updated 1/25/2007 1:10:47 PM ET 2007-01-25T18:10:47

Guests: Tony Snow, Terry McAuliffe, Margaret Carlson, Kate O‘Beirne, Howard Fineman, Eamon Javers, Jack Reed

MIKE BARNICLE, GUEST HOST:  The Senate is ready to rebuke President Bush‘s troop escalation in Iraq but how many Republicans will join Chuck Hagel to tell the president he is wrong?

Let‘s play HARDBALL.

Good evening.  I‘m Mike Barnicle in tonight for Chris Matthews. 

Welcome to HARDBALL.

Last night in his State of the Union address President George Bush asked Congress to give us plan to escalate the war in Iraq a chance.  Today the Democratic-controlled Senate Foreign Relations Committee approved a nonbinding it resolution saying Bush‘s plan to increase troops in Iraq is not in the national interest.  We‘ll talk about the president‘s response in a moment with White House press secretary Tony Snow.  Plus Senator John Kerry announced on the Senate floor he will not run for president in 2008.

(BEGIN VIDEO CLI)

SEN. JOHN KERRY, (D) MA:  I‘ve concluded this isn‘t the time for me to mount a presidential campaign.  It is the time for put my energy to work as part of the majority in the Senate to do all I can to end this war and strengthen our security and our ability to fight the real war on terror.

(END VIDEO CLIP)

BARNICLE:  So we‘ll talk about picking the next president in 2008 with former Democratic Party chairman Terry McAuliffe, author of “What a Party” and chairman of Senator Hilly Clinton‘s presidential campaign.

But first, Chris Matthews is not sick.  He‘s in Nevada tonight on assignment, but he filed this report in reaction to the president‘s State of the Union address.

(BEGIN VIDEOTAPE)

CHRIS MATTHEWS, HOST:  With support for the Iraq continuing to decline, President Bush delivered his sixth State of the Union address Tuesday night.  It came just weeks after he called for more than 20,000 additional troops in Iraq.

(voice-over):  In his address before a Democratic-controlled Congress President Bush urged Americans to continue to back a war that they increasingly regret.

GEORGE W. BUSH, PRESIDENT:  Ladies and gentlemen, on this day, at this hour, it is still within our power to shape the outcome of this battle.  Let us find our resolve and turn events toward victory.

MATTHEWS:  According to the new NBC “Wall Street Journal” poll, a majority of all Americans believe that overthrowing Saddam Hussein was not worth it and almost two thirds do not believe the U.S. will prevail and leave Iraq stable.

But while most Americans are focused on the war in Iraq, the president dedicated much of his speech to domestic issues.  He called for energy independence and the development of alternative fuels.

BUSH:  We must continue investing in new methods of producing ethanol. 

Using everything from wood chips to grasses to agricultural wastes.

MATTHEWS:  And on health care he announced a plan to help states provide insurance.

BUSH:  States that make basic private health insurance available to all their citizens should receive federal funds to provide this coverage to the poor and the sick.

MATTHEWS:  The question, however, is whether the president has any political capital to spend.  This week the well respected Republican Senator John Warner offered a resolution opposing the troop increase and John McCain, one of the president‘s closest supporters in Iraq, criticized vice president Dick Cheney and the president‘s reliance on his advice.

On the Democratic side, newly elected Senator Jim Webb of Virginia delivered a tough rebuttal, hitting the president on the war.

SEN. JIM WEBB, (D) VA:  The war‘s cost to our nation have been staggering financially.  The damage to our reputation around the world.  The lost opportunities to defeat terrorism and especially the precious blood of our citizens who step forward to serve.

MATTHEWS:  And two of the leading Democratic candidates for president hit back hard.

SEN. BARACK OBAMA, (D) IL:  I think what you saw as evidenced by the response not just from Democrats, but Republicans is enormous amount of skepticism within Congress, that‘s matched in the country about this plan to escalate troop levels.

SEN. HILLARY CLINTON, (D) NY:  He certainly tried to once again summon the Congress and the country to see his version of reality.  I don‘t think it‘s going to sell.

MATTHEWS:  And reaction today in Washington, at the annual post State of the Union breakfast hosted by the “National Journal” and MSNBC.

REP. JAMES CLYBURN, (D) SC:  There were two different speeches last night and I think two different personalities.  The first part of the speech, the domestic part of the speech, Bush was somber, he was reaching out.

SEN. SUSAN COLLINS, ® ME:  I thought that the president made a smart move in discussing Iraq last night, because he didn‘t try last night to reargue the case for the new strategy.

MATTHEWS:  With the 2008 contenders already vying for position, the president will have a tough time winning back the spotlight, let alone support from his own party.

(END VIDEOTAPE)

BARNICLE:  Thanks, Chris.  And now stepping in to the batter‘s box, Tony Snow, White House press secretary and all-around good guy.  Tony, tough times for the White House.  The Senate Foreign Relations Committee resolution today, Senator Chuck Hagel and Senators John Warner, ambling off the reservation.  Senator John McCain going after Vice President Cheney.  How is the White House handling all of this?

