Virginia, Jim Gilmore, the former governor of Virginia and former chairman of the Republican Party.

So how‘s your party doing, now that the party‘s over?

JIM GILMORE, FORMER GOVERNOR OF VIRGINIA:  Well, we‘re certainly not happy that the Democrats are in charge of the House and Senate.  But you know, Chris, I think it‘s an opportunity for us.  I think it‘s a chance to reset the table and begin to think like conservatives again. 

We shouldn‘t be the party of earmarks.  We should be the conservative party of controlling spending and delivering some value down into the middle class.  That‘s what we should be doing. 

MATTHEWS:  So you think the main thing that decided this election was the failure of Republicans to be Republicans?

GILMORE:  I absolutely do.  I think that just—and furthermore I think it‘s a chance to get back to where we need to be. 

MATTHEWS:  Could you have beaten the war issue, if you‘d just been—if your party had been clean: no Mark Foley problem, no problem with—with Abramoff, none of that sleaze problem, none of the big spending problems?  If you‘d just been good Republicans you could have dealt with the worst?

GILMORE:  I think—I think it‘s fair to say that all of it combined together was influencing the results across the entire United States.  We‘d have a better chance, of course, if all those other things were going on.

But I think the war issue is legitimate.  I think we have to address the issue of where we go from here.  You can‘t leave.  You can‘t stay.  Obviously, we‘ve got to find a middle ground.  We‘re going to have to find a more creative policy.  And I think that‘s what the American people...

MATTHEWS:  Why is a middle ground necessarily better than either extreme, either staying the course or getting out?  Why do you think sort of staying is better than getting out?  What can we get done in six months or a year or a year and a half, because we can‘t stay much more than that, that we couldn‘t get done by just leaving now?

GILMORE:  You know, I think what we‘re going to have to do is think about all the elements of American foreign policy.  We‘re going to have to think about diplomacy, economic power, as well as military power.

MATTHEWS:  Keep focused on Iraq?

GILMORE:  Focused in Iraq and, frankly, in the entire Middle East. 

And I think that we have to be sure that we remain on the moral high ground, also.  We—everybody across the Middle East has to know that we‘re the right guys and the good guys that are trying to help and to lead things in the right direction.  I‘m not sure we‘ve been able to achieve that so far. 

MATTHEWS:  Steve.

STEVE JARDING, WEBB CAMPAIGN ADVISOR:  Well, I‘ve got—I mean...

MATTHEWS:  Let me ask you a different question, from your perspective.  The governors explain what the Republican Party faced and what it wasn‘t able to handle and what it couldn‘t handle otherwise.  The Democratic Party won because of Iraq, and in your state, Virginia, because of the “Macaca” comment, right?

JARDING:  No, I don‘t agree with that entirely.  Certainly Iraq, but you go so southside Virginia, Southwest Virginia, the issues were economics.  Those percolated higher than the war.  The rest of the state...

MATTHEWS:  OK.  What‘s wrong with the economy down there?

JARDING:  The economy is not good.  We still have too high of unemployment.  We don‘t—the wages are down.  We‘ve had wages down six years in a row. 

And I respectfully disagree with the governor.  I think the Republicans were being Republicans.  I mean, they gave away $8.7 trillion.  That‘s our debt now.  They went into a war that—with no rationale. 

They‘ve not been good for the working class. 

They‘ve not been good for people that need health care.  We‘ve got 47 million Americans without health care.  Another 45 million lack it for significant portions of the year. 

We‘ve got wages down six years in a row.  Even though productivity is up 15.7 percent in those same six years, 73 percent rise in health insurance premiums.

I mean, the litany, Chris, goes on.  It‘s long.  It‘s a problem.  And part of the problem is I think Republicans were ignoring those thing, because they were busy giving money to the top 1 percent.  The top 1 percent got 43 percent of that $1.7 trillion tax cut, Chris. 

MATTHEWS:  And you think that was the big issue?

JARDING:  Well, I think people said, “Wait a minute.  We need fairness in government again.  We need equity.  We‘re getting screwed out here in middle America.

