updated 7/3/2007 10:15:35 AM ET 2007-07-03T14:15:35

Guests: Jonathan Turley, R. Emmett Tyrrell, Melanie Sloan, Matt Cooper, Craig Crawford, David Axelrod, Jenny Backus, David Rivkin, Michael Isikoff, Marcy Wheeler

DAVID SHUSTER, GUEST HOST:  President Bush commutes Scooter Libby‘s sentence.  He‘ll pay the fine but do no time.  Let‘s play HARDBALL.

Good evening, I‘m David Shuster in for Chris Matthews.  Late this afternoon President Bush commuted Scooter Libby‘s sentence in the CIA leak case.  Libby still must pay his fine of $250,000 and will be on probation for two years, but the surprise announcement came just hours after a federal appeals panel ruled that Libby, the former top aide to Vice President Cheney, could not delay his prison term of two-and-a-half years.

Libby would have been the highest-ranking White House official to go to jail since the Iran-Contra scandal.  Tonight the reaction from Washington to this breaking news story, which takes on added drama because of the evidence in Libby‘s perjury trial that he was taking actions on behalf of Vice President Cheney. 

We begin with NBC‘s Kelly O‘Donnell who is near the Bush family compound in Kennebunkport, Maine—Kelly. 

KELLY O‘DONNELL, NBC CORRESPONDENT:  Good evening, David.  Let me give you a little of the behind the scenes of how this decision was reached.  Senior advisers to the president say that Mr. Bush has been considering this for a long time and that White House lawyers have been evaluating the legal arguments for a period of weeks, and over about a last week or so, they say the president began to lean towards this option, commuting the sentence as you described it. 

Also we know that this happened only because the U.S. Circuit Court of Appeals made the decision that Libby could not remain free on bond while he went through the appeals process.  That triggered this action, according to officials, had it not happened, we wouldn‘t see this statement today. 

We were here in Kennebunkport because the president was hosting Vladimir Putin, and I‘m told by advisers that the announcement—that the decision from the District Court of Appeals came through when the president was actually visiting with reporters and talking about the summit. 

When he went back into the family home, he was notified and a series of events were triggered then and the president was able to make this final decision today before he got on Air Force One, returning to Washington.

Now part of the statement, it is a two-page statement that outlines arguments in this case.  It‘s interesting that the president cites the views of both critics and defenders of any action the president might take.  He also commends Patrick Fitzgerald who was the special counsel in this case. 

And a senior adviser told me that the president wanted to appear certain not to appear to disregard the actions of the jury that found Libby guilty of those felony counts.  So one section of the statement, David, that really outlines how the president feels about this goes as follows.

“I respect the jury‘s verdict, but I have concluded that the prison sentence given to Mr. Libby is excessive.  Therefore I am commuting the portion of Mr. Libby‘s sentence that required him to spend 30 months in prison.”

As you indicated, there are other aspects of this, the fine, $250,000, the time of probation, and because, as you know, Libby was a lawyer, a public servant, he will likely lose his law license, will not be able to serve in public life, and to president notes that and that his career and his life have been—there are long-lasting harmful effects.

He also notes Libby‘s wife and children having been harmed by this.  So the president describes that he believes truth is important, truth matters.  He accepts the conviction which effectively means he believes that Libby lied to the FBI and committed perjury. 

But the president also indicates that the Constitution gives him this authority, the power of clemency.  And the president indicates in his statement that he believes he exercised that power appropriately—David.

SHUSTER:  Kelly, what part of this statement was directed at the politics?  I mean, we‘re already starting to see the statements from the Democrats who are calling this disgraceful and ridiculous, and a number of Democrats, at least the blogosphere has exploded with people talking about the evidence that came out at this trial involving Vice President Cheney.

Surely there‘s probably something in the statement by the White House to try to deflect some of that, right? 

O‘DONNELL:  Well, as you mention, the vice president—sources close to the vice president say that he did consult with the president.  He agrees with the president about this decision.  That‘s no surprise.

As you know, Libby had served very closely to Cheney as not only his chief of staff, but his national security adviser.  But what is less mentioned is that he held the highest title in the White House among staffers, assistant to the president.  So he was also a staffer to Mr. Bush. 

Now on the politics, the president does cite that repeatedly here, as if he‘s predicting what critics are now pouring out with.  Those who felt that this was a case that should not have been prosecuted, he describes that.  He also talks about the fact that there are those who believe that what a jury decided should not be interfered with.  The president does talk about that as well. 

We‘re told by officials close to the president that he did not consult the Department of Justice to make this evaluation, that how he came to the conclusion was with the advice of people inside the White House at the very closest level. 

When he talks about politics here, he also does a couple of times refer to Valerie Plame.  There has been no indication in this of any concern about her lost career or an apology to her.  Many have said that should have come.  It‘s not in this document, and that may be a source of criticism.

But it outlines again the background of what happened, how her name was leaked, and to a newspaper columnist, Robert Novak.  And the president says that even though there has been so much debate about this, that he felt that those arguments, while they are well-meaning on both sides, that it was his time now to intervene and this is a decision that comes with great political cost and some benefits for the president.  And that will be weighed by a lot of people over the next few days—David. 