TONY SNOW, WHITE HOUSE PRESS SECRETARY:  The White House is handling it fine, Mike.  Look, we understand right now that there are going to be a lot of people having conversations on Capitol Hill.  Meanwhile we‘re moving forces in to Iraq and furthermore a demonstration of American strength and determination.  I think it is going to make a difference in Iraq.  The president believes strongly that his way forward if the proper way.  Members of Congress are going to assess it in the next few weeks.  It‘ll be interesting to see what happens if in fact we have success on the ground and whether they‘ll have new resolutions.

BARNICLE:  Tony, with regard to the insertion of troops in Iraq, as you just mentioned, 21,000, 21,500, into Baghdad, no matter what you call it, whether you call it escalation, insertion or surge, what is different about the insertion of these additional troops in to Baghdad, in to Iraq today, as opposed to the insertion of more troops last summer?

SNOW:  A whole series of things, Mike.  First you‘re going to have a greater presence of Iraqi troops.  What you‘re really talking about is not merely 21,000 Americans but upwards of 80,000 Iraqis.  In every one of the nine districts of Baghdad, what you‘re going to have is a battalion - a brigade of Iraqi troops and a battalion of U.S. and support.  The Iraqis get there first and the U.S. goes in.

When they get to those districts, they‘re facing a completely different set of challenges and also rules of engagement.  Last time around, if people went in to Baghdad, a politician could call up on a cell phone and say stop that raid.  We don‘t want it to proceed.

That isn‘t the case anymore.  Our folks can to what they need to get peace on the ground and get Iraqis in the lead.

Once they do it you‘ll now have enough force to be able to hold the neighborhood to keep peace 24/7.  Why?  Because the people are going to be staying there over night and they also are going to be working aggressively developing faith and also confidence among the people in those neighborhoods.  They do ongoing operations.

There also is going to be the insertion of money, capital, the start creating jobs.  In some areas of Baghdad you have got a 40 percent unemployment rate.  That‘s certainly a key contributor to violence or an inducement to it.  So you have a much more coherent strategy an our guys don‘t have their hands tied behind their backs anymore.  They‘ve got the opportunity to move forward.

For people to say yeah, well, prove it, there‘s been some interesting development in the last few weeks.  You‘ve seen the Iraqi military going aggressively after terror groups within Baghdad, Shia and Sunni.  You‘ve seen the apprehension of a key member of the Mahdi Army.  The prime minister has been very forward leaning in terms of his determination to sends a message to everybody if you‘re operating out the law, you‘ve got a Shia militia, sorry, you can‘t to it anymore.  You have got a Sunni insurgent group?  We‘re not going to accept that either.

There‘s a few tone in Iraq and furthermore there are new rules of engagement.  So this a lot different than what happened before and one of the reasons the president decided to proceed with this plan is that he thinks that these rules as well as this sort of combination of force has a much better chance of providing the kind of success we need which is a more peaceful and effective government within Baghdad.

BARNICLE:  OK, Tony.  You mentioned new rules, you mentioned a new tone in Iraq, you mentioned hands untied.  Yet, is there a sense in the administration or within the Pentagon, within the quasi-politico-military operations that are going on there, that if you don‘t se a certain amount of progress with the Iraqi Army against the Mahdi Army or any other element of insurgency within Baghdad, within Iraq, within a certain timeframe, that we‘re out of there?  Is there a timeframe for that?

SNOW:  Look, we‘re not issuing ultimatums, for a very important reason.  The moment you do it, you know what happens?  The Mahdi Army or anybody else says, OK, we‘ll just hang out, we‘ll wait for the date to come, doo-doo-doo-doo-doo.

And then at that point they immediately begin to resume operations and you haven‘t done anything to affect or improve the security situation.

On the other hand, we have made it clear it‘s not an open ended commitment.  What‘s interesting, Mike, is since the president has made his speech, it‘s already had some impact in this sense.

Muqtada al Sadr told his Mahdi Army guys take off the black outfits, put down the guns and for those of you in the government, get back to the parliament.  There have been significant changes already.  I‘m not telling you it‘s a rosy scenario, but people now get a sense of American determination and focus and also Iraqi determination and focus and already that‘s having at least some preliminary impact on the ground.  But there‘s a lot more to.

BARNICLE:  Tony, let me ask you about the president.  The State of the Union address last night and the president.  Several people looking at the president thought his demeanor was different, thought that it appeared that perhaps he was wearing the weight of this war on his shoulders a bit more than he had in the past.  We‘re if a town now, Washington, DC, where the politics of it war are just as much talked about as the actual fighting of the war.  And it‘s bitter on both sides, the partisanship on both sides.

Let me ask you about the president personally if I could.

SNOW:  Sure.  Yeah .

BARNICLE:  A brutal weekend this past weekend, 25, 28 Americans killed in action.  When does the president get the casualty count?

SNOW:  The president gets it every week and quite often every day.  The president hears about it and he also writes to the families of every person who has been killed in action.  So he is deeply aware of what‘s going on.

