updated 5/17/2007 11:18:12 AM ET 2007-05-17T15:18:12

Guests: Sen. Sheldon Whitehouse, Jonathan Capehart, Dianne Feinstein, Debbie Wasserman Schultz, Jack Kingston, Jenny Backus, Matt Continetti

CHRIS MATTHEWS, HOST:  A pair of White House henchmen, including Alberto Gonzales, head to a hospital to arm-twist the sick attorney general into signing a surveillance order.  What is this, “The Godfather”?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  It was the hospital scene from “The Godfather.”  The only things missing were the black marias and the turned-down fedoras.  There was the target, Attorney General John Ashcroft, lying semi-conscious and vulnerable on the gurney.  Heading toward him weren‘t armed hoodlums but operatives Card and Gonzales armed with the authority of a president.  In the role of the saving son, James Comey, the deputy attorney general, standing up for Ashcroft—“The Godfather” Part IV.

We‘re talking about Comey‘s sworn account yesterday of White House efforts to push their surveillance campaign past a seriously ill attorney general.

Also tonight, “The Wall Street Journal” says Paul Wolfowitz, the president‘s wartime consiglieri, is about to cop a plea.  He gives up the World Bank, gets to walk without a rap sheet.

Plus, the second Republican debate.  Last night in Columbia, South Carolina, the two GOP frontrunners showed profiles in courage, McCain opposing torture, Giuliani defending abortion rights as good libertarianism.  It was a tough night for a pair of politicians who showed how to stand their ground.

In a moment, Senator Sheldon White House, a former U.S. attorney who‘s now a member of the Judiciary Committee.  And later, Senator Diane Feinstein, another Judiciary Committee member.

We begin tonight with the testimony of former deputy attorney general James Comey.  Here‘s HARDBALL correspondent David Shuster.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  It was March of 2004, and the Bush administration was engaged in a secret program that tapped phone calls without court approval.  A week before the deadline to reauthorize the program, Attorney General John Ashcroft met with his top deputy, James Comey.  They agreed the program was illegal and should not be reauthorized.  A few hours later, Ashcroft became violently ill with pancreatitis.

JAMES COMEY, FORMER DEPUTY U.S. ATTORNEY GENERAL:  The attorney general was taken that very afternoon to George Washington Hospital, where he went into intensive care and remained there for over a week, and I became the acting attorney general.

SHUSTER:  James Comey testified that a few days later, he told officials in the White House and in the vice president‘s office about the Justice Department‘s decision on the wiretap program, which was due to expire in two days.

The next evening, just before the deadline...

COMEY:  That night was probably the most difficult night of my professional life, so it‘s not something I forget.

SHUSTER:  Comey testified that at 8:00 PM, while he was in a car downtown with his security detail, he received an urgent message.

COMEY:  Mrs. Ashcroft reported that a call had come through, and that as a result of that call, Mr. Card and Mr. Gonzales were on their way to the hospital to see Mr. Ashcroft.

SHUSTER:  Comey then called his colleagues at the Justice Department and phoned FBI director Robert Mueller.  Then...

COMEY:  Told my security detail that I needed to get to George Washington Hospital immediately.  They turned on the emergency equipment and drove very quickly to the hospital.  I got out of the car and ran up—literally ran up the stairs with my security detail.  I was concerned that, given how ill I knew the attorney general was, that there might be an effort to ask him to overrule me when he was in no condition to do that.

SHUSTER:  Comey arrived at Ashcroft‘s room.  His gallbladder had been removed the day before, and this was his sixth day in intensive care.

COMEY:  And I immediately began speaking to him, trying to orient him as to time and place and try to see if he could focus on what was happening.  It wasn‘t clear to me that he could.  He seemed pretty bad off.

SHUSTER:  Comey then stepped into the hallway and called FBI director Mueller again.  Mueller than asked to speak with the head of Ashcroft‘s FBI security team at the hospital.

COMEY:  Director Mueller instructed the FBI agents present not to allow me to be removed from the room under any circumstances.  And I went back in the room.

SHUSTER:  Within minutes, in walked White House chief of staff Andy Card and White House counsel Alberto Gonzales with documents in hand.

COMEY:  They came over and stood by the bed.  They greeted the attorney general very briefly, and then Mr. Gonzales began to discuss why they were there, to seek his approval for a matter.

SHUSTER:  Comey testified he was shocked to see Ashcroft gather his strength, sit up, and clearly explain why the Justice Department opposed reauthorizing the wiretap program.

COMEY:  As he laid back down, he said, But that doesn‘t matter because I‘m not the attorney general.  There is the attorney general, and he pointed to me, and I was just to his left.  The two men did not acknowledge me.  They turned and walked from the room.

SHUSTER:  A few minutes later, Comey received an angry phone call from Card.  The White House chief of staff demanded that Comey meet him at the White House immediately.

COMEY:  I responded that after the contact I had just witnessed, I would not meet with him without a witness present.  He replied, What conduct?  We were just there to wish him well.  I said, again, After what I just witnessed, I will not meet with you without a witness, and I intend that witness to be the solicitor general of the United States.

SHUSTER:  The solicitor general was Ted Olson.  Comey reached him by phone at a party.  Olson left and met Comey and others on his staff at the Justice Department.  Then Comey and Olson went to the White House.  There they met with Gonzales and Andy Card.  Comey said the meeting was more civil than the phone call or the White House visit, and Comey again explained the Justice Department position on wireless wiretaps.  The meeting ended, however, with the issue unresolved.  The next, Thursday, was the reauthorization deadline, and Comey got a message from the White House.