SHUSTER:  Kelly O‘Donnell, great reporting, as always, Kelly, reporting there from Kennebunkport, Maine. 

Jonathan Turley is a law professor at George Washington University.  And Bob Tyrrell is the founder and editor-in-chief of The American Spectator. 

Jonathan, I want to start with you, because the evidence came out in this trial, even pre-trial about actions that Scooter Libby took as far as talking to Judy Miller and Matt Cooper, two reporters, at the behest of Vice President Cheney.  And when you and I spoke about a year-and-a-half ago, you expressed some surprise that Cheney wasn‘t an unindicted co-conspirator in all of this. 

Does that mean then that you believe that this is somehow some sort of cover-up here? 

JONATHAN TURLEY, GEORGE WASHINGTON UNIV. LAW SCHOOL:  Well, I think that today‘s actions are going to support the idea that Scooter Libby was a designated defendant and that he was a surrogate for the vice president.  When you went through the trial, it was all about the vice president. 

You know, Scooter Libby didn‘t spontaneously decide to do all this.  He was sent to a task by Dick Cheney.  It was Dick Cheney that was involved in the allegations of whether there was uranium and—or whatever being sought after in Africa. 

Dick Cheney ran through this.  He was actually the spine of the entire trial but he wasn‘t a defendant or an unindicted co-conspirator.  And so there was this view among many that Scooter Libby was expected to carry this water for the vice president. 

What was also very surprising is that Scooter Libby got this incredibly aggressive team that‘s known for its aggressive tactics in trial.  And they in fact had a signature plan that they announced.  They were going to call Dick Cheney.  They were going to really horn into the White House.  And then suddenly it evaporated. 

All the promises there, indications, were gone.  And they actually had a very sort of staid defense, and they stayed well away from people like Dick Cheney.  And many of us thought that that seemed to be an effort to preserve the option for a pardon. 

He was a loyal soldier all the way through this. 

SHUSTER:  Bob Tyrrell, I imagine you support the commutation today? 

R. EMMETT TYRRELL, THE AMERICAN SPECTATOR:  Well, as a matter of fact, I would have supported a pardon.  I have an entirely different take on this.  I mean, I come as an American spectator, I‘m not—I mean, don‘t implicate me in Washington.  I‘m not part of Washington. 

And it seems to me my understanding of this White House is that this president is in charge, and the policies of this White House are reflection of him.  He‘s a severe judge.  And a commutation is a lot more severe than I think he should have given this guy.  No crime had been committed to begin with.  That was established.  And...

SHUSTER:  But one of the reasons they couldn‘t establish that there was no crime is because at least Patrick Fitzgerald had said that he sand thrown in his eyes.  I mean, he never made a judgment about whether there was a crime or not with the actual leak.  But he did determine that Scooter Libby lied and committed perjury. 

TYRRELL:  But my understanding was that—what I meant to say is that it was not a crime to reveal the—her CIA identification was not purposefully revealed to endanger her in any way.  In fact many of the people involved here had no idea except for Armitage.  And the...

SHUSTER:  Bob, did The American Spectator take a position on President Clinton‘s impeachment for perjury and obstruction of justice?

TYRRELL:  Well, The Spectator aside, I did in my recent book...

SHUSTER:  You supported it, right?

TYRRELL:  I assume you‘re alluding to my recent book on Clinton and retirement which I.... 

SHUSTER:  And you supported the impeachment, right?

TYRRELL:  Yes.  Well—but I thought you were talking about...

(CROSSTALK)

SHUSTER:  My point is, what‘s the difference between supporting an impeachment of President Clinton for perjury and obstruction of justice and why not then support Scooter Libby going to prison when he is convicted by a jury with a Republican judge, and he is two-and-a-half years?

TYRRELL:  Well, I have an entirely different take on it.  First—and the thing I find most interesting, if you want to talk about the Clinton administration, is that Clinton in the last 24 hours of his life in the White House gave 176 pardons—or 176 pardons or commutations without any of the due process, without any of the processes that are regularly followed. 

SHUSTER:  But in his case, Bob, there was due process.  And that Scooter Libby had plenty of opportunities in this case to argue that the sentence was harsh, the judge found it was no basis to disregard—no basis to overturn his judgment.  The appeals court, which had two Republicans appointed by President Reagan and Bush and the father, they found that there was no basis for essentially stopping Scooter Libby from going to prison. 

TYRRELL:  Yes, well, as you (INAUDIBLE).  But I must say there‘s a difference between the impeachment of a president and sending him to jail.  I don‘t—there is—one moment, I would not have sent Bill Clinton to prison. 

TURLEY:  See, the problem with this entire sort of Capitol drama, it‘s going to strike many correctly as part of political kabuki.  You know, this guy plays this role, saved at the final hour, days from his demise, by a grateful king. 

And the problem is that all along President Bush says, we have got to let the legal system work, we‘ve got to let the jury make a decision, we‘ve got to let the judges do this, we‘ve got to let this prosecutor do this. 

But it‘s going to look like he was only giving them that opportunity so long as they came to the conclusion he wanted.  And the very day that they did not, the very day that even Republicans said this man needs to go to jail, he then says, well, you know what, I don‘t agree, so I‘m going to change this. 

