updated 5/9/2007 12:38:08 PM ET 2007-05-09T16:38:08

Guests: Sen. Trent Lott, Rep. Anna Eshoo, Rep. Marsha Blackburn, Lois Romano, David Yepsen, Frances Townsend, Jonathan Capehart

CHRIS MATTHEWS, HOST:  In or out?  This September is shaping up as decision time for U.S. involvement in Iraq.  Could this be the time, four months from now, when our country faces the acid test?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  On Monday night, the FBI arrested six men on charges that they planned to attack a U.S. military base, Ft.  Dix, in New Jersey.  Four of the men are from the former Yugoslavia, one is from Jordan and one is from Turkey.  Federal officials describe all of them as Islamic militants who wanted to, quote, “kill as many soldiers as possible,” close quote.  Officials tell NBC News that the men were inspired by al Qaeda propaganda.  We‘ll get to the inside from Fran Townsend, homeland security adviser to President Bush.

Meanwhile, Iraq.  Congress looks ahead to September to see if the troop escalation is working.  Democrats are trying to find a way out, and some Republicans sound increasingly eager to join them.  In a moment, Republican senator Trent Lott weighs in on Iraq, and two members of the Congress will debate what Congress can do about the war and what President Bush might agree to.

Also tonight, how high will gasoline prices go?  What‘s causing the record rise, and what will stop it?  Is it going to $4 a gallon?  We‘ll ask Jim Cramer, the host of CNBC‘s “MAD MONEY.”

But first, Senate minority whip Trent Lott.  Senator Lott, where are you in terms of looking ahead four months on the war in Iraq?

SEN. TRENT LOTT (R-MS), MINORITY WHIP:  Chris, from the beginning, we have said that we need to give this redeployment, putting more troops in Baghdad, trying to get the violence under control, a chance.  We voted in the Senate unanimously to confirm General Petraeus.  He has evoked a lot of confidence in the members of the Senate.  He has said we want to get the troops in there.  And by the way, we still don‘t have all the troops in there that‘s needed to do the job.  He has said all along that he would give us a report in the fall, in September, and we would assess how it has worked, what we‘re doing and decide how to go forward from there.  There‘s nothing new about that.

Some Democrats are saying, Oh, my goodness, well, the Republicans are talking about a date, an end date.  No, there‘s no artificial September 15.  All we‘ve said all along is, Look, this is not an open-ended deal.  We expect progress to be made.  We want the Iraqis to do more.  Nobody disagrees, really, about that.  We have said all along that we‘re going to expect to see some difference, and we‘re going to decide how we go forward into the future because we have to decide on appropriations at the end of the fiscal year.

MATTHEWS:  Let‘s listen to John McCain, your colleague, talking about Iraq during the Republican debate last week.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  The war was terribly mismanaged.  The war was terribly mismanaged, and we now have to fix a lot of the mistakes that were made.  Books have been written, but we have a new strategy and a new general, and these young men and women are committed to winning.

(END VIDEO CLIP)

MATTHEWS:  Senator Lott, I guess that means that he‘s hopeful that we can win this surge, but when do you think this surge gets its full potential?

LOTT:  I think this summer, you‘ve got to see a difference.  I was just visiting with Senator Kit Bond, who just got back from Iraq, along with a couple other senators and a House member.  They went into some areas where you couldn‘t go before.  He feels like some progress is being made.

And this is not an impersonal thing with Senator Kit Bond.  He has a family member that is over there in Iraq doing his job, so he really pays close attention to what‘s going on.

I believe that, as the weeks go by in the summer, you know, there will be difficulties, no question about it.  We‘re not going to have an instant total peaceful situation.  This is a violent situation there.  But I do believe you‘ll see some progress is being made as we get more troops in there, as more—hopefully, more of the chieftains work with us to get al Qaeda under control.  But by fall, we‘re going to need to feel like some progress is being made.  There‘s not a deadline saying that then we‘re going to precipitously, you know, withdraw.  We‘re going to look at what‘s happening and make an assessment as to where we go from there.

MATTHEWS:  Are you confident, or are you at least supportive of the idea of our military deploying small groups of American servicepeople in these little outposts throughout the Baghdad area, where they‘re stuck there 24/7, surrounded by bunkers and heavily fortified, but basically. out there as targets for anybody who wants to commit a suicide bombing attempt?  Does that worry you, that we‘re leaving our men divided?  It reminds me of Custer‘s last stand, where you divide the force, putting people out all by themselves overnight.  Do you think that‘s worthy of—or worth the effort on our part?

LOTT:  It sounds worrisome, Chris, but that‘s my point.  I am not a military man or a commander on the ground.  I have every confidence that our men and women, our non-coms, our officers, our generals, are going to try to do the right thing and the things that have the greatest impact.  So it‘s not for me to sit back here in Washington and try to micromanage or second-guess decisions that are being made.  Maybe there‘s a basis for that.  Maybe they can provide some security by doing it that way.  I don‘t know.

I just know this, that 535 members of Congress cannot manage the situation on the ground.  We have to give the funds for our troops, and we have to listen to our commanders and give them a benefit of the doubt until, you know, something to the contrary develops.

MATTHEWS:  Let‘s look at another piece of tape.  This is John McCain, the senator from Arizona and presidential candidate, talking about Osama bin Laden.  Again, it‘s the debate—the Republican debate last week.

(BEGIN VIDEO CLIP)

MCCAIN:  On the subject of Osama bin Laden, he‘s responsible for the deaths of thousands of innocent Americans.  He is now orchestrating other attacks on the United States of America.  We will do whatever is necessary.  We will track him down.  We will capture him.  We will bring him to justice, and I‘ll follow him to the gates of hell!

(END VIDEO CLIP)

MATTHEWS:  Well, you know, he was taking issue with a statement put out by Governor Romney several days earlier, where he said we shouldn‘t move heaven and hell—or heaven and earth—I think hell was what John McCain was talking about—heaven and earth to go after one guy, bin Laden.  Do you think it should be high priority to get this bad guy who led the attack against us on 9/11?

