updated 7/11/2007 10:41:45 AM ET 2007-07-11T14:41:45

Guests: Sen. Chris Dodd, Todd Harris, Karen Finney, Tom Hagel, April Ryan, David Brody

CHRIS MATTHEWS, HOST:  Could John McCain, his most ardent advocate, become the Iraq war‘s first political casualty?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  And welcome to HARDBALL.  It‘s “Super Tuesday” on MSNBC, and we have major news developments in politics today.  First, has John McCain‘s “Straight Talk Express” collided with political reality?  His campaign manager and chief strategist are now out.  Today, the former 2008 frontrunner announced the resignations of both his campaign manager and long-time chief strategist.  As Senator McCain stood on the Senate floor today defending the surge in Iraq, the announcement caught the political world off-guard.

One big problem: McCain‘s so-called “burn rate,”  His campaign war chest reportedly has less money in the bank now than back-of-the-pack candidate Ron Paul, and his poll ratings have sunk to single digits out in Iowa.  Can a staff shakeup save his campaign?  More on this breaking news story in a moment.

And sex and politics.  Republican senator David Vitter of Louisiana declared today that his phone number was in the records of the so-called “D.C. madam.”  He had this statement.  “This is a very serious sin in the past for which I am, of course, completely responsible.”

But the biggest story today is still Iraq and the growing tension in this, our fifth summer of war.

Joining me now is Democratic senator Chris Dodd, who‘s very much a candidate for president.  Senator Dodd, thank you for joining us.  First question.  Is President Bush changing his policy or simply staying the course post-surge?

SEN. CHRIS DODD (D-CT), PRESIDENTIAL CANDIDATE:  It sounds like he‘s staying the course, Chris.  I listened to the—or heard—read the remarks, rather, today in Ohio, and I didn‘t hear any change there at all.  He talked about the commanders on the ground dictating the troop levels, but frankly, the realities on the ground are dictating the troop levels.  And so I didn‘t hear much of a change at all.  Hence, I think we‘re going to have a very strong debate here over the next two weeks on the defense authorization bill, and hopefully, going to come up with some clear datelines here, some deadlines for redeploying or withdrawing our troops out of Iraq.

MATTHEWS:  The only candidate who‘s running as a complete Bush defender—in fact, has clad himself as a Bush defender almost to the point of wearing a uniform—is John McCain.  John McCain is in big trouble.  His campaign‘s apparently coming apart.  His top leadership have been ousted and resigned in one case and pushed out in another case, apparently.  Now he finds himself in single digits in Iowa, having started as the frontrunner.  Is this war an albatross for any Republican who carries it with him?

DODD:  I think it‘s—listen, people are so far ahead of Washington on this issue.  I just came back from doing almost a 2,000-mile trip from the Mississippi to the Missouri River over four-and-half days, 24 events in Iowa, and I can just tell you, Chris, the people are so far ahead of us on this.  They believe this is a failed policy.  They have great respect—I can‘t tell you the thunderous applause‘s I got everyplace I said, Would you please join me for a minute, regardless of your views on Iraq, in thanking our men and women in uniform for the job they‘re doing.   There‘s great respect for that these kids, these young people by and large, have done here.

But there‘s also just dismay over the fact that this president and those who support him continue to believe that our ability to be there militarily to solve a civil war is just—is just insane.  And they‘re really worried over the fact that this president‘s going to persist in this, and they want us out of there.  They believe there‘s a better chances with a robust diplomacy.  Henry Kissinger this morning in “The Washington Post” laid out some ideas diplomatically which the Bush administration ought to be listening to, if you‘re really going to try and get a stable situation in Iraq and get our troops home.

MATTHEWS:  You‘re running for president, Senator Dodd.  If you were president right now, would you pull our troops out?

DODD:  I‘d start redeploying them immediately here, and I‘d be...

MATTHEWS:  Would you pull them out of Iraq?  We have 160,000-some troops over there.  Would you remove them from Iraq?

DODD:  I would get them out of Iraq, without any question.  But simultaneously, Chris, I‘d be engaging in a very robust diplomacy, both regionally, internationally and within Iraq itself.  None of that seems to be happening very effectively.  That‘s the only long-term solution that‘s going to bring stability there and allow us to regain our moral authority.  But I‘d begin this evening by getting our troops out of Iraq.

MATTHEWS:  Sixty-two percent of the American people, according to the latest “USA Today” poll, believe it was a mistake to go into Iraq.  Do you agree with them?

DODD:  I do.  You know, I said, look, I cast the vote in fall of 2002.  You know, none of us like to admit mistakes.  That was a mistake.  I wish we hadn‘t had that vote.  But in my view now, that‘s—while it‘s an interesting question and certainly a relevant one, the more important question is what would you do now?  For the last seven months, I‘ve advocated the same position here.  It‘s time to get these troops out of Iraq.

They‘ll tell you themselves over there.  Chris, I was at Walter Reed a couple of weeks ago with a kid from Torrington, Connecticut.  He said proud of his service, would go back tomorrow, by the way, but said, Senator, listen, we go in, spend a month-and-a-half trying to clean out an area.  Within an hour-and-a-half—and I‘m quoting him—an hour-and-a-half after we leave, it‘s right back where it was a month-and-a-half before.  These people will not tell us where the IEDs are.  They won‘t tell us where the ammo dumps are.  And frankly, you know, they‘re disappointed and believe that, frankly, our presence there isn‘t going to resolve this issue, this civil war.

MATTHEWS:  Can you take the heat of the charge, Who lost Iraq, if Republicans do end up buckling and blame the loss of the war on the Democrats?  Can your party take the hit?

DODD:  Listen—listen to Jim Baker and Lee Hamilton and others.  Listen to our military leaders.  There was never going to be a military solution in Iraq.  How can you have a defeat or victory when you can‘t have a military solution?  No one‘s ever believed that our military was going to necessarily win this civil war in Iraq.  So that‘s a false argument, in my view.  And if you‘re truly interested in the United States regaining its footing, regaining its authority, making a difference in that part of the world, then withdrawal of our troops out of Iraq is the only way, in my view, to get that done.