And I think that does really undermine the system.  It has really very little to do with whether there was an intent to disclose an covert operative‘s name.  He was convicted of lying. 

SHUSTER:  Right.  But didn‘t it undermine this case from the beginning—you and I have talked about this before, Patrick Fitzgerald did not put Vice President Cheney under oath.  He seemed—in your words, you said that he treated the vice president with kid gloves.  If he‘s going to treat the vice president with kid gloves, not put him under oath, then what‘s the justice in bringing Scooter Libby up on charges for perjury and obstruction of justice? 

TURLEY:  Well, I have to say, I‘m not a fan of this investigation or the special prosecutor.  I thought the investigation was not aggressive.  I thought it was a lot of spin.  I mean, it was the media that came up with names that his investigators never even spoke to that were involved. 

And every time his investigators got close to Dick Cheney, a light seemed to go off in the investigation.  So I was not impressed at all with the investigation.  But none of that really saves Scooter Libby. 

I mean, the problem is he was convicted of crimes, and this president has been one of the most miserly presidents in history when it comes to pardons.  And he is the last guy that I know of that complains about the harshness of sentences.  His administration has defended sentences that have been condemned internationally because they‘re too harsh.

Scooter Libby gets a multiple-month sentence and he says this is too severe for me to tolerate. 

SHUSTER:  The one thing I think we can agree on is that this is going to play out politically and it certainly is going to be very interesting to watch.  Jonathan Turley and Bob Tyrrell, thanks very much for joining us. 

And up next, as we mentioned, a number of organizations are simply going nuts over this decision, including one called the Citizens for Responsibility and Ethics.  Melanie Sloan is a lawyer who represents that organization, we will talk to her on the other side of this break.  You‘re watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

SHUSTER:  And welcome back to HARDBALL.  We‘re covering tonight‘s late-breaking news that President Bush has decided to commute Scooter Libby‘s two-and-half-year prison sentence.  Libby will still have to pay the $250,000 fine but he will not have to serve any time.  Senate Majority Leader Harry Reid called the decision “disgraceful.” There has been reaction from other Democrats across town. 

But we‘re going to go right now to Melanie Sloan, who is with Citizens for Responsibility and Ethics.  She joins us in Washington.  She is a representative of Joe Wilson.  It was Joe Wilson‘s wife Valerie Wilson whose identity was compromised, sparking the beginning of the CIA leak investigation.  And Scooter Libby, of course, was convicted for lying to a grand jury and to the FBI during the course of that investigation. 

Melanie, first of all, what is your reaction to this commutation? 

MELANIE SLOAN, CITIZENS FOR RESPONSIBILITY & ETHICS:  Well, I think it‘s outrageous.  As Professor Turley said earlier, this isn‘t a president whose known for having sympathy to criminal defendants except if they happen be high-level official from his own administration. 

SHUSTER:  Melanie, Joe Wilson never testified in this case, so isn‘t this sort of a separate issue from whatever damage may have been caused to Joe Wilson and his wife Valerie?

SLOAN:  Well, it‘s a separate issue except that the president said that he would take the leak of classified information very seriously, and he obviously hasn‘t done that.  Not only did Scooter Libby stay in his administration until the day he was indicted, Karl Rove is still there, and now the president has commuted a sentence of somebody who was convicted of obstructing justice and perjury in regard to that leak. 

SHUSTER:  What do you think Scooter Libby‘s motive was—for the actions that he took as far as the jury finding him guilty of perjury and obstruction of justice, what do you think motivated Scooter Libby to make the statements that he did? 

SLOAN:  Scooter Libby was trying to protect the president and the vice president, and he was trying to protect the administration‘s rationale for going to war in Iraq.  Joe Wilson had written an editorial in The New York Times undercutting that administration rationale, which was that Niger had not in fact sold yellowcake uranium to Iraq and the administration said they were going to get Joe Wilson for telling the truth.  And that is what Scooter Libby did, vice president...

SHUSTER:  But, Melanie, Scooter Libby was not charged with leaking classified information or disclosing Valerie Wilson‘s identity.  He was only charged with lying about action during that crucial week.  So again, what was his motivation to lie? 

SLOAN:  Well, he was clearly covering up what happened.  I mean, obviously I can‘t get into Scooter Libby‘s head, but—you say only, but obstruction of justice and perjury are very serious charges and the president and most Republicans have thought they were very serious charges up until the day Scooter Libby was indicted on those charges. 

SHUSTER:  OK.  Melanie Sloan, who speaks for Joe Wilson tonight.  I want to bring in Jonathan Turley, who is an attorney; Bob Tyrrell is with The American Spectator. 

And, Bob, your reaction.  Obviously some anger in the Joe Wilson camp tonight. 

TYRRELL:  Yes.  I think that didn‘t she start by saying that there had been a leak?  A leak that was an illegal leak?  And wasn‘t that discovered that it wasn‘t an illegal leak?  I mean, that was early on.  And early was that Fitzgerald recognized that Armitage was the man who mentioned, without trying to leak anything, just talking—he was just in conversation. 

SHUSTER:  But he also discovered early on that Armitage was not...

TYRRELL:  Did I get that right? 