LOTT:  I do, and I think we should continue to work on that.  And for Senator John McCain to say that, that‘s not an idle statement.  This is a man that‘s been to the gates of hell.  This is a man who was shot down while flying a naval plane over Vietnam, went down, was a prisoner of war, probably thought he was in earth‘s version of hell.  That is a serious statement for him to make.

I don‘t think it should become and all-consuming thing, where we only focus on trying to get him.  We have to be prepared to deal with the situation in that part of the world, Afghanistan and Iraq, in a multi-faceted way.  It‘s complicated.  It‘s difficult.  Thank goodness, in Afghanistan, at least our allies are trying to pitch in and help us.  I met today with the ambassador of Australia and talked about the situation in their country and in their view of Iraq and Afghanistan.  They‘ve been a very good ally.  Their point of view is worth listening to.

MATTHEWS:  Do you believe, Senator Lott, based upon all these years now in Iraq, five years, I mean, going back to 2001 and ‘02, where we‘re talking about (INAUDIBLE) back in the early ‘90s, with the first Persian Gulf war—do you think that we can stand up a democratic, stable society in that country?

LOTT:  It‘s very hard, Chris, obviously.  And there‘s some fundamental questions about, you know, how or whether we can achieve that.  We have been trying to do the right thing.  But Chris, I don‘t think I‘m making any, you know, disloyal statement to say that, all along, I‘ve emphasized that at some point, we‘re going to have to say to the Iraqis, Congratulations, Saddam Hussein is dead.  You‘ve had elections.  You have a constitution.  You have a government.  We helped you train your people.  We‘ve made tremendous sacrifices.  But now it‘s up to you to decide if you genuinely want peace and democracy.  I‘m not saying it‘ll be a moment, a specific moment where we say, OK, this is it, but I mean, it‘s not a never-ending process.

MATTHEWS:  Do you believe they can ride the bike without the training wheels?

LOTT:  At some point, they‘re going to have to do it.

MATTHEWS:  OK.  Thank you very much, Senator Trent Lott, minority whip, number two Republican in the U.S. Senate.

Up next, two members of the House of Representatives debate what Congress can do about Iraq.  And later, White House homeland security adviser Fran Townsend is coming on to talk about that terror plot that was just broken up at Ft. Dix.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Can Congress craft a war funding plan that President Bush will accept?  Republican congresswoman Marcia Blackburn of Tennessee is a member of the Homeland Security Committee, and Democratic congresswoman Anna Eshoo of California is a member of the Intelligence Committee.

Congresswoman Eshoo, can you give us a sense of how this new parsing-out plan is going to work, whereby you give the president some money now, some later, given certain successes in Iraq?

REP. ANNA ESHOO (D-CA), SELECT INTELLIGENCE COMMITTEE:  Well, the bill is about $93 billion.  A good part—almost all of it in the bill will be appropriated for our troops.  But there‘s about three months of money, about $40 billion, that‘s being fenced—in other words, withheld subject to benchmarks that the Congress is setting, that are actually the president‘s benchmarks on the accountability measures relative to the government of Iraq—reforming, de-Ba‘athification, a long list of things.  So accountability is built into the bill.

I think the American people want to see that.  These are billions and billions of dollars.  I think the American people want to know if the Iraqi government are going to meet the standards that not only the president has set, but also that the Iraqi government has said they would perform on.

MATTHEWS:  Congresswoman Blackburn, do you have a thought on that?

REP. MARSHA BLACKBURN (R-TN), HOMELAND SECURITY COMMITTEE:  Well, anything, Chris, that is going to be artificial timelines and is going to be a plan for failure is going to be a non-starter.  Now, I do think that benchmarks are going to be an important part of the discussion as we move forward on this.  What we need to be certain is that we have a bill that is a clean bill.  Republicans are united on that.  We need to be certain that this is something that the president is going to sign because our troops need the funding.  We need to get that money to them, and we do not need a bill that is going to tie the hands of our commanders in the field.

MATTHEWS:  Do you accept the reasonableness of a plan that would require action on the part of the Iraqi government?  Not on the part of our military.  It doesn‘t tie the military‘s hands, it simply says, as I understand it, if they want to get the money to support their democratization of that country, they‘ve got to democratize.  They have to move forward.

BLACKBURN:  Well, there are lots of times, as we have moved through this process, that we have said to the Iraqi people, You need to be moving forward.  And the goal—we all agree, that the goal is to have the Iraqis be able to stand up and take control of this, see their civil defense stand up and take control, go through the hydrocarbons agreement, go through the de-Ba‘athification process.

And Chris, what we need to do is be certain that our military men and women have the funding they need and the flexibility they need to get the job done.  We have to win.  This is something that we cannot lose.  The terrorists want to end our way of life.  They want to end our free enterprise system.  We have to be certain that we have a plan to win.

MATTHEWS:  OK.  Let me go back...

ESHOO:  Chris, if I might just say something?  The president is going to have to report back to the Congress July 13, with the Congress making a decision.  There‘s a guarantee in the language of this bill that we will return to the defense dollars, the dollars that are set aside.  But the president is going to have to come back and report to the Congress on these benchmarks.  It‘s very important, and I think it‘s common sense, most frankly.  When I gave money to my kids, I wanted to see what they were doing with it.  This is much larger than that, and the American people‘s patience is really running out.

MATTHEWS:  Do you think the president‘s going to agree to live on an allowance, Congresswoman?

ESHOO:  This is a big allowance, Chris.

BLACKBURN:  You know, what we have to do...

ESHOO:  This is a big allowance.