MATTHEWS:  How come, if that‘s true, that—I‘ve just been studying the Democratic plan for the agenda for next year—I don‘t see that there.  I don‘t see any plan to repeal the Bush tax cuts.  If that‘s what you believe, why don‘t you say so?

JARDING:  I will say so. 

MATTHEWS:  But it‘s not in the Democratic plan. 

JARDING:  Well, they should put it in the plan.  They should put it in the plan, offer an agenda that leads.  They should talk about balancing the budget. 

MATTHEWS:  I have yet to hear Nancy Pelosi say, “We‘re going to repeal the tax cuts.”

JARDING:  Well...

MATTHEWS:  You think they should?

JARDING:  Well, I think they should for the upper levels, they sure should, because it was unfair, Chris.  I mean, the top 10 percent got 87 percent of the tax cuts. 

MATTHEWS:  Do you think the Democrats could cut a deal with the Republicans on the war?  Instead of opposition?

JARDING:  They should absolutely work together.  A war should not be politicized. 

MATTHEWS:  But once they do it, they‘re signing on to it.  And every casualty from the day they sign on, they‘re responsible for it. 

JARDING:  Oh, but Chris—but the problem is, it‘s the president who wasn‘t signing on.  The president went his own way on this.  And I think the Democrats have to offer an alternative, and it‘s the president that‘s going to have to buy it. 

MATTHEWS:  Governor?

GILMORE:  Chris, I‘m not surrendering one bit of the middle class and the working class people to the Democratic Party.  The Democrats always end up raising taxes, and the people who always end paying them are going to be the working class and the middle class.

We‘ve got to control spending and push those tax cuts down exactly to those people.  And that‘s what conservative Republicanism is, and that‘s what we should be doing.

MATTHEWS:  What went wrong with your party?  You mentioned something -

there‘s no doubt that your party came with a very clean message in ‘94, which was less taxes, better government, cleaner government, less Washington.

GILMORE:  Smaller government, yes.

MATTHEWS:  In fact, Newt was telling—Newt Gingrich was telling keep your press secretaries back in the district.  Keep your families back in the district.  Don‘t get caught up in the Washington-Potomac mentality. 

But how did it happen that you get caught up in it?

GILMORE:  I think...

MATTHEWS:  You have Denny Hastert out there and Reynolds and all those, covering for Mark Foley and all this stuff going on.  It was all cover-up.  It was a Washington game.  How did that happen?

GILMORE:  I think the entire process has been a problem.  When you get in the majority, you have a tendency to want to stay in the majority.  The Republican Party has to stress its values.  And that means less government, less taxes, push something down into the working and middle class. 

I did this when I ran for governor.  I carried northern Virginia.  I spoke on education and I spoke on tax cuts, too.  And that‘s what the Republican Party needs to do. 

MATTHEWS:  If John Warner retires next time, will you run for that seat?

GILMORE:  I have a lot of choices and options.  But we don‘t know what John Warner is going to do.

MATTHEWS:  It‘s you against Tom Davis, against perhaps George Allen. 

That‘s a busy field. 

GILMORE:  It‘s a busy—it‘s always a busy field in Virginia. 

MATTHEWS:  Everybody wants to be senator for Virginia.

GILMORE:  It doesn‘t matter what wants to be what; it matters what we stand for, Chris. 

JARDING:  And what—Chris, what the Republican Party has stood for and the problem is, is they haven‘t been standing for working Americans.  They have not been doing it.  The numbers don‘t reflect it.  You can talk all you want.

You mentioned a Contract with America.  Contract with America said if we don‘t balance the budget, it literally says kick us out.  It said, if we don‘t give you term limits, kick us out. 

There‘s over 100 members of Congress today sitting in Washington who signed that Contract with America.  That thing was a sham.  You can put it on a piece of paper, but if you don‘t stand by it. 

MATTHEWS:  It wasn‘t meant to be a sham, was it?

JARDING:  I don‘t know.  I mean, you hope not.  But how serious were they when they control everything and none of that stuff is getting done? 

GILMORE:  But the Democrats don‘t have a platform and a program either, Chris.  They haven‘t put anything forward that they‘re running on.  I see this as...