SHUSTER:  You got that right—part of it.  But here‘s the problem.  You only got part of it right.  Armitage was leaking to Bob Novak, but Armitage would have never even known this information about Valerie Wilson had it not been for requests by Scooter Libby to the State Department. 

And furthermore, when you talk about early on in the investigation, Pat Fitzgerald had Scooter Libby‘s statements at the beginning of the investigation to the FBI where he was—he believed that Scooter Libby lied. 

So why not pursue why somebody is trying to cover up or lie? 

TYRRELL:  Well, I guess my—as an ordinary guy, I mean, I‘m sitting here with a distinguished professor of the law, but this lie was a lie that depended on verification from Tim Russert who was—you couldn‘t expect—I wouldn‘t expect Tim Russert to lie for me, so the lie most likely was confusion rather than a lie.  It depended on verification from somebody who was not involved in this at all.

(CROSSTALK)

SLOAN:  The jury rejected that argument.  It wasn‘t confusion.  Mr. Libby was convicted by a jury of 12 citizens who found that he obstructed justice and committed perjury and that there—confusion was not the answer.  That was the defense they gave for it. 

TYRRELL:  I‘m not speaking as a jury.  I‘m speaking as an observer.  And as an observer, I see no reason for this man to put his neck out based on—tender his neck with Tim Russert as the man who had decided whether to drop the axe or not.

SHUSTER:  Well, actually there were nine different witnesses though who contradicted Scooter Libby, nine different witnesses at this trial who said that, no, Scooter Libby had information before the conversation before Tim Russert even happened.  And Tim Russert, of course, denied Scooter Libby‘s account. 

But in any case, Jonathan, the president said tonight that the sentence of Scooter Libby was excessive, it was excessive and that‘s why he wanted to commute it.  Is 30 months excessive when somebody is convicted of four felony charges? 

TURLEY:  No, it‘s not excessive.  It‘s pretty much in the groove in terms of this type offense by a high-ranking individual in government.  You know, you can‘t—when you commit a crime as a high-ranking government official, you get a certain heightened sentence, but this sentence is not otherworldly, it‘s not particularly harsh.  For this administration, it‘s certainly not that way.

And part of the hypocrisy that comes forth through the decision is that you also had a president who not only said, I‘m going to let the legal system take—run its course, but at the very beginning he said, if we find out who the leaker is, I‘ll fire them. 

Well, whether or not he was—whether or not Scooter Libby was the source as opposed to Armitage, for a particular article, it was clear in the trial that the White House was leaking this information, leaking a great deal of information during this period with the president and vice president‘s knowledge. 

And nobody was fired, and one of the guys who was clearly peddling the information just got his sentence commuted. 

SHUSTER:  Well, one of the other fascinating things that came out of this trial was that Scooter Libby was taking action on behalf of Vice President Cheney and others as far as handling this classified information.  The CIA director, the national security adviser, they had no idea.  They were completely out of the loop as far as what Scooter Libby was doing. 

But in any case, we‘ll be back with Jonathan Turley, Bob Tyrrell, and Melanie Sloan.  And when we return, Chris Matthews, who played a starring role of sorts in this trial, he will join us.  You‘re watching HARDBALL, only on MSNBC.   

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to HARDBALL.  Breaking news tonight.  President Bush says that Scooter Libby‘s two-and-a-half-year prison sentence is excessive, he has therefore decided to commute it.  Even though Libby will still pay a fine, he will not serve any time in jail.

Back in the summer of 2003 when Joe Wilson wrote an article complaining that the president had misled the American people in a State of the Union right before the war, there was one journalist that summer who was seizing on the information that was contained that Joe Wilson had been reporting on, and that was the man who normally sits in this chair, Chris Matthews. 

Chris Matthews pounded Scooter Libby and the others in the vice president‘s office for the information about Joe Wilson going to Niger and coming back and finding that there had been no effort by Iraq to seek uranium from Niger.  And therefore, Chris was wondering, well, why then did that end up in the State of the Union?  Chris got mentioned in the Scooter Libby trial, and he joins us now by phone. 

And, Chris, first of all, what is your reaction to what the president did tonight? 

CHRIS MATTHEWS, HOST:  Well, David, I‘m not surprised.  I‘ve been saying for weeks I thought he would pardon—the president would pardon him.  I didn‘t realize he would find this sort of three-quarters of a way to pardon him which leaves him with a fine to pay and being disbarred.  And in a sense he‘s still a felon, so he has paid a terrible price already for his crimes.  So it‘s not too surprising. 

SHUSTER:  Chris, did you have any thought that perhaps if Scooter Libby was going to prison that he might think again about those conversations that he couldn‘t remember exactly what Vice President Cheney had told him? 

MATTHEWS:  I‘ve always wondered about his incredible loyalty to the boss, to Dick Cheney, his boss, who, according to the trial testimony, as you pointed out, he worked hand in glove with all through his service as chief of staff to the vice president. 

Not just with regard to the leaking of the information to Judy Miller of The New York Times and Matt Cooper of TIME magazine, but also the entire effort to build the case for war—the nuclear case for war that the vice president was so strong in making, and of course the president made in his State of the Union in those infamous 16 words where he talked about a British intelligence report that there was in fact an effort by Saddam Hussein to purchase yellowcake in Niger. 