COMEY:  The program was reauthorized without us and without a signature from the Department of Justice attesting as to its legality.  And I prepared a letter of resignation, intending to resign the next day, Friday, March the 12th.

SHUSTER:  Comey‘s decision was even more remarkable given the news that Thursday morning—a series of al Qaeda terrorist attacks at a train station in Madrid, Spain.  Despite the chaotic developments for the Bush administration, Comey said his decision was firm.

COMEY:  I couldn‘t stay if the administration was going to engage in conduct that the Department of Justice said had no legal basis.  I simply couldn‘t stay.

SHUSTER:  Comey testified that others were also prepared to resign, including the FBI director Mueller, Mueller‘s chief of staff and half a dozen other FBI and Justice Department officials.  The next day, on Friday March 12, President Bush asked Comey to meet him privately for 15 minutes in the Oval Office.  Then at Comey‘s urging, the president had a meeting with FBI director Mueller.  After that meeting, the president overruled White House officials, including Card and Gonzales, and authorized Comey and Mueller to make changes to the wiretap program that would satisfy the Justice Department.

SHUSTER:  We had the president‘s direction to do what we believed, what the Justice Department believed was necessary to put this matter on a footing where we could certify to its legality.  And so we then set out to do that, and we did that.

SHUSTER (on camera):  The Bush‘s administration has never detailed what those changes were.  As for some of the key figures in this story, John Ashcroft regained his health and resigned from the Justice Department soon after the 2004 election.  James Comey left several months later.  And now, of course, Alberto Gonzales remains in charge of the Justice Department, the very department he tried to steamroll.

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.  Joining me is Senator Sheldon Whitehouse.  He‘s a Democrat from Rhode Island.  He sits on both the Judiciary Committee and the Select Intelligence Committee.  He‘s also a former Rhode Island attorney general.

Senator Whitehouse, what do you make of this caper?  It does look like “The Godfather.”  It looks like the hospital scene in “The Godfather.”

SEN. SHELDON WHITEHOUSE (D-RI), INTELLIGENCE COMMITTEE, JUDICIARY

COMMITTEE:  It is unbelievable, Chris.  It has to be one of the most astounding episodes in the Department of Justice history, all the way back to the Saturday night massacre.  And the mental images that it leaves you with are just indelible ones.  I mean, a deputy attorney general of the United States at a dead run up the hospital stairs in order to beat Alberto Gonzales to a sick attorney general to prevent something nefarious from happening?  The director of the FBI having to instruct his agents not to throw Comey out of the room because they‘re afraid, evidently, that had Gonzales gotten over there, he would have had the deputy attorney general of the United States thrown out by FBI agents in order to get a signature from a sick attorney general?  It‘s unbelievable.

MATTHEWS:  So what does it tell you about Gonzales?

WHITEHOUSE:  Well, you know, I think, once again, it makes his continued tenure as attorney general hopeless from any objective perspective.  Seen from the point of view of the Bush administration, if what you‘re looking for is an attorney general who isn‘t going to look in any unfortunate corners too hard, maybe he‘s their idea of an ideal candidate.  But if you‘re interested in the fair administration of justice and if you‘re interested in the wellbeing of the Justice Department, this kind of thing is lethal.

MATTHEWS:  is he a presidential retainer—in other words, a sort of a functionary, a staffer—or is he actually serving as attorney general, an independent member of the cabinet who speaks to the president as a colleague, or is he simply somebody who does the president‘s bidding every moment of the day?

WHITEHOUSE:  Sadly, the evidence is that he is much more somebody who‘s over there to do the president‘s bidding and to watch the president‘s back than somebody who is prepared to stand up and make the tough calls that attorney generals often have to, often against the people who put them in power.

MATTHEWS:  Well, let‘s go back over this case here of the attorney general, John Ashcroft, in hospital bed, just having had his gallbladder taken out the day before after six days of intensive care.  Someone details the chief of staff to the president and Gonzales over there to tell him to sign some letter that the president wants sign.  Now, I have to tell you, having watched this White House for seven years now, that seems more like a vice-presidential mission than a presidential mission.  Have you people on the committee been able to determine whose orders these people were following, Gonzales and Car, at that moment?

WHITEHOUSE:  No, not as of yet.  The other thing that we need to look into further is the whole question of the internal investigation by the Office of Professional Responsibility into this, into misconduct in the Department of Justice, including the attorney general, that was shut down when the White House refused to allow the OPR investigators, I think for the first time in the department‘s history, the necessary security clearances.  So there‘s a lot still to look into in this matter.

MATTHEWS:  Let me ask you about the question of Karl Rove.  He‘s always the focus of attention in this city.  Karl Rove apparently had a number of e-mails back and forth with regard to the Justice Department decision to fire those U.S. attorneys.  Do we know if those e-mails exist?  And two, do you know if you‘re ever going to get them?

WHITEHOUSE:  Not at this point.  Not at this point.  As time goes by, they get harder and harder to retrieve and recover.  Obviously, I hope that we recover as many as possible because I think it‘s a critical part of this puzzle, and the puzzle is critically important to our country.  I mean, the Department of Justice is a great and noble institution, and it should never be in the situation it is right now.  And I think it‘s a matter of real urgency to get it back on its feet and get people who care about it, like James Comey, back in charge again.

MATTHEWS:  I get the message from the White House that they‘re very confident that they don‘t have ever turn those e-mails over.  Is that your sense, that they‘re just going to be able to stonewall this?  You can subpoena them all you want, you‘re not going to get Karl Rove‘s e-mails.

