updated 5/15/2007 11:45:02 AM ET 2007-05-15T15:45:02

Guests: Paul Eaton, Howard Fineman, Eugene Robinson, KT McFarland, Michael Feldman

CHRIS MATTHEWS, HOST:  Missing, three American hostages in enemy hands.  McCain makes the case for staying in Iraq for the long haul.  Giuliani looks to superhawk John Bolton to help with foreign policy.  Romney takes a shot at his own religion‘s past.  Obama wants to pay for health care by killing the Bush tax cuts.  Bill says Hillary‘s just great.  Things are getting gritty out there.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.  The deadly violence against American troops in Iraq continues.  Saturday, an attack on a convoy killed four U.S. soldiers, and a massive manhunt is under way for three missing soldiers abducted by suspected al Qaeda militants.  Today the U.S. military reports two more soldiers were killed, our soldiers, and another four wounded when their patrol came under attack today southeast of Baghdad.  More from Iraq later in the house.

From the 2008 campaign trail, Republican frontrunner Rudy Giuliani is getting a taste of what it‘s like being on the national spotlight.  Giuliani, still taking heat from conservatives for his stance on abortion, is now under scrutiny for his business deals and his partners.  And former president Bill Clinton is back on the stage, starring in a new video—we‘re going to show you the whole thing—promoting his wife, Hillary.  Clinton, boy, is he out there.  He‘s the guy.

When we begin tonight, we‘re going to start with John McCain and his appearance Sunday on NBC‘s “Meet the Press.”  Tim Russert, the moderator of “Meet the Press,” NBC‘s Washington bureau chiefer—chiefer?  Why did—chiefer?  Oh, that‘s interesting—and the author of the new book “Wisdom of our Fathers,” now out in paper.

How many did it sell in hardback?  Tons.

TIM RUSSERT, “MEET THE PRESS”:  Five hundred thousand.

MATTHEWS:  Oh, geez!  It‘s unbelievable!  You don‘t need any help.

(LAUGHTER)

MATTHEWS:  Hey, thanks for coming on.  Let‘s talk about that fascinating interview yesterday.  McCain—you‘ve known him a long time.  You‘ve been—you‘ve known him for years.  You‘ve watched him.  Is something missing this time around, or can you say, that wasn‘t—that was there last time, seven years ago, something different?

RUSSERT:  Two things.  One is he is so tied to the war in Iraq, Chris.  When he said yesterday, I may be the last man standing, you know, in my mind, I‘m recording that because I—we‘re going to—if he‘s the nominee, that‘s going to be the campaign.  He said, We‘re going to stay in Iraq and we‘re going to continue.  We‘re going to win.  We‘re going to fight.  And he doesn‘t care if the Iraqi parliament or the U.S. Congress is opposed...

MATTHEWS:  He said that to you!

RUSSERT:  Absolutely.

MATTHEWS:  In fact, you raised the question, We‘ve gotten reports, of course, that the Iraqi parliament is moving a petition to tell us to leave on a timetable.  And he said, Well, we have a government over there.  We don‘t have to worry what the parliament says.

RUSSERT:  Right.  Right.

MATTHEWS:  And then you asked—and he said, That‘d be like having a vote here in the United States.  And he said that would be irrelevant, too.

RUSSERT:  Right.  It‘s—this is what he‘s decided is in the best interests of the country.  This is what his experience tells him to do.

MATTHEWS:  So it‘s not about selling democracy, per se, it‘s about making our stand.

RUSSERT:  Now it is.  Now it is, that despite whatever happened, whatever mistakes were made—I asked him your favorite question.  Was it a good thing now, in hindsight?

MATTHEWS:  You tried.  You did it, I think, three times...

RUSSERT:  Right.

MATTHEWS:  ... and he finally sort of said yes.

RUSSERT:  Right.  Right.

MATTHEWS:  Let‘s take a look at the—you really opened him up on this.  You asked Senator McCain, Tim, about his Iraq plan.  Let‘s take a look at the whole picture here.

(BEGIN VIDEO CLIP)

RUSSERT:  Under your plan, you‘re strongly suggesting we‘re going to be there for the next 10 years, at least, in order to secure and stabilize that country.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I am suggesting that we will, hopefully, reach a situation where American troops will not be on the front lines, where—and by the way, that will not be immediately—where American troops are able to withdraw.  We‘ve had troops in South Korea for 60 years, and Americans are very satisfied with that situation.

The key to it is, is the Iraqi military and police taking over these responsibilities.  And that is, I believe, the ultimate way we‘re going to know whether we can reduce American casualties and they take over the responsibilities for governing their own country and militarily attacking and resisting al Qaeda and other sectarian violence, which will be there for a long, long time.

(END VIDEO CLIP)

MATTHEWS:  Tim, you know, you ask tough questions, and these guys go on the show knowing they‘re going to face them.  Why has no one checked John McCain on what he just said before you came along?  We‘ve been in Korea, but the war was over when Ike ended it in ‘53.  We haven‘t been in a shooting war in South Korea.  Of course, we had problems at the DMZ.  But he acts like there‘s an actual parallel between us staying in Iraq, which is war-torn, and defending a peace line, an armistice, in Korea.  Totally different situation.

RUSSERT:  South Korea actually has a functioning army.  The difference is with Iraq, General Pace said this week they have 10 out of 120 battalions that are operating independent of the United States.  That‘s 6,000 soldiers.  That‘s it after four years.

MATTHEWS:  You mean that can undertake combat operations...

(CROSSTALK)

RUSSERT:  Independent.  Correct.  Correct.  And to suggest that it‘s going to be necessary for the Iraqi army to stand up and be able to secure their country- they are so far from that.  And that‘s why we have to keep saying, OK, then how long is it going to be?  And what‘s going to happen?

The other thing, Chris, is that according to Jim Miklaszewski, our Pentagon correspondent, that in April, we simply do not have the American troops to continue the rotation of 150,000 troops that we‘re committed to.  Senator McCain said we‘re going to have to expand the size of the army.  Sure, but that‘s going to take some time.  This is really crunch time, no doubt about it.