And all of that information would be available to the chief of staff and the vice president.  Also he was the vice president‘s chief intelligence liaison.  So he would have gotten it firsthand, perhaps all that information he would have gotten his hands on and developed before the vice president even took a part in it. 

And number two, as chief of staff to the vice president, I know this from my experience working in the White House years ago, the vice president‘s office clears all the paper going to the president.  So if the president is giving a State of the Union, you can bet your bottom dollar that the first office to get a copy of that State of the Union Address, long before it‘s given is the vice president‘s chief of staff. 

So Scooter Libby was at the concourse of the intelligence at the case for war.  And he was also apparently at the concourse of the leaking operation. 

SHUSTER:  Chris, do you think that this is a reward for Scooter Libby of sorts? 

MATTHEWS:  Well, you know, he‘s not in trouble now and he doesn‘t face a felony rap for the rest of his life because he went out and robbed a gas station or cheated on his income tax, he‘s in trouble for being part of a team.  Part of a team whose purpose it was to sell the war and to perhaps make sure that someone who was out to debunk the case, Joe Wilson—Ambassador Joe Wilson, wasn‘t credible. 

And so everything he has been accused of and found guilty of were efforts which were very much a part of the administration‘s political purpose.  Now who is to know who told who what to say or exactly what micromanaging went on by the vice president or the president.  But clearly, the irony in this case is that the president said he would deal with anyone who leaked, and now we know his way of dealing with Scooter Libby is to pardon him.  That‘s his way of dealing with it.

And to say that the penalty was excessive may well be true.  But it‘s the same crime that President Bill Clinton was impeached for by a Republican House of Representatives and in which 50 U.S. senators, Republicans, voted to remove him from office. 

So the Republicans, as a party, I guess you would say, thought that perjury and obstruction of justice was sufficient to remove an elected president—a twice-elected president, from office.  And now the president is saying that 30 months in prison is an excessive penalty for the same exact crime.  That‘s inconsistent.

SHUSTER:  Chris, the Republicans, as you would imagine, have been noticeably silent tonight, not saying anything.  But the Democrats are coming out with statements like the one from Harry Reid who is calling the president‘s decision today “disgraceful.” How do the politics on this cut from here on out? 

MATTHEWS:  Well, if the president were proud of this decision, and I—certainly as a citizen don‘t hold it against the president pardoning anybody, that is his decision and it‘s his right to make it, and if it‘s a political ally involved I certainly understand that he sympathizes with Scooter Libby and his family. 

The human aspects of this are totally understandable and may well be that Scooter Libby certainly has suffered enough already and will suffer in the future with the loss of his membership in the bar and his dignity and everything else.  I think you could very well argue that he has suffered enough by the punishment already exacted of him without going to prison. 

But clearly, if the president were proud of this, he would have held it in the Rose Garden, he would have said it himself and not issued a statement on paper out of the White House, out of the building.  He wouldn‘t have done it on a Fourth of July eve.  He wouldn‘t have done it with everyone out of town.  He would have done it with some flourish and some pride.

This is midnight—when you do something at 5:40 in the afternoon right before—actually in the middle of a holiday period, clearly they were embarrassed by the decision.  This is what you usually dump out of the White House Friday night, as you know, David, around 6:00. 

SHUSTER:  Right.  Well, Chris, we‘re going to take a...

MATTHEWS:  This is not—I think the president probably felt he had to do it because the 25 to 30 percent of the country who still believes in his job performance are conservatives largely and who do believe in this war.

And as you‘ve seen with the poll data that we‘ve shown on the air, it‘s kind of frightening that 40 percent of the country still believes that Iraq attacked us on 9/11, that 20-some percent of the country still believes that there were weapons of mass destruction discovered by our military forces when they went into Iraq.

And so the misinformation in the country remains after all those years of propaganda before we went to war, well, the results of that propaganda are still in effect.  People are still are under a misunderstanding of the nature of why we went to war, and the case for war.  And that‘s the tragedy here. 

People are still arguing an old argument which has been disproven by our troops going into Iraq and bravely fighting that war and discovering there were no WMD, and no one, by the way, along the line, ever had evidence that Saddam Hussein, as bad as he was, had anything to do with 9/11. 

SHUSTER:  Chris, we look forward to seeing you back hosting the show later this week.  And as you can tell, Chris Matthews, and for those of you who have been following HARDBALL, Chris is the one journalist in prime time television who has been on this story and passionate about this story from the beginning.  Chris will be on “The Today Show” tomorrow morning.  Thank you also to Bob Tyrrell, Jonathan Turley, and Melanie Sloan. 

And up next, did President Bush buckle under the pressure from his base?  And is he trying to have it both ways by making Libby pay his fine but giving him a pass on jail time?  You‘re watching HARDBALL on MSNBC.  

(COMMERCIAL BREAK)

(NEWSBREAK)

SHUSTER:  And welcome back to HARDBALL.  We are covering the breaking news tonight.  President Bush‘s decision to commute Scooter Libby‘s two-and-a-half-year prison sentence.  We‘re joined now by Newsweek‘s Michael Isikoff; Congressional Quarterly‘s Craig Crawford; Democratic consultant Jenny Backus.  And right now let‘s bring in on the phone, former TIME magazine reporter Matt Cooper, was one of the journalists at the center of the CIA leak case and one of the journalists who Scooter Libby leaked to about Valerie Wilson. 