MATTHEWS:  They‘re going to raise the minimum wage.  I hear that all the time. 

GILMORE:  You hear that for sure.  But they‘re going to end up paying for it by higher taxes on working people.  Now here‘s the fact.  We have an opportunity here...

JARDING:  That‘s not true. 

GILMORE:  We have an opportunity—we Republicans have the future in our hands.  This is an opportunity for us. 

MATTHEWS:  OK.  I think you‘re running for senator.  You sound like a

now he sounds like a clean conservative. 

GILMORE:  I don‘t know—Allen does.

MATTHEWS:  He sounds like Oliver Cromwell here.  He‘s going to take it back to the clean state.  Good luck, Governor.  You will run, I think you‘re going to run. 

Steve Jarding, congratulations.  You won in Virginia.  I think you guys have got—two in a row you‘ve won now.  Right?

JARDING:  Yes.  We‘ll take them when we can get them. 

MATTHEWS:  I like people who win elections.  Thank you, Governor. 

Thank you, Steve Jarding.

Coming up next, a bunch of familiar Republican faces went down in defeat on Tuesday.  We‘re going to talk to one of the candidates who managed to win, Connecticut‘s Chris Shays. 

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Now to Connecticut, where U.S. Congressman Chris Shays won his 11th term in the House of Representatives, narrowly defeating outspoken antiwar candidate Diane Farrell.  The race set a high national profile because Shays, a longtime supporter of the Iraq war, announced during his campaign that U.S. policies there aren‘t working and called for Defense Secretary Donald Rumsfeld‘s resignation. 

Congressman Shays joins us now. 

Congressman, thank you for joining us.  Where do you think we have to go in Iraq?

REP. CHRIS SHAYS ®, CONNECTICUT:  There‘s four things we need to do, Chris.

The first thing is we need set a timeline to transfer Iraqis to patrol the streets and get our guys from patrolling the streets.  The Iraqis need to start doing the police work.  And by doing that it incentivizes them, the Shias and the Kurds and the Sunnis, to start to work out their differences. 

The second thing we need to do is set timelines for the Iraqis, the Shias and the Sunnis, in particular, to work out their differences on reconciliation, on de-Ba‘athification and where the oil goes and federalism.

The third thing you need to do is we need to get the six—and this is Dennis Ross‘ plan.  I think he‘s right on target.  We need to get the six neighboring countries to come together, Iran included obviously, and say, “You know, if we fail, Iraq gets divided into three parts.  None of you want that.” 

And finally, I think you need a plebiscite.  If two-thirds of the Iraqis aren‘t going to support our being there and our plan to withdraw, then we leave even sooner.  They need to start showing some support for our troops, or otherwise we just need to leave. 

MATTHEWS:  What about the—the administration?  They have a strong ideological bend, very much inhabited by neoconservative thinking, very hostile to a lot of those Arab governments?  Why do you think this president will change his mind and begin talking to Bashar Assad or to Ahmadinejad in Iran?

SHAYS:  Well, he needs to do that and, frankly, we need to have embassies in every country, including North Korea and Cuba. 

But the bottom line is, this president wants to have a success.  He wants to bring our troops home eventually.  And I don‘t think he does it without doing exactly what you described. 

MATTHEWS:  Well, let me ask you about the prospects on this.  You know, the Democrats may wonder why they should sign onto a dying policy.  How do you get them to join up in any kind of coalition when they see—they might see themselves getting blamed for what‘s to come? 

SHAYS:  Yes.  I‘m so happy you asked me this.  You know, we‘ve got to be Americans first, not Republicans and Democrats.  And when you said sign on and make it their own, they‘ve got to make it their own. 

I mean, we—we went into Iraq on a bipartisan basis.  Jim Moran is wrong about that.  Two-thirds of the House voted to go in, three-quarters of the Senate.  And we‘re only going to be able to leave Iraq successfully, and I‘ll put quotations around “success”, if we do it on a bipartisan basis. 

So if the Democrats love their country, they‘ll stop thinking about its impact on them politically and think about how they can help.

MATTHEWS:  Do you still have faith in President Bush?