MATTHEWS:  Well, it looks like someone in this administration is orchestrating a lot of voices in opposition to what you‘ve just been saying, Senator.  Ambassador Ryan Crocker, our ambassador over in Iraq, has just come out and said that if we pull out, there‘s going to be increased violence, an all-out regional conflict.  And of course, we are aware now that the Turkish army stands on the border.  What do you think will happen when we leave?

DODD:  Well, first of all...

MATTHEWS:  If we leave.

DODD:  ... it couldn‘t get much more chaotic than it is.  How much more information do you—how many more stories do you have to hear every morning about 140 people dying, 150 people dying, 11 more soldiers losing their lives over there?  And frankly, the Turkish army on the border up there has already been discounted by the administration as not something to be terribly concerned about, at this juncture here.

So frankly, I think the idea that it‘s going to be more chaotic—I‘m not suggesting to you this is going to all of a sudden end when we withdraw our troops from the area, but I presently believe that continuing our presence there has turned Iraq into a petrie dish for Islamic jihadists.  It‘s given them a cause celebre all over the world.  It‘s made it almost impossible for this situation to get resolved politically and diplomatically with in the region.  So a change of course is absolutely essential, in my view, and anyone who‘s spent any time looking at this I think agree with that conclusion, including a growing number of Republicans.

MATTHEWS:  You represent New England, of course, Connecticut, in the United States Senate, Senator.  Do you believe in that that part of the country, your part of the country, is now especially antagonistic towards this war?

DODD:  Well, I don‘t think it‘s one part of the country, Chris. 

Again, I just told you I spend a week in Iowa, going across that state.  I‘ve spent time in New Hampshire, South Carolina, as well, obviously, as part of this presidential campaign.  And again, I‘m just telling you there‘s great respect for troops.  I can‘t begin to tell you the depth of feeling for those young men and women serving over there.  But there‘s equally strong feelings about this failed policy and how Americans across the board, Democrats, Republicans, independents—look, they want to see the United States back on its feet again.  I think a good part of the world does.

And frankly, we‘re not going to get there as long as we persist in the president‘s view that we‘ll have no change here whatsoever, we‘re not going stay the course no matter that.  That‘s hurting our country very, very much, puts our soldiers and sailors at risk.  It‘s weakened our military.  It‘s hurt us diplomatically all over the world.  We need a change in direction.  That‘s what I‘ve been advocating.  And we‘ll try again in the next couple of days to offer some language here to cut off this funding, bring it to a close over the next seven or eight months, and let‘s move on simultaneously with the kind of effort that could make a difference.

MATTHEWS:  On a less dramatic moment—point, I have to ask you about

one of your colleagues.  David Vitter has just declared that he was on the

his name is listed with the so-called “D.C. madam.”  He was apparently a client of one of the prostitutes in D.C.  Is that an issue that‘s going to haunt us?  Are we going to have a lot more names popping off that list?

DODD:  I don‘t know, Chris.  He‘s going through a lot personally right now, and I‘m not going to get into that.  That‘s a matter that I (INAUDIBLE) have no comment on whatsoever.

MATTHEWS:  No comment on that.

DODD:  No.

MATTHEWS:  Well, thank you very much, Senator Christopher Dodd, running for the United States presidency.

Coming up: Is John McCain‘s campaign in a crash?

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  Is John McCain sinking fast?  Today his campaign manager and his top political strategist both resigned, apparently under pressure.  The news comes as McCain reported another quarter of weak fund-raising and low poll numbers.  He doesn‘t have to report those.  We know about them.   Are his positions on Iraq and illegal immigration doing him in?

We go now to “Congressional Quarterly‘s” Craig Crawford and our own NBC‘s Andrea Mitchell.  Andrea, has this man got a real problem that‘s got nothing to do with staff, his hawkish support for President Bush‘s war, our war in Iraq, his strong position on behalf of people who came to this country illegally, immigrants, undocumented workers, and his age?  Are those just insurmountable obstacles to a popularity contest in the Republican Party?

ANDREA MITCHELL, NBC CORRESPONDENT:  Well, I think there‘s one other factor, Chris.  It‘s his original embrace of the evangelicals and the others, the conservatives who had criticized him and fought against him in 2000, when he reverted, embraced not only George Bush in the 2004 campaign, but also went and courted the very people at Liberty University and elsewhere who had trashed him, really, back in 2000...

MATTHEWS:  Did that make him look like a pander bear?

MITCHELL:  It did.  It made him look like a pander bear who is—and that‘s not what most people associate with John McCain, a hero and the agent of change and...


MITCHELL:  ... the real straight talker.  And now he is actually a profile in courage in some minds, in some lights, because of his stance on the war and on immigration and campaign finance because they are counterintuitive and against popular will and against the Republican base.  But it makes him an alien on both sides, of the independent front and the more conservative Republican base.

MATTHEWS:  So is it the fundamentals, Craig Crawford, that are hurting him, not his staff problems, not his fund-raising, not his organization, but the fundamental position he‘s taken as a hawk, the fundamental position he took as an advocate on behalf of illegal immigrants, basically, for reform, to give them a break, let them stay here—he‘d let them be legalized—and guest workers and all that, and his age, which is just something that happens to us all?


think all those hurt with different groups, the immigration with the hard-core conservatives.  His position on the war I think hurt him more with the media than Republican voters.  The media was his great friend in 2001.

MATTHEWS:  Well, I don‘t know—who—I don‘t know anybody in the media doesn‘t respect his service to the country.

CRAWFORD:  Oh, I don‘t—I‘m not saying that.  I...


CRAWFORD:  I think a lot of...

MATTHEWS:  Who in the media‘s taken a shot at him?

CRAWFORD:  A lot of—a lot of the mainstream media who had been so excited about McCain in his first run in 2000 -- I do think his position on the war caused some to step back a bit.


CRAWFORD:  And he didn‘t get the glowing...

MATTHEWS:  Well, he was...

CRAWFORD:  ... coverage...

MATTHEWS:  ... a very popular figure on this show...

CRAWFORD:  And then—and then...