But look—the idea—the president understands wars are tough and he also understands if the United States were to leave without victory in Iraq it would up leash a chain of circumstances that could be catastrophic to us.  It would allow a terror network to have access to the second largest proven oil reserves on the face of the earth, the wealth that would generate, the be able to use that to train, equip, and send forth people to come and kill us and also create the ability to intimidate neighboring oil states make them calculate for themselves, do we rely on the Americans for security or do we cut a side deal with these guys?  It would be catastrophic for our security.  So he understands the importance of it.

You know why the president had a subdued tone in the back half of the speech?  Because testify important to talk thoughtfully with the American people.  That was not a sign of the president being down.  Instead it was a sign of the president being focused on doing something that I think you and I both will agree is important, which is trying to have a thoughtful debate not only about what‘ going on and how we are perceived but what are the costs if he with don‘t get the job done right.  And frankly I think a lot of people found that very persuasive and very important and they‘d like to hear more.

BARNICLE:  So the president certainly is hearing more—With regard to getting the job done right, as he defines it, as he insists it is proper to do.  What is his reaction when people like John Warner or people like Chuck Hagel, people belonging to his own party, part of his own Republican base, seemingly are walking away from his view of the war?

SNOW:  Well, it‘s very interesting, because the president has said number one we cannot fail in Iraq.  Those guys say absolutely right.  We say that Iraqis need to be in the lead.  Absolutely right.  You‘ve got to support the troops.  Absolutely right.

So it seems that there is a fair ground of agreement.  These guys opposing for whatever reason, using more forces to get the job done in a very focused way in Baghdad and in Anbar province.  President disagrees.  We also happen to know that everybody in America is watching.  People want to see result and we don‘t blame them and frankly a lot of the debate in the days and weeks to come are going to play off of what happens on the ground and one of the other things is General Petraeus, David Petraeus was talking on Capitol Hill yesterday and he is guy who successfully fought insurgency up in Mosul.  He is the kind of guy who has a lot of confidence among military commanders.  They have people on the ground.

It will be interesting to see also how they interact with him.

BARNICLE:  Tony Snow, thanks very much.

SNOW:  Thanks, Mike.

BARNICLE:  Coming up, the chairman of Senator Hillary Clinton‘s presidential campaign, Terry McAuliffe and later the latest from Scooter Libby‘s trial with HARDBALL‘s David Shuster.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.

Democrats control the House and the Senate now, but can they take back the White House.  Terry McAuliffe is the former chairman of the Democratic National Committee and he is now the chairman of Senator Hillary Clinton‘s presidential campaign and a perpetually happy person.

He‘s also the author of a new book called “What a Party”, which is a lot of fun to read and is a number one best-seller right now in barnesandnoble.com.

Terry, thanks for joining us.  Your role of chairman of Senator Hillary Clinton‘s presidential campaign.  As all of American now knows she announced last weekend.  Looked marvelous in announcing.  Got five days free run, no questions asked.  Your role as chairman, raising money, your specialty, do you anticipate counting the money you raise for Hillary Clinton or weighing the money?

TERRY MCAULIFFE, HILLARY CLINTON‘S CAMPAIGN CHAIR:  Hopefully a little bit of both.  I‘m looking forward to just getting out there and a lot of excitement on a campaign.  Hillary is tanned, rested, she is pumped up, she is ready to go.  I‘ve never seen her in better spirits.

It‘s going to be a great campaign for us.  We‘re all very excited about it, Mike.  As you know, the primary calendar has changed a little bit.  California has now said they are moving up to the 5th of February.  Florida says they‘re moving up to January 29th.  We‘re at the point that a year from today we will almost have a nominee for the Democrat and Republican Party.

BARNICLE:  Well, I was going to ask you about the timing of that.

MCAULIFFE:  Yeah.

BARNICLE:  So what happens to New Hampshire and Iowa, given this projected new primary calendar?

MCAULIFFE:  That‘s a good question, because if you have these huge, megastates like a California and New Jersey as well as Michigan, are now saying they are a going to move up, Iowa an New Hampshire always important.  The early contests, Hillary, as you know, going to Iowa this weekend.  They‘ll have an important play.  But also if you are aye collecting delegates, you are going to have to have a lot of money to compete in the big state that are just going to come 10 days later.

So it‘s going to be a massive expenditure of funds to try and compete in all these different contests.

BARNICLE:  Well, California and Florida, are those dates set if stone? 

Have they been moved up?

MCAULIFFE:  Well, they both have said their legislators are going to move them up and people have to be prepared.  So we‘re planning accordingly as I‘m sure other campaigns are.  But until this calendar is set you‘re not exactly sure where you‘ll commit your resources.

So right now you have got of course Iowa, New Hampshire, South Carolina and Nevada, the early states and then there will be a whole mixture, literally you could have 40 percent of the delegates chose in a week ending on February 5th, which I predict now, Michael, we will have a nominee of the Democratic Party.

BARNICLE:  Sop you‘re not going to have money problems in the Clinton campaign.  What other candidates would you anticipate not having money problems?