WHITEHOUSE:  Well, the problem is that if you go the subpoena route and then you pursue it into court to pursue the contempt of the subpoena, by the time the delays and the lawyers and everything have taken place, they‘re getting pretty close to the end of President Bush‘s term.  So he may be able to just brass this one out.

MATTHEWS:  Let me ask you about another question.  Paul Wolfowitz over at the World Bank—it looks from all the outside press that‘s been leaking out, and maybe they‘re doing it on purpose, that Bob Bennett, his attorney, figures the best he can get for Paul Wolfowitz at this point is a clean bill of health on his way out the door.  Is that the way that you read it?

WHITEHOUSE:  I don‘t know any more about it than you do, Chris.  I really can‘t be very helpful there.

MATTHEWS:  Well, let‘s go back to the attorney general case.  Where is this going to end, Senator?  You‘re on Judiciary.  You can‘t remove an attorney general.  What can you do to make this case and in a clear-cut fashion—in other words, his removal from office?

WHITEHOUSE:  There may be other ways to get our hands on some of the e-mails.  They may have turned up, for instance, in the Fitzpatrick investigation.  We may be able to get them from other sources.  Those e-mails are going to be critical.   The Office of Inspector General is looking into the whole U.S. attorneys firings.  They‘re going to have a lot of access.  They can do this full-time.  I think people in the department probably trust them, probably even want to reach out to them to try to get this situation off their backs so they can stand tall again and be rid of this attorney general.  So I think that OIG report is likely to be very thorough.  That‘s going to be another enormous blow, I suspect, to the attorney general.  So there will be continued interest in this.  We‘re going to continue to press it as hard as we can.  You know, I want our Department of Justice back and...

MATTHEWS:  Well, there‘s no way you get it back if the president says he wants to keep it in the hands of his friend, Alberto Gonzales, is there?  There‘s no constitutional means to remove this man, I guess unless you impeach him.

WHITEHOUSE:  That I think is the only legal means.  But I think if we continue to put the pressure on, it may get to the point where even if the president‘s highest purpose is to get his administration out of Washington without further indictment, it‘s still not worth it to carry the weight of Attorney General Gonzales and his incompetent and very unprincipled administration of the Department of Justice.

MATTHEWS:  You mention the weight.  Do you have enough weight to impeach and convict him and remove him from office?

WHITEHOUSE:  You know, after the run that the Republicans took at President Clinton, I think there‘s a real bad odor in the public‘s mind about that.  It is the one device that is at our disposal.  It‘s been used in the past, for secretaries of war back in the Civil War.  But I think right now, everybody‘s focus is on really trying to get to the bottom of this and find out for once and for all what happened.

MATTHEWS:  And you would tell the president to fire him, if you could.

WHITEHOUSE:  It would be in the interests of America.  It would be in the interests of the Department of Justice.  I think, frankly, it would be even in the interests of the president, at least the proper interests of the president.

MATTHEWS:  OK, thank you very much, U.S. Senator Sheldon Whitehouse.

Coming up: the Republican presidential candidates faced off in their second debate last night.  Who has the edge now?  It was an interesting night last night.

And tomorrow morning at 8:00 Eastern here on MSNBC, David Gregory interviews one of the Democratic frontrunners, Barack Obama.  There he is.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The 10 Republicans running for president met again last night in South Carolina.  Who made headway?  Who lost ground?  Chuck Todd‘s the NBC News political director, and Jonathan Capehart‘s a member of “The Washington Post” editorial board.  He writes those exciting editorials.

Anyway, here‘s Senator McCain on the use of torture last night.  I was very taken with these words.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  The use of torture -

we could never gain as much as we could from that torture as we lose in world opinion.  We do not torture people.  When I was in Vietnam, one of the things that sustained us as we underwent torture ourselves is the knowledge that if we had our positions reversed and we were the captors, we would not impose that kind of treatment on them.

It‘s not about the terrorists, it‘s about us.  It‘s about what kind of country we are and the fact the more physical pain you inflict on someone, the more they‘re going to tell you what they think you want to know.

(END VIDEO CLIP)

MATTHEWS:  You know, I have to tell you, I don‘t offer strong opinions all the time on this show—I usually bow to the guests—but I am so taken with that, Chuck, so taken with that, Jonathan, because of all the men on that stage, he‘s the one who has served in combat.  He shows the sign of torture in his arms.  You can see where his arms were pinned back in the way he can‘t use them now.  He apparently can‘t even comb his hair, this guy.  Hew can‘t raise his hand.  We were told, Don‘t ask the candidates to raise their hands in their debate out in California.  And there he is saying torture must not be American.  And all the other guys played to that crowd down there—there was hooting and hollering for blood down there—saying they were for “enhanced interrogation,” all enjoying it.  And this guy—I know he scored no points, Chuck, last night, but he scored one with me.  He stood alone.

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  Oh, I think he scored points.  You know, look, those—he and Rudy last night got what I call “wheelhouse negatives.”  They got negative questions about certain things that are supposed negatives for them, but they were expected negatives.  And both of them just socked them out of the park when they had the chance.

(CROSSTALK)

MATTHEWS:  Do you think that helped—I mean, let‘s talk politics, not right and wrong.

TODD:  I will be honest why it helped.  Because...

MATTHEWS:  Do you think that helps him, to stand up in front of that crowd, that was pretty darn conservative, if not right-wing—I don‘t want to judge them completely, but they looked very, very angry when they came up to the issue of torture and things like that.

And they cheered Romney when he said, we won‘t even give these guys lawyers.  And they seemed to really be loving it down there.  And here is the guy who said, no, no, we should not be the ones that use torture, we Americans. 