BLACKBURN:  What we have to do now—this is about funding for the troops.  General David Petraeus came to the Senate.  He laid out his plan.  We need to hear back from him.  We need to get the troops on the field.  My goodness, all the troops are not even there that should be there to return to the levels that are needed to carry out his plan.  He is a good man that understands how to fight terrorists.  He is over there to win.  That is what we want to be certain that we do, that we have...

MATTHEWS:  Congresswoman...

(CROSSTALK)

ESHOO:  We‘re not cutting any money for the troops.

MATTHEWS:  Congressman Blackburn, suppose there were no Democrats in Congress, only Republicans.  What role would you play in this war, simply going along with the president or would you be partners?  What role would you be, as members of Congress, if there were no Democrats?

BLACKBURN:  My role would be what it has been from the start, which is to support the men and women in uniform...

MATTHEWS:  But that‘s not—that‘s not...

(CROSSTALK)

MATTHEWS:  I don‘t get it.  In other words, say yes.

BLACKBURN:  You support your men and women in uniform.

MATTHEWS:  Say yes to the president.  In other words...

BLACKBURN:  You support your men and women in uniform.

MATTHEWS:  No, no.  That‘s...

BLACKBURN:  And you hold—you hold the Pentagon, you hold the military accountable for how they spend money.  Yes, indeed, you do that, but what you have to do, Chris, is be certain that you‘re not tying their hands.  You don‘t want a plan that is going to set you up to lose.

MATTHEWS:  OK.

BLACKBURN:  What you want to do is make certain that you are going to win in this war on terror.

MATTHEWS:  Do you have any views on this war that are independent of the president, Congresswoman Blackburn?

BLACKBURN:  Do I have any views...

MATTHEWS:  That are independent...

BLACKBURN:  ... that are independent...

MATTHEWS:  ... of the president, yes.

BLACKBURN:  ... of the president?  You know...

MATTHEWS:  Or are you just completely with the president?

BLACKBURN:  Chris, I love how you ask these questions and set it up. 

There are things where I differ with the president.  Absolutely there are.  But indeed, I think what you have to do is, first of all, listen to the men and women in the field and listen to your commanders in the field.

What we have to do is be certain that we—you know, if you‘re going to leave Iraq, you have to be able to say who won.  And are the American people going to be able to say we lost and the terrorists won?  Now, that‘s a question that you have to ask as you move forward with this discussion.

Is the president always right?  Probably not.  But I‘ll tell you what.  I think that as many things as I disagree with him on, that many times, he has been right.  And I appreciate the fact that when some of us were saying, You need to listen more to the men and women in the field, you need to do something about some things happening at the Pentagon, that, yes, indeed, those changes were made, not early enough, but they were made.

MATTHEWS:  Yes.  You know, the problem, Congresswoman Eshoo, this idea that somehow the military sets the standards for what we‘re doing in the field—if you follow that, General MacArthur would have taken us into China back in the Korean war.

ESHOO:  Well, I—I think that...

MATTHEWS:  I don‘t know where General Patton—General Patton might have taken us to Moscow back in ‘45.  I mean, we do believe in civilian control of the military...

ESHOO:  We do.

MATTHEWS:  ... as our Constitution...

ESHOO:  We do.  But we also believe in accountability, and the accountability—and the standards that must be met should be met by the Iraqi government.  So I think, in terms of the big debate, you know, the byline of this is no more blank checks and there‘s accountability.

MATTHEWS:  Right.

ESHOO:  And there should be.  And so the president‘s going to need to report back again.  These are not only his benchmarks, but what the Iraqi government has said that they would do.  We cannot have war without end and funding without end.  And so the Congress is standing up.  I think the American people...

MATTHEWS:  OK.

ESHOO:  ... support these—they‘re sensible measures.

MATTHEWS:  OK...

BLACKBURN:  I think there also need to be some lessons learned from this.  And as we move forward, we need to look at this and say, There‘s some lessons learned here.  This is what happens when you cut funding to your intelligence community.  It‘s what happens when you cut funding to your military.  And this is—there also should be lessons learned in that this is a new type warfare.  Terrorists do not show allegiance necessarily to one country.  They are showing allegiance to an ideology.  And Chris, I hope that that is something that, as we move forward, we go back and we look at those lessons that, hopefully, we have learned.

MATTHEWS:  I hope we learn a lot.  Thank you very much, U.S.

Congresswoman Eshoo of California, Congresswoman Blackburn of Tennessee.

Coming up: What is the thwarted plot, thank God, to attack Ft. Dix tell us about the fight against terrorists in the U.S.?  White House homeland security adviser Fran Townsend is coming up on HARDBALL.

You‘re watching it on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

Six men, four of them from former Yugoslavia, were arrested last night on charges they plotted to attack the Fort Dix Army base in New Jersey and kill as many soldiers as possible.  Those were their words. 

The suspects appeared in court today and were described by the FBI as Islamic radicals.  They face charges of conspiracy to kill U.S.  servicepeople.  The men had been under surveillance for over a year.  And the apparent attack was stopped in the planning changes. 

Frances Townsend is the assistant to the president for homeland security and counterterrorism.

Well, congratulations to all the law enforcement people, all the way to the top and all the way down to the field.  I‘m glad we caught them. 

Tell us, what were these—these men up to?

FRANCES TOWNSEND, WHITE HOUSE HOMELAND SECURITY ADVISER:  Well, there‘s no question, Chris, they weren‘t just talking.  They were training.  They were trying to acquire advanced weapons, AK-47s and M-16s. 

They had done surveillance and were talking about targets not only at Fort Dix, but also Dover Air Force Base and the Philadelphia Coast Guard station. 

MATTHEWS:  Close to where I grew up. 

Let me ask you this.  Are these people—were they—what was their motivation?  Were they angry about our action in Kosovo?  A lot of them come from the former Yugoslavia.  They‘re Islamic.  I thought we were on their side in that war.  We were looking out for them against Serbia.  They should be grateful to us.  We protected their lives, didn‘t we? 

