updated 8/1/2007 10:45:37 AM ET 2007-08-01T14:45:37

Guests: Rep. Jay Inslee, Rep. Chris Cannon, Melanie Sloan, Alastair Campbell, Jenny Backus, Melanie Morgan, Lynn Sweet, Mark Leibovich

MIKE BARNICLE, GUEST HOST:  The FBI and IRS raid the home of Alaska senator Ted Stevens, the longest-serving Republican senator in history.  And Democrats in the House call for the impeachment of Attorney General Alberto Gonzales for lying to Congress.  Law and disorder in Washington.

Live in Washington, let‘s play HARDBALL.

Good evening.  I‘m Mike Barnicle, in for Chris Matthews.  Welcome to HARDBALL.  Polls show most Americans think Washington stinks.  The news this week won‘t do much to change that.  The country‘s number one cop, Attorney General Alberto Gonzales, stands accused of lying to Congress.  Right now, a group of House Democrats, all former prosecutors, are trying to impeach him.  We‘ll talk to Congressman Jay Inslee, who is leading that fight, and Republican Responsibility Chris Cannon, who sits on the Judiciary Committee.

And how about this.  The longest-serving Republican senator in history, Alaska‘s Ted Stevens, had his raided by the FBI and the IRS Monday.  That‘s not good news.  Stevens is under investigation for his relationship with an energy company.  Today there are calls for his resignation.  More on political crimes and punishment later in the show.

Plus, the hottest news from the 2008 campaign trail.  Political spouses from Bill Clinton to Judith Giuliani are playing a major role in this race.  Tonight on our HARDBALL debate, super-spouses—do they help or hurt the campaigns?

But we begin with HARDBALL‘s David Shuster with the latest on the growing controversy over Attorney General Alberto Gonzales.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  Exactly one week after Attorney General Alberto Gonzales gave sworn testimony that was contradicted by other administration officials, including the director of the FBI, today a group of House Democrats, all former prosecutors, introduced a resolution calling for impeachment proceedings against Gonzales.

REP. JAY INSLEE (D), WASHINGTON:  There is a national embarrassment right now in the United States attorney general‘s office.  It needs to be remedied.  And if the president will not do his clear job, we will do ours.

SHUSTER:  The Democrats charge Gonzales used political considerations in firing some of these federal prosecutors and then gave false testimony about the dismissals.  This spring, some of his sworn statements on the U.S. attorney scandal were repeatedly contradicted by officials, including some of Gonzales‘s former aides.  The Democrats also insist that the attorney general lied under oath a week ago to the Senate Judiciary Committee about disagreements with former attorney general John Ashcroft and deputy Paul Comey regarding the terrorist surveillance program.

ALBERTO GONZALES, ATTORNEY GENERAL OF THE UNITED STATES:  Mr. Comey‘s testimony about the hospital visit was about other intelligence activities, disagreements over other intelligence activities.  That‘s how we clarify it.

SEN. CHUCK SCHUMER (D-NY), JUDICIARY COMMITTEE:  That is not what Mr.

Comey says.  That is not what people in the room say.

GONZALES:  That‘s how we clarify it.

INSLEE:  If you count the number of times this attorney general has refused to shoot straight with the U.S. Congress, it has to set a congressional record.

SHUSTER:  At the White House today, press secretary Tony Snow said the president believes Alberto Gonzales has testified accurately and that impeachment is a toxic approach.

TONY SNOW, WHITE HOUSE PRESS SECRETARY:  So we support the attorney general.  Let there be no question about it.  We support the attorney general.  In this particular case, the attorney general has testified truthfully.  And this is the kind of thing that is designed to turn up the temperature, rather than to turn on the light.

SHUSTER:  But even top congressional Republicans have said they‘ve seen enough to say Gonzales should resign.  Late yesterday, amid Senate requests for a special counsel to consider perjury charges against Gonzales, Republican Arlen Specter gave the attorney general until noon today to clarify his most recent testimony.  Gonzales did not meet the deadline.