MATTHEWS:  ... let me tell you.  And I‘d love him to still be on this show.  he‘s hard to book these days.  He‘s just a harder booking than he used to be.


MATTHEWS:  He used to be on the Don Imus show all the time when Don was on the air.  He was a very popular guest on that program.  He‘s a familiar figure on the airwaves.

CRAWFORD:  Yes, I think...

MATTHEWS:  Why did he choose to stop doing that?  Why did he stop doing that as a campaign tactic?

CRAWFORD:  I think it‘s frontrunner disease.  He...

MATTHEWS:  Thought he was too big for us?

CRAWFORD:  He became a traditionalist—yes, and...

MATTHEWS:  Well, I‘ll welcome him here tomorrow morning...


CRAWFORD:  I think—he might—I‘ll look at the half-full glass for a moment.  I mean, first of all, I wouldn‘t want to be the first campaign manager for the first frontrunner in any presidential campaign...


CRAWFORD:  ... because when the inevitable stumble comes, you‘re the first to go.  We saw that with John Kerry.  We saw it with Al Gore.  We even saw it with Ronald Reagan...


CRAWFORD:  ... going back a few more years.  So there‘s a chance here he can turn it around.  I think he‘s better off as a maverick and an underdog.


CRAWFORD:  If immigration‘s off the table now, he‘s probably better off than...


MATTHEWS:  ... I‘ll try it with Andrea.  You know, if you look at it on paper, here‘s a guy who‘s more seasoned than the current president, President Bush.  He‘s got more military experience.  He‘s been around a long time in terms of national responsibility.  He‘s been a patriot, of course.  He served this country brutally as a POW.  He‘s always been honest and respected in the media.  He has all the pluses in the world of a sort of a, you know, an Audie Murphy, if you will, a real war hero.  It‘s not working.

MITCHELL:  It isn‘t working.  And I wouldn‘t count him out, except for money factor because everything has piled up.  And this race is so extraordinarily expensive that it‘s hard to imagine how he can compete.  We‘ve seen already how Mitt Romney was able to pull ahead of some of the others just by putting ads up.  And John McCain...

MATTHEWS:  Well, one of his top guys has talked to me...


MATTHEWS:  I‘m sorry.  One of his top guys was talking to me on the phone today, and it was off the record, but I think he‘s elsewhere making the same point, which is this burn rate.  He‘s using up his money too much.  Is that a problem?

MITCHELL:  And that could have something to do with what we saw today, the staff shakeup.  These are the people who were in charge of the money, and they were obviously spending it on the wrong things or spending too much, or there‘s another story there.  But there‘s some concern, clearly, about the way this campaign is organized.

CRAWFORD:  You know, they rejected...

MITCHELL:  I do know that...

CRAWFORD:  They rejected this, but I think the idea of him quitting the Senate and showing he‘s fully in this race is not such a bad idea.  Now, that was rejected...


MATTHEWS:  ... Bob Dole and...

MITCHELL:  Oh, I don‘t know.

CRAWFORD:  That was rejected, but...

MITCHELL:  This man‘s life is in public service.  How could you imagine him...

MATTHEWS:  He‘s not giving up—


MITCHELL:  ... long shot for the presidency?


MATTHEWS:  ... but this man wants to be Barry Goldwater, a senator for life from Arizona.  He does not—it‘s one of the reasons why he wants immigration reform.  He wants to get  some Latino votes down there.  He doesn‘t want to be known as the Republican Party that doesn‘t like Latinos.

MITCHELL:  And he believes in it.

MATTHEWS:  He‘s taken a very liberal position.  Well, he does believe in it.  But also, it‘s good politics for...


CRAWFORD:  My point is there‘s a real feeling he‘s not fully in this race.  He only held two fund-raisers in the first quarter.  That‘s been part of his problem.  He hasn‘t really been committed to fund-raising.  So his commitment...


MATTHEWS:  ... so instructive.  Andrea, we‘re watching him just a moment ago sort of get—do one of—what they call the mike check for one of these debates.  I think he‘s miniaturized by standing among 10 Republicans, a man of his seasoning and vintage to have to go out there and stand between Tancredo and Duncan Hunter and all these new guys...

MITCHELL:  You‘re on to...

MATTHEWS:  I don‘t think it works.

MITCHELL:  You‘re on to something, Chris.  If he was standing with Rudy Giuliani and Mitt Romney, you know, just a handful of guys, stacked up against them, his experience in foreign affairs, his experience in the Senate, I think, would really dominate a debate.


MITCHELL:  But by having to, you know, debate everybody else in that lineup, it becomes much more difficult stand out.

CRAWFORD:  Well, he‘s going to New Hampshire this weekend, so we‘ll see if he shows us something a little different.

MATTHEWS:  Let me—let me be—let‘s get into the really worst part of my job, which is to talk about what happens if he does continue to sink.  Andrea, who wins?  Who picks up the McCain vote?  Does it all go to Fred Thompson, his friend?  Does it go to his fellow maverick, Rudy Giuliani, or not exactly fellow maverick, but a man who he has some things in common with, Rudy Giuliani?

CRAWFORD:  Well, Fred Thompson is still untested.  He is unscrutinized.  And he has managed to float above all of this...

MATTHEWS:  I know.

MITCHELL:  ... and he is clearly picking up the McCain support and the McCain sort of iconic, you know, image.  And he was one of the earliest supporters of McCain.  So that is likely where it goes.  Look, it could open the way, you know, eventually, for somebody more independent.  You know who that is.

MATTHEWS:  Who‘s that?

MITCHELL:  Well, Mike Bloomberg down the road.

MATTHEWS:  OK.  OK.  Let‘s stay within the Republican pack here. 

Andrea, let me ask you this.  We all support the troops.  People on the political left who don‘t like the war go over and do USO shows because they want to help the troops out.  They‘ll do what they can.  John McCain appears to us almost in a flack jacket.  We‘ve seen pictures of him in the marketplace over there, walking around in Baghdad, tough neighborhoods, a man probably the most identified with the physical reality of his horrible war.  And yet he‘s been hurt the most.