SHAYS:  Yes, absolutely.  And I think, you know, ironically, Jim Moran is totally wrong on this.  I mean the president is not going to be marginalized.  I mean, we—you thought that when we were in charge.  And I remember him saying almost the same thing.  And President Clinton proved he was not marginalized. 

MATTHEWS:  You‘re so right.  You‘re so right.

SHAYS:  Yes.

MATTHEWS:  So you still think it‘s still going to be a bipartisan decision, it‘s going to have to be, to get successful in developing a strong policy?

SHAYS:  We have men and women dying in Iraq, and the only way we help our troops is to work together. 

MATTHEWS:  You‘ve been over there so many times, 14 times I‘m told.  What do you expect to find when you go back again in Iraq?  What do you want to find out about?

SHAYS:  I—I want to find out the impact our election has had on the Iraqis.  Because my 13th and 14th visit were very disappointing.  I was there in July and then again in August. 

They‘re content to have us do the heavy lifting.  They don‘t want to do the same kinds of things that they did in ‘05.  In ‘05 staying the course made sense.  They elected a government.  They created a constitutional convention, created a constitution.  They had to ratify the constitution.  Then they had elections, pretty impressive. 

This year they‘ve basically been treading water.  We need to motivate them.  And if they‘re not motivated, we need to leave. 

MATTHEWS:  OK.  Congressman Chris Shays, congratulations.  What a tough year you‘ve had.

SHAYS:  Thanks.

MATTHEWS:  And you have proved the Democratic process works; you got

re-elected.  Thank you, sir. 

Up next, we‘ll talk more about what will happen in the Democratic controlled Congress with “The Hotline‘s” Chuck Todd, the “Washington Post‘s” Jim Vandehei and Bloomberg‘s Roger Simon.

And this Sunday on “Meet the Press”, Tim interviews senators John McCain and Joe Lieberman.  NBC News has learned McCain will set up an exploratory presidential committee for a 2008 run.  And he‘ll talk about it on “Meet the Press”.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(NEWSBREAK)

MATTHEWS:  Welcome back to HARDBALL. 

How far will Democrats go with their oversight subpoena power?  Will they flex their muscle in probing the Bush administration‘s use of prewar intelligence on Iraq, the warrantless eavesdropping program and the CIA secret prisons?  And could multiple investigations backfire on them?

For a look at the new Democratic committee chairs and what‘s on their agenda, we welcome our panel.  HARDBALL political analyst Chuck Todd is also editor in chief of “The Hotline”.  Jim Vandehei is with the “Washington Post”.  And Roger Simon‘s a political correspondent for Bloomberg. 

Roger, is it your sense the Democrats are going to go in there and investigate and investigate and nail this administration for the way we went into Iraq, the energy policy that perhaps favors the big energy companies, the oil companies?  What are they going to do with all this power?

ROGER SIMON, BLOOMBERG POLITICAL CORRESPONDENT:  I think Iraq is definitely on the table in terms of investigations and one thing they want to do is bring the generals back in front of them to answer questions about how they think the war is going.  Did they have the equipment they needed?  Did they have the troops they needed?  The Democrats are anticipating that the generals will say, no we didn‘t.

I think things like impeachment is off the table.  There was talk of it.  The left wing blogosphere of the Democratic Party definitely wants it.  That‘s not going to happen.  I think it will be very focused on the Iraq war.

MATTHEWS:  Jim, give me your sense of how much they‘re going to go after the bad guys as they see them and how much they‘re going to try to develop a bread and butter agenda?

JIM VANDEHEI, WASHINGTONPOST.COM:  I think a lot on both.  They are certainly going to be under a lot of pressure to do some investigating and I think they think that there was a mandate, because so many members actually went out there and campaigned on the idea that we need more oversight.  And they are definitely going to bring a lot of oversight.

They‘re going to look at every aspect of the run-up to the war.  Why weren‘t there any weapons of mass destruction.  But also, you know, I think what will be the most important hearings right now are the conduct of what‘s happening over there.  How do we get out of there?  What‘s our military strategy and what are the alternatives?  And I think that‘s what‘s going to dominate the short term, because this is all going to happen at the same time that you have the Baker Commission coming up with it‘s own set of recommendations, which you know Congress is going to have to chew over.