Meanwhile, the scandal ledger in Washington is getting even worse for the Republican Party, thanks to the GOP‘s longest-serving senator, Alaska‘s Ted Stevens.  Yesterday, FBI and IRS agents raided Stevens‘s Alaska home.  Stevens has ties to a energy services company called VECO.  This spring, VECO‘s chief executive pleaded guilty to a bribery scheme involving Alaska lawmakers.  Raids like the kind at Stevens home are not usually allowed unless law enforcement officials convince a judge there may be evidence related to a crime.

(on camera):  As the investigation into Senator Stevens continues, the hotter issue at the moment is the controversy over Attorney General Alberto Gonzales.  Late today, the Justice Department was delivering the letter Senator Specter wanted on the attorney general‘s most recent testimony, but the letter came nearly five hours after the time Senator Specter had been promised.  And while the senator‘s office wouldn‘t comment on the attorney general missing the deadline and embarrassing a Republican senator, Democrats argued it was more proof that Attorney General Alberto Gonzales is not just credibility-challenged, but also politically tone deaf.

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

BARNICLE:  Thanks, David.

Democratic congressman Jay Inslee of Washington is calling for a congressional investigation into whether Attorney General Alberto Gonzales should be impeached for high crimes and misdemeanors, and Republican congressman Chris Cannon of Utah is a member of the Judiciary Committee.

Congressman Inslee, the attorney general of the United States—is he a liar?

INSLEE:  Well, I think that that‘s just one of the difficulties of the multiple deceptions and half-truths.  But you know, there are much deeper problems, and that is the firing of these assistant attorney generals (SIC ) to politicize the Justice Department.  There‘s really no greater toxicity for American democracy than we have partisan politics interfering in the prosecution.  And as a former prosecutor, I can tell you that when you stand in front of a jury, we need to have the faith of the American people in the judicial system.  That has been compromised by this attorney general on multiple occasions.  It is indefensible.  The president is really trying to defend the indefensible, and I know he believes...

BARNICLE:  But do you think he lied?

INSLEE:  I believe he was deceptive consciously on multiple occasions and...

BARNICLE:  Does that mean lying?

INSLEE:  ... the language—the language you would like, my mother asked me not to use that language as a congressman.

(LAUGHTER)

INSLEE:  But it is clear that he has indulged in half-truths, partial truths and outright deceptions.  You know, he told us when these attorney generals‘ (SIC) firing came out that these were just performance-related matters.  Well, the performance he was speaking of is that these men of integrity refused to engage in partisan political prosecutions.  And as a result, they were fired.  That is extremely dangerous.  It is a deadly cocktail for democracy and will not stand.

BARNICLE:  Congressman...

REP. CHRIS CANNON ®, UTAH:  It‘s fortunately not true.

BARNICLE:  What part of it isn‘t true?

CANNON:  Not to use the “L” word or anything like that, but this is a partisan gotcha game here, and that‘s all it is.  Thus far, there‘s no evidence that anybody can adduce that would indicate that the people that were fired from the Justice Department were not fired for appropriate reasons.  Now, the Democrats started art saying, Corruption, corruption, and now we‘re talking about deception and not being forthright with the American people.  That is just not the case.

BARNICLE:  But...

CANNON:  In fact, your intro had Gonzales—this problem growing, when in fact, what we‘re sitting here is with a deflated problem.  This morning, “The New York Times” had an article that—or—I‘m sorry, “The Washington Post” had an article that it wasn‘t perjury.  What Alberto Gonzales did the other day was actually really interesting.  He appropriately answered a question.  He had an obligation to be forthcoming, but he was being asked questions that he couldn‘t talk about in public.  They should have gone into closed session if they wanted to know what the details were.

BARNICLE:  The FBI director did.  Bob Mueller did.

CANNON:  I thought he was very careful.  What Bob Mueller did was exactly the same thing that Alberto Gonzales did when he was testifying in the Senate.  He used the same cover of a program—a national security program, that sort of thing, without identifying what the program was.

BARNICLE:  You know, this whole thing started—correct me if I‘m wrong—with the dismissal of the U.S. attorneys, the several U.S.  attorneys...

INSLEE:  Correct.

BARNICLE:  ... including one from your home state.

INSLEE:  That‘s correct.  John McKay, good Republican from Seattle, Washington.  These were Republicans who were fired for failing to do partisan activity.