TODD:  It‘s because he was John McCain.  He was sort of the guy that you understood why he had a following.

Look, you know, we always talk about he lost South Carolina.  Well, he also got over 45 percent of the vote.  There is a huge veterans population in South Carolina.  And, if you remember, Chris, he started that appeal with—by talking about notice that which side of the aisle people in uniform are when it comes to... 

(CROSSTALK)

MATTHEWS:  Yes, anybody who has ever been in uniform...

TODD:  That‘s right. 

MATTHEWS:  ... is against torture.  And it is the pencil necks, if you will...

TODD:  Right. 

MATTHEWS:  ... the armchair generals, who always like wars in a lot of cases, except when they or their family members might be in those wars. 

Here is a guy whose kid is over there fighting as an enlisted guy, whose other son is in the military.  And he has been tortured for years, two years in solitary.  I think he has a special claim to a point of view. 

What do you think, Jonathan?

JONATHAN CAPEHART, “THE WASHINGTON POST”:  I think it was a great moment for John McCain, for him to stand on that stage with those other guys, who are—as you said, it was bloodthirsty.  For him to say, it‘s not American, and it has more to do about—more to do with us...

MATTHEWS:  No applause, did you notice, from that..

(CROSSTALK)

CAPEHART:  No applause, but...

MATTHEWS:  Not a single bit of applause. 

CAPEHART:  But, you know, he—I thought he stood on very high ground.  He did the right thing.  He said the right thing. 

And it probably won‘t work.  It doesn‘t work.  If you...

MATTHEWS:  Yes. 

CAPEHART:  ... listen to the applause, it doesn‘t work with the voters of South Carolina, or maybe even the Republican base.  But it does work with most Americans, I would think.

MATTHEWS:  If he can get that far. 

CAPEHART:  Right. 

(LAUGHTER)

MATTHEWS:  He has got to get to overall—the overall vote. 

Let‘s take a look at another moment last night.  This may not be as scintillating, because the issue of abortion rights is so morally difficult to deal with.  But here is Rudy Giuliani, the former mayor of New York, talking about his position on abortion rights last night in Columbia, South Carolina. 

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI ®, PRESIDENTIAL CANDIDATE:  There are people, millions and millions of Americans, who are of as good conscience as we are, who make a different choice about abortion. 

And I think in a country where you want to keep government out of people‘s lives, or government out of people‘s lives from the point of view of coercion, you have to respect that.

There are things that you can oppose, things you can be against.  And then you can come to the conclusion, in the kind of democracy we have, the kind of society that we have, and the kind of society we have where we want to keep government out of people‘s personal lives, that you can respect other people‘s view on this.

And I think everyone on this stage, including most Democrats, could probably very, very usefully spend a lot of time figuring out how we can reduce abortion. It‘s going to take a while for the courts to figure out what to do about this. 

(END VIDEO CLIP)

MATTHEWS:  You know, there again, he took Barry Goldwater‘s libertarian position, and he laced it with Catholicism:  We have to do everything we can to reduce the number of abortions.  We have to create opportunities for adoption.  We have to discourage unwanted pregnancies. 

He did everything right, except take the outlaw-abortion-in-the-country position.  But what do you think of it, Jonathan?

CAPEHART:  Well, I think...

(CROSSTALK)

MATTHEWS:  It wasn‘t popular in that crowd.

CAPEHART:  It wasn‘t popular in that crowd.  But, again, it plays—it plays to the center.  And I think it‘s actually—as—McCain talking about torture is McCain being McCain.  Rudy Giuliani talking about abortion, Rudy Giuliani talking about gay rights...

MATTHEWS:  When you say plays it, you don‘t think mean to say, he—those—those two guys think those positions are winners, do you?

CAPEHART:  No, not that they—not—they‘re not winners for the Republican primary.

MATTHEWS:  Are they winners anywhere?

But I think they‘re winners with swing voters and middle-of-the-road people, who are a little uncomfortable with what could be viewed as the extremist position...

MATTHEWS:  Yes. 

CAPEHART:  ... coming from the Republican Party. 

And Rudy Giuliani—this is—this is the way Rudy dealt with abortion in New York. 

MATTHEWS:  I thought it was interesting.

You know, last night, Chuck, it was interesting that Romney, who took a pro-choice—a pro-like position last night, said people should decide this, not the courts.  That sounded to me less like an actual pro-life position, than a position that said it should be left up to each state to vote on it. 

TODD:  Yes.  It sounded like what Rudy Giuliani was trying to say 12 days ago. 

(LAUGHTER)

MATTHEWS:  Yes. 

TODD:  You know, where Rudy—I just don‘t understand what took Rudy

why it took him 12 days to come up with that answer. 

He—doing the libertarian line, if he had done that 12 days ago...

MATTHEWS:  I know.

TODD:  ... there would not have been 12 days of Rudy in a pretzel on abortion.  It was—it was stunning that it took him that long to get to... 

MATTHEWS:  Well, he has been slow off the mark in so many ways, fund-raising and everything else.  I just think...

(CROSSTALK)

TODD:  And, yet, he never gets punished for it, yes.  No.

MATTHEWS:  I don‘t think he realizes that everything is not as—you know, he thinks New York is the toughest place in the world.  If he can do it there, he can do it anywhere, like the song.  No.  It is tougher nationally than it is in New York.

We will be right back with Chuck Todd.

And, when you run for president, it is a whole new game. 

Anyway, Jonathan Capehart, stay with us. 