Whereas guys like Rudy Giuliani—I‘ve never seen him wearing fatigues.  I‘ve never seen Fred Thompson wearing fatigues, and certainly not Mitt Romney, who‘s always extremely well dressed in some other kind of khaki.  But they don‘t look like G.I. Joes.  And there‘s this guy who always shows up with the troops getting murdered politically.

How come the Republican Party, which is the hawkish party, is punishing the one big hawk in the race?

MITCHELL:  It‘s an extraordinary development, but part of it is when he did go over and walk through that marketplace, he—you know, he tried to paint the picture too brightly, too optimistically.  And then when you pulled back and take a look at all the support and the flyovers and the armament around him, that undercut his basic message that things were improving on the ground.  And things are improving on the ground, but John McCain was always describing the glass as half full, not half empty, and that is, frankly, not the conventional wisdom, nor what people want to hear.

CRAWFORD:  But I got to keep coming back to—among the traditional Republican primary voters, his position on the war is not what‘s hurting him.  It‘s hurting him in other sectors of the...

MATTHEWS:  What hurts him among the base?

CRAWFORD:  ... race.  I think immigration.  I think his...

MATTHEWS:  His maverick nature.

CRAWFORD:  ... the maverick—the loss of the maverick status and the whole evangelical complicated mix...


MITCHELL:  And guys, you know, you‘re onto something there, too, because the traditional Republican base has never trusted him since he went up against George W. Bush—too much of a maverick in 2000, still not trusted in 2004, despite the (INAUDIBLE)...

MATTHEWS:  Yes, isn‘t that awful?

MITCHELL:  ... and never really accepted by traditional Republicans.

MATTHEWS:  Isn‘t it funny, Andrea?  You and I have been watching this business for a long time.  And the Republican Party, unlike the Democratic Party, is more organized, as you both—we both know.

They say, wait your turn.  Well, here, this poor guy waits his turn.

CRAWFORD:  It‘s his turn. 


MITCHELL:  Absolutely.

MATTHEWS:  It‘s his turn. 

CRAWFORD:  Right. 

MATTHEWS:  and he‘s getting the Bob Dole rollover.

Anyway, thank you, Andrea Mitchell.

MITCHELL:  You bet.

MATTHEWS:  And thank you, Craig Crawford.

Up next:  America speaks.  We will hear what is on the minds of real voters out in Southern California, out in Burbank.

And later:  What is wrong with John McCain‘s campaign?  We will get back to that big question today, because it‘s been a huge day for him, a bad day for the—a bad day at Blackrock for John McCain.  What is really going on?  Why did he lose his two top staffers?  Why is he having this purge?

You‘re watching HARDBALL on MSNBC. 


MATTHEWS:  OK.  We‘re back with HARDBALL.

Let‘s check the pulse of the American people out there on this Super Tuesday on MSNBC.

Let‘s go to NBC‘s Michael Okwu, who has been speaking with real people, not that we‘re not real people, at Universal Studios out in Burbank. 

Michael, take it away. 

MICHAEL OKWU, NBC CORRESPONDENT:  Well, Chris, as you know, about two-thirds of the American public thinks the—the country is moving in the wrong direction.  They disapprove of the job President Bush is doing, and disapprove of the job that the Democratic Congress is doing—the big issues on their minds at this point, immigration, health care, and, of course, the war in Iraq, without question, the war in Iraq.

All of that has been reflected here today with the people that we have been talking to. 

I am joined now by Tom Sawyer (ph).

You come from Georgia. 


OKWU:  What is the big issue for you? 

UNIDENTIFIED MALE:  Well, Iraq is a large issue for me.  Number one, you know, they say it‘s a failed state.  I never give fail on my troops, you know?

I have been with this war since it started.  And another issue to me is—it‘s about what that last poll last week, or yesterday, was about $15 million—or $15 billion a month.  Excuse me.  You know, $15 billion a month, I know a lot of money—that‘s a lot of money.  You know, I would like it being spent other places.  And, if it is going to be spent in Iraq, I want to see progress.  You know, I want to see...


OKWU:  So, do you want—do you want to stay in Iraq or do you want us to pull out of Iraq? 

UNIDENTIFIED MALE:  We are going to have to stay in Iraq.  I feel like, if we pull out, it could create a black hole in that region.  And we have very unstable neighbors.  I am really worried Iran.  You know, I don‘t know if we‘re going to have to do some kind of strike.  They have stuff.  You know...

OKWU:  Tom, is there one particular presidential candidate right now that you are edging towards? 


OKWU:  Because of his view on Iraq?

UNIDENTIFIED MALE:  He is a war veteran, and he understands the realities of war.  And I think he will get the job done maybe.

OKWU:  Tom, thanks. 

Tess Hoff (ph) has joined us well, Chris. 

Tess, what is your big issue?  When you look at the political landscape, the issues that come to mind are what for you? 

UNIDENTIFIED FEMALE:  Two issues that I feel very strongly about are the war in Iraq and health care.  And...

OKWU:  In terms of the war in Iraq in a nutshell, stay or go? 

UNIDENTIFIED FEMALE:  Go.  Go.  We should not have gone there in the first place.  And we are wasting money, and time, and people, and lives.  And I think it‘s a disaster.

OKWU:  You mentioned health care.  Other people here today have mentioned health care as well.  It—it is coming in a close second, after the war in Iraq, at least based on my very unscientific poll here.

What specifically about health care are you concerned about? 

UNIDENTIFIED FEMALE:  Our health care system is entirely broken, our insurance, people without insurance, our medical system.

I think that we need to completely revamp the medical system.  And, particularly, my big cause is women‘s health care.  I have been involved in that for years.  And there are a lot of holes there.  And we don‘t have enough time to go into...


UNIDENTIFIED FEMALE:  ... what I feel about that.



OKWU:  A lot of candidates out there.  In a nutshell, is there one candidate that is speaking...

UNIDENTIFIED FEMALE:  Barack Obama.  Barack Obama is—totally, all the way, I‘m 100 percent behind him. 

OKWU:  Thank you very much, Tess...


UNIDENTIFIED FEMALE:  Thank you.  Thank you. 

OKWU:  ... and Tom Sawyer here.

Chris, as you hear, two completely diverse views on this.  This is what we have been finding all day.