MCAULIFFE:  I think people can rest assured, go to bed at night, we‘ll be OK on the funds.  We have a lot of support.  We announced on Saturday.  We had 100 hit per minute on our Web site.  Just truly extraordinary.

I think Barack Obama who is in the race is going to have a great ability to raise money.  And John Edwards has been out.  He has got his base from when he ran before.  Vilsack, Richardson, the governors out because they had so many supporters.

I will say this, Michael.  I believe that ‘08 field that we have today is probably the best field we have ever had.  I think the Republicans have their weakest field.  They have had some good, but I do not think this is a particularly good one.  I think there is going to be a lot of money raised and spent on the Democratic side.  We have so many quality candidates.

BARNICLE:  How long have the Clintons and people like you, and James Carville and Paul Begala, people close into the Clintons, how long have you been actively talking about her running for president?  Since 1992 or since last August or when?  How long?

MCAULIFFE:  I can speak for myself, as retired as chairman of the party in February of 2005.  And Hillary has not been talking about it but I have been talking at her that she needed to run for president.  I am very straight.  I am a huge supporter of the Clintons.  Best friends of the Clintons.  I know her very well.  She would be a great president.  I know her personally, I have been on vacations with her.  She is tough and she is smart.  She is what we need, the leadership skills, she has the relationships.

So I‘ve been pushing this myself, but I think Hillary only takes half of what I say, she just sort of grins but I‘ve been pushing this for a couple of years.

BARNICLE:  Terry McAuliffe is staying with us.  And later, Democratic Senator Jack Reed, a former Army Ranger tells us what he thinks should happen with U.S. troops in Iraq.

Plus, HARDBALL‘s David Shuster will have the latest news from Scooter Libby‘s trial.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.

We‘re with the happy warrior, former Democratic Party chairman and current Hillary Clinton presidential campaign chairman Terry McAuliffe.  His book, “What a Party!”  Available at bookstores everywhere.  A lot of good stories in there.

Terry, there is endless speculation and curiosity—has been for years—about the marriage, the dynamic, Hillary Clinton, former President Bill Clinton.  I don‘t care the marriage but what role, if any, is he going to play in her campaign?

MCAULIFFE:  I want everybody to read the book, because I talk about the Clinton relationship as seen from someone who has been with them.  They have a great marriage, they adore each other and it is a special relationship.  You see the Clintons, Chelsea in for Thanksgiving cooking dinner for 25 people.  It‘s just a great relationship.  Bill Clinton is going to be very active in the campaign.  He‘s probably the most popular man in the world today.  He is writing a book right now, but he will do events for us, travel around the country, we want him as much as we can‘t get him.  People remember fondly those eight great years under the Clinton-Gore administration.

But this is Hillary‘s campaign for president but he wants to do everything that he possibly can to help her and get this country back on track, so you‘ll see President Clinton out there many, many times.

BARNICLE:  What about strategy?  Thinking of commercials and lines for speeches, things hike that?

MCAULIFFE:  The president and Hillary speak many times a day.  I think he‘s probably the best strategist in American politics and he‘s going to be offering his advice.  He offers me advice every single day on topics, whether I request any information or not.  And I can promise you his wife running for president, he is going to be a master strategist helping us as this campaign gets going.

BARNICLE:  Terry, what about her as a campaigner.  I‘ve seep her in a big hall and I have seen her in a small room, small environment and it would just seem to me, not that it matters what it seems to be but she‘s very affective in small rooms with small groups of people.  Less so in a big hill, speaking from a podium, do you have any plan to try and insert her, as hard as that might be with Secret Service protection, in smaller environments?

MCAULIFFE:  Yeah, and it‘s very important, that why she‘ll go to Iowa this weekend and we‘re going to go to New Hampshire and we‘re going to go to these early smaller state and she is going to get to know everybody.

Listen, I grew up in Upstate New York, Syracuse, New York.  Hillary won in all those upstate counties in New York, traditionally Republican areas.  And she did it, people got to know her, they see how effective she was as United States senator.

Maybe the first time around they didn‘t vote for her but they came out in record numbers to vote for this time and we need to make sure everybody in New York who got to know her so well, they‘re talking to people around the country explaining how effective she has been but she is her greatest advocate and when she gets out there in these small groups, which is very important, I couldn‘t agree with you more, Michael, that she needs to do that and she is going to do it.

Listen, she is Middle America girl, that‘s where she grew up.  Part of middle class America and people need to get to know her and we need to make sure that we‘re out there getting her around to meet so many different people.

She is smart, she is tough, she is a great leader, she has got a great sense of humor and she‘s probably got the best belly laugh of anyone I ever seen and I want her out there telling her stories.

BARNICLE:  Not better than Chris Matthews.  But Terry quickly, you trash John Kerry‘s presidential campaign in the book.  I‘ve gotten that far.  He withdrew today as a candidate for the presidency.  Your thoughts on John Kerry?

MCAULIFFE:  Listen, I know it was a tough decision.  Anyone - I mean, John if he had changed 60,000 votes in Ohio, he‘d be president of the United States today so I respect that decision and know how hard of a decision it is for him.