Coming up later: Democratic Senator Dianne Feinstein of California. 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re back with NBC News political director Chuck Todd and “The Washington Post” editorial—editorial board member—he‘s one of the guys who writes the editorials—Jonathan Capehart.

Listen to this exchange last night—it got a lot of ink last night -

over Iraq and 9/11 between U.S. Congressman Ron Paul of Texas, a libertarian, and Rudy Giuliani, of course, the former mayor of New York. 

(BEGIN VIDEO CLIP)

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE:  I‘m suggesting that we listen to the people who attacked us and the reason they did it.  And they are delighted that we‘re over there, because Osama bin Laden has said:  I am glad you‘re over on our sand, because we can target you so much easier.

They have already now, since that time, have killed 3,400 of our men, and I don‘t think it was necessary.

GIULIANI:  Wendell, may I make a comment on that?

That‘s really an extraordinary statement.  That‘s an extraordinary statement, as someone who lived through the attack of September 11, that we invited the attack, because we were attacking Iraq.  I don‘t think I have ever heard that before, and I have heard some pretty absurd explanations for September 11.

(CHEERING AND APPLAUSE) 

(END VIDEO CLIP)

MATTHEWS:  Well, just in political terms—and I mean crass political terms—that was a big moment for Rudy, wasn‘t it, Jonathan Capehart? 

CAPEHART:  A big moment, a home run for Rudy.  There is no—there is no denying it. 

And I knew that what Rudy was saying was heartfelt, and he meant it, because, when you look at his eyes, you have never seen him more serious, more focused.  Those—his pupils were the size of laser beams.  He—he was upset.  He was angry.  And I think he tapped into not only the mood of the crowd, but also the—the—the mood of the country, in a sense.

MATTHEWS:  I think you‘re right.

Chuck?

TODD:  He stole the debate from McCain.  You know, McCain was on his way to basically winning this debate.  I think he was on his way.  And, maybe on points, if you were scoring like a boxing match...

MATTHEWS:  Yes. 

TODD:  ... McCain would have won.  But it became the moment.  It‘s the one thing this debate will definitely be remembered of.

And, you know, he owns 9/11. 

MATTHEWS:  Ron Paul has a big problem, by the way.  I do think we have got to understand the simmering hatred and the hostility, the sea of hostility, over there that allows so many people to commit suicide to kill us, and including the ones who, at 9/11, they flew into those buildings squealing with delight as they killed themselves. 

But you can‘t say it‘s because we put troops in Iraq, over the fly—no-fly zone, because they tried to blow up that same building back in ‘93, before all these skirmishes over the no-fly zone.  You can‘t say that particular argument. 

Chuck, I‘m sorry.  Go ahead.

TODD:  No, no, no, it‘s fine. 

I mean, I just think—look, it—it—Rudy, he owns 9/11.  And he just proved it.  The way John McCain has the high ground on torture, and there‘s no way anybody can question his opinion on the issue...

MATTHEWS:  I know.

TODD:  ... Rudy owns 9/11.  And there‘s nobody on that stage—you know what struck me the most after that exchange?  You know, they gave—they gave Paul a chance to respond to Rudy.

And, then, remember when, like, six of them glommed, and they were like, oh, oh, me, me; please, let me try?

(CROSSTALK)

MATTHEWS:  They want a piece of this guy, yes.

TODD:  It was pathetic. 

MATTHEWS:  It reminds me of the old days with the Philadelphia Phillies when Robin Roberts would up those gopher pitches, you know, right over the middle, high and fast.

(LAUGHTER)

TODD:  Oh, right.

MATTHEWS:  And Rudy hit that baby right over center field wall.  And I

that is what politics is.  It is opportunity.  It is exploitation.

TODD:  He seized it.

(CROSSTALK)

MATTHEWS:  And it is luck. 

Anyway, thank...

TODD:  It‘s a Reagan microphone moment.

MATTHEWS:  Right. 

Anyway, thank you, Chuck Todd, for that emphasis on greatness. 

Anyway, thank you, Jonathan Capehart.

Up next:  Will Gonzales go?  We will ask—we will ask U.S. Congress

U.S. Senator Dianne Feinstein, a member of the Judiciary Committee.  We are coming right back with her.

You are watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

REBECCA JARVIS, CNBC CORRESPONDENT:  I‘m Rebecca Jarvis with your CNBC “Market Wrap.”

Stocks closed sharply higher today.  The Dow Jones industrial average gained more than 103 points, and closed at another record high of 13487.  The S&P 500 gained almost 13.  And the Nasdaq was up 22 points. 

After the closing bell, Hewlett-Packard reported, second-quarter sales rose 13 percent and earnings beat analysts‘ estimates.  In after-hours trading, HP shares are up fractionally. 

New home construction rose by a larger-than-expected 2.5 percent in April, but applications for building permits plunged by the largest amount in 17 years. 

Meantime, industrial output rose in April by a stronger-than-expected seven-tenths-of-a-percent. 

And struggling Bausch & Lomb agreed to be acquired by private equity firm Warburg Pincus for $65 a share.  Shares of the eye care products maker jumped more than 9 percent today. 

And oil prices fell after it was reported U.S. oil and gasoline stockpiles rose this week. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL.

The Justice Department has been given another deadline to turn over Karl Rove‘s e-mails that relate to the firings of those U.S. attorneys.  It is this Friday at 10:00 a.m., the latest deadline for turning over those e-mails.  An earlier deadline was missed. 

Joining us right now is U.S. Senator Dianne Feinstein of California. 

She is on the Judiciary Committee. 

Thank you, Senator Feinstein.