So that‘s what you‘re going to be hearing for the first couple of months and it‘s a debate that obviously the American people want to have and that we need to have.

MATTHEWS:  Do you think they‘re going to go after the vice president and the role of intel in getting us into the war, especially the 16 words that somehow get through their office in the president‘s state of the union and said we‘re about to have a mushroom cloud and the rest of that stuff to scare us into war?  Do you think they‘ll really go into that and maybe that might endanger the tenure of the vice president?

VANDEHEI:  You‘ve got to be careful with the going after.  I think that‘s what Democrats are thinking, like they want to have a very strenuous oversight, but they don‘t want to make it look like they‘re on a witch hunt  That‘s why they dismiss this idea of an impeachment.  And will they look at Dick Cheney?  I think if you take a close look, not just on Iraq but they‘re going to take a look at those hearings—or those meetings that he had to develop the energy policy in the first term.

So he‘s certainly going to be a target, but they know that the American people don‘t want just partisanship and just drill them, drill them, drill them with hearings.  They know that they‘ve got to show that they can govern, so it‘s a fine line.  They‘re trying to strike that balance right now, but in a lot of meetings this week, I think we‘ll see over the next couple of months how they try to strike that balance.

MATTHEWS:  Chuck Todd, Joe Biden was on this week and he said that the Democrats are going to have Fulbright style hearings, the kind of hearings that Senator Fulbright from Arkansas held back in the ‘60s about the Vietnam War to educate us to how we got into this war and how we‘re doing it.  Won‘t that play well?

CHUCK TODD, THE HOTLINE:  I think some investigation into the war and the conduct of the war and maybe how to get out might be done in hearings like that.  But I actually think they‘re going to use their investigatory power not as much about Iraq, but you know, maybe a Halliburton investigation or something like that.  But I think they‘re gunning for corporate America.  I think you‘re going to see more CEOs having to raise their right hand and swear on a Bible than you will administration officials with a Democratic Congress.

MATTHEWS:  Let me go back to Roger.  Carl Levin is top critic of the war.  He‘s from Michigan, he‘s a Democratic senator, he‘s got armed services.  He can go into the whole question of inadequate armor, inadequate everything.

SIMON:  He could, but I think as Jim indicated, what the Democrats have to do is walk a narrow line.  They‘re going to investigate the war, but they‘ve got to be seen to be making progress.

This can‘t be about retribution, this can‘t be about extreme partisanship.  If the voters sent any message, it‘s that they wanted change.  They wanted an end to hyperpartisanship in America.  The Democrats have to end the war.  If they can—even though people say oh, it‘s impossible, it‘s the president‘s war, all they can do is cut off funding, they can‘t do it, they have to end the war. 

The American people do not like this war.  Anything they do of an investigative nature that has a positive end, that will play well with the American people.  If it‘s just about retribution, it ain‘t going to work. 

MATTHEWS:  Well wouldn‘t the American people like to know that they were lied into the war, rather than they were stupid enough to go along with the war?  Wouldn‘t they like to hear that?

SIMON:  I think the American people already know that.  I think they sent that message by who they sent to Congress.

MATTHEWS:  OK, up next we‘re going to look at these elections and how they might change the presidential landscape for 2008.  Who‘s in and who‘s out?  Well we know there are at least four major casualties of this last campaign in the presidential fight for 2008.  Let‘s talk about them first.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Chuck Todd of the “Hotline,” the “Washington Post‘s” Jim VandeHei and “Bloomberg‘s” political correspondent Roger Simon.

Let me go to Jim VandeHei.  Which presidential candidate has come out of this election in good form?  I mean, McCain‘s apparently going to announce an exploratory committee within a couple of days.  In fact, Sunday apparently.

Who‘s gained from this election?