TOWNSEND:  That‘s right, Chris. 

You know, as you know, this often does not make sense.  These guys clearly, though...

MATTHEWS:  Were they just stupid? 

TOWNSEND:  Well, I mean, they—they dealt with an FBI agent in trying—in terms of trying to acquire the weapons.  That‘s good for us, that they didn‘t realize that. 

MATTHEWS:  Yes. 

TOWNSEND:  No question that these guys were radicalized.  They were caught, in terms of the possessions, with the last will and testament of two of the 9/11 hijackers, pictures of bin Laden, and—and sort of calls to holy war and jihad.

Not clear what motivated them to get there, but they were clearly there and committed. 

MATTHEWS:  Well, were they—we don‘t know whether what was driving them was Iraq.  we don‘t know whether it was Saudi Arabia, our deal over there.  We don‘t have any idea, do we?  You don‘t have any idea what made them want to commit suicide?  It was a suicide attack, right? 

TOWNSEND:  Well, no, it‘s not clear.  They thought that they could go in, and kill as many U.S. soldiers as they could.  But we don‘t know enough yet, from the complaint, as to whether or not they thought it would be a suicide mission.  That‘s not clear.

MATTHEWS:  But, according to the reports, they were—they were studying and being influenced by these suicide videos of the people who attacked us 9/11. 

TOWNSEND:  That‘s right, absolutely.

I should say, Chris, the real unsung hero here is a shop owner who tipped local police, who then cooperated with the FBI.  This is a real good-news story about where we have come since September 11.  The vigilance of the public, the cooperation between federal and local authorities is what led to this—these—this success. 

MATTHEWS:  Do they get out on bail? 

TOWNSEND:  That will be—they have to go to court.  I—I wouldn‘t expect so.  We would sure hope not. 

MATTHEWS:  What kind of a—what are they looking at, in terms of time, if they are convicted, if they are guilty? 

TOWNSEND:  Well, you know, Chris, it‘s really too—it‘s too soon to tell.  That will be based on—the sentencing guidelines will be based on all the facts as they would come out at trial.  And, again, I hasten to add, people are innocent until they are proven guilty. 

MATTHEWS:  Of course.  I should say that as well.  It‘s important. 

But let me ask you about, didn‘t you have some footage?  Don‘t you

have some evidence, videotape, of their—of their meetings and stuff?  I

I thought I sensed you had real good—you have the goods on these guys.

TOWNSEND:  Yes. 

I—this is—this looks like a real strong case.  It‘s a very detailed complaint.  And this was—as I say, it‘s real good work by the FBI and the local authorities.  I want to be sure that people understand, the local police get an awful lot of credit here. 

MATTHEWS:  We had George Tenet on last night. 

And there‘s a—there‘s a mixed bag, if there ever was one, as a witness for this show.  I don‘t know how much to buy of what he says.  He seems to have either a terrible memory or he is one hell of a spook, because he doesn‘t remember anything about the president or the vice president. 

I mean, the guy remembers nothing that you want to get an answer to.

But he said something that was profoundly, I think, influential to our viewers and to me.  He said he believes, in his gut, that al Qaeda is out there and it‘s planning to hit us here. 

TOWNSEND:  Absolutely. 

And, if we weren‘t convinced of that, we should have gotten that message August of last year, when we interrupted that—that plane plot that I talked to you about.  That plane plot was chilling.  It was meant to kill thousands of Americans.  It clearly tried to get around our defenses, in terms of screening.  And it was intended to be another September 11-style attack.  So, they are very committed to killing us here at home. 

MATTHEWS:  What happened to all the sleeper cells?  Do we still know there‘s X many of them?  Do we—have we got a tail on these guys?  Have we got them bugged? 

TOWNSEND:  Well, the...

MATTHEWS:  How many sleeper cells are there in the United States right now made up of Islamic—Islamists, I think, is the right word—Islamist radicals who want to commit violence? 

TOWNSEND:  Well, there is no question that uncovering any sleeper cells in the United States is a top priority of the FBI, working with state and local officials.

We don‘t talk about numbers.  But, certainly, identifying them, investigating them, and bringing them to justice is our first priority. 

MATTHEWS:  And what do you know of what—can—can you give us a sense of what the network looks like right now? 

TOWNSEND:  Well, your—your questions suggest that there is a single network.  Oftentimes, there are individual cells. 

This one, it‘s not clear.  These people are not being charged as part of a large international terrorist group. 

MATTHEWS:  I understand.

TOWNSEND:  And, so, oftentimes, these are individual cells that get an inspiration, if you will, from al Qaeda. 

MATTHEWS:  OK, scary enough. 

Thank you very much, Fran Townsend...

TOWNSEND:  Thank you.

MATTHEWS:  ... assistant to the president for homeland security.

Up next:  The new Gallup numbers are out, and Hillary Clinton seems to be widening her numbers over Obama in the Gallup poll.  These polls are all a little different, so we have got to be careful.  But the Gallup has got her galloping.  How is she doing it? 

We‘re going to ask when we come back.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

DARBY DUNN, CNBC CORRESPONDENT:  I am Darby Dunn with your CNBC “Market Wrap.”

After five straight record closing highs for the Dow Jones industrial average, a down day, the Dow losing almost four points.  And the S&P 500 fell almost two points, while the Nasdaq was up fractionally. 

Investors were cautious ahead of tomorrow‘s Federal Reserve meeting on interest rates.  The Fed is widely expected to leave rates unchanged. 

After hitting a six-month low yesterday, oil prices climbed today, crude rising 79 cents in New York trading, closing at $62.20 a barrel. 

The SEC charging a Hong Kong couple with insider trading of Dow Jones stock.  The pair allegedly bought $15 million worth of Dow stock before shares skyrocketed on word that News Corp. was trying to buy the company, the publisher of “The Wall Street Journal.”