MATTHEWS:  And he‘s among those on the very hawkish side of the Iranian situation, where there‘s a very real possibility if we commit an act of war against Iran, we‘ll have to commit troops, ultimately.  We can‘t just take a big shot at them, at their suspected nuclear sites, then walk back.  Doesn‘t everybody know that might involve another land war?

RUSSERT:  But where do the troops come from?  That‘s the big question.

MATTHEWS:  Let me ask you about McCain personally.  I mean, maybe this

is too subjective, but one of the great things about his campaign in 2000 -

and everybody enjoyed covering it.  It was just fun because McCain had the “Straight Talk Express.”  He was a maverick.  We always love covering mavericks.  There was a happiness to the campaign, fun, sprightliness.  It was a joy to see him out there.  He was laughing.  He was having the time of his life.  Would you say that‘s the case yesterday, when you interviewed him?

RUSSERT:  It‘s much more of an establishment candidate.

MATTHEWS:  But is he happy?

RUSSERT:  I think he realized in 2000 that if a state where the Democrats and independents could cross over, he could win.  If it was Republicans only, he couldn‘t win.  He won Connecticut, and that was it.  Every other state, Bush just rolled over him...

MATTHEWS:  Yes.

RUSSERT:  ... from Republicans only.  So he decided to be the heir apparent, the more establishment candidate, embrace George Bush and Dick Cheney in 2004 and change his position.

MATTHEWS:  But that‘s unrequited love, isn‘t it?

RUSSERT:  Well, I think we‘ll find out.  I mean, that‘s—I mean, I said...

MATTHEWS:  I don‘t see any evidence of the White House people, the well-known staffers over there or friends of the president, flocking to the McCain campaign.  They‘re much more flocking to the Romney campaign, if you will.

RUSSERT:  Some have, Mark McKinnon and others.  But I did ask Senator McCain, I said, Wouldn‘t it be ironic that in 2000, you lost the Republican primary to George Bush, and in 2008 you lost it because of your loyalty to him and the Iraq war?  And he said—actually, he smiled at that because he understood the irony of it.

MATTHEWS:  He saw the irony.

RUSSERT:  Yes.

MATTHEWS:  But he‘s not happy about the irony.

RUSSERT:  But the difficulty, I think—and it was obvious with tax cuts and with ethanol...

MATTHEWS:  Right.

RUSSERT:  When you change your position, it is painfully difficult to articulate why you changed it.

MATTHEWS:  Well, here you have him again, Tim, from “Meet the Press.” 

Yesterday you asked John McCain about his newfound support for ethanol. 

Let‘s take a look at this back-and-forth.

(BEGIN VIDEO CLIP)

RUSSERT:  So you‘ve changed your mind.

MCCAIN:  No, I haven‘t.  I have adjusted to the realities of the world we live in today, and if I don‘t adjust to those realities, then I would be stuck in the past.  I have to adjust to realities.  The realities today are that we have a serious problem with climate change, which I have been concerned about for many years, and we have a far more serious challenge associated with our dependence on foreign oil.  Not too long ago, a year or so ago, there was an attempted attack on a Saudi oil refinery.  If that attack had succeeded, the price of oil would have gone to $150 a barrel overnight.

RUSSERT:  And the reality of being part of the Iowa caucuses had nothing to do with it?

MCCAIN:  I don‘t—I don‘t—I can‘t respond to a statement like that.  I do what I think is right, and I will continue to do what I think is right.  And if conditions change as far as some specific issue is concerned, then obviously, then I will continue to re-evaluate my position on specific issues.

(END VIDEO CLIP)

MATTHEWS:  Tim, this obstacle course in politics—it used to be you could take a position for 20 years and hold onto it.  I like Social Security, I don‘t like Social Security.  I like Medicare, I don‘t like it.  I‘m for the war, I‘m against the war.  Now these guys have to do this—this incredible mobility.  They have to be able to move back and forth on something like ethanol, (INAUDIBLE) on Roe versus Wade.  They may not even think about it, but they got to keep moving.  Is that the new politics of the 21st century, mobility?

RUSSERT:  It‘s a jujitsu.  You know, I fully expected Senator McCain to say, Well, you know, ethanol—I changed my mind because I went out to Iowa and those people in Iowa are the smartest voters I ever encountered.

(LAUGHTER)

MATTHEWS:  He‘s not a complete BS artist, is he.  He‘s not willing to do that.

RUSSERT:  Oh, no.

MATTHEWS:  Well, the fact that he‘s chosen to compete in the Iowa caucuses—last time around, he chose not to and it was a smart move.  Why is he doing it this time?

RUSSERT:  Because he knows he has to.  If he wants to win the nomination, he cannot afford to miss Iowa.  You know, yesterday, Chris, he sat there for a full hour.  He laid out his positions on a whole variety of issues.  You can disagree with him, but I thought he was pretty forceful in saying, I believe this about Iraq.  I believe this...

MATTHEWS:  Have you—have you dropped a commercial halfway between the first—everybody who watches “Meet the Press” watches this show.  When you go on the—you‘re laughing because this is tactics.  This is Russert tactics.  You must have thought this through.  When you put a guy there in that chair, like this—it‘s about this distance.  So he‘s sitting there.  And you‘ve got all the preparation of at least three hard days into this thing.  And you‘re ready.  This guy may have gotten his homework done or not.  The fact that you don‘t give him a breather at, like, a quarter of, that you—or a quarter after, rather, that you press him for 35 minutes, the maximum you can get away with without a commercial, right?

RUSSERT:  Absolutely.

MATTHEWS:  You squeeze him.  You push the envelope.  Does that wear them out more than giving them 15-minute breathers, every 15 minutes?

RUSSERT:  Absolutely.

MATTHEWS:  Yes.  It‘s not like you go back to the corner and put that

you know, put the wet towel on your face.

RUSSERT:  Right, take a drink of water and (INAUDIBLE) have the adviser run up...