I say many great things in the book about the Kerry campaign.  There are several things I thought were wrong.  Not going after Bush at our convention.  Not responding to swift votes.  Fifteen million dollars in the bank at the end of the campaign.

But there are many great things that John did and he ran a great race. 

We almost one it against the incumbent president in war.

My book just lays it all out there.  I‘m an Irish story teller.  I say it right up front.  I lay it bluntly, all the campaigns, I have been in this business now for 25 years and I just lay it out, not meant to be personal but this is a serious topic to me and the stakes are so huge.

So buy the book, read the whole thing and I‘m blogging and you can talk to me and we‘ll go forward together.

BARNICLE:  All right.  I‘ll blog you later, Terry.

MCAULIFFE:  Thanks, Mike.

BARNICLE:  Terry McAuliffe.  The book is called “What a Party!”  A lot of good stories in the book.  Seriously.

Up next.  What did the first witnesses in Scooter Libby‘s trial say today?  A full report from HARDBALL‘s David Shuster.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(MARKET REPORT)

BARNICLE:  Welcome back to HARDBALL. 

David Shuster has been covering the CIA leak case since the beginning. 

He‘s been at the court house following the Scooter Libby trial all day—

David. 

DAVID SHUSTER, MSNBC CORRESPONDENT:  Well, Mike, the prosecution‘s case rests on them proving that there are half a dozen government officials who told Scooter Libby about Valerie Wilson working at the CIA before Scooter Libby started having his conversations with reporters because Libby is charged with perjury and making false statements for testifying under oath in the investigation that he first learned about Valerie Wilson from reporters. 

Well, the prosecution today put on two government witnesses, one who used to work at the State Department, another who works at the CIA, who—both said that in June of 2003 they personally provided information about Valerie Wilson to Scooter Libby.  One of the witnesses said that he was dragged out of the meeting with a director of the CIA in order to take a phone call phone call on this issue from Scooter Libby. 

The third witness that prosecutors put on today, who was also from the CIA, enabled the government to establish for the first time a document that Scooter Libby had mentioned Valerie Wilson‘s name to another government official again before the crucial time period when Scooter Libby started having conversations with reporters. 

And this testimony was dramatic, not so much because of the details regarding the Wilsons, but because this was the a CIA, who for a year providing the morning intelligence briefing to Scooter Libby and Vice President Cheney.  He talked about the briefing books and how they‘re prepared and how he would write notes in the table of contents if there was any feedback or some comment made by either the vice president or Scooter Libby or something that the CIA needed to in response.

And introduced into evidence was a June 14, 2003, table of contents of his briefing and written by the CIA briefer was the notation from Scooter Libby in which Scooter Libby said, “Told this was a vice presidential office question, Joe Wilson, Valerie Wilson.” 

The CIA briefer testified he didn‘t know who the Wilsons were.  But, again, it underscores that Scooter Libby was telling another government official about Valerie Wilson at a time period before Scooter Libby says he learned about the Wilsons from reporters.

There was another morning briefing that the CIA briefer testified about and another document introduced to evidence.  And that was July 14, 2003.  That was right after a Bob Novak column came out exposing Valerie Wilson‘s CIA status.  According to the CIA briefer, either Vice President Cheney or Scooter Libby told him, “Did you read the Novak article?  Not your problem.” 

Again, that was the notation from the briefer.  He testified that he remembered not knowing—he remembered not having read the Novak column.  He told that to the vice president and Scooter Libby.  Then he testified he later went back, read the Novak column, and had another conversation with both the vice president and Scooter Libby, in which the CIA briefer said, “You know, this revelation about Valerie Wilson could cause a lot of damage to Central Intelligence Agency assets around the world.”

What prosecutors, Mike, are trying to do is they‘re trying to give the jury a motive for why Scooter Libby might then go in front of investigators, either because he was embarrassed or because there might be political damage if he told the truth.  They‘re trying to lay out a case as to why Scooter Libby then lied. 

The next phase of this, of course, will be more government officials who will testify they told Scooter Libby.  And then of course we‘ll start hearing from the journalists, who Scooter Libby says he heard about the Wilsons from them.  The journalists deny that—Mike.

BARNICLE:  David, Shuster, excellent report.  Thank you. 

Here now to talk about the 2008 presidential and assorted other items, the State of the Union Address, Iraq, politics, are the Hardballers: the “National Review‘s” Kate O‘Beirne and “Bloomberg‘s” Margaret Carlson.

Welcome to both of you. 

KATE O‘BEIRNE, “NATIONAL REVIEW”:  Thank you, Mike.

Did you decide you‘d rather be with Margaret and me, unlike Chris Matthews, than with Miss America contestants? 

BARNICLE:  I voted for you.  I voted for the both of you.

MARGARET CARLSON, BLOOMBERG:  Chris had to got to Las Vegas looking for Miss America.

BARNICLE:  John Warner, Chuck Hagel, the Libby trial: are the wheels coming off the Bush administration?