And lower expectations for the housing market—the National Association of Realtors today dropped its forecast for existing home sales, lowered its forecast for this year and for next. 

That‘s it from CNBC, America‘s business channel—now back to

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Since the Democratic debate last month, Hillary Clinton has widened her lead over Barack Obama from five to 15 points—that‘s a jump of 10 points—in the latest Gallup poll. 

Here to talk about that, plus Vice President Cheney‘s trip to the Mideast, are “The Washington Post”‘s Lois Romano, “The Des Moines Register”‘s David Yepsen, and “The Washington Post”‘s Jonathan Capehart. 

Let me go to Lois Romano. 

Thank you for joining us, Lois.

It seems to me that Hillary Clinton seems to be growing in strength, and Obama is out there giving speeches to people by the tens of thousands, but he isn‘t engaging with her.  Is that a mistake? 

LOIS ROMANO, “THE WASHINGTON POST”:  No, I don‘t think it‘s a mistake. 

I think he has to run on his own hook, and try to convince the American people that he‘s ready.  And I think she did a little bit of a better job of that at the debate. 

I mean, she was very well prepared, both substantively and stylistically.  And he looked like he was struggling a little bit more. 

MATTHEWS:  Do you agree with that, David, that he can win this election against Hillary—and he is going to have to beat her to win this nomination—by going out there on his own, doing these solo flights?

Doesn‘t he have to come in and debate her, challenge her to a debate, chase her around the country, and beat her one on one? 

DAVID YEPSEN, “THE DES MOINES REGISTER”:  I don‘t think it has to be that way, Chris. 

I—I think—I think Hillary Clinton has a lot of supporters, a lot of positives.  But she‘s also got a lot of negatives.  I think Barack Obama is kind of a—an empty slate, if you will, to many voters.  And I think he—before he can have the heft to go attack her, I think he has really got to establish his own positives on issues, before he can go on the attack. 

MATTHEWS:  Jonathan...

(CROSSTALK)

YEPSEN:  I don‘t think Democrats—I don‘t think—I don‘t think Democrats like to see that kind of thing either right now, either. 

MATTHEWS:  Well, they don‘t in your state. 

JONATHAN CAPEHART, “THE WASHINGTON POST”:  Yes, Chris?

(LAUGHTER)

MATTHEWS:  I mean, Iowa is so offended by any kind of intramural debate, aren‘t you?  I mean, you guys just don‘t like politics out there, it seems.

YEPSEN:  Very...

(LAUGHTER)

YEPSEN:  Very civil politics here, Chris. 

MATTHEWS:  I mean, I—I‘m still worried about the attack video that Maureen Dowd wrote about. 

(LAUGHTER)

MATTHEWS:  I mean, you guys are still offended by that, that somebody caught Joe Biden imitating a British prime minister. 

(LAUGHTER)

MATTHEWS:  I thought that was fair game. 

(LAUGHTER)

MATTHEWS:  Not in Iowa, though. 

YEPSEN:  No, not...

(CROSSTALK)

MATTHEWS:  We don‘t do that.

YEPSEN:  No, that‘s right.  That‘s right. 

MATTHEWS:  Let me go to Jonathan Capehart.

Jonathan, same question to you.  Do you think that—that he has to get in there and debate her, challenge her?  Or can he win her—beat her way out there, giving those wonderful speeches to big crowds? 

CAPEHART:  Well—well, Chris, we have got to keep something in mind here.  We‘re, what, 18, 19 months out...

MATTHEWS:  From what?

CAPEHART:  ... from the 2008 election.

MATTHEWS:  Count it up again, Jonathan.

(CROSSTALK)

MATTHEWS:  We‘re not 18 months away from the big primaries. 

CAPEHART:  Well—well, maybe not from the big primaries.  But we are...

MATTHEWS:  Well, that‘s what this is about. 

CAPEHART:  We—we—wait.  But, Chris, we‘re—we‘re so far ahead of where we—where we have been historically.

And I think what Barack Obama needs to do is—I think David was the one who said that she—I‘m sorry, not she—that Barack is a blank slate. 

And what he—I agree with you, David, because I think Obama has to get out there and say—not just debate Hillary Clinton, but say who he is and what he stands for on a variety of issues. 

MATTHEWS:  Well, let me go back to Lois again. 

It seems like he doesn‘t have—he has a very wide turning radius.  It takes Barack a long time to make a point.  During the debates in South Carolina, Hillary was moving on a dime.  She was spinning on a dime, answering questions in 13 seconds, 15 seconds, whatever.

He took the longest time to wind up in his answers.  And is that going to be a problem for him? 

ROMANO:  I think it will get better, Chris. 

I mean, clearly, you could see that he was processing questions.  I mean, he‘s being briefed hours and hours a day.  And he‘s up against a woman who basically, you know, sat next to a president of the United States for eight years.  I mean, she is clearly very comfortable in this arena. 

MATTHEWS:  Yes. 

ROMANO:  And he is just not quite there yet. 

MATTHEWS:  All I can do is point to these numbers again.  Right now,

Hillary Clinton is 38 in the Gallup.  Obama is only 23.  He‘s about—he‘s

he‘s about the same in the Irish betting odds.  I checked them again the other day...

(LAUGHTER)

MATTHEWS:  ... about one in 5, 1-5. 

On the—in April, he was within five of her, and we were building it up here, how close he was getting.  And now he is not as close anymore.  So, that‘s what I‘m talking about, reality here.

Let‘s go to this Rudy Giuliani thing.  Let‘s listen to former Mayor Giuliani at last week‘s Republican presidential debate. 

(BEGIN VIDEO CLIP)

MATTHEWS:  Would the day that Roe v. Wade is repealed be a good day for America?

GIULIANI:  It would be OK.

MATTHEWS:  OK to repeal?

GIULIANI:  It would be OK to repeal.  It would be also if a strict constructionist judge viewed it as precedent.  And I think a judge has to make that decision.