(CROSSTALK)

MATTHEWS:  Because I notice after you keep it up, after about 10 questions in, I do notice that they‘re just, like—it‘s like—it‘s an assault psychologically.  They can‘t keep changing topics as fast as you can take them.

RUSSERT:  Yes.

MATTHEWS:  Admit it‘s tactics, will you?

RUSSERT:  Well, it‘s part of it.  It‘s part of a strategy, sure.  And it‘s trying to give the viewer a chance to see this person up close.  Do they really believe in something?  How do they articulate it?  Can they think on their feet or in their chair?  And I think it‘s part of the process of electing a president.

MATTHEWS:  It‘s like Sipowicz in the interrogation room, isn‘t it?

(LAUGHTER)

RUSSERT:  It can have that feeling...

(CROSSTALK)

MATTHEWS:  I really noticed that with him and with George Tenet the other day.  George Tenet was, like—I don‘t think he liked standing up that long against you.  That was just real work for him.

RUSSERT:  But that—OK, we went into Iraq because we said we had weapons of mass destruction.

MATTHEWS:  Right.

RUSSERT:  They weren‘t found.  We need to find out what happened. 

There‘s nothing more important.

MATTHEWS:  There was a lot of salesmanship in getting us in that war.

We‘ll be right back with Tim Russert.  We‘re going to talk about the other candidates and Hillary and Bill and Rudy and Romney.  There‘s a lot going on this last couple days.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES:  You know, the only reason to really support anybody for president is that you believe they‘ll be the best president.  I‘ve seen a lot of people come and go over time, and I like most of the people I‘ve met in politics.  But I can tell you that what I believed 35 years ago about Hillary, that she has the best combination of mind and heart, of leadership ability and a feel for the human consequences of the decisions that a leader makes—I believe that today even more strongly than I believed it then.

(END VIDEO CLIP)

MATTHEWS:  Can you feel it, Tim?  Can you feel the love?  He‘s good, isn‘t he?

RUSSERT:  Remember ‘92, two for the price of one.

MATTHEWS:  Now it‘s the other way around.  So in the debate the other day, I asked the Republicans whether they thought—what they thought of having Bill back in the White House.  I thought they would all jump on it like banshees, but they were very careful.

RUSSERT:  Right to Hillary.

MATTHEWS:  Right to Hillary.  They were afraid to go after this guy.  Is he back?  Is he recuperated/  Is he revived as a major national figure after all these years?

RUSSERT:  Democrats, Republicans, liberals, conservatives, you ask them who‘s the political heavyweight, they say Bill Clinton.  They admit it.  They know that.  Now, does he engender the attitudes and fire people up?  Absolutely.  But in a Democratic primary, with base core supporters...

MATTHEWS:  Right.

RUSSERT:  ... he is absolutely the most important weapon any candidate can have, and particularly if you‘re running against Barack Obama, the senator from Illinois.

MATTHEWS:  Sure.  We‘re looking at a (INAUDIBLE) picture there with Hillary with a lot of African-Americans.  Clearly, that‘s his strength.

(CROSSTALK)

MATTHEWS:  How do you do it—and here‘s a great political question.  You‘re looking at the advisers out there.  What do you think they‘re smart to be doing?  Al Gore cut it the wrong way.  He didn‘t run on the Clinton record.  He ran against Clinton personally and somehow ran against the Clinton record.  He should have probably separated himself from the Clinton problem and ran on the record.  Can Hillary benefit from the good Bill and not get hurt by the bad Bill, given all the way things are going right now?

RUSSERT:  Well, in terms of the bad Bill, everyone saw her as a victim.  So now she doesn‘t have to even talk about it.

MATTHEWS:  She benefits both ways.

RUSSERT:  She just says, Look at the record we had in our administration.

MATTHEWS:  When my husband was president.

RUSSERT:  In terms of job growth...

MATTHEWS:  OK.

RUSSERT:  ... in terms of surpluses.  We can go back...

MATTHEWS:  OK.

RUSSERT:  ... to those good old days.

MATTHEWS:  I love asking you these political questions.  You said a while ago, and I keep repeating it whenever I talk to a group—you said the Southwest is her opportunity to really expand on the Democratic blue state opportunity because of—because of a lot of Hispanics, because of the fact that it‘s a little less macho.  I think it‘s because it‘s a little less macho out there than, say, the states we know better, the Rust Belt states—Pennsylvania, Michigan, Ohio, deer hunter country.  Isn‘t it harder for her up there?

RUSSERT:  Tougher.

MATTHEWS:  Like upstate New York.

RUSSERT:  Guns and boats.

MATTHEWS:  Guns and boats.

RUSSERT:  Tough, OK?  But if you say to Hillary Clinton, You cannot win Ohio and you cannot win Florida, Al Gore couldn‘t, John Kerry couldn‘t, where does she get that 271 electoral votes...

MATTHEWS:  Florida.  No?

RUSSERT:  Even if she doesn‘t win Florida or Ohio, if you win three of four, New Mexico, Arizona, Nevada, Colorado...

MATTHEWS:  OK, Nevada because it‘s not that right-wing a state, and women voters, women union members.  New Mexico and Arizona, Latino voters.

RUSSERT:  Arizona has a woman governor, a Democratic woman governor.

MATTHEWS:  A little more open to a woman leader out there.

RUSSERT:  Absolutely.

MATTHEWS:  Why?  Explain that because that‘s...

(CROSSTALK)

RUSSERT:  It‘s the pioneer spirit.

MATTHEWS:  I was told sturdy frontierswomen.

RUSSERT:  Absolutely.  That‘s who settled it.  And if the Democrats can win those three of those four states, they‘re in the White House.  That‘s why I think—that‘s where the new focus is going to be.  That‘s why Bill Richardson is trying to move out so aggressively, because he figures he could be vice president to anybody who gets nominated.

MATTHEWS:  Do you—you know a lot of these politicians in the room with them because just going on and off the air, in the Green Room you meet them.  You meet them before and after your broadcast.  They‘re not always the same person.  Hillary seems to have the biggest—well, Al Gore did, too—the biggest difference between on air and off air.  Al Gore could be a regular guy sometimes—sometimes.  Hillary is much more charming in person.  Do you think that‘s going to come across by the election, or will she always have the difference between herself as you meet her and as she stands behind a microphone?