Matt, you almost went to prison and yet there‘s Scooter Libby getting out of prison today, what‘s your reaction? 

MATT COOPER, FMR. TIME REPORTER:  Well, I suppose, David, if people have objections to this, they should take it up with the founding fathers who gave the president undiluted authority in this matter.  It‘s his to do with what he wants and he has chosen to do that. 

But I tend to agree with a lot of what Chris said before I got on.  I mean, look, at the end of the day, Scooter Libby was indicted by a Republican, Bush-appointed prosecutor.  He was sentenced by a jury of his peers before a President Bush-appointed judge.  His appeals were denied by many Republican-appointed appellate judges.  It‘s hard to see the gross miscarriage of justice that required presidential intervention, especially from a president who has been very loathe to give out pardons in other circumstances. 

SHUSTER:  Matt, it came out at the trial that on the very day Scooter Libby called you and you had your conversation about Valerie Wilson, that just perhaps an hour before, there was Scooter Libby and Vice President Cheney on Air Force Two talking about how they should respond to your phone call.  What do you believe the vice president‘s role was as far as the information that you got from Scooter Libby but also the vice president‘s role in making sure that Scooter Libby would not have to go to prison?

COOPER:  Well, I‘m not privy to what has gone on behind the scenes at the White House.  I think you have to—you know, reading the tea leaves, think that he argued for this commutation, if not an absolute pardon.  And you know, it doesn‘t seem like he had to argue very long because this came so quickly after the appellate court was upholding the previous sentence. 

I mean, look, it‘s—you know I think historians are going to look back on this and look at books like Michael Isikoff‘s and others and make it very clear that we got into this war under very dubious circumstances. 

And it‘s also going to be very apparent that, you know, the administration really took the charges from Joe Wilson very seriously, it was the first real shot across the bow about the whole premise of the war, weapons of mass destructions, and they pushed back very aggressively. 

It may well be that it was a war skeptic, Richard Armitage, who gave the first leak to Robert Novak, but let‘s not forget who else leaked. 

SHUSTER:  Matt Cooper, thanks for calling in.  We appreciate it.

Craig Crawford, the politics on this, is it wise for the president? 

CRAIG CRAWFORD, CONGRESSIONAL QUARTERLY:  Well, you know, I always knew that at the end of the day it would be only a journalist who spent time in jail in this case.  That‘s my first reaction is just from the standpoint of the profession and the damage. 

SHUSTER:  Just to clarify for our viewers, we‘re talking about Judy Miller, who refused to give up information about Scooter Libby...

CRAWFORD:  About Scooter Libby.

SHUSTER:  Served some 81 days in prison and then Libby gave her a waiver. 

CRAWFORD:  She protected Scooter Libby, went to jail for it.  He gets out of jail, and at the end of the day she‘s the only one who spent time in jail.  I don‘t defend everything she did.  I think some of that day protection she gave him wasn‘t deserved, but nevertheless, on the political front, this is going to be a huge battering ram for Democrats in 2008. 

I think this will be the Jack Abramoff lobbyist scandal of the 2008 campaign as Democrats rally their own activists and grassroots supporters.  You know, remember, Libby.  The details of the case, the complexities of commutation versus pardon, that all will get thrashed out.

But at the end of the day, the president kept a White House official from going to jail for lying to a grand jury.  That bright line will not be forgotten when Democrats start pounding it. 

SHUSTER:  Well, and let‘s see what the Democrats are doing as far as the 2008 campaign.  And joining us on the phone is David Axelrod, who is a chief media strategist for Barack Obama.

And, David, what is the Obama campaign‘s reaction to the commutation? 

DAVID AXELROD, OBAMA CAMPAIGN CHIEF MEDIA STRATEGIST:  Well, Senator Obama put a statement out after the decision, and he said that—and he condemned the decision, saying it is—it cements the legacy of the administration characterized by a politics of cynicism and division, one that has consistently placed itself and its ideology above the law. 

And I think that sums up his feeling about this.  This sends an unmistakable message that if you‘re willing to cross the line in order to advance the ideological and political agenda of this administration, that you ultimately will be backed up and you will escape punishment for that.  And that‘s a terrible message. 

SHUSTER:  Well, David, let‘s put you on the spot here.  If Barack Obama is elected president and if a member of his White House is found guilty of a felony, can you pledge tonight that President Obama is not going to pardon or commute his sentence? 

AXELROD:  Yes, well, I don‘t—President Obama will never be in the position of signing a commutation or a pardon to excuse criminal behavior that—on the part of anyone in his administration, particularly in advance of political goals for the administration.  And that is really what makes this so egregious. 

So the answer to that, is yes. 

SHUSTER:  It‘s a confusing case, though, isn‘t it, David?  I mean, it‘s tough for candidates to explain the CIA leak case and explain what this is all about, isn‘t it? 

AXELROD:  Well, I don‘t think it‘s that confusing.  Scooter Libby was part of an effort on the part of the administration to embarrass a critic and he did it by being part of an effort to leak information involving a CIA agent and her identity.  I don‘t think it‘s that hard.  Obviously he was convicted on perjury charges.