MATTHEWS:  Would it be OK if they didn‘t repeal it?

GIULIANI:  I think that—I think the court has to make that decision, and then the country can deal with it.  We‘re a federalist system of government, and states can make their own decisions.

(END VIDEO CLIP)

MATTHEWS:  Well, that‘s two thumbs up for Rudy Giuliani, Lois, either for or against.  I mean, he has got it both sides. 

ROMANO:  Right. 

(LAUGHTER)

MATTHEWS:  ... like Siskel—or it‘s, rather, like Ebert and Roeper now:  I liked the movie and I didn‘t like the movie. 

(LAUGHTER)

MATTHEWS:  It‘s OK if they do get rid of it; it‘s OK if they don‘t. 

ROMANO:  Well, the big question...

MATTHEWS:  Is that going to work in American politics, where you have half the voters women, who do have an interest in that issue, particularly?

ROMANO:  No.  No.  Rudy is going to have to decide where he is on this. 

But—but the one thing that we still don‘t know is whether the Republican base who are supporting him, who are giving him these poll numbers, whether they really understand where he is on the social issues. 

(CROSSTALK)

MATTHEWS:  Wait a minute.  He just said where he is.

ROMANO:  Right.  And how many people were watching that debate?  I mean...

MATTHEWS:  Well, you guys—you guys—you journalists, you liberal journalists—I‘m sorry, Lois—you keep assuming that conservatives don‘t—are dumb.

(LAUGHTER)

MATTHEWS:  They‘re not paying attention.  You keep saying, when they find out....

ROMANO:  Weren‘t the numbers, though, less than the...

MATTHEWS:  ... where they have the same access to information you and I do.  Why do you keep saying...

ROMANO:  But the numbers..

(CROSSTALK)

MATTHEWS:  ... Republicans haven‘t gotten the message yet? 

Everybody around me says that:  You just wait until the Republicans find out what is going on, on this planet. 

(LAUGHTER)

MATTHEWS:  Well, they do know what is going on.

I mean...

(LAUGHTER)

ROMANO:  But—but, Chris, it‘s early.

MATTHEWS:  Lois, I want to give you one more time here.

(LAUGHTER)

MATTHEWS:  You think that the average Republican is more benighted than the average journalist.  They don‘t know what is going on.

We all know about Rudy being pro-choice...

ROMANO:  That‘s not what I‘m saying.  Let me go back.

MATTHEWS:  ... but they don‘t know it.

ROMANO:  It‘s early.  It‘s early in this process.

MATTHEWS:  Oh...

(CROSSTALK)

ROMANO:  And Rudy is basically—has really high poll numbers because of 9/11, because he speaks bluntly, because of law and order.  And he has never had to address these issues on a national level, social issues.

So, we have one debate where he says it, and I‘m not sure we can tell from that just yet. 

MATTHEWS:  Listen, do you really think that somebody in Tennessee thinks that the mayor of New York is pro-life, any mayor of New York has ever been pro-life? 

Do you think they are that out of it, that they think that in the Bible Belt, that the mayor of New York, reelected to two terms, was...

(LAUGHTER)

ROMANO:  Well, he‘s a Republican.

MATTHEWS:  ... was on their side of the cultural issues, that he was anti-gay, anti-choice, that he agreed with them on everything?

(LAUGHTER)

MATTHEWS:  He was a fundamentalist; he didn‘t believe in evolution? 

ROMANO:  You never know.

(LAUGHTER)

MATTHEWS:  Do you really think they think that? 

(CROSSTALK)

ROMANO:  Well, all they really know about him is—is 9/11.

MATTHEWS:  Let‘s go to Iowa.  I‘m going to Iowa.  Let‘s go.

(LAUGHTER)

(CROSSTALK)

MATTHEWS:  Now, you lived in Oklahoma for a while, but you still think nobody knows anything.

Let me go to—to David. 

David, do you think that conservatives know what‘s going on, on this planet, as much as anybody else does, or you think they‘re completely out of it, like Lois does?

(LAUGHTER)

YEPSEN:  No, I think conservatives do understand that Rudy Giuliani is pro choice.  I think he botched that answer.  It reminded me of Jim Hightower and his great line, that the only thing you find in the middle of the road are yellow stripes and dead armadillos.  Rudy Giuliani was sort of trying to finesse it, have it both ways.  Look, in American politics today, you are either pro-life or you‘re pro-choice.  You say it that way and you move on.

Because he was doing well in the polls despite the fact that a lot of conservatives know he is pro-choice, because there are other issues at work.  There is war, terrorism, the economy. 

MATTHEWS:  Would he have been better off—Tactically, David, would he have been better off if he simply said, you know, I think Roe v. Wade—we can argue about it, but the basic notion that a woman has less freedom as they proceed in their pregnancy, toward the end, than they do in the beginning, under our law, is a reasonable court ruling and a reasonable public policy?  Why didn‘t he just say that? 

YEPSEN:  He wouldn‘t even have to be that long about it.  He could just say I‘m against abortion myself, but I‘m pro choice.  And let it go at that and move on. 

CAPEHART:  Chris, that would never happen, because Rudy‘s answer in the debate was something that was very familiar to me, as someone who covered him when I was at “The Daily News.”  In New York, Rudy‘s pro choice credentials were questioned.  And what you‘re finding now is that Rudy‘s pro life credentials are being questioned.  And yes, what you find in the middle of the road are yellow stripes, dead armadillos an Rudy Giuliani when it comes to the issue of abortion. 

MATTHEWS:  You know, there are ways to answer this, Lois, because a lot of people don‘t like abortion.  But they do believe we live in a free sots and they want to maximize the freedom people really do have, even if they do things they really don‘t want them to do.   

ROMANO:  I agree. 

MATTHEWS:  It isn‘t as if he is in this all by himself.  But he could have answered it better.

ROMANO:  He has to have an answer.  I agree with you, he needs an answer. 