RUSSERT:  I think that‘s her biggest challenge.  Also, if you see her in a room of 50 supporters, as opposed to a room of 5,000, dramatic contrast.

MATTHEWS:  Much better with 50.

RUSSERT:  Absolutely.  If she gets to the podium, there‘s a sing-song...

MATTHEWS:  I know.

RUSSERT:  ... approach in her presentation.  And if you‘re going to be a leader, you have to learn how to communicate in both those forums.

MATTHEWS:  Yes.  Well, as you and I know, the hardest trick to learn is the microphone works.  It works.  You don‘t have to yell through it.

Let me ask you—let‘s switch to another New Yorker, a much more home-grown New Yorker, Rudy Giuliani.  It seems like—I think Michael Wolf or some one of the columnists wrote this, I think with “Vanity Fair,” that no matter how many hits he takes, no matter how many brickbats he takes over abortion, over his business dealings, over the disease that people got, some of them, after the fallout from 9/11, all these particular problems, he still keeps floating ahead like a hovercraft.  He just keeps going because of a certain level of celebrity.  It just adds to the story.  What is the Giuliani situation, as you see it right now, if you had to tout this thing?

RUSSERT:  The morning of September 11, no one else was speaking to the country.  We‘ll never forget that.  It was Rudy Giuliani.

MATTHEWS:  He was there.  He showed up.

RUSSERT:  Walking, and the dust was flying, and he was there.  It‘s indelibly ingrained in our minds.  OK, but, however, he wants to make that the issue over and over again—The terrorists are coming.  The terrorists are coming.  They‘re coming back...

MATTHEWS:  You‘re looking at it right now.

RUSSERT:  Yes.  That‘s the picture.  We‘ll all remember it.

MATTHEWS:  Well, will that be—will that be displaced by some other picture that brings him down, or is that the one that will carry him through the primaries?

RUSSERT:  What we now—has the chiseling effect.  People are trying to take him off the 9/11 mountain, in effect.  And, certainly, the debate you had with abortion, when he said, OK, his answer to Roe v. Wade...

MATTHEWS:  To both possibilities. 

RUSSERT:  Be a famous OK... 

(CROSSTALK)

MATTHEWS:  He was very much like John Kerry‘s “I was for the 87 before I was against it.”

But do people want that hero enough to help defend him? 

RUSSERT:  That‘s—that‘s what we don‘t know.  You know, I can tell...

MATTHEWS:  I think they do want a hero so much, they don‘t want to see that chiseling effect to work.  But I may be wrong.  I don‘t know.

RUSSERT:  The big issue—and people at the White House are very open about it, Chris.  They still feel quite perturbed about Bernard Kerik, the former police chief who Mayor Giuliani recommended to be head of Homeland Security.  And now he‘s under indictment.

MATTHEWS:  Yes. 

RUSSERT:  Also the White House said, gee, why would we get a recommendation for such a candidate?

Also, the business dealings that you talked about—I think it‘s going to be a very interesting vetting process...

MATTHEWS:  Yes. 

RUSSERT:  ... of Mayor Rudy Giuliani over the next several months. 

MATTHEWS:  It‘s not like there‘s a lot of perfect candidates floating out there as his alternative.

RUSSERT:  There are none.  There are none.

MATTHEWS:  There‘s no perfection out there.

RUSSERT:  There are none.

MATTHEWS:  More with Tim Russert when we get back.  We‘re talking hardball. 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to Tim Russert, moderator of “Meet the Press” and author of “Wisdom of Our Fathers.”

We are going to talk about this book right now.  Now, here‘s the thing

this book, a half-million—fathers and sons, not directly in this book, but everybody loves this book.  And I loved your first one. 

RUSSERT:  Thank you. 

MATTHEWS:  I cried, it was so good. 

This one, fathers and sons, we now have one president who is the son of a president who looked like he did a 180 on the old man, looked like Oedipus Rex, or whatever.  Everything the old man did—he was for tax increases.  This guy is for tax cuts.  He was pro-Arab.  The son is pro-Israel.  He‘s—you know, every issue...

(CROSSTALK)

RUSSERT:  He didn‘t go into Baghdad after the Persian Gulf War. 

(CROSSTALK)

MATTHEWS:  It seems like everything the old man didn‘t do, the son did, out of love or education. 

Now, this guy, we hear—Romney, there is a big piece on him in...

RUSSERT:  “TIME.”

MATTHEWS:  ... in “TIME.”  And the story was that the old man got hurt when he ran in ‘68 because he was too moderate.  He was a moderate Republican. 

And now the kid, this good-looking guy here, is going to beat the rap, because he is going to be an out-and-out conservative.  Are we watching sort of like the first draft of history followed by the second draft? 

(LAUGHTER)

MATTHEWS:  Is this going to be going on in everything, you—your father run as your canary in the mine, then you run after and do the opposite?

RUSSERT:  That‘s beyond me. 

(LAUGHTER)

MATTHEWS:  Come on.  You write about this.  You‘re an expert on fathers. 

RUSSERT:  No.

MATTHEWS: “Wisdom of Our Fathers,” name of the book. 

RUSSERT:  There‘s a—I will tell you, Chris...

(CROSSTALK)

MATTHEWS: “Letters and Letters”—“Lessons and Letters from Daughters.”

Well, let‘s talk about the sons of presidents here.  Are they all—and politicians—do they all learn from the old man, and say, I love the old man, but, boy, he blew it? 

RUSSERT:  You know, it‘s a company business in many ways. 

MATTHEWS:  Yes. 

RUSSERT:  And, when kids are growing up, and they are young, a lot of them say, I don‘t want anything to do with politics. 

And, then, all of a sudden, they get into their 20s, 25, they realize, you know what?  The old man, he had a pretty interesting life.

MATTHEWS:  Yes. 

RUSSERT:  And he did some pretty good things. 