CANNON:  No, no, no!

INSLEE:  ... against Democrats...

CANNON:  They were fired for many different things, and it was...

INSLEE:  They were fired...

(CROSSTALK)

INSLEE:  And we were told by this attorney general that these were performance-related issues, that these people didn‘t show up to work or they were incompetent.  It comes out that we find out...

(CROSSTALK)

INSLEE:  ... not the case.  And I understand that the president believes Alberto Gonzales is doing a heck of a job, just like he believed that Brownie did and Rumsfeld did.  But in fact, as they did, he has seriously let down this country.  And this is a national embarrassment.  I wish the president would resolve it.

We also have the problem of this attorney general failing to follow his oath to insist on the statutes being followed regarding privacy and security.

CANNON:  What—what kind of...

(CROSSTALK)

INSLEE:  I‘m referring—I‘m referring to the intelligence gathering, where he went to try to get John Ashcroft in hospital...

BARNICLE:  Your guy‘s getting (INAUDIBLE) here.  You got to jump in.

(CROSSTALK)

CANNON:  Do you want—the fact is, these are all the wish list the Democrats have, but they are not justified by the facts.  The fact is that it was not Gonzales who said it was performance-related.  That was one of his subordinates.  It was probably an inappropriate thing to do, and it made these guys mad and made them come back and say, We‘re not incompetent...

(CROSSTALK)

BARNICLE:  One of his subordinates.  One of his subordinates.  If a baseball team goes on a losing streak, the manager doesn‘t blame the third base coach.  He‘s the attorney general.

CANNON:  So what is the losing streak here?  The losing streak is that you got people playing gotcha politics and screaming about what the attorney general‘s done and screaming that he‘s lied, he‘s committed perjury, and that were going to impeach him.  And lo and behold, what he said was very carefully crafted, as you would expect an attorney general to do.  And what he—what he did was an appropriate thing to do.  If they want to know what was going on there, they should have gone into closed session and discussed that in a context where he could have explained what he was doing.

BARNICLE:  All right, you used the phrase, a carefully crafted answer.  So I want to ask you a question.  With my limited abilities, my limited knowledge of Washington, sitting there, an average guy watching TV, watching the attorney general of the United States, tell me why I should have to go to law school in order to understand an answer from the attorney general of the United States...

CANNON:  Well, because he‘s being asked questions...

BARNICLE:  ... my lawyer.

CANNON:  He‘s an attorney, and he‘s being asked questions by attorneys on the Judiciary Committee about a top secret program.  And if you want—if you want an answer, a direct answer to that, you go into closed session so that the—the discussion can be had without telling the enemy what we‘re doing.

BARNICLE:  Realistically, do you think you have any shot at impeachment of the attorney general?

INSLEE:  I do.  This is—you know, it‘s a very serious issue.  I don‘t think impeachment is something to be taken casually.  It is really only the last resort.  But the Founders understood that when civil officers have abused their office, it is appropriate.  I think members are going to go home, listen to their folks in grocery stores and corners, and they‘re going to find out that people—Republicans, independents and Democrats—believe there‘s an embarrassment that needs to be removed.

By the way, we called for an investigation.  We intend to give due process to the—to this attorney general he did not give to his fired U.S. attorneys.

CANNON:  Well, that would due process—the president—the president—the press has not given the attorney general.  You have acknowledged that Bill Clinton committed perjury but that we shouldn‘t prosecute him.  You‘ve also said, Jay, personally, that the president should not be prosecuted.  That‘s like because it goes too far politically.  And so you want to go after the attorney general, who probably hasn‘t—in fact, I think everybody who‘s now looked at it has decided that he didn‘t commit perjury, and you want to go after him just because the press is out there not happy with this president?

BARNICLE:  Last word, quick word.

INSLEE:  Everything‘s Bill Clinton‘s fault, according to the Republican Party...

BARNICLE:  Or the media.

(CROSSTALK)

BARNICLE:  Congressman Jay Inslee, Congressman Chris Cannon, thanks very much.

Coming up: The FBI and IRS searched the house of the longest-serving Republican in the U.S. Senate.  How much worse can things get for the president and his allies?