MATTHEWS:  I‘m not going to tease you one more time, Lois.  When do you think the conservatives are going to find out that Rudy Giuliani is --  just give me a month.  Like, you know, Petraeus, it‘s September.  What month do you think the conservatives of America are going to know that Rudy Giuliani, mayor of New York, is pro choice? 

ROMANO:  It could be as early as tomorrow, because we now know he contributed to Planned Parenthood. 

MATTHEWS:  Right, I forgot.

ROMANO:  Yes, you can‘t forget.  Little by little, we‘re going to be learning about all these candidates.  Look, I think the thing about Hillary‘s poll numbers going up is extremely telling, because here we are, so early—I mean, we are six months out, and yet one event manages to push her poll numbers up.  I think all of this is incremental. 

MATTHEWS:  Do you think the Democrats—do you think we‘re going to have a third party candidate who is anti-war, like Hagel, if Hillary is the nominee?  If that means two hawks running?  Do you think the American people will be looking for a dove to run somewhere, Lois? 

ROMANO:  I‘m not so sure about that.  I mean, because everybody is kind of a dove right now, don‘t you think? 

MATTHEWS:  No, Hillary is not.  No, I‘m sorry.

ROMANO:  Well, she‘s not, but—

MATTHEWS:  No, she‘s hawk.  She‘s a hawk.  She‘s a hawk.  I‘m sorry, she‘s a hawk.  The president‘s a hawk.  Rudy‘s a hawk.  A dove is someone who thinks this war was a lousy idea and they‘re trying to avoid getting in the hole any deeper.   

ROMANO:  No, I don‘t think so.  I don‘t think there is going to be a dove in the race.  People want protection.  They want us to fight terrorism.  They just want us out of this war right now. 

MATTHEWS:  That‘s right.  That‘s right.  Lois Romano, thank you.  David Yepsen, thank you.  Jonathan Capehart, thank you.  They‘re all staying with us.  So, I‘m not thanking you yet.  Anyway, this is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the “Washington Post‘s” Lois Romano, the “Des Moines Register‘s” David Yepsen and the “Washington Post‘s” Jonathan Capehart.  Let‘s take a look—last night I moderated—I was moonlighting last night.  I moderated the final mayor‘s debate in Philadelphia.  This is the Democratic primary contestants.  The primary is next week.  It is one of those hot mayoralty races you only get in places like Philly. 

Let‘s take a look at this exchange.  I want Jonathan to respond.  You have covered New York.  Take a look at Philly.  This is Tom Knox, a business guy, running against U.S. Congressman Bob Brady with three other people on the stage—four other people.  

(BEGIN VIDEO CLIP

TOM KNOX, PHILADELPHIA MAYORAL CANDIDATE:  I didn‘t get any no-bid contract.  His commercials say so.  That‘s a lot of bologna. 

BOB BRADY, PHILADELPHIA MAYORAL CANDIDATE:  If you‘re given 500,000 dollars through contributions, you‘re looking for access. 

KNOX:  No, you‘re not.  You‘re looking for good government.  Good government.  That‘s what you for because that‘s your mentality.  If you start look for jobs for people and stop getting jobs for yourself!

(CROSS TALK)

KNOX:  Access to Governor Rendell.  What do you think?  I was his deputy mayor.  I can call him up any time of the day or night.  I don‘t need to make any money to get access.   

BRADY:  Deputy mayor, making a dollar a year, grossly overpaid. 

(END VIDEO CLIP)

MATTHEWS:  It got worse than that, Jonathan.  This is about funding of campaigns, and it‘s topical today nationally, because for the first time, almost like the Watergate, the big candidates are saying no more limits on campaign spending.  No more participation by the federal.  Everybody is now saying spend all the money you can raise.  It‘s basically a big casino.  If Hillary can raise more than Obama, so be it.  It‘s all about raising money.  Are we back to the old days before Watergate of buying influence by big campaign contributions? 

CAPEHART:  Well, I don‘t know, speaking personally, I don‘t know if

we‘re going back to the battle days of pre-Watergate.  But what I do think

is that the campaign finance laws, such as they are, are so filled with

holes and rooms and areas for people to evade the law that it sort of makes

whatever campaign finance laws we have on the books meaningless.  And so,

at this early stage in the game, the money primary, as it‘s called, is the

one way that people who get into the race for president or for any office -

it‘s the only way they can figure out whether they actually have any kind of support. 

MATTHEWS:  David, are you going to see out in Iowa people going around like the Kennedys used to do back in the old days and just buying county chairman?  I mean, the money seems to be unlimited this time. 

YEPSEN:  You‘re right, it is.  I think money in politics is like water on a flat roof.  It will find a way through.  We are getting back to the bad old days.  There is a whole culture of people whose sole purpose in life is to find ways around campaign finance spending limitations.  So, it isn‘t going to be like the Kennedys, where you go buy a county chairman, but it is going to be where you go buy TV time, where you go buy direct mail and phone banks, and all the things that go into a winning campaign today.

And it‘s been made worse by the compression of this campaign schedule.  That means that the only candidates who are going to be able to compete are those that can raise big bucks. 

MATTHEWS:  Lois, your thoughts of going back to where we started from before the reforms. 

ROMANO:  I totally agree with David.  What happens here—I mean, there is a reason that these reforms were put in place, to kind of level the playing field.  I think what‘s going on now is that basically anybody who is just an upstart, who might have a good message, who might make a good president, can‘t even get off the ground. 

MATTHEWS:  Right, just getting blown away.  Lois, it‘s a bad wheel that‘s turning.  We‘re going back under again, in the Ferris wheel of corruption.  Anyway, thank you very much.  It of the great to have my friend Lois Romano.  And David Yepsen, you are like “Brigadoon” my friend, you‘re in season again.  And Jonathan Capehart, I‘m pushing for you young man.