And whether it‘s Walter Mondale‘s kids or Jerry Brown—or Pat Brown‘s kid...

(CROSSTALK)

RUSSERT:  ... they all do it. 

It‘s fascinating to me.  And you see how many kids follow their dads or their moms into the political profession.  And it‘s the real deal. 

Now, do you learn from your father‘s mistakes?  I hope so.  You know, I—my dad taught me so much through his actions.  He lived a sermon.  He didn‘t preach one.  But I also learned from his mistakes.  And he would be the first to say that. 

One, he quit school in the 10th grade to go fight in World War II.  To this day, he really feels...

MATTHEWS:  And you‘re thinking of that in law school.  I‘m not quitting this, no matter how hard it is. 

RUSSERT:  Absolutely.

MATTHEWS:  I‘m sticking with it.

RUSSERT:  Well, because he worked 30 years as a truck driver...

MATTHEWS:  Yes. 

RUSSERT:  ... and a sanitation man, so I could go to school.  And I‘m worried about law school exams being too hard, when he...

MATTHEWS:  You know what I think?

I think when my dad would work every night all—and he was a court reporter.  He wrote down everything Every night.  He would work until midnight every night.

RUSSERT:  Right. 

MATTHEWS:  And I then work—every time I work, I say nothing compared to him.

RUSSERT:  Right. 

MATTHEWS:  Nothing. 

RUSSERT:  Right.  Right.  That‘s who they are. 

(CROSSTALK)

MATTHEWS:  So, our kids are going to work not as hard as us? 

(LAUGHTER)

MATTHEWS:  I wonder.  I wonder if anybody is going to work as hard.

RUSSERT:  That‘s...

(CROSSTALK)

RUSSERT:  ... one of the fathers in here said, you know—he said, when I was a little boy, my dad was a boss.  Now I have my own son, and he‘s the boss.  When the hell do I get to be the boss? 

(LAUGHTER)

MATTHEWS:  That‘s pretty good, actually. 

RUSSERT:  It‘s not bad.  That‘s our generation. 

MATTHEWS:  It used to be really simple.  You‘re scared of your father. 

Now you‘re—no, I‘m not scared of...

(CROSSTALK)

MATTHEWS:  I‘m not scared of...

(CROSSTALK)

RUSSERT:  The best thing that happened with this, Chris, I left this first page open, so kids could write notes to their dad.  And the dads all sent me xeroxes of that page, saying, for the first time, I now understand how my kid really feels about me, how my son or daughter really loves me. 

(CROSSTALK)

RUSSERT:  That made everything worthwhile. 

MATTHEWS:  Well, your dad is still around.  Don‘t forget...

RUSSERT:  God bless him.

MATTHEWS:  ... because I lost mine last year.  But I do—we never had a big conversation.  You know, I don‘t think—you know, it‘s hard to have those big conversations with somebody from...

(CROSSTALK)

RUSSERT:  You know what?  In many ways, you don‘t.  Your whole life is a conversation. 

MATTHEWS:  Yes.  But you never sit down and say, what—what was mom like?  What was this like? 

We never got to that. 

Anyway, Tim, it‘s your story, your book.  You have done it again, a

half-million copies.  And now it‘s very economical to get one of these for

when is Father‘s Day?  Come on.  You know.  June...

RUSSERT:  June 17. 

MATTHEWS:  God, you‘re good.

The name of the book is “Wisdom of Our Fathers,” perfect for Father‘s Day. 

Up next:  Another general takes to the airwaves to speak out against President Bush‘s leadership.  They‘re all talking now.  General Paul Eaton joins us when we return.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MARGARET BRENNAN, CNBC CORRESPONDENT:  I am Margaret Brennan with your CNBC “Market Wrap.”

Stocks closed mixed on Monday, with the Dow Jones industrial average gaining more than 20 points.  The S&P 500 lost almost three—the Nasdaq down by just short of 16 points. 

The big news of the day, DaimlerChrysler announcing it‘s selling 80 percent of Chrysler to private equity firm Cerberus Capital Management for $7.4 billion.  Daimler paid $36 billion for Chrysler back in 1998.  DaimlerChrysler shares rose more than 2 percent in today‘s trading session. 

Meantime, Ford‘s founding family says it is not discussing the sale of its controlling stake in the number-two U.S. automaker, even though they met last month with a Wall Street advisory firm.  Ford shares rose 4 percent today on those rumors. 

And gasoline prices are at a record high.  The Energy Department reports the average nationwide price for regular unleaded rose past a nickel this week to $3.10 a gallon.  That‘s three cents higher than the old record. 

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

MATTHEWS:  Welcome back to HARDBALL. 

The search continues for three U.S. soldiers missing in Iraq since Saturday.  An al Qaeda front group claims it captured the soldiers in an attack that left four other American soldiers dead. 

More from NBC‘s Ian Williams in Baghdad. 

(BEGIN VIDEOTAPE)

IAN WILLIAMS, NBC CORRESPONDENT:  Chris, the U.S. military confirming earlier this evening they do believe these three U.S. soldiers are being held by al Qaeda or one of their affiliates.  They say that this information comes from credible intelligence sources. 

Now, Major General William Caldwell, the U.S. spokesman here, also painted a picture of the sheer size and intensity of this search now under way.  It involves thousands of soldiers, American and Iraqi, house-to-house searches, helicopters, drones. 

They say they are getting valuable information from local people, surprising, given that has been quite a hostile area for them.  The area is still completely sealed off. 

Interestingly, as well, General Caldwell saying that this attack on Saturday wasn‘t on a convoy.  These troops weren‘t patrolling, but they were an observation post that had been looking for roadside bombs.  And, in fact, the reaction force that came to find them had been delayed itself by other roadside bombs. 

Now, in continuing this search tonight, they will clearly be hoping that these soldiers are still in that area around Mahmoudiya, about 20 miles to the—the southwest of Baghdad. 

And they may be encouraged in that belief by the statement which al Qaeda themselves put out today on a militant Web site.  That statement, a curious statement, urged the U.S. to stop the search, saying, if you want your soldiers back, if you‘re concerned about their safety, then don‘t search for them. 