But the case, itself, was very clear.  The effort on the part of the administration to besmirch a critic who turned out to be right is very clear.  I don‘t think this is all that confusing.  The case itself may have been confusing but the essence of it wasn‘t.  And it‘s completely consistent with the behavior of this administration. 

Remember, Mr. Libby came out of the vice president—you know, as late as the last couple of weeks the vice president has argued that he is not subject to disclosure laws relating to classified information because in his estimates he was not part of the executive branch of government. 

And of course, he has backed off of that since.  But he has conducted himself in secrecy and stealth from the beginning.  And Mr. Libby was part and parcel of all of that. 

SHUSTER:  David Axelrod, spokesman for the Obama campaign, chief media strategist.  David, thank you.  And I want to go to Jenny Backus. 

We‘ve had our first Democrat come forward and say, no pardons or commutations if they are president, but seriously, how does this cut politically?

JENNY BACKUS, DEMOCRATIC STRATEGIST:  This is bad news for the Republicans.  And it‘s very, very simple.  Look, this case comes down to lying and law and order.  And the Republicans are about to do the great unveiling of their “Law & Order” candidate, and you heard it here first, David, Fred Thompson, and I bet he does an e-mail to take down Scooter‘s—to take down—you know, Scooter‘s fine fund. 

Fred Thompson was already raising money for Scooter Libby‘s defense fund.  Mitt Romney, the guy who‘s law and order, the D.A. in the country‘s eyes, Mitt Romney never, ever issued a pardon as a governor, tied himself up in a bunch of pretzels in a debate in New Hampshire trying to say that he would pardon him. 

Rudy Giuliani, Mr. Law and Order, oh, I would pardon Scooter Libby.  This guy got special treatment.  He‘s the highest-ranking official since Iran-Contra in the Reagan administration—the highest-ranking White House official to get convicted by a judge.  And they are doing and end-run around him. 

I think it‘s a very—I think it‘s a very simple message, if you want law and order, vote for the Democrats, if you want special treatment for people who lie, vote for the Republicans. 

SHUSTER:  I‘m not sure it‘s going to be that simple, but Jenny Backus and Craig Crawford, we are going to come back to you at the—again, and we‘re also going to talk with Mike Isikoff, who wrote one of the most interesting articles several months ago about Bush administration guidelines for pardons and for commutations.  We‘ll be back with more on the president‘s decision to get Scooter Libby a “get out of jail” pass.  This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  And we‘re back on HARDBALL.  As Joe Wilson‘s criticism of the Bush administration took hold here in Washington, it was his wife, CIA operative Valerie Wilson who was the targets of efforts by several officials in the White House, including Scooter Libby, Karl Rove and Richard Armitage.

Joe Wilson will be Keith Olbermann‘s guest tonight on “COUNTDOWN.” And here‘s part of what he had to say. 

(BEGIN VIDEO CLIP)

AMB. JOSEPH WILSON:  The president himself acknowledged in his statement today that Mr. Libby was guilty of serious crimes.  And then he makes himself an accessory to the obstruction of justice by the mere act of commuting the sentence so that now Mr. Libby is under no incentive whatsoever to the tell the truth to the prosecutor, to remove that sand that Fitzgerald said that he threw into his eyes, or to do anything to lift the cloud that Mr. Fitzgerald says continues to exist over the Office of the Vice President. 

(END VIDEO CLIP)

SHUSTER:  And we‘re back with Newsweek‘s Michael Isikoff, who we‘ll get to in just a sec.  And CQ‘s Craig Crawford.  Democratic consultant Jenny Backus.  And on the phone right now is former Bush 41 Justice Department official David Rivkin. 

And, David, is President Bush an accessory to a crime, as Joe Wilson just said? 

DAVID RIVKIN, FMR. BUSH 41 JUSTICE DEPT. OFFICIAL:  Of course not.  This is the typical partisan over-the-top rhetoric which is all that Joe Wilson has really engaged in.  The president of course, has the power to issue pardons as well as to provide lesser measures like the commutation of sentence here. 

But let me clear about something.  It‘s interesting, a number of observations that the guests have made underscores how politicized this whole prosecution has been.  I will tell you, given the fact that president is a chief law enforcement official, he probably thought it was unseemly to say anything other than praise Mr. Wilson—excuse me, Mr.  Fitzgerald. 

SHUSTER:  But, David, is it unseemly for the president to step in when you‘re talking about a judge in this case who was appointed by President Bush? 

RIVKIN:  No, of course not.  The task of a judge is to apply the law.  The president has the power to do that.  Incidentally, one thing, and I‘m a big fan of Chris‘, but timing, there‘s nothing sinister about the timing.  The reason it was done now, not to in any way downplay the media impacts of it, but very simply is because it was today that the D.C. Circuit rejected the appeal from Mr. Libby‘s lawyers to allow him to stay out on bail. 

SHUSTER:  Well, and that‘s right because Scooter Libby would have gone to jail in the next two or three days.  I want to—David, hold on for a sec, I want to bring in Mike Isikoff. 

Mike, talk about the Justice Department guidelines for commutations and pardons and whether or not any of those guidelines were met in this case. 