First of all, what do you make of this “Godfather”-like scene that was described by Mr. Comey yesterday? 

SEN. DIANNE FEINSTEIN (D), CALIFORNIA:  Well, it was like watching television.  It was like a Monday evening show on television, no question about that. 

I thought it was very surprising, at best, and I thought it was really sad, at worst, that this much effort by the White House was being made, essentially, to—or to create a program outside of law, when that program could have been created inside the law. 

MATTHEWS:  Well, you are a principal.  You have been mayor.  You‘re a senator.  You know what it is like to have people working for you for all these years. 

Can you imagine Card and Gonzales taking that mission on to themselves

to go to the hospital bed of an ill, and seriously ill, an attorney general

who has just had an operation, a gallbladder removed, and insisting that,

in that condition, he sign something, without being on instruction of their

their president, of their principal? 

FEINSTEIN:  No, I don‘t think so. 

And one of the—the interesting things about this U.S. attorney business is, first of all, there has never been a time in history when as many U.S. attorneys have been fired at one time.  There has never been a time when virtually all but one, or possibly two, of them had absolutely excellent performance records. 

And, yet, when we try to find out who put these names on the list, we can‘t find out.  Virtually the top people of the Department of Justice have all said they did not put the names on the list.  The attorney general said he did not put the names on the list.  Kyle Sampson said he was just the aggregator. 

So, the question comes, who suggested these names? 

MATTHEWS:  Yes. 

FEINSTEIN:  And why were these names suggested?  And I think that is where the Rove subpoena becomes so important. 

MATTHEWS:  Do you, on the committee, consider calling Senator Pete

Domenici as a witness, since he was the one who made the call to Iglesias

in Albuquerque, urging that he give him the latest update on whether he‘s -

he‘s prosecuting those people for voter fraud? 

FEINSTEIN:  Well, no, I don‘t conceive that we would call Senator Domenici.  I mean, Senator...

MATTHEWS:  Because he would tell you who told him to put the pressure on Iglesias. 

FEINSTEIN:  Well, I don‘t know that anybody did.

And I think that where we want to go is, who put the names on the list?  That is what is important, is who...

MATTHEWS:  But it may have been Domenici who might have supplied that one name.

FEINSTEIN:  No, I don‘t...

MATTHEWS: “This guy is not cooperating, because Heather Wilson is trying to get him to do something.  I am trying to get him to do something, and he won‘t do it.  So, let‘s get rid of this guy.”

How do we know that didn‘t happen? 

FEINSTEIN:  Well, Senator Domenici may have made a suggestion.  I don‘t know. 

But, right now, that is not the issue.  Right now, the issue is to find out, candidly, whether the White House made a decision that these people were not loyal enough or were too independent or wouldn‘t carry out a bidding on a given case. 

I think, for me, those are the issues.  That is what I want to know, because it is very strange that the people in charge of the U.S. attorneys did not put names on the list.  The man in charge of the department did not put names on the list.  So, who did?  How was this list put together? 

MATTHEWS:  Well, how about Karl Rove?  Suppose he stonewalls your latest subpoena, and the—and the deadline passes this week, and he hasn‘t—the e-mails have not been delivered up by the Justice Department?  What is your—what is your resolution here? 

FEINSTEIN:  I think we take that when it happens.  I do not think we need to announce it now.  I am very hopeful that Mr. Rove will.  If the White House has nothing to hide, it seems to me that he would come before us and he would forthrightly state whatever his role was, or whatever the role of the White House, of which he was informed, was.  It could be a very simple matter.  It could be disposed of in a relatively short period of time. 

MATTHEWS:  I do not think he is ever going to deliver these e-mails, senator. 

FEINSTEIN:  That is your view.  I must say that view is concurred in by others.  But that does not mean we should not try.  And that doesn‘t mean that we should not use the right of subpoena to garner this information.  That is just exactly what our chairman is doing.   

MATTHEWS:  What do you make of this administration?  Do you it has a chance for a—you know, we‘ve had presidents like Bill Clinton after the attempted removal of office over the Monica matter, and Ronald Reagan after that disastrous Iran Contra catastrophe, were able to resuscitate their presidencies in the last year and a half by shuffling the cabinet, bringing in new chiefs of staff, et cetera.  Do you think this president has the vitality to do that? 

FEINSTEIN:  I think that is the 64 dollar question.  Candidly, it has surprised me, because the Department of Justice, in particular, which is a big, a major, a critical federal department, with lots of power, has been losing its credibility.  And I have always liked to believe that the brightest and the best were within the Department of Justice.  I think it is sullied.  I the torture memos, Guantanamo, the Geneva Convention, all of this has sullied the department‘s credibility. 

And now, on top of all of these things, we have what appears to be a firing, not for a bona fide reason, of some very talented U.S. attorneys.  As a matter of fact, when I sat there and listened to them, and looked at them, and read their performance reports, and read their biographies, I thought, how much I wish you were Democrats, because I really felt these were very bright, very competent, and very professional people. 

MATTHEWS:  I am sorry. 

FEINSTEIN:  I think what we need to ferret out is if they were fired because they did not bring a case, or because they wanted to bring a case.  Now, there is no evidence one way or another on this question.  But this is a question I believe that looms in the corner of the room. 

MATTHEWS:  OK, thank you very much Senator Dianne Feinstein of California, a member of the Senate Judiciary Committee.  Up next, is Congress closer to giving President Bush a war funding bill that he won‘t veto?  Maybe.  Two members of the House will debate that, and when it‘s time to leave Iraq, of course, which is behind all this issue of funding.  When are we leaving that country, if ever?  This I HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The Senate struggled with war funding legislation today and rejected Senator Russ Feingold‘s proposal to cut off money for combat operations in a Iraq by April of next year.  But the measure did pick up support from Senator Hillary Clinton and Senator Barack Obama, among the 29 Democrats who voted for it.  So what‘ going to happen right now?