Up next, CNBC‘s Jim Cramer on what‘s behind the spike in gasoline prices right now.  It‘s almost four bucks for premium right now in California.  And if there is anything Congress can do about it.  I doubt it.  You‘re watching HARDBALL, only on MSNBC.

MATTHEWS:  Welcome back to HARDBALL.  With the Memorial Day weekend just around the corner, will gas prices head towards four dollars a gallon as the summer travel season gets underway?  And is there anything Congress can do about it?  Jim Cramer is host of Mad Money, which airs at 6:00 and 11:00 each night on CNBC. 

Jim, let me ask you, we get our usual economic report on here from CNBC and it does not seem to be related, these high gasoline prices, to oil production. 

JIM CRAMER, CNBC ANCHOR:  No, not at all, Chris.  As a matter of fact, your high price at the pump is distinctly for one reason: there have been so many outages, so many refineries taken off line because of maintenance, because of flair ups, because of things going wrong.  That‘s the reason why we‘re getting the spike.

MATTHEWS:  Let me ask you this through it; we‘ll do a little retailing around the country geographically.  Why is premium out in California almost four bucks?

CRAMER:  Because there is a bottle neck throughout the system.  A lot of the traditional refineries have gone off line.  But I‘ve got to tell you something, I am going to go out on a limb here, Chris—and you can hammer me a month from now if I‘m wrong—a lot of the bottlenecks will be cured within the next three weeks.  I think right now is the top, the peak.  We are not going to got that four dollars across the rest of the country.  I would be a seller of gasoline right now if I were in the gasoline business. 

MATTHEWS:  What causes the differential?  I mean a lot of People are very cost conscious.  They have to be.  They are on very limited budgets.  A change in gas prices affects where they get shoes for the kid and stuff like that.  Will they ever go to the movies ever?  I‘m serious about it.  This is a marginal cost.  You don‘t get anymore out of your car when the gas price goes up.  You just lose income.  It‘s like a tax. 

CRAMER:  Chris, I‘ve got to tell you; this is all because we have not had a new refinery built in this country in 28 years. 

MATTHEWS:  So Bush is right?  Because that‘s what he always says.   

CRAMER:  It is.  Now, where there are refineries, they‘re trying to build them out a little bit, but nowhere near the demand we have in the country.  This is a not in my backyard—we have all been by refineries.  They stink.  And they are dangerous.  No one wants one anywhere near them. 

But that is the problem with our gasoline prices. 

MATTHEWS:  Where are the refineries right now?  Aren‘t they in Baton Rouge?

CRAMER:  A lot of them are in Texas.  A lot of them are scattered in the eastern sea board.  But it really is this one Gulf area.  And we know that, because when Katrina came by, it wiped out a lot of the refining capacity.  And we saw gasoline spike then.

Also, don‘t forget, the Ethanol mandate has made it once again very difficult to be able to process all of the gasoline and ethanol that we need.  This is not a good time if you are in the oil business.  It‘s a great time if you‘re in the refining business.

MATTHEWS:  Is ethanol saving us anything? 

CRAMER:  No, nothing at all. 

MATTHEWS:  OK, let me ask you about Wolfowitz, who was a big architect, in fact a big advocate.  We know that.  Everybody knew of him and the war and Iraq.  He is he now on the grid iron at the World Bank.  Are these charges against him about the war in Iraq and the fact that he was a hawk?

CRAMER:  I think that when you look at the fact that he is so closely aligned with the Iraq view, that‘s it‘s a lot of it.  But you know what, this is one of those where we ought to sacrifice this guy.  Let‘s just give them Wolfowitz.  Throw him to the wolves, so to speak.  Because he did create some violations.  He is blaming it on the World Bank.  The Germans don‘t want to hear that.  Let the Germans have him. 

MATTHEWS:  I think I‘m watching “The Tale of Two Cities” here on the way to the guillotine.  Let me ask you this, is he really guilty of anything that‘s worthy of a charge? 

CRAMER:  Oh, no. 

MATTHEWS:  Accept that he came in there in a context of being villainized because he was a hawk. 

CRAMER:  No, I mean, these Europeans, don‘t they do this stuff all the time.  No, there is a sense that he is this great imperialist force.  No one in Europe wants to be associated with him.  This guy had to be holier than Caesar‘s wife.  He wasn‘t.  This is easy to knock him out.  Our administration ought to say, hey listen, take some time off. 

MATTHEWS:  You know what it reminds me of?  Larry Summers at Harvard, where Larry Summers went there and tried to shake the place up.  And they just waited for him to make one mistake.  And he made that comment about women not being as good as men in math and science.  And he was gone.  It was the end for the guy.  You can say it‘s a big mistake or a small mistake.  But he made that one.  He said the wrong thing.  And now he got bounced.

CRAMER:  I‘m not going to disagree with that.  But remember, Larry did about three things wrong.  Wolfowitz just did one thing wrong. 

MATTHEWS:  We‘re going to figure out whether that‘s wrong or not.  According to that ad hoc committed that reported, he‘s got until tonight to respond back.  They‘ve got him on a short string.  It looks like they are railroading him, maybe.  But then again, I disagree with him on the war.  I have very mixed feelings about this very rough justice going on here.  I think people should be judged for what they really do wrong, and not come up with some excuse, like getting Al Capone on income tax evasion.  Anyway, I guess we should have gotten Al Capone on income tax evasion. 

CRAMER:  Any way you can get, you‘ve got to get him.  But it‘s Germany that wants him out Chris.  Germany is going to make this a big issue.  It‘s just better to let Germany have the scalp here.

MATTHEWS:  Hang them high.  Anyway, thank you Jim Cramer from Money Matters.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “TUCKER.”

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

END   

Copy: Content and programming copyright 2007 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2007 Voxant, Inc. (www.voxant.com) ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

transcript

Watch Hardball each weeknight at 5 & 7 p.m. ET

Discuss:

Discussion comments

,