And I should add one thing.  Most of the people, the vast majority of people we have spoken to—and, again, I want to stress, this is not a scientific poll—really want us to pull out of Iraq, and sooner than later.  They just don‘t know who to trust to get us out of Iraq in a timely manner—manner, without doing any damage to the security of the United States—Chris.  

MATTHEWS:  Well, that‘s the—that is the conundrum facing our country.  How do you end a terrible war without making things worse?

Anyway, thank you, Michael Okwu, out at Universal Studios.

Good advertising, by the way, for Universal Studios, which is part of the GE family.


MATTHEWS:  Up next, our HARDBALL debate:  Has Iraq become an albatross for the Republican Party?  Is it killing the party‘s chances in this presidential election? 

You‘re watching HARDBALL, only on MSNBC.  


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

Here‘s what happened in today‘s trading session: a big sell-off on Wall Street, blamed on some high-profile earnings warnings and the subprime mortgage crisis.  The Dow Jones industrial average closed down 148 points, closing at 13501.  The S&P 500 lost nearly 22 points on the day.  The Nasdaq closed down by almost 31. 

Moody‘s, the rating agency, cut the ratings of nearly 400 mortgage-backed securities.  Moody‘s cited a higher rate of delinquencies than was expected, this after a report out this morning that S&P was considering a similar move.  And that definitely put pressure on stocks today. 

Retailers also reeling from the housing slump—Sears says, second-quarter earnings fell short of expectations, while Home Depot is lowering its goal for the year. 

And the jury is deadlocked in the fraud trial of former media tycoon Conrad Black.  The judge asked jurors to try again to reach a verdict on charges that Black swindled shareholders of Hollinger International newspapers for more than $60 million. 

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

MATTHEWS:  Welcome back to HARDBALL. 

Senator John McCain‘s bid for the White House took another body blow today, as we have said.  Not only is his campaign short of money.  This morning, he lost his two top senior advisers.  In fact, it looked like they were forced out. 

But is McCain‘s support of the war in Iraq the real problem?  Is Iraq the Republicans‘ death knell in this campaign?

Here—you‘re laughing, aren‘t you?

Here for the HARDBALL debate is Karen Finney with the Democratic National Committee—she‘s the spokesperson for it—and Republican strategist Todd Harris, who laughs at the very idea that this horrible war, or this conflict, in Iraq is killing your party‘s chances. 

Therefore, you get to start. 


TODD HARRIS, REPUBLICAN STRATEGIST:  I laugh, Chris, because we have to remind ourselves, this is July of 2007.  The election is in November of 2008. 

Let‘s—let‘s go back and set historic precedent here.  At this point in the campaign...

MATTHEWS:  So, the worst could be over by next summer?


HARRIS:  At this point in the campaign in 1999, we would be talking about Elizabeth Dole‘s campaign.  We would be talking about Dan Quayle.

MATTHEWS:  ... ask you this question.


HARRIS:  It is far too early to be writing anybody off... 


MATTHEWS:  Karen, let‘s start with today‘s news.  Has this war support by the gutsy John McCain cost him in this election, his hawkishness?


Yes, of course it has, absolutely.  And this is a sign to the other Republican ‘08 contenders, and, frankly, for the Republican members of Congress who are going to face a vote later this week, that they‘re going to be in the wrong... 

MATTHEWS:  You are targeting these people, aren‘t you?

FINNEY:  They are going to be in the wrong place.

MATTHEWS:  You are targeting Sununu up in New Hampshire?

FINNEY:  They‘re in the wrong—absolutely.  They‘re in the wrong place on this issue. 

MATTHEWS:  You are targeting Snowe up in Maine, and Norman Coleman. 

You are nailing anybody from a moderate state, aren‘t you?

FINNEY:  That is exactly right, because you know what?  The American people, the Iraq Study Group, even some of the military generals have said, we recognize, the surge is not working. 


FINNEY:  And the Iraq war—you‘re right.  We can talk about what is going to happen a year from now or what happened a year before.  But the reality is, is, the Iraq war is the number-one issue.

HARRIS:  We don‘t—we don‘t need to talk about a year from now.  Let‘s talk about what is going to happen in September.  We are going to get a report from David Petraeus that is going to say one of two things.


FINNEY:  ... Republicans...


HARRIS:  It‘s going to say either it‘s working or...


HARRIS:  ... or it‘s not working.

And, if it‘s working, then Republicans get some breathing room.  If it‘s not working...

FINNEY:  We already know it‘s not working.

HARRIS:  ... the political market—the forces of the political market...


HARRIS:  ... are going to take over. 


MATTHEWS:  Todd, do you think the American people will buy that report...

FINNEY:  We already know—we already know it‘s not working.

MATTHEWS:  ... if it is sanguine, if it is an upbeat report?

Do you think they will believe that this war is going... 

FINNEY:  But...


MATTHEWS:  Just a minute.

Do you think they will believe it?

HARRIS:  No.  The report cannot be 100 percent rah-rah.

MATTHEWS:  But, if it‘s even relatively positive, will they buy it?

FINNEY:  Wait a second.  Wait a second.

HARRIS:  Yes.  I think that the American people will buy that there

have been—look, you put more troops in, things get more secure.  People

people generally understand that.  I don‘t think that they‘re going to buy a bunch of cheerleading.  But I also don‘t think that that is what the report is going to show. 

FINNEY:  No, but let‘s look at what the—what the—what today‘s news said, that—today‘s news said that Bush was going to change his rhetoric on the war in Iraq.  This is not a rhetoric problem.

HARRIS:  Who said that?

FINNEY:  Six hundred Americans...


FINNEY: “The Washington Post” says...


FINNEY:  ... change the rhetoric on Iraq.




HARRIS:  Guess what?  George Bush...


MATTHEWS:  You can‘t blame Bush for what “The Washington Post” writes?


FINNEY:  They are not changing their strategy.  All he‘s doing is changing his rhetoric. 

HARRIS:  Guess what?  George Bush is not running for reelection. 


HARRIS:  You have got a whole new crop of Republicans.