And don‘t forget, we want to see your campaign commercials.  Take part in the “HARDBALL Campaign Ad Challenge.”  Send us your videos for your favorite presidential candidate.

Here‘s an ad from Abrahem Hamadeh of Scottsdale, Arizona.

(VIDEO CLIP)

BARNICLE:  Great song.  Keep your ads coming, boys and girls.  Just upload them at our Web site, Hardball.msnbc.com.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.  Yesterday, the Federal Bureau of Investigation and the Internal Revenue Service raided Senator Ted Stevens‘s home in Alaska.  Senator Stevens the longest-serving Republican senator in history, is under federal investigation for his dealings with Bill Allen, founder of VECO Corporate, an Alaska-based oil field services and engineering company that has been awarded tens of millions of dollars in federal contracts.

Melanie Sloan is the executive director of Citizens for Responsibility and Ethics in Washington.  Boy, that‘s quite a title to hold in this city, responsibility and ethics in Washington, D.C.  Senator Ted Stevens—you want him to step down?

MELANIE SLOAN, CITIZENSFORETHICS.ORG:  Yes, he should step down from his post on the Appropriations Committee.  It‘s highly inappropriate for him to stay on the Appropriations subcommittee which oversees the Justice Department‘s budget, when the Justice Department is investigating Senator Stevens.

BARNICLE:  Well, what about giving the old guy his day in court, Melanie?  I mean, step down—I mean, they just knocked on the door on Monday morning, and now you want him to step down?  Come on.

SLOAN:  Well, it‘s one thing to have your day in court, and it‘s another thing to be in charge of the budget of the agency that‘s investigating you.  I think that‘s inappropriate, and I think most Americans would agree.

Over in the House, Alan Mollohan, who‘s under federal investigation, stepped down from his perch—or he recused himself from his position overseeing the Justice Department budget on the Commerce, Justice, State Appropriations Committee.  And many members of the House have also been forced to step down from the Appropriations Committee once they have had their homes raided.  So it seems fair that what‘s good for the House should be good for the Senate.

BARNICLE:  What do you think the chances of that happening are, realistically?

SLOAN:  I think right now, the Senate hasn‘t felt the same kind of pressure from corruption charges that members of the House have.  But the House Republican Conference got itself into deep trouble in 2006 by ignoring corruption for such a long time.  I don‘t think that the Senate Republicans are going to fail to heed the lessons that the House has learned.  I think they‘ll take the problems of Senator Stevens fairly seriously.

BARNICLE:  Yes, but let‘s—what are his problems?  His problems are that the FBI and the IRS came to his home on Monday.  Nobody wants that to happen.  He hasn‘t been charged with anything.

SLOAN:  That‘s pretty serious.  When the FBI comes to your...

BARNICLE:  What‘s serious?

SLOAN:  When the FBI comes to your house and conducts a raid, they‘re saying that a federal judge issued a search warrant, which means there is probable cause to believe that Senator Stevens was involved in criminal wrongdoing.  This scandal also involves his son, former Alaska state senator Ben Stevens, who has already been named as an unindicted co-conspirator and is likely to be facing indictment himself in the near future.  And in fact, also Representative Don Young from Alaska may also find himself in this scandal.

BARNICLE:  What‘s in the water up there, do you figure, in Alaska?

SLOAN:  You know, that‘s a really good question.  It seems that the Alaska...

(CROSSTALK)

BARNICLE:  ... so removed from the continental United States and media targets, whatever?  I don‘t know.

SLOAN:  I think the Alaska delegation has been big on giving earmarks to everybody in Alaska, and they‘ve gotten payback for it.  And now that‘s a chicken coming home to roost.

BARNICLE:  Well, Senator Stevens still has his day in court coming up, perhaps.  Melanie Sloan, thanks very much.

Up next: President Bush had his first meeting with new British prime minister Gordon Brown, but will their relationship be anywhere near as close as the president had with Tony Blair?

You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL. 

This week marks the first official visit in the United States by the new prime minister, Gordon Brown.  The former prime minister, Tony Blair, was one of America‘s closest allies. 