Now, that would seem to imply that the soldiers may well still be

alive and may be in this area.  So, it will, in many ways, encourage the

military here to step up the search and intensify the search in that area -

Chris.

(END VIDEOTAPE)

MATTHEWS:  Thank you, NBC‘s Ian Williams. 

Joining me now is retired Major General Paul Eaton, a former commander in Iraq who is featured in the new ad by VoteVets.org. 

Take a look at this ad right now.

(BEGIN VIDEO CLIP, VOTEVETS.ORG AD) 

MAJOR GENERAL PAUL EATON (RET.), U.S. ARMY:  President Bush says he listens to his military commanders. 

Well, Mr. President, I was one of those commanders, and you weren‘t listening when we warned you of the dangers we would face invading Iraq.  Now our military is overcommitted, and America is less secure. 

Mr. President, you‘re being told we need serious diplomacy, not escalation, and you‘re still not listening. 

If the president won‘t listen, Congress must. 

(END VIDEO CLIP)

MATTHEWS:  General, who told the president that we would face an insurgency in Iraq, that any occupation of an Arab country would yield a situation which would require counterinsurgency, interrogation, perhaps torture, and the animosity of the entire region?  Did anyone put that in the president‘s face before we went into Iraq? 

EATON:  One of the reasons that General Zinni is so unpopular with this administration was that he laid it out very clearly. 

MATTHEWS:  And what happened? 

EATON:  Well, apparently disregarded. 

If you didn‘t accept the party line that this was going to be a cakewalk, rose petals, you were dismissed out of hand by the administration.  So, they were fixed well before they decided to invade, in the face of some very fine advice by very fine leaders who had been working in this region for a long time. 

MATTHEWS:  Well, don‘t we have, as—as part of our military training, a general education in the experience of past colonial or post-colonial exercises in that part of the world, where the French and the British were ultimately rejected, ejected from those countries with great violence and hatred, because they tried to occupy them through the latter part of the 20th century? 

Don‘t we have a lot of information in our history books and in our training manuals, that this is what‘s going to happen if you try to take over an Arab country? 

EATON:  Clearly, Chris, this was part of the—the upbringing that all of my peers have had, and the—the generation that is fighting this war.  We have all studied it.  They studied it. 

And you will please recall that General Abizaid, when he first brought up the fact that we were facing an insurgency, was challenged on that notion by the former secretary of defense. 

MATTHEWS:  Were the civilians in the Defense Department immune to that kind of information?  Did they just say, we don‘t want to hear that because of ideological reasons?  I‘m talking about Wolfowitz and Feith especially, but also Cambone and a few others.

Were they just absolutely committed to the policy of regime change, to the point they didn‘t want to hear any history? 

EATON:  Chris, you have laid it out very clearly. 

This was a—we—the term groupthink is a tired term, but this exact term applies to what we saw in the Department of Defense in the civilian circles up there.  They would not tolerate a challenging opinion to what they thought was going to be the outcome of an invasion conducted by a small force. 

MATTHEWS:  Let me ask you about this dangerous situation right now. 

We have three guys, hopefully alive, in a hellish situation, perhaps in the hands of an al Qaeda group, because they were picked up on a convoy when four of their colleagues were killed, their—their comrades were killed.

When you divide up your force, as we‘re doing in Baghdad right now, and establishing any number of dozens of outposts throughout the city, with small numbers of troops in the complement, doesn‘t that invite this kind of situation, and we‘re going to face more of it, where our guys are going to get captured? 

EATON:  Chris, as the father of—of two soldiers, my heart and prayers go out to the men involved and to their families. 

This is a terrible situation.  This is a result of—of a great many missions imposed upon a force that is—that is too small to meet this particular foreign policy obligation. 

MATTHEWS:  Yes. 

EATON:  Our Army is too small, and it is reflected by the end strength that we have got in Iraq right now. 

MATTHEWS:  But General Custer, back at the Little Bighorn taught us, don‘t divide up your force. 

I mean, isn‘t this basic to training in the military?  You don‘t take a strong force, which is a phalanx of power in a country, and divvy it out into little groups that can be overrun? 

EATON:  Clearly, we have got a—a—an opportunity to second-guess the commanders on the ground.  I‘m not going to do that. 

Mass has a quality of its own.  We love that expression.  And if we had this number of soldiers involved, and they were able to be surprised, we‘re going to have to learn the lessons that we can from it.  I was not on the ground.  I can‘t—I can‘t speculate about the risk analysis that the commanders applied in determining what level of force to put on the ground at that particular point. 

MATTHEWS:  God, the education we‘re getting we could have gotten before the war.  Thank you for coming on HARDBALL.  Breaking news now.  The number two man at the troubled Justice Department, Paul McNulty, has resigned.  NBC News chief justice correspondent Pete Williams joins us.  Pete, what‘s this about? 

PETE WILLIAMS, NBC NEWS JUSTICE CORRESPONDENT:  Chris, I think this is about the fallout over the U.S. attorney scandal, no question about it.  This has been something we have been expecting for a while.  The only question was the timing.  And the deputy attorney general has written this letter to the attorney general today.  It‘s addressed to Attorney General Gonzales. 

He says, “I intend to step down sometime this summer.  The financial reality, just college-aged children and two decades of public service, lead me to a long overdue transition in my career.”  But I don‘t think there is any question here but that the timing of Mr. McNulty‘s decision is driven by this issue with the U.S. attorneys. 

This is a guy who worked in the Justice Department under the Reagan administration.  He worked in Congress on justice issues.  Then he was brought back to the Justice Department under John Ashcroft, given a very important assignment as the U.S. attorney here in suburban Virginia.  And then he came in as acting in November of 2005.  So he has been the actual confirmed deputy attorney general about a year. 

But it‘s no secret, Chris, that he and the attorney general had been at loggerheads.  They didn‘t agree on how to handle the announcement of these firings of the U.S. attorneys, so there has been some disagreement between the two of them about how to handle this issue.  Things have been somewhat strained.  I think Mr. McNulty just doesn‘t want to answer any more questions from Congress about this. 