HARRIS:  And what they‘re going to show—what Republican candidates running for office in ‘08 need to show is that they‘re listening to the American people.  They need to show that...

FINNEY:  They have already shown that they‘re not, because they all support the surge.  They all support the president on Iraq.  And it‘s going to cost them, just like it is costing John McCain. 


HARRIS:  You know what?  Every Republican running...


HARRIS:  ... can happily and proudly...


HARRIS:  ... stand up and say they are going to give David Petraeus the time and the support that he was promised to try to make things work in Iraq. 

FINNEY:  And let more young Americans die, more young Americans.

MATTHEWS:  The question on the table is, is the Republican Party getting being killed by the war in Iraq?

You disagree?

HARRIS:  Look, I think, if the election were held today, yes, I think we would have a lot of problems.

But, like I said, the election is not until November of 2008.

FINNEY:  But wait.

HARRIS:  That‘s why polling today doesn‘t matter.  That‘s why all of the horse race figures today...

FINNEY:  What about the loss of life?

HARRIS:  ... that—of course the loss of life matters of.  Of course it matters.  And what Republicans running in 2008 are going to be talking about is a way to make sure that Iraq is secure, to make sure that we don‘t have a continued loss of life in Iraq, and to make sure that the people who have already died have not done so in vain. 


MATTHEWS:  Does this hurt your party, that Colin Powell came out yesterday in Aspen, and said that, I tried to stop this war; I was against it? 

HARRIS:  Look, I think that the more...

MATTHEWS:  Does that hurt your party?

HARRIS:  Yes.  The more that the debate in 2008 focuses on what happened, it‘s going to be a problem for us.  The more that our candidates can show...

MATTHEWS:  I‘m going to make some news here.

HARRIS:  The more that our...



MATTHEWS:  I‘m sorry.  You‘re doing great here, but I‘m going to interrupt.


MATTHEWS:  Todd Harris, I want to ask you for a question...

HARRIS:  Yes. 

MATTHEWS:  ... for the record book, because we do keep these videotapes. 

Was it a mistake to take the American army into Arabia, the whole army, and put it in Arabia, like we did?  Was that mistake?

HARRIS:  I‘m—I‘m—not only am I not an elected...

MATTHEWS:  Was that a mistake?


HARRIS:  Look, I run campaigns for a living.  Lord knows I‘m not qualified to—to answer that question. 

MATTHEWS:  You dodge...


HARRIS:  Are you kidding me?

MATTHEWS:  Was it a mistake to take the American army into Arabia? 

FINNEY:  I think it is a mistake for any Republican to support President Bush on the surge and on Iraq. 

MATTHEWS:  Well—no, wait a minute.  Was it a mistake?  I‘m asking

you an objective question.  Was it a—on behalf of the Democratic Party -

you speak for it—was it a mistake to take the American Army into Arabia, into Iraq?  Was that a mistake?

FINNEY:  I think we know it was a mistake. 


But it‘s not going to hurt your party? 

HARRIS:  Look, like I said, if the election were held tomorrow, we would have some serious problems. 

MATTHEWS:  Honest man. 

HARRIS:  The election...

MATTHEWS:  You know, it‘s much harder to be honest on this show, and you‘re proving it. 


MATTHEWS:  You‘re an honest man.

Thank you very much, Karen Finney.  You are a great debater.

And, Todd, you‘re an honest man. 


MATTHEWS:  Up next: our HARDBALL roundtable on McCain‘s—we‘re calling them the castoffs, the purgees, the top flank.  It‘s like the Kremlin Wall, new faces, old faces gone.  So, what is happening in the fight with Iraq politically?

This is HARDBALL, only on MSNBC. 


MATTHEWS:  Coming up:  What‘s John McCain‘s problem?  Is it Iraq, immigration, or age?

HARDBALL returns after this.


MATTHEWS:  Welcome back to HARDBALL and our own Super Tuesday her on MSNBC.  Let‘s get straight into the day‘s big news with our panel.  Our round table, April Ryan, White House correspondent for American Urban Radio Networks, Tom Hagel, the brother of Nebraska Republican Senator Chuck Hagel.  By the way, he‘s a fellow veteran with his brother and he is a law professor at the University of Dayton.  And David Brody is a reporter for the Christian Broadcasting Network. 

First up tonight, Straight Talk Exit, John McCain‘s campaign manager Terry Nelson, his top strategist John Weaver and his long time chief of staff Mark Salter (ph) all quit today or were pushed just a week after more bad news on the fund-raising front.  Today, just as the campaign shake-up news broke, McCain hit the Senate floor to report on his recent trip to Iraq. 


SEN. JOHN MCCAIN ®, ARIZONA:  No one can be certain whether this new strategy, which remains in the early stages, can bring about stability.  We can be sure that should the United States Senate seek to legislate an end to the strategy as it is just beginning, we will fail for certain. 


MATTHEWS:  Tom Hagel, I do not see how we can be losing so badly if this war were more popular.  It seems to me he is going down with the popularity of this war. 

TOM HAGEL, SEN. CHUCK HAGEL‘S BROTHER:  I believed all along that he attached his star to President Bush.  He did that—I think you could see the beginning of that at the end of the 2004 campaign.  And I think that John McCain, though I have immense amount of respect for his service, wants to be president too bad, and he is going to pay a price for making the wrong decision. 

He, like so many members of Congress, especially Republicans, have dealt with this issue about the war as politicians instead of as true patriots and statesmen.

MATTHEWS:  OK, your response to that, David.

DAVID BRODY, CHRISTIAN BROADCASTING NETWORK:  Well, I‘ve got to tell you, he‘s going to try to change the topic.  That‘s what he is going to do.  Whether or not he is successful—

MATTHEWS:  From Iraq?

BRODY:  Yes, sure, what he‘s going to do—what you‘re going to see start September, according to people close to the McCain camp, is that they‘re going to talk about, he is, on the stump, out of control spending.  He‘s talked about that before.  But that‘s going to be the focus, foreign policy experience, differentiate himself between himself and Giuliani and Romney.  This is the tactic at least going forward. 

MATTHEWS:  How does he get away from this albatross of being the biggest hawk in the party? 