Now his closest adviser, Press Secretary Alastair Campbell, is out with a new book, “The Blair Years: The Alastair Campbell Diaries.”  The book describes defining historical events from a British point of view, like September 11, the wars in Afghanistan and Iraq, and the 2000 Bush-Gore election. 

Alastair Campbell, thanks very much.  Thanks for keeping the diary, incidentally, “The Blair Years.”

(LAUGHTER)

BARNICLE:  It‘s—I went through it.  I skimmed through it last night. 

Let me ask you about a couple of things in the book.  It appears, just from my—my brief reading of it, that, at times, there was kind of a tension convention better T.B., Tony Blair, and G.B., Gordon Brown.

But your assessment?

ALASTAIR CAMPBELL, AUTHOR, “THE BLAIR YEARS: THE ALASTAIR CAMPBELL

DIARIES”:  True.

And I think what I have kept in there is some of the tensions.  What I have not done is kind of gorge on it in the way that maybe some of the Labor government‘s opponents would want me to. 

And I think it‘s interesting that, in the end, what I have tried to do with the book is show that politics, in the end, is just human beings trying to do their best.  And they have good days and bad days.  They have days when they get on and days where they don‘t.  But it kind of doesn‘t matter, ultimately, because What the Labor Party has done, under Tony‘s leadership, and now with Gordon, is, we have improved British politics, and, on the way, we have improved Britain immeasurably. 

BARNICLE:  Do you—what differences, if any, do you think portend for this country‘s relationship, this president‘s relationship with Great Britain, now that Gordon Brown is the prime minister, as opposed to Tony Blair?  Because, here in America, we always saw the two of them thick as thieves, great friends. 

Gordon Brown, there seems a bit more distance, although it‘s early, certainly, in his tenure.  But what differences do you think might occur? 

(CROSSTALK)

CAMPBELL:  I don‘t think it will be that different. 

I think on—you have got to remember with Tony—and this comes

through in the book—his relationship with the United States, both

politicians and people, if you like, was defined by a succession of really

big moments, the election in ‘97, which was huge, Princess Diana‘s death,

Northern Ireland peace process, which I know that covered, the September 11

the attacks of September the 11th, when there was a sense, I think, in America that Tony really kind of articulated what people were feeling, and, then, of course, the wars that you mentioned in Afghanistan and Iraq, so—and, of course, Kosovo before that.

So, these were really big defining moments in our country and in your country.  And he really came to your attention.  Gordon has been the treasury minister for 10 years.  That is not a position that kind of gives you the sort of international national profile he‘s now going to get.

But I think what you saw yesterday was somebody who will be absolutely committed to trying to maintain and strengthen the special relationship, who is a very serious, substantial political figure, who will use power to try and make a difference.

BARNICLE:  Was—was Tony Blair at all wary of your keeping a diary and now obviously publishing the diary? 

CAMPBELL:  No.  And if he—if either he, or Gordon, for that matter, had said, please, don‘t do this, I would not have done it.

I‘m a very...

BARNICLE:  Really?

CAMPBELL:  Yes.  I‘m a very Labor figure.  I mean, I want the Labor Party to stay in power forever. 

(LAUGHTER)

CAMPBELL:  Now, it‘s—we took so long to get it there, we have got to stay there.

(LAUGHTER)

CAMPBELL:  And I think what it does—look, some people were probably a bit wary.  There are some people who don‘t think you should keep a diary.  There are some people who don‘t think you should do books. 

But I‘m not coming along, having worked for 10 years for Tony Blair, saying he‘s a great guy because that was my job, and now saying something different.  I am still saying he is a great guy, but I am saying, this is what it was really like.  These were the warts, as well as the... 

(CROSSTALK)

CAMPBELL:  Plenty of warts.

BARNICLE:  You absolutely—you absolutely get the sense of Tony Blair, the human being, from these diaries.

CAMPBELL:  Yes.  Yes, and some of the people he has to deal with.

(CROSSTALK)

BARNICLE:  G.B., Gordon Brown, and all your other...

(CROSSTALK)

CAMPBELL:  GWB, B.C.

BARNICLE:  Yes. 