He has had it with the hearings.  He just sees no great future for himself in the Department of Justice.  I think this doesn‘t mean, Chris, anything about what the attorney general himself is going to do. 

MATTHEWS:  Let‘s get to the intrigue, Pete.  I‘m sorry.  This is HARDBALL.  I want to get to the intrigue here.  What about this notorious meeting at the house of Chuck Schumer, where McNulty went over to see him in some sort of ex parte conversation.  How does that fit into this?  Was he trying to square himself with the Democratic senators who were investigating Gonzales to his own relief, or what was that all about? 

WILLIAMS:  Well, I think what—if you ask McNulty‘s people, they say he was trying to give the Congress a straight up answer and try to give them some indication of how these firings were carried out, and did indicate to some of them that there were performance-related issues.  The attorney general did not want to get into that. 

MATTHEWS:  He was defending Gonzales or he was trying to cut a separate piece with the Democrats? 

WILLIAMS:  Well, I don‘t think actually at the time there was the question about whether the two were going in opposite directions.  The according was out of town when he saw what the deputy was saying.  He thought that was the wrong way to handle this.  The two disagreed on how to present this to Congress. 

The attorney general apparently felt it wasn‘t necessary to get into all the details.  McNulty wanted to be as forthcoming as possible.  He is a former Congressional staffer.  But I don‘t think at that point there was any question about his loyalty to the attorney general.  I think those divisions came later. 

MATTHEWS:  I think a lot of people think McNulty is a lot shrewder than Gonzales based on his Hill experience.  Anyway, that‘s my perception.  Thank you very much Pete Williams for that update. 

Up next, Iraq and presidential politics.  Why is Hillary Clinton leading among Democrats when she wants to keep troops in Iraq for the long term?  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  In the midst of the kidnapping in Iraq and a bitter fight in Congress over ending the war over there, will Democrats and Republicans cut a deal on troop funding?  Will the president actually pull those troops out of the country if the Iraqis don‘t measure up to the benchmarks that are called?  Here to talk war politics and also domestic politics and breaking news, “Newsweek‘s” Howard Fineman and the “Washington Post‘s” Eugene Robinson. 

Big news bulletin just crossed our desk, which we just announced, which is that Paul McNulty, the very shrewd political guy, number tow at the Justice Department, has just said he is going to walk.  I don‘t want to be cynical.  But for family reasons, he wants to help his kids pay tuition bills.  Sure, but usually people put those things off if they really want to stay. 

HOWARD FINEMAN, “NEWSWEEK”:  What I think it means is this is a guy who has a lot of background, has some career experience, who has an institutional sense about the Justice Department.  I think he wants to get away from the thing which has turned into nothing but a nonstop pinata exercise involving Gonzales. 

MATTHEWS:  He wants to get out. 

FINEMAN:  He wants to get out of there and let Gonzales take it directly. 

MATTHEWS:  Does this mean, Gene, that Gonzales is there for the duration? 

EUGENE ROBINSON, “THE WASHINGTON POST”:  I think so.  I don‘t think Gonzales is going anywhere. 

MATTHEWS:  The polls don‘t show the public really gives too much anger.  It‘s like 39 percent go, 30 stay.  He could beat that.

ROBINSON:  I think there was a muffled cheer in Democratic sitting rooms around town, really, because Gonzales is such a great target. 

MATTHEWS:  You know who I think is leaving this week.  I think Wolfowitz is going to finally meet the end this week.  I smell it coming.  I sense that the column writing is starting to go against him.  People are starting to turn.

FINEMAN:  The common thread is George W. Bush and George W. Bush‘s attitude toward politics.  He sticks and sticks and sticks with these same people, sometimes merely for the purpose of allowing them to be dart boards surrounding them.  So he‘s not the guy who gets hammered.  That‘s certainly the case with Gonzales.  Chuck Schumer, the Democrat, head of the committee up there, issued a statement praising McNulty, saying this is a guy who is at least willing to talk to us.  But of course Gonzales isn‘t.

ROBINSON:  Wolfowitz, I just don‘t see how he can stay at this point. 

He would like to leave with honor.  I don‘t think it is even that. 

MATTHEWS:  Maybe that would be an appropriate solution.  It also would be nice if America could get another pick on that.

ROBINSON:  They hate him over there. 

MATTHEWS:  You know what it reminds me of, back when they dug up King Tut‘s tomb in the early 20th century.  Everyone in the expedition was assumed later to have had a violent death.  It‘s like everybody came into this war, whether it‘s Feith or it‘s Wolfowitz or it‘s Rumsfeld.  They are all dead dogs now pretty much. 

FINEMAN:  Again, the amazing thing to me is George Bush‘s willingness to stick with them, to give them medals of freedom, to pat them on the back, stick with them as long as possible. 

MATTHEWS:  Unfortunately, the medal of freedom has become like Weimar currency in this administration.  They‘re handing them out in wheel barrels when they should be probably giving them to the people that deserve them. 

Let me ask you about this thing with Romney.  Romney was on “60 Minutes.”  He was on the cover of, what, “Time” this week, the other magazine.  Is he going to get a big run now?  Is he really going to break into the big three, or is it still going to be Giuliani with McCain right behind him? 

FINEMAN:  Well, I think he has. 

MATTHEWS:  He‘s in the top three?

FINEMAN:  I think he began that process in the debate that you moderated last week, the other week.  I think he showed himself to be of presidential timber, if not substance.  We‘re waiting to see the rest of it, but he handled himself well.  He‘s on a media roll.  You have got to ride those things when you get them.  Interestingly, he‘s going to be getting a lot of attention tomorrow when there is a debate on another network. 

MATTHEWS:  I have to tell you, I guess people know I‘m Roman Catholic.  I am stunned that he keeps making this comparison to John Kennedy back in 1960.  The such that I‘m in, the Roman Catholic Church, has become incredibly invasive in the public life.  You can‘t say religion doesn‘t matter.  The pope is talking about abortion rights all the time and public officials all the time and denying people communion. 