BRODY:  It is hard.  There is no doubt about it.  But here‘s what he‘s also going to do: one of the key things here is you are going to see the attack dogs within and around the McCain campaign go after some of these other candidates.  And that is how they hope, at least, they will get on better footing. 

For example, there is an implosion element to all of these candidates, Giuliani, Romney, Thompson potential. 

MATTHEWS:  They all have weaknesses. 

BRODY:  No doubt about it.  So, in essence, what you do, from a golf perspective, McCain is on the back nine.  He‘s trailing by four or five strokes.  But the reality is that Romney could three put a couple of holes, his Giuliani could slice it into the trees, and who knows, McCain maybe is left standing.   

MATTHEWS:  Can he still afford the greens fees?  Let‘s go to April Ryan because I want to get a view here.  Is John McCain of the race? 

APRIL RYAN, AMERICAN URBAN RADIO NETWORKS:  It does not look good.  He is way back in money, polls and presence.  I talked to a major Republican, Chris, inside the beltway, just before I came out to talk to you.  And they said, you know, he‘s done for.  They said, number one, his age, number two, it‘s because he has aligned himself now with the president. 

Before he was against the war, and now he is in bed with the president on Iraq.  They also said there is something that a lot of people are not talking about, his famous temper.  So they‘re saying that‘s very well known.  They say he is out. 

MATTHEWS:  Do you think this was a temper tantrum that cost him his two top aides?  By the way, he didn‘t Mark Salter today.  That was wrong.  He‘s kept Salter.  He‘s still aboard the ship.  But the other two are gone.  Do you believe, April, that this was a burst of temper on his part to dump these two top people? 

RYAN:  I don‘t know.  We have not found that out, as of yet.  But I‘m going to tell you this, we will find out very soon.  But that temper has—the news about the temper will spread.  For you to lose several of your key personnel in a major campaign, a presidential campaign, when it is all about going the race and staying the race and that sort of thing, it is pretty bad.  So we will find out very soon. 

MATTHEWS:  OK, next up, surge purge; according to the Associated Press, an upcoming Pentagon report will say that the Iraqi government has not met any of its goals.  Pouring fuel in the fire, Olympia Snowe is the newest Republican senator to break with President Bush, calling for a timeline for withdrawing U.S. troops completely out of Iraq.  Today, on NBC‘s “Today Show,” White House spokesman Tony Snow said the surge is only starting. 


TONY SNOW, WHITE HOUSE SPOKESMAN:  We are now two weeks into having the surge operational.  The first thing we want to see is whether it is working. 


MATTHEWS:  You know, I don‘t get this, because the president has been talking about this surge for months now, all the way back to February.  Now Tony Snow has been sent out to say it just started.  There is a clash of fact here. 

BRODY:  There‘s no doubt there‘s a clash of fact.  But, at the same time, what we have to watch for is the GOP, in the Senate especially.  And Biden—Joe Biden may have been right all along, which is that they need to pick off roughly about 17 GOP senators.  They‘re on their way with some of those moderates.  Now, of course, we have some others coming like Lugar and Domenichi.

But the reality is that when Senator Jeff Sessions, Senator John Cornyn, people who have been pretty much tied at the hip to George W. Bush on this one, they start to fall off the ranch come September, then watch out.   

MATTHEWS:  Tom, it seems to me there‘s been a lot of change in vocabulary over the last year.  But the basic policy is, as it looks to the world, we are fighting a war in Iraq.  We have more than a hundred thousand troops there.  We have increased it to about 160,000.  We‘re going to reduce it perhaps down to 100,000 after the surge.  But the fact of the matter is, we still are fighting a war in Iraq.  And all of the president‘s rhetorical pirouettes are not changing that.   

HAGEL:  This shouldn‘t surprise anybody, because he has been out of touch with reality, like most people who have never been connected with the military, have a hard time relating to the realities of what is going on over there.  And what we have done is entertained for too long—in fact, I believe his name was Todd, your Republican strategist, alluded to it earlier in this show—about this delusion that we still have that we saw in Vietnam, where we think that we have invested so much time, so much money, so much human capital in the enterprise, that even if it is a mistake, then we have to stick in their to try to salvage something out of it. 

This is what sucked us into Vietnam year after year after year.  A mature adult would be expected, when they understand they have committed a mistake, to recognize the mistake and do something to fix it.  I think a nation should be held to the same standard.  This was a massive mistake, and we ought to get out.  I‘m not necessarily saying get out completely, but get out in terms of combat troops, pullback security forces, NATO, whatever.  But the point is that these generals—

MATTHEWS:  Wait a minute, you lost me, Tom.  Do you really believe we can talk to the Danes or the Belgians or the French to go in there when we are leaving, to go into Baghdad and fight the Sunni and Shia and al Qaeda elements in that country because we would like to leave? 

HAGEL:  Well, absolutely not. 

MATTHEWS:  You said to bring in NATO. 

HAGEL:  Let me finish, bring them in, in the sense of whoever would come over there, which the water is so poisoned now, I doubt we can get anybody who used to be an ally to come over and help us.  But to pull back on the sidelines and let the Iraqi people, like they‘re ultimately going to do anyhow, figure this out on their own. 

We‘ve seen—I forgot the general‘s name—I keep confusing him because he‘s more of a politician than a general—keeps on hammering this thing that if we leave now it will be total chaos.  What do people think we have now there?  There is no legitimate argument, based on the facts that we know today, to continue to send our people home in body bags. 

MATTHEWS:  Tom, we will be right back with April and also with David.  We will be right back.  We have to show you the ads the Democrats are running against the vulnerable Republicans, and also talk about poor David Vitter, whose been in that chair, by the way, a number of times, United States senator from Louisiana who‘s got his name listed now.  He put it out himself—probably good politics—that he was on a call girl‘s list.  You‘re watching HARDBALL, only on MSNBC. 


MATTHEWS:  We have some breaking news reports.  Homeland Security Secretary Michael Chertoff said late today that he has a gut feeling that the U.S. faces a higher chance of some kind of terror attack this summer.  He says his comments aren‘t based on any specific intel, but he says he is making the assumption based on past patterns of terrorist attacks overseas. 