O‘BEIRNE:  Well, it‘s certainly a very unwelcome development for the White House to now have this host of Republican critics willing to do something about his latest plan, which is a new strategy for Iraq.  We‘ve long recognized that as long as Republican support held up for him, he would be in much better shape politically.  But, now, as I said, there are a fair number of Senate Republicans who seem to be determined to go on the record, however ineffectually, to back some sort of a resolution with no real-world effect except to undercut the president and demoralize the troops... 

BARNICLE:  You say ineffectually, but Chuck Hagel...

CARLSON:  I think Senator Chuck Hagel is important, but far more important is Senator John Warner, who‘s a white-haired old lion of the Senate, former secretary of the Navy.  And where he goes, so go others because it‘s safe to follow him.  And his departure from Bush, in rather harsh language, I thought, on Monday I think signals to other Republicans you can come over here with me and this is a place where Republicans can go. 

Chuck Hagel, by contrast, went with Democrats, so it looks—he‘s more like the new McCain, the independent, the Democrat.  But Warner remains a loyal Republican.  Do you remember, Mike, in August of 1974 when Barry Goldwater and Hugh Scott went to Nixon and said you‘ve only for the 15 senators left, and that was almost the end for him.  And I think this is not the end of Bush, but this is an erosion of support.  That is really important.

O‘BEIRNE:  They‘re not just parting with George Bush, they‘re parting with General Petraeus.  I mean, he was up testifying yesterday and explained, I want the surge, I back the surge. 

He gave a—explained, of course, the situation in Iraq is dire.  There are no guarantees of success, but—and these resolutions, he explained, do encourage the enemy, do risk undermining the morale of the troops.  So it‘s the new commander on the ground that Senator Warner‘s now parting ways with.

BARNICLE:  On that note, though, and back to the president—and we talked to Tony Snow about this at the top of the hour—the president‘s demeanor last night, he seemed much more subdued than he has in any prior State of the Union Address or maybe even speech lately.  And there are some people who say, oh, boy, the guy is really—he‘s wearing the weight of the war now, take a look at him.

What did you think?  What did you think, looking at him, listening to him?

O‘BEIRNE:  I liked that demeanor, it seemed like fitting the circumstances and a serious one.  And we always look at people‘s outsides and try to figure out, well, what‘s on the inside.  I did think it did show that Bush is bearing some weight of the war.  If he had had that demeanor and if it actually went inside and he had that temperament in 03, we might not be where we are today.

BARNICLE:  That‘s what Joe Scarborough says.

O‘BEIRNE:  I‘m glad to be in Joe‘s company.

CARLSON:  Well, of course, he‘s bearing the weight of the war.  Every time it seems to me he‘s talked about the Iraq war, he‘s had a pretty serious demeanor.  So I thought it was perfectly fitting last night.

BARNICLE:  He‘s done the bring them on thing, and you know...

CARLSON:  He‘s come to this late.  I don‘t think he‘s always had this.  And it was so evident last night that he has internalized some of it and that he gets it.  And, you know, General Petraeus is new to this fight, no pun intended, and would have preferred many, many more troops than the 20,000 to do what needs to be done. 

And in fact, there are many generals that are with Senator John Warner.

O‘BEIRNE:  Well, the remaining general on the ground is not, and he‘s not new to Iraq, of course.  He was part of the initial assault and he‘s the army‘s leading expert now on counter insurgency and he‘s confident, as he told the senators, that he will have the number of troops he needs and he has a real commitment for the first number who have been.

BARNICLE:  Earlier today, the president‘s opponent and another fight, a political fight, John Kerry, his ‘04 opponent withdrew, announced he would not run for the presidency in ‘08.  There was an emotional moment when his voice caught in his speech.  What do you think of John Kerry now today after his statement today?

O‘BEIRNE:  He has to himself of course be personally extremely disappointed.  I think there was sigh of relief from an awful lot of Democrats that he wasn‘t going to make another run. 

I assume he has—it was a wakeup call for him when he had that gaff

a couple of months ago, the gaff with the joke about the troops.  And

Democrats didn‘t rally to him.  I think that caused him maybe to re-examine

it‘s not all that common that politicians are so self-aware and I think he‘s thought long and hard about it, and the kind of feedback he‘s getting tells him that the party—there‘s little reason to think the party wants a rerun of the Kerry candidacy.  He wound up being a pretty flawed candidate.

BARNICLE:  Flawed campaign and thus a flawed candidate.  OK, I‘ll buy that.  Where does his money go?  Enormous fundraising ability in ‘04.  Where does it go now?  To whom?

CARLSON:  Well Kerry, who was just on your show, went ballistic over the fact that he hoarded $15 million that Terry thought could have been spent now just on...

BARNICLE:  ... Terry McAuliffe.

CARLSON:  Terry McAuliffe, not just on the presidential, but in for instance some of those Senate races, those close Senate races that they lost.  He‘ll be maybe a king maker, because he‘s got money to give out.  Hillary has a huge pile of money and attracts it.  And then there‘s everybody else.

So he will be able to pick and choose among them.

O‘BEIRNE:  And the party has a new Vietnam vet in the person of Jim Webb.