There is clearly a connection between your religion if you‘re Roman Catholic and you‘re in public life.  You can‘t get away from it.  It just seems an odd thing for him to keep hanging onto.  John Kennedy said it doesn‘t matter.  It doesn‘t matter. 

ROBINSON:  Right, it seems weird to me.  Look, I‘m not an expert in the Mormon faith.  But insofar as I know anything about it, it does matter.  It does matter in how you conduct your daily life, down to the wearing of the Mormon undergarment. 

MATTHEWS:  Getting married when you‘re young, staying married, not having sex before you‘re married.  How did you like Mike Wallace asking him on “60 Minutes” if he and his wife had sex before marriage?  You think this show is tough.  Mike Wallace brings this up on “60 Minutes,” the Tiffany Network, and they are asking about this stuff.  You wouldn‘t ask it.  Are they going to ask Hillary and Bill this now? 

FINEMAN:  I‘m waiting to see if Mike Wallace asks it of all the other candidates.  I don‘t know. 

MATTHEWS:  There is a wise response.  You are so good.  Fairness for all, fair and balanced.  Any way, Howard Fineman, thank you, Gene Robinson.  Up next, more on Mitt Romney.  Will his Mormon faith hurt his chance for the presidency?  Who knows.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The number two official at the Justice Department, Deputy Attorney General Paul McNulty, has quit the job.  We have the HARDBALLers now to go through it.  Michael Feldman was an advisor to Al Gore, and Republican K.T. McFarland—Remember that smiling face, there she is.  She ran against Hillary.  Let me ask you, K.T., you‘re on defense right now; it seems to me that this is another sign of deterioration, of fear—I hate to use the phrase, but the rats leaving the ship, not that McNulty is a rat. 

KT MCFARLAND ®, FMR. NY SENATE CANDIDATE:  Look, Chris, this is a lot of atmospherics, and it sets up a Republican candidate very well for the 2008 election.

MATTHEWS:  How so?

MCFARLAND:  You are the first person to say that people want to vote. 

It‘s a very personal vote when they vote for a president.  And they want to vote for what they saw lacking in the last administration. 

MATTHEWS:  That is my song.  You got it right.  Every election is a solution to the current problem.  I totally believe in that.

MCFARLAND:  So what is the take away from the administration?  Is it the competence or incompetence of the Bush administration?  Or is it Iraq being a distraction from the war on terror?  Either one of those speak to a Republican candidate.  If it‘s a competence issue, well look, we‘ve got Rudy Giuliani.  He turned New York around.  Mitt Romney, he turned Massachusetts around.  They‘re great chief executives.

If it‘s national security, again, Rudy Giuliani, he is the terrorism expect.  He‘ll keep America safe.  John McCain, national security expert.  Both of them, no matter what happens, I think Republicans, oddly enough, will be in a very good position because it will be a whole new crop of Republicans.  Neo cons are discredited.

MATTHEWS:  Well, I am not so sure of that.  John Bolton, he‘s getting close to the Giuliani campaign, according—that‘s not a sign that the neo cons are going away. 

Michael Feldman, let me ask you this.  Let‘s go back to a less complicated take.  The number two at Justice has quit? 

MICHAEL FELDMAN, FORMER ADVISOR TO AL GORE:  This is not good news. 

MATTHEWS:  How so?

FELDMAN:  Well look, this is an administration that does not have the capacity to deal with any more scandals.  The longer this stays in the headlines, the longer this stays above the fold in the paper—

MATTHEWS:  This is the third person to quit right around Gonzales. 

FELDMAN:  Yes, it‘s drip, drip, drip.  That‘s the danger of this.  Gonzales shows no signs of going anywhere, and this story is going to continue to be alive.  This Goodling negotiations, over her testimony, threatens to be another development.  So it‘s just another day they are dealing with something like this.  They are not talking about the issues that they want to talk about.  It‘s a real problem for them.

MATTHEWS:  Do you think it‘s better for the Republican administration to have these death ships still in the water, like Gonzales, or it‘s better to have them leave, KT? 

MCFARLAND:  I think it‘s better to have them leave.  Whatever happens, whoever is running for president on the Republican ticket is going to be new slate.  It‘s going to be a new person.  It‘s going to be a new set of issues.  And it‘s going to be a new candidacy. 

MATTHEWS:  But if they are looking at this slate of cabinet members, with all of their problems, with the inability to really get anything done, you think that that‘s a plus for the next candidate who is a Republican?  You are standing before the Republican convention.  Do you disinvite the current cabinet?  Do you disinvite President Bush and say, I preferred you stay in Washington, sir.  I‘m going to be up here trying to sell my new thing? 

MCFARLAND:  Well, you can‘t do that.  But I don‘t think it‘s going to be a long appearance.  It‘s not going to be like Reagan was when President Bush 41 was nominated. 

MATTHEWS:  Well, he was out of town by Monday midnight.  So that‘s the normal way.  You are saying they won‘t even get to 9:00. 

MCFARLAND:  I don‘t know that they get to 9:00.  And I can‘t imagine that anybody who is serving in this administration will serve in a subsequent Republican administration? 

MATTHEWS:  You are—This is kindler, gentler, tougher, whatever—can the Republicans be the change party next time? 

MCFARLAND:  Absolutely. 

MATTHEWS:  Well, you have been saying it for four minutes now.  I agree you believe it.  Mike, do you think it‘s credible for the Republicans to be the change party? 

FELDMAN:  No, it‘s getting harder and harder.  Look, the dance the other night, the debate that you moderated, you see that dance in every Republican forum.  They are trying to stay close enough to the president to be credible, especially with the base of the Republican party, but draw enough contrast, distance themselves enough, to be credible in a general election.  It‘s a very difficult dance, and stories like this don‘t help. 

MATTHEWS:  OK, thank you.  KT, it‘s good to see you back and in fighting shape.  And Mike Feldman, thank you sir.  Join us again tomorrow night for more HARDBALL.  And tomorrow on NBC Nightly News, Brian Williams interviews outgoing British Prime Minister Tony Blair.  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   

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