(LAUGHTER)

BARNICLE:  But one of the things that I found really interesting in here is—obsession might be the wrong word, but I think it‘s similar here in America with politicians and people working for politicians—your obsession over the media, media coverage, and media people, and reporters, and newspapers.

One, in particular, who is strung throughout the book, Rupert Murdoch...

CAMPBELL:  Mm-hmm. 

BARNICLE:  ... what do you think Rupert Murdoch‘s plan is with “The Wall Street Journal”?  I realize it‘s not in the diaries, but you know him.  He‘s met with you. 

CAMPBELL:  Well, I don‘t know what has been announced—whether it‘s been announced yet or whether anything has actually moved on that.  But his immediate plan, it seems to me, is to get ownership of another newspaper. 

Look, I think there‘s two sides to this, and it‘s important people try to understand both.  I mean, Rupert Murdoch is, of all the kind of media people around the world, in a sense, he has been the one who has always been ahead of the game.

And I think that you are right a lot of people in modern politics—you used the word obsessed.  I think it‘s just you have got to be concerned about the way the media develops if you‘re in policy-making and decision-making, because it has such a profound impact upon the job that you are trying to do.  And it can be a complete nightmare. 

And I just think the pace of media change has been so fast.  Rupert Murdoch has been a very, very important part of that.  But I think a lot of the questions that are being asked now about the journalists at the paper that he‘s trying to take over, they are kind of the questions that were being asked 10, 15, 20 years ago.

But you‘re now in a completely different age.  And I suspect that he will take it over.  It will be part of his expanding business empire, and he will make a success of it. 

BARNICLE:  Well, Alastair Campbell, I want to thank you very much for the book, “The Blair Years: The Alastair Campbell Diaries.”  It takes you inside 10 Downing Street, inside the world, actually, of Tony Blair, world politics.

Up next, the HARDBALL debate:  Bill Clinton, Elizabeth Edwards, Judy Giuliani, do political spouses help or hurt a candidate‘s chances to become president?  And which party‘s spouses have the edge in this presidential race?

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Stocks gave up some solid gains that we saw earlier in the session and closed deep in the red, on renewed concerns about subprime mortgages.  The Dow Jones industrial average tumbled 146 points, taking down the broad market as well, S&P 500 down more than 18.5, tech stocks taking a 37-point stumble there, with the Nasdaq closing at 2546.

The pullback really came when American Home Mortgage announced that it doesn‘t have cash to fund new loans and it may actually have to sell off some of its assets.  American Home shares plunged more than 89 percent today.  And that worry spread to the broader market.

Crude oil also put pressure on stocks.  Crude closed at a record high of $78.21 a barrel in New York‘s trading session, after gaining $1.38.

And a deal is expected to be announced as soon as tonight for Rupert Murdoch‘s News Corp. to buy “Wall Street Journal” publisher Dow Jones & Company for $5 billion.  Dow Jones & Company shares rose 11 percent in trading today. 

We are just now just getting word from CNBC‘s David Faber that Dow Jones‘ board will resume its meeting at 7:00 p.m. this evening. 

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

HARDBALL. 

BARNICLE:  Welcome back to HARDBALL. 

The candidates‘ spouses have rarely had as high a profile as in this 2008 race.  But can spouses become too involved in campaigns?  It depends who is campaigning.

I‘m joined by conservative radio talk show host Melanie Morgan and Democratic consultant Jenny Backus.

Let me ask the both of you about my view, that spouses—I don‘t care about spouses.  We‘re at war in Iraq.  There are huge domestic problems.  I want to know what the candidate is going to tell me.

Both of you, tell me why I should care about candidates‘ spouses.  How can they be negatives?  How can they be assets?

Jenny, start with you.

JENNY BACKUS, DEMOCRATIC STRATEGIST:  Well, I think it is really interesting this cycle, Mike, that we are in a cycle of superstar spouses on the Democratic side, at least. 

We have candidates who used to be former presidents of the United States.  We have Elizabeth Edwards, who has graced the cover of “People” magazine, with a really compelling human interest story.  These are spouses that are like megastars, beyond the fact that their spouses are running for president.  They would, you know, garner attention anywhere.