VANDEHEI:  George Allen has not gained.  I would say, John McCain, certainly though he still has a problem of being so closely aligned with the war, but I think by coming out right after the elections and saying we need more troops, we need more troops.  It allows him a couple of months from now to say listen, maybe things didn‘t work out, but I always had a different plan.  And Hillary Clinton, I mean, she raised so much money, you know, was essentially unopposed for reelection, won, hasn‘t been controversial.  So she certainly emerges much stronger and I think Barack Obama, not necessarily because of what happened in this election, but just because of what‘s happening to him over the last couple of months is also somebody who I think is on the rise.

MATTHEWS:  So Hillary, Barack and John McCain are the big winners of this season?

VANDEHEI:  Yes.

MATTHEWS:  Chuck, your thoughts on the big winner?

TODD:  Actually I think—I don‘t think Hillary was a big winner out of this election because of where the Democratic Party, what kind of Democratic Party it became, this big tent.  You know, this economic populism, there‘s a lot of non-free traders there, non-DLC types, non-Clintonian. 

I actually think message wise, the guy that fits the Democratic Party, this new Democratic Party better, is a John Edwards, who‘s been doing this economic populism stuff for the last year and a half.  And somehow, he may fit this new Democratic Party better.  On the Republican side, I agree with Jim.  McCain is the big winner because when you look at what the Republicans, who the Republicans lost in this election, they lost independents and they lost them badly.  John McCain obviously can woo independents.

MATTHEWS:  Roger?

SIMON:  I think McCain was a loser not because—I mean he energetically campaigned for a lot of Republicans so the party likes him.  However as Jim indicated, the issue is the war.  And McCain has a full-throated, unnuanced support of President Bush on this war.  In fact McCain has said he thinks we should send more troops.  He admits that politically impossible.

MATTHEWS:  Would somebody tell me how he‘s any different than Bill Kristol or any of the neos who pushed this war?  How he‘s different than Kagan, different than Jon Kyl, different than anybody on the far right on this war?  How is he different from the far right?

VANDEHEI:  Because he‘s John McCain. 

(CROSSTALK)

VANDEHEI:  There‘s some reason—there‘s a brand called John McCain that seems to be popular despite the fact that he supported the same war that these guys started, and for some reason it doesn‘t seem like he‘s been as scuffed as other people by the war. 

Part of that is, is like everyone feels like he‘s a straight shooter and maybe he‘s gotten a free pass in the past from the press, but he continues to be very popular, and I don‘t think that he emerges from this in any more trouble.  For some reason, it doesn‘t seem like Iraq has brought him down.

Now, maybe it will.  Maybe in the end if this war looks as bad two years from now as it does now that that is just too big a hurdle for him to overcome, but he has shown an ability to distance himself from these things, because of his positions on whether it‘s campaign finance reform or being a straight shooter on budget.  Like for some reason, there‘s something about John McCain that allows him to separate himself from these issues? 

MATTHEWS:  Are we going to have a change election next time or a conformation election, Chuck?  And if it‘s a change election, where does McCain fit in?

TODD:  WELL, I think it‘s going to be a change election, and that‘s the problem—I mean, that‘s a problem that John McCain has, because he‘s sort of trying to position himself as heir—as the heir apparent in the Republican Party, but at the same time, he‘s trying to bring a different style of leadership and maybe a different style to the presidency. 

So I think, look, any time you have a new, even open race for the presidency, it‘s more likely going to be change, because both the Republicans are going—whoever the Republican nominee is, trying to be different than Bush or he‘s going to be advocating a change of some sort.  And of course, the Democratic candidate is going to be nothing but change, no matter who that person is.

MATTHEWS:  Let me ask you, Roger, I only have a chance for a minute.  Do you think John McCain helped himself in the view of the press that‘s covering this campaign, the political press, by the way he reacted to the John Kerry misstatement?  Which is what it was.  He‘s treated it as if John Kerry, his old war buddy, was actively out there trashing people who enlist, by saying they‘re not as bright and therefore they get somehow drafted into the military?  That‘s a hideous description of what happened. 

SIMON:  I think the bloom is off the rose between John McCain and the press this time, and maybe that‘s a good thing.  Maybe too many reporters gave their hearts to John McCain the first time.  And McCain never asked them to, but they have given him a break or two or three or four or 500. 