We‘re back with April Ryan of the American Urban Radio Network, Senator Chuck Hagel‘s brother Tom Hagel, a fellow veteran, and David Brody of the Christian Broadcasting Network.  Let me ask you, April, what do you make of this?  You live in a big city.  You are now told that the head of urban defense, basically, thinks we‘re going to get hit this summer, in his gut. 

RYAN:  It does not make you feel good.  You have to remember, we have been seeing what is happening in London.  We saw what happened in Spain.  And of course the United States is a target.  We saw 9/11.  Chris, you have to remember this, it is not about if; it is a matter of when.  There are many vulnerabilities in this country.  So, I don‘t know if it‘s going to happen this summer, if he is not going on anything but his gut.  That is one thing.  But we need to know something serious. 

Remember when they went on what they thought was serious and everyone was going out and buying plastic sheeting for your homes?  So you do not want to use scare tactics, but you want to use something really credible to tell the American people. 

MATTHEWS:  That‘s an odd statement from the director of homeland

security.  Let me go to David Brody on this one.  We just got word tonight

it just moved right before we were on the air—that the Senate is cutting off funding for Vice-President Cheney‘s office.  You know why that is the case, because he has denied he is member of the executive branch. 

BRODY:  What it‘s going to do—I mean, you don‘t know exactly—

When it comes to the Senate, the reality is that where is this really going to go anyhow?  Can they get that through a House? 

MATTHEWS:  Can they evict the vice president from offices?  Can they kick him out on the street, kick him out of his house on Massachusetts Avenue?   

BRODY:  I don‘t think that‘s the case at all. 

MATTHEWS:  Why not?  It says they can cut off the funding.  It‘s 4.8 million dollars for his budget.  Suppose they do that. 

BRODY:  That is something that, obviously, as journalists we‘re not going to be able to know the concrete final analysis of that.  That is something for someone much higher up than me, in terms of government officials.  They‘re going to have to work that out.  But clearly that is going to be, once again, another talking point for the Democrats on this whole long list of talking points. 

MATTHEWS:  Tom, does this make the Democrats look a little odd when they move to basically evict the vice-president from his offices and his whole because he‘s not making correct statements about the nature of his job? 

HAGEL:  It makes both parties, the people who are actively involved in it, responding to it as well as pushing it, look like idiots anyhow.  Look at the problems this country is facing today.  We have probably the world‘s greatest deliberative body screwing around with this. 

MATTHEWS:  I agree with you.

HAGEL:  Put this aside, this is why nothing gets done.  And focus in, if I were advising the Democrats, I would say just stay away from it.  Mr Cheney—is that how you pronounce it—

MATTHEWS:  The family name is Cheney, but he doesn‘t mind that people call him Cheney, because it‘s the more common pronunciation.  But the irony is, his name really is Cheney, he just doesn‘t care what you or I think.  By the way, Tom and the others—you start Tom.  Here‘s the ads that the Democrats are running to try to knock out incumbent Republican senators like Susan Collins, Norm Coleman, John Sununu.   


UNIDENTIFIED MALE:  Instead of doing the right thing, Senator Coleman just gives us more of the same.  Four times this year, Coleman voted to continue George Bush‘s open ended commitment in Iraq. 


MATTHEWS:  There it is, Tom.  Is that going to blow them out of the saddle?  It didn‘t look to me like the strongest ad in the world.  

HAGEL:  I do not know if it‘s going to blow them out of the saddle, but everybody who supported the original resolution and than ultimately supported all of these funding resolutions basically are going to have to go back to the voters and justify it.  Quite frankly, as time has gone on, I do not see how that is possible. 

That is why I back to my original statement that too many of the people in Congress have dealt with this issue as politicians versus being true patriots and statesman.  Notice about the Republicans who are now coming out of the closet, distancing themselves from President Bush; they are not doing that because they have had a change of heart.  They read the polls. 

The greatest good to a politician is getting reelected come hell or high water.  That is their main concern, and that is sad because there are people over there being sent home in body bags as a result of this. 

MATTHEWS:  I‘ve got to bring in—right now we have a special report coming in now by NBC‘s chief justice correspondent Pete Williams on those comments I mentioned by Homeland Security Secretary Michael Chertoff, that he has a gut feeling that the United States faces a risk of a terrorist attack this very summer.  Pete, how do you assess this? 

PETE WILLIAMS, NBC NEWS JUSTICE CORRESPONDENT:  I assess this as that he was asked about it, Chris, and that  he said that this was not based directly on intelligence but just a pattern that he sees, that he thinks al Qaeda is rebuilding its activities.  We have seen recent activity in the Pakistan-Afghanistan border of more training.  He says there seems to be a pattern of al Qaeda wanting to attack in the summer.  And he believes, therefore, we‘re entering a period this summer of increased risk.

But, as he says, this is a gut feeling.  On one hand, this is his own assessment.  On the other hand, he is one of those few individuals in government who does get briefed on all of the very latest intelligence.  So, what he has to say is more than just a casual theory.  But it is not based on any direct threat. 

Nothing is changing as a result of this.  It is just kind of an interesting barometric reading on what the government‘s anxiety is. 

MATTHEWS:  Can you discern in his comment a pattern—When he says a pattern, you know, it is very hard to figure out a mathematical model for when we‘re going to get a big bang from al Qaeda.  If you look at 1993 and the Cole and the African embassies and you try to put it together in some sort of model, it doesn‘t seem to make much sense when they‘re going to hit us.  When he says there‘s a pattern, what is he talking about?   

WILLIAMS:  Well, I think if you look at the calendar though.  I mean, there are very few al Qaeda attacks in February, for example.  You have the London terror attack in July.  You have this most recent attack here.

MATTHEWS:  Seasonal?

WILLIAMS:  Although, remember, September was 9/11.  So, you know, is that the summer?  I think all he is saying is if you plot them on a curve, they tend to occur this time of year. 

MATTHEWS:  By the way, September 11th is still summer.  Thank you Pete Williams for this quick report.  And thank you April Ryan, Tom Hagel and David Brody.  Right now, it is time for “TUCKER.”



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