Let go right now to two guests, Democratic Congresswoman Debbie Wasserman-Schultz of Florida and Republican Congressman Jack Kingston of Florida, both sit on the Appropriations Committee.  Congresswoman, it just seems to me dramatic that 29 Democrats, all Democrats, voted to pull all the money out of Iraq by the end of next March, including Dianne Feinstein, who is quite a moderate on the war.  She joined the 29.  That is a lot of votes, isn‘t it? 

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA:  It sure is.  It is more than half of the Democratic caucus in the Senate that joined the 171 Democrats that voted for a similar amendment on the House side last week.  We, unlike the president—Democrats are not politically tone deaf.  We understand that we can no longer give the Iraqis, the Iraqi government, a blank check and an open ended commitment.  In order to make sure that we can eventually bring out troops home and make progress in Iraq, there have to be benchmarks tied to a timeline and make sure that we can fully fund out troops, and take care of our troops while they are there. 

That is what we‘ve been trying to do all along and for some reason the Republicans keep rejecting it. 

MATTHEWS:  Well, let‘s go to Congressman Kingston, let him speak for the Republicans.  Sir, do you think there is going to be a deal here?  Are we going to get a spending bill to support the troops, which includes some kind of language that both sides can agree to? 

REP. JACK KINGSTON ®, GEORGIA:  Chris, I am optimistic that we can.  I mean, the vote today—Democrats control the Senate and House.  If they wanted out of Iraq, they could pass that bill right now.  They are unable to do that.  That Senate vote today showed they don‘t even have the Democratic support to get that done. 

I believe that we will have a good compromise.  I also think that the failure of that vote to pass today showed that people are coming to their senses that you just can‘t yank your troops out of there.  I believe the benchmarks are a good thing.  I think they are a laudable goal.  But I think on the other hand, it is impractical to say, hey, whether you reform or not, we are going to leave at a date certain. 

MATTHEWS:  I agree.  That seems to be the tenor.  I am sure you watched the debate last night among the presidential candidates in your party.  Clearly there was a difference of tone.  They were supportive of the president‘s position, as you are, sir, but they put a lot of pressure on the Iraqi government to get it together. 

KINGSTON:  Well, I think that is the proper thing to do.  We want that Iraqi government to get it together.  But, you know, General Petraeus put it this way; he said, for them to have major—reverse the de-Baathification process would be like going into America right after the Civil War, in 1870, and saying, all right, now you have to have major civil rights legislation. 

They‘re not ready for everything, and they‘re not going to be ready in the next six months.  That‘s why this thing is frustrating everybody.  We want instant democracy, but, unfortunately, it is going to take a lot of time. 

WASSERMAN SCHULTZ:  Chris, this is not “The Wizard Of Oz.”  We can not be like Dorothy and click our heals together three times and wish our troops home.  In order to make sure that we have progress in Iraq, we have to tie the benchmarks to the funding and we have to make sure that there is a timeline, which applies pressure on the Iraqi government to actually make progress.  Without those three things working together—and I agree with Jack.  We do need to work towards compromise.  And I think compromise is possible. 

But with the Republicans as dug in as they are, without any movement whatsoever, how is that going to happen? 

MATTHEWS:  Let me liberate our thinking here, my included.  Congressman Kingston, how many years do you it will take, roughly, to build an Iraqi army capable, and with significant political direction from Baghdad, to keep al Qaeda from establishing a base in that country, to keep the two sides, the Sunni and Shia, from fighting each other?  How many years will it take to have an army strong enough to subdue the civil war, to end it, basically, except for some terrorism, and to make sure al Qaeda doesn‘t establish a base in that country?  How long would it take to get an army that strong? 

KINGSTON:  Chris, I‘ll cite a Brookings Institute report.  And, as you know, Brookings is left-leaning, largely Democrat type group.  They have said it is going to take 10 years.  But the good news in that is that insurgencies usually fail.  And they examine civil wars and disturbances all over the world to come to that conclusion.  But it was a very good, I would say really non-partisan, study. 

MATTHEWS:  Will the people of Georgia support 10 more years of American military involvement in Iraq?  

KINGSTON:  Well, people know we are still in Germany and South Korea. 

MATTHEWS:  No, no, no, I won‘t let you get away with that.  That is not a fair comparison.  We do not have a war in South Korea.  There is no German that has fired on an American since 1945.  That is not a fair comparison. 

KINGSTON:  Well, it still is going to take time. 

MATTHEWS:  It‘s not a fair comparison.

KINGSTON:  It still takes time, and Chris—

MATTHEWS:  No, no, no. 

(CROSS TALK)

MATTHEWS:  That is not an acceptable argument.  You cannot compare our peaceful occupation of Germany since 1945, our peaceful occupation of Sour Korea, with the situation in Iraq.  It‘s more, congressman, as if the Korean War had continued all these years. 

KINGSTON:  Well, Chris, let me say one thing, that I have a co-sponsored the bipartisan Iraq Study Group implementation, which Frank Wolfe is reintroducing this week.  And I think one of the thing that it underscores is that if we leave right now, as much as you and I and Debbie might want us to leave right now, that you will have civil war that will spill over the boarder. 