MATTHEWS:  Because he‘s served in Vietnam, and a lot of us didn‘t.

SIMON:  Well, it‘s one thing.  One thing is he‘s a wonderful guy to cover, because he gives you access about 20 hours a day.

MATTHEWS:  That‘s true.

SIMON:  And that‘s what reports want, he‘s always there for you.  He‘s always there.

But let me answer a different thing.  Hillary Clinton helped herself this time, because she wasted $29.5 million, the most money spent by any candidate in this election, by running against a guy she didn‘t have to spend $29 to beat.  That was to send a signal to Democrats, to intimidate them from running against her.  Seh was saying, I can squander $29.5 million and you can‘t even raise $29.5 million. 

MATTHEWS:  Unbelievable.  We‘ll talk about—it‘s potlatch, is what it is.

Thank you very much.  I can burn up more property than you can.  Thank you, Chuck Todd.  Thank you, Roger Simon.  Thank you, Jim VandeHei.

When we come back, we‘ll talk with “Time” magazine‘s Adam Zagorin about charges being brought against Don Rumsfeld in Germany for alleged abuses at Abu Ghraib and Guantanamo.  This should be interesting.  You‘re watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  And it‘s time.com‘s exclusive.  Adam Zagorin reports that Donald Rumsfeld could be the subject of a criminal investigation for his alleged role in abuses at Abu Ghraib and Guantanamo prisons.  Legal documents are expected to be filed next week in Germany against Rumsfeld and other high-level U.S. officials, including former CIA Director George Tenet.

Adam, welcome and explain.  Can another country bring charges against somebody from our country and our government about abuses against somebody from still another country in the Middle East? 

ADAM ZAGORIN, TIME:  Well, according to German law, they can.  And that‘s what the German prosecutor will be called upon to decide when these papers are filed next week. 

There was an attempt to do the same thing two years ago, which did not work out.  The prosecutor said that the U.S. government and the U.S. courts and authorities would adjudicate these matters, and therefore the Germans didn‘t need to. 

The argument this time is that nothing has happened in the U.S. system that would—to deal with the alleged involvement of Rumsfeld, Tenet, et cetera, in these matters, and therefore it‘s up to the German court.  And this has a place in German law and a statute that created universal jurisdictions for these kinds of...

MATTHEWS:  Because of the Holocaust? 

ZAGORIN:  Well, the law was actually—the statute in question was passed in 2002, and obviously the Holocaust occurred many years before that.  But, yes, I mean, that‘s part of the background. 

MATTHEWS:  Well, universal jurisdiction is quite a claim. 

ZAGORIN:  Yes, it is, and the United States can be expected—I mean, not just Rumsfeld, but the United States is expected to contest the jurisdiction of the court.

MATTHEWS:  Now, that‘s the question, excuse me, I could ask this more dramatically, like so what?  If I got condemned in some country I never intended to visit again, is that the end of it? 

ZAGORIN:  Well, I think that the spectacle of if this matter should proceed, which we don‘t know, of, you know, senior U.S. officials being called to account in a foreign court for, you know, their alleged activities would potentially be quite damaging. 

Whether Don Rumsfeld could be, you know, arrested in Germany or something is frankly not clear.  There have been other cases, for example, involving General Pinochet, the former dictator of Chile, where he was held in house arrest, if you will, in Britain, pursuant to an attempt by a Spanish judge to bring charges against him.  He spent months and months and months in Britain in kind of a legal limbo, and ultimately went back to Chile.  He was a man already in his 80s at that point. 

MATTHEWS:  So what should—what should—should former—or about to be former Secretary of Defense Rumsfeld go out and hire a lawyer who speaks German?  I mean, is that what he has to do? 

ZAGORIN:  I don‘t think we‘re quite at that point yet.  The German prosecutor will look at this case and decide whether to take it.  If the prosecutor does not take the case, there‘s very likely to be an appeal.  And if that appeal is unsuccessful, I‘m told that it‘s quite likely they would try and go to the highest court in Germany.

MATTHEWS:  OK, thank you very much, Adam Zagorin with “Time” magazine.

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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