MICHAEL ISIKOFF, NEWSWEEK:  Well, they weren‘t.  The president, I think as is well-known, has been—this president has been especially stingy about giving out pardons and commutations.  By some counts he has given out less than any president in modern times. 

And when the question of pardons and commutations have come up in other cases, he has made clear that he was going to play it by the book and apply Justice Department guidelines .  The Justice Department guidelines for pardons say that no applicant can even be considered until five years after they have completed serving their sentence. 

So Scooter Libby wouldn‘t get to first base under Justice Department guidelines.  For commutations they say that no applicant should even be considered—generally be considered unless they have begun serving their sentence, Scooter Libby clearly had not.

And number two, that they were no longer pressing their appeal.  In other words, they were no longer asserting their innocence and had accepted their guilt.  Clearly that doesn‘t apply in this case.  Scooter Libby is continuing his appeal. 

So look, there‘s nothing that—the president doesn‘t have to apply these guidelines.  The president has an absolute power to pardon and commute anybody‘s sentence he wants.  But he has said in every other case he was going to do that.  So clearly he‘s making an exception for Scooter Libby that other people have not, and given consideration that other people have not gotten. 

I should say one other thing, it‘s worth remembering that Scooter Libby actually made, to my knowledge, one appearance before Congress in this administration, when he served in this administration, and that was when Congress launched an investigation, the House Government Reform Committee, into the pardon of Marc Rich...

SHUSTER:  Mike, we‘ve got to wrap you up.  You‘re going with Marc Rich, yes.  One of the most...

ISIKOFF:  Scooter Libby had once been a lawyer for Marc Rich.  There‘s nothing to stop Congress, and I think you would expect to see congressional inquiries into the circumstance behind this pardon—this commutation. 

SHUSTER:  Well, we‘ll see what Congress does with this.  But Mike Isikoff, thanks very much.  Also thanks to Jenny Backus and Craig Crawford.  We‘ll be back with more on President Bush‘s decision to commute Scooter Libby‘s prison sentence, you‘re watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

SHUSTER:  And welcome back to HARDBALL.  We‘re talking about the president‘s big decision today to commute Scooter Libby‘s 30-month prison sentence.  Senator Joe Biden, who is a presidential candidate, has sent out this e-mail to supporters urging Americans to “flood the White House with phone calls tomorrow expressing their outrage over this blatant disregard for the rule of law.” 

There is also been reaction from another possible 2008 presidential candidate, Fred Thompson.  Fred Thompson said that he is happy for Scooter Libby‘s family.  It is worth pointing out, however, that Fred Thompson voted to convict President Clinton on obstruction of justice in the president‘s Senate impeachment trial of 1999.  Joining us on the phone is Libby blogger Marcy Wheeler, who is the author of “Anatomy of Deceit,” which provides sort of count by count explanation of this entire case. 

And, Marcy, you know the ins and outs of the evidence in this case.  What did the president say today that was incorrect? 

MARCY WHEELER, AUTHOR, “ANATOMY OF DECEIT”:  Oh, well, I mean, the president said that the sentence for Libby was too harsh, but then he did away with the entire sentence.  So starting from there, pretty much everything about this was incorrect. 

SHUSTER:  Marcy, what‘s the—I mean, there has been sort of an explosion on the blogosphere, but I mean, how do you think this goes?  Doesn‘t this story just die down now?  I mean, I don‘t know too many people, with all great respect for all the terrific work that you guys have done, and for your book, “Anatomy of Deceit,” it is still a very complex story. 

WHEELER:  It is a complex story.  But what it comes down to finally is that Vice President Cheney ordered Scooter Libby to leak classified material.  After receiving that order, Scooter Libby went and leaked Valerie Plame‘s identity and a CIA leak—a CIA report to Judy Miller. 

Vice President Cheney did that, he told Libby, with President Bush‘s approval.  When Vice President Cheney was trying to exonerate Libby later that fall, he said, “the president,” and crossed that out to protect the president, but he said, the president basically asked Scooter Libby to put his neck in the meat grinder. 

And that makes it clear that the two people that Scooter Libby was protecting with his obstruction were Vice President Cheney and George Bush, himself.  He has every legal right to commute Libby‘s sentence, but he is clearly obstructing justice and obstructing the investigation into his own role in the outing of Valerie Plame. 

SHUSTER:  Marcy Wheeler, author of “Anatomy of Deceit” and also blogger on the Libby case. 

Craig Crawford, how does this play out over the next couple of days? 

CRAWFORD:  Well, for the president, he has nothing left to lose.  There almost something liberating about his low approval ratings.  So I think he could pardon Libby before dinner and bomb Iran before bedtime and he would only go down a couple of points. 

SHUSTER:  And real quick, Jenny Backus, is it wise for the Democrats to bring Libby up for hearings?

BACKUS:  Absolutely.  Look, this is—the president has a right to pardon him, but there‘s a difference between right and wrong.  This is the wrong move for the president.  He said he would take care of the leaker, well, it looks like he is taking care of him. 

SHUSTER:  Jenny Backus, Craig Crawford, Mike Isikoff, thanks very much.  And of course, Marcy Wheeler as well.

Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Next on “COUNTDOWN,” Keith‘s interview with Joe Wilson.

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

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