(CROSS TALK)

MATTHEWS:  -- which I find lazy.  These comparisons to previous eras and previous countries do not do us any good.  We are in the middle of Arabia, surrounded by a billion Islamic people who do not want us there.  We have to deal with that fact of Americans getting killed every day.  We got three guys in captivity right now.  It is not fair. 

(CROSS TALK)

MATTHEWS:  And all the neo conservatives do it over and over again.  It is a lazy thinking, congressman.  It‘s the kind of propaganda that has not help this country understand the situation. 

KINGSTON:  But the Iraq Study Group itself, a bipartisan group, which both sides cite quite often, says if you pull out suddenly—

MATTHEWS:  I agree with all these arguments.

(CROSS TALK)

MATTHEWS:  Do not compare it to totally different situations in South Korea during the Cold War or Germany today. 

KINGSTON:  All right Chris, I understand I stepped on a nerve there. 

(CROSS TALK)

MATTHEWS:  you stepped into a dishonest comparison, congressman, and that‘s the problem. 

KINGSTON:  OK Chris, let me accept that and move on.  The point is, if you leave—and saying that you can leave in nine months is going to leave this country in worse condition. 

MATTHEWS:  That is an argument that most Americans are worried about your being right.  Let‘s move on to the realities though.  I am sorry to get involved in this fight. but some people come on this show over and over again, saying things that just are not true objectively.  Thank you, Congresswoman Wasserman Schultz and thank you Congressman Kingston. 

Some breaking news right now, the Department of Justice turned over some of Karl Rove‘s e-mails connected to the firing of several U.S.  attorneys to the Senate Judiciary Committee.  And the Justice Department says it is looking for more. 

Up next, what is happening to all the president‘s men.  You are watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  NBC News is reporting at this moment that the Department of Justice has turned over some Karl Rove e-mails in connection with the firing of several U.S. attorneys to the Senate Judiciary Committee.  My skepticism, but we‘ll just see.  We‘ll just see.  The Justice Department is looking for more they say.  Let‘s go to HARDBALLers, Matt Continetti of the “Weekly Standard,” and Democratic consultant Jenny Backus.  Matt, do you think they‘re really going to turn over perhaps controversial, if not incriminating notes? 

MATT CONTINETTI, “THE WEEKLY STANDARD”:  They will turn over emails, but they will dribble it out over the course of months.  They‘re running against the clock here. 

MATTHEWS:  Put out things like are we going to have lunch next Tuesday or not?  Is that what they‘re going to put out?

CONTINETTI:  And then they‘ll cancel at the last minute, and then they‘ll reschedule. 

MATTHEWS:  But if they‘re deciding which ones to put out then it doesn‘t do you any good.

CONTINETTI:  I assume the White House is looking at what they want to put out or not.  They want to drag this out as long as possible, because the Bush administration knows they need Gonzales there through the end of the administration.  They need Rove there through the end of the administration.  Otherwise, the administration would be crippled.

JENNY BACKUS, DEMOCRATIC STRATEGIST:  But don‘t you think this is just killing them; it‘s sucking the life blood out of the administration?  I mean, you have Wolfowitz again in the news today, that he‘s probably going to go down.  Everywhere you look, there‘s still another rotten apple.

CONTINETTI:  It could always get worse.  That‘s my first rule. 

BACKUS:  They‘re misplaying this scandal though. 

MATTHEWS:  Well the cabinet member that‘s not in trouble is serving the president best.  Which are they?  There‘s a few that haven‘t gotten in trouble. 

BACKUS:  Who‘s the guy at housing? 

CONTINETTI:  Elaine Chao is still there.  He‘s been the longest serving cabinet member now.

MATTHEWS:  Well, what do you make of this thing with Gonzales?  Your argument is that it‘s better to keep the guy there? 

CONTINETTI:  If Gonzales leaves and the Democrats are going to be able to pick whoever they want to replace him.  And the person that they want to replace him is someone who will initiate unregulated investigations of this administration.  You‘re talking about bleeding the administration now.  Wait until the Democrats pick the next attorney general. 

(CROSS TALK)

MATTHEWS:  I‘m a great believer in salvation.  Could the president just say I‘m going to start picking first rate people.  Ted Olsen, I‘ll ask him to take a salary cut for the next year and half.  I need a great attorney general. 

CONTINETTI:  He could.  He could very well do that.  The question is will Chuck Schumer let Ted Olsen, for example—

MATTHEWS:  How could you stop Ted Olsen? 

(CROSS TALK)

BACKUS:  But I think the other thing is that you also might get the Howard Baker safe ex-senator pick.  You know what I mean?  They‘ll go out and find one of these guys that is going to be no harm, no foul.  Look, the Democrats know that they have to, in addition to start raising questions about accountability on the hill, they also have to start passing laws.  I mean, Leahy‘s got some great laws lined up.  He‘s got a privacy bill.  They don‘t want to spend all their time—

MATTHEWS:  Has anybody benefited from the association with George W.

Bush? 

CONTINETTI:  It‘s an interesting question.  I mean, people have benefited. 

MATTHEWS:  Rumsfeld‘s on the hash heap of history.  Wolfowitz is going to be joining him.  Feith has already joined him.  Libby‘s facing prosecution for five or six years.  I mean, does anybody benefit from knowing George W.? 

CONTINETTI:  Gonzales‘ job is safe, Chris.  Look at the House Republicans, they‘re sticking with him.  He‘s going to be there until the end of the administration.

MATTHEWS:  Thank you very much Jenny Backus.  No relation to Jim Backus.  Matt Continetti a great writer for a magazine of mixed results.  Join us again tomorrow night 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

,