BARNICLE:  What did you think of his speech last night?  You both watched it, tell me what you thought.

CARLSON:  I really like Jim Webb.  He seems like an authentic person to me, not enough of which Democrats have.  Like, you might be able to call Jim Webb and he‘d come over and he‘d be to fix the washer in your sink.  Like he‘s a real guy.

You know, Republicans just like their losers, they let them run again.  They have seniority.  Democrats do not like anyone who‘s lost.  And they just kick them out.  I mean, you don‘t get another chance.

BARNICLE:  Republicans like losers? 

CARLSON:  Yes, Bob Dole got a second chance, Ronald Reagan got a second chance.

O‘BEIRNE:  They have enough of them, Mike, maybe they are fond of them.

BARNICLE:  Did any aspect of Jim Webb‘s presentation last night remind you of a time when the Democratic Party stood for strength?  Paul Douglas, Phil Hart, guys who had fought in World War II.  Guys who weren‘t talking about these touchy feely, social, cultural issues, gay marriage.  He was talking about the war in Iraq and the money in your wallet.  I mean, did any of that strike you?

O‘BEIRNE:  Yes, no, I think he has a—he‘s a former interesting persona, and so it was a former interesting speech than typically given in these responses.

So as I said, he‘s the new favorite Vietnam vet.  I did thing his tone, and this doesn‘t surprise me, based on having watched his Senate campaign—he was contemptuous of the commander in chief.  I think he could have toned that down.  But he‘s got this populist message that I think the Democrats find welcoming.  He talks to real people.

BARNICLE:  Kate O‘Beirne, Margaret Carlson, thanks very much.  Up next, the 2008 contenders all had something to say about the State of the Union.  Did we learn anything about how they‘ll each try to stand out?  This HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back.  So what have we learned from the State of the Union speech and what can we expect in the next two years leading to the general elections?  Two years, good grief.

“Newsweek‘s” Howard Fineman joins us now and he‘s also an MSNBC political analyst.  And Eamon Javers, who is Capitol Hill correspondent for “BusinessWeek.”  Howard, first of all, let‘s start with you.  You‘re talking about the president of the United States, you‘re writing gin “Newsweek” that the president of the United States has this in his head that he‘s a reincarnation of Harry Truman?

HOWARD FINEMAN, NEWSWEEK:  Well, I thought that he had be going into this praying to god of Harry Truman, which all presidents with low approval rating do.

EAMON JAVERS, BUSINESSWEEK:  They don‘t pray to Jimmy Carter.

FINEMAN:  No, not to Jimmy Carter, because Harry Truman was seen to be right in the eyes of history.  He took on big issues like the fight against communism.  He put the money into Greece and Turkey, et cetera, when it was an unpopular thing to do.

Bush thinks that‘s who he is in his head, but it isn‘t working out that way at all political for him.  And I think the speech last night didn‘t stand him in good stead when he spent a lot of time going over the same argument he‘s made before about how No. 1, we can bring democracy to Mesopotamia, and No. 2, that it‘s working.

The American people just don‘t buy it anymore.

BARNICLE:  And before you get to the American people, I mean, Eamon, he‘s standing there on the floor of the House, the House and the Senate both gathered together and he‘s got a big guy, John Warner, Senator John Warner, former chairman of the Senate Armed Services Committee, basically angling away from the president on his Iraqi policy.  What does that do internally to this White House and this Republican Party?

JAVERS:  Well, it makes it really, really tough for them going forward. I mean, I was in the gallery last night overlooking all of this and the atmospheres, there‘s always these see-saw standing ovations as the Republicans all applaud and then the Democrats all applaud for their lines.

And on some of the Republican applause lines, about half of them were sitting still.  You know, polite golf claps, that sort of thing.  But the body language just wasn‘t there for the Republicans, supporting this president.  Already, Warner has left the reservation and others are sure to follow as the numbers continue to go south.

FINEMAN:  Chuck Hagel.  I bet you if Eamon had a chart of the golf clapping, a lot of the golf clappers would be the 18 Republican senators who are up for re-election in 2008, including John Warner, who‘s decided to run again, even though he‘s of a certain age.  He wants to stay in the Senate, and he doesn‘t really want to get on the wrong side of this issue even in Virginia, which is a state with tremendous military establishment.  But Virginia is changing, like a lot of the rest of the country. 

JAVERS:  And 2008 was really in the room last night as you watched all this.  I was sitting right above where Hillary Clinton and Barack Obama were sitting, just one seat away from each other.  These two people were within—closer than you and I are right now for about 20 minutes in the run-up to the speech.  They were gladhanding, gripping and grinning.  And politicians like to touch each other and say hello.  They did not acknowledge each other‘s existence the entire time they were standing there.  It was an astonishing thing to watch.  I was watching them for about 15 straight minutes.  They didn‘t turn around and say hello, they didn‘t shake hands, they didn‘t smile.  And at the same time, they were saying hello—Hillary Clinton was kissing every politician who came within lip reach.  Barack Obama was hugging people. 