So, they have the ability to generate a level of news media that we have never seen before from somebody.  And I think that, because it is such an open race and people don‘t know a lot—I mean, they—they know—they think they know a lot about Hillary...

BARNICLE:  Yes. 

BACKUS:  ... but everybody else, that they are going to use spouses as a way to get a full picture of what the candidates are. 

BARNICLE:  Melanie, let me ask you, what is your matchup for the biggest spouse in the race on either side, Bill Clinton? 

MELANIE MORGAN, RADIO TALK SHOW HOST:  Well, I think that Hillary‘s wife, Bill, is going to be a detriment, unfortunately, to Mrs. Clinton, because it‘s going to be a situation where, since he is still dating, it‘s obviously going to be a detraction, I think, from the race.  So, that‘s going to be problematic for Mrs. Clinton.

Plus, you know, you are going to have to hire private detectives, keep an eye on him, and so forth.  And that is going to be a difficulty. 

On our side, though, I think that Jeri Thompson is going to be a spectacular asset to her husband, should he decide to get into the race.  I think that Mrs. Thompson...

BARNICLE:  Why—why would she be an asset, because she is great-looking? 

MORGAN:  Because she is smart, accomplished.  She‘s an attorney. 

She‘s gorgeous, that‘s true.  That always helps. 

(LAUGHTER)

MORGAN:  Plus, she is aware of something that other women don‘t seem to get on the liberal side of the equation, that we are fighting a battle against terrorism that really has our very culture and our lives at stake.

And, so, I think that she will also understand—and she does understand the fact...

BARNICLE:  Yes, but that—but that—that gets...

MORGAN:  ... that global warming is a hoax and all the other tax issues that are very important.  

BARNICLE:  Jenny is having difficulty hearing what you‘re saying, so let me do the instant Berlitz from what Melanie said. 

(CROSSTALK)

BARNICLE:  Melanie said that she thinks—and correct me if I am wrong, Melanie—she thinks Bill Clinton is going to end up being a liability to Senator Clinton‘s campaign, and that Senator Thompson‘s wife, potentially...

BACKUS:  Jeri.

BARNICLE:  ... yes, is going to be an asset.

BACKUS:  Well, I have to respectfully disagree with her.

I think Bill Clinton is a huge asset to Hillary Clinton inside a

primary.  He is very well received by Democratic candidates.  And Hillary -

what Hillary needs right now is what I was saying before, Mike.  She needs people to know who she is.  People think they have this preconceived notion of Hillary. 

But Bill Clinton knows Hillary Clinton‘s qualities and strengths better than anybody.  And he is out there, especially in places like Iowa, which are must-win for her, validating who she and then telling where she comes from. 

Now, Jeri Thompson, again, I beg to differ.  She has already caused some stir and commotion inside that campaign.  They have already had staff leave and they haven‘t even announced their candidacy yet.  That is an interesting trait that is happening on the Republican side. 

It used to be something that people used to say about Hillary Clinton.  But, this cycle, you have got Cindy McCain, who was very involved in the shakeup in John McCain‘s race.  You have got Judy Nathan, who has taken a very active role.  And Giuliani has promoted her a co-partner.

You have got Ann Romney, who had a big profile in “People” magazine this week.  You have spouses that are very involved in the day-to-day running of campaigns.  It is very different from, I would say, 10 years ago. 

BARNICLE:  Melanie, to your point that you raised a couple minutes ago about the candidates‘ wives talking about global warming or the war on terror, here I am.  I am the Luddite from Boston, OK?  I don‘t care what the candidates‘ spouses have to say on global warming, or the war on terror.  I want to hear what the candidate has to say. 

So, what do you—what do you say in response to that... 

(CROSSTALK)

BARNICLE:  ... the spouses?

MORGAN:  That is because you are a guy, Mike.  You‘re a guy.

Women really pay attention to a lot of the stuff that goes around campaigns.  Women are looking at the spouses. 

BARNICLE:  Fred Thompson‘s wife on global warming, they are going to pay attention to her?

MORGAN:  They are going to pay attention to whether or not a woman appears to be warm and accessible, whether the candidate‘s wife is cold and grasping.  They are going to be looking at the whole package, whether they are attentive mothers. 

I think that whether