And you know the only thing she said to Barack Obama?  $150 million, baby.

(CROSSTALK)

BARNICLE:  Well, I want to ask you about that, actually.  Both of them

one‘s announced and one is presumed to be going to announce shortly, Barack Obama.  How much money is there for politics in this country? 

FINEMAN:  I think there‘s a certain elasticity of demand, so to speak.  I think there‘s a lot of money.  But the interesting thing going on is that Hillary is sort of running the way George W. ran in 1999.  She‘s running on inevitability, on money, on family power.  In this case, it‘s not the father; it‘s the husband.  And she‘s telling all these big funders up in New York, not only do we want you to give to us, we‘re going to make sure that you don‘t give a penny to anybody else.  So they are playing it very, very tough.

And by the way, between now and February 10th, when Barack Obama‘s supposedly going to have his big announcement, official announcement in Springfield, Illinois, Hillary is going to make it as tough as possible for him to raise money.

JAVERS:  They‘re trying to strangle the Obama candidacy in its cradle right now.  And it might be working.  I‘ve talked to a couple of big Democratic money men who were saying, you know, I just can‘t go with him.

BARNICLE:  Howard Fineman, Eamon Javers, thanks very much.

Coming up, Democratic Senator Jack Reed on what‘s happening right now in Iraq and what he thinks should happen next.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.  The Senate Foreign Relations Committee approved a measure today opposing President Bush‘s plan to put more U.S. troops in Iraq.  Will their resolution change what happens?  Democratic Senator Jack Reed is a former Army Ranger, and a member of the Senate Armed Services Committee.  Senator Reed, thanks for joining us.

SEN. JACK REED (D), RHODE ISLAND:  Thanks, Mike.

BARNICLE:  Let me ask you about an incident that occurred in Iraq within the last week and a half.  A CAU unit, an Army CAU unit, civilian affairs unit, five soldiers, I believe, stationed fairly permanently south of Baghdad, 25, 30 miles south of Baghdad.  Insurgents described as diplomats arrived in a black SUV.  Couple of black SUVs.  Firefight ensues.  Five United States soldiers killed.  Is it fair to cite that example and say, this could be a preview of coming attractions with regard to American troops stationed permanently in neighborhoods in Baghdad? 

REED:  I think it is very fair, and it‘s accurate.  Because the new strategy that General Petraeus was talking about and the president is talking about involves taking small units of Americans, inserting them into neighborhoods, and actually asking them to be engaged in local policing activities, providing support to not only the Iraqi army, but the Iraqi government in terms of limited public services.  And so they will be more exposed, and they will be more vulnerable to these types of attacks.  A very clever attack, these people were using good intelligence about the meeting time, meeting place.  They had, in some cases, reported, American uniforms.  The disguise themselves.  They came through the checkpoints.  The Iraqi troops let them through.  And we can expect that type of activity. 

That‘s the difference between this approach in Baghdad and previous approaches, where we really were trying to stay out of some of these neighborhoods.  We were going after the insurgents in Anbar province, but we were trying to let the Iraqi forces do the bulk of the work in the cities, in Baghdad. 

BARNICLE:  Last night in the State of the Union, the president indicated that he had spoken to many of you people, senators, congressmen, and had listened to your arguments, and yet here was the policy.  Do you think he actually listened to you? 

REED:  I don‘t think he listened effectively, because not only with members of Congress, but also the Iraqi Study Group, a significant opinion, I think, on the military side, in terms of the Joint Chiefs and others.  And I think he tended to disregard that.  He thinks he has a better way. 

I personally don‘t think it is the appropriate approach.  In fact, I think even the terms as he described it, a 20,000 increase, is probably inadequate in terms of manpower to be a decisive factor in Iraq. 

The key issue here when you sort of separate all the different competing issues, what will compel the Iraqis to make the tough political decisions in their own protection and for the survival of their own country? 

BARNICLE:  What will?

REED:  I personally think it‘s not putting more troops and; it is suggesting that we‘re going to stop redeploying—not only suggesting, but saying that.  And also, to say essentially, they have to step up.  And if they do not step up, we are not going to be an endless source of support, equipment, supplies. 

The perception I have is that the Shia government believes it‘s winning.  And most politicians, if they are winning, are very reluctant to change what seems to be working for them.  Only when they sense that this issue could be in doubt will I think they will truly begin to take tough steps, reconciliation, sharing power, and that‘s at the heart of this whole effort. 

BARNICLE:  So what concerns you more, the president‘s policy or his apparent inability or reluctance to listen to people who say they have another plan? 

REED:  I think they both come together.  And I think what we have seen is throughout this endeavor in Iraq, the president has missed I think critical turning points.  Insufficient troops, the growing insurgency.  He has paid more attention I think to his own voices than to what was happening on the ground in Iraq. 

BARNICLE:  Senator Jack Reed, thanks very much.

Play HARDBALL with us again Thursday.  Chris will be back then.  He‘s on location tomorrow in Las Vegas.  Guests include Senate Majority Leader Harry Reid.  Time for “TUCKER.”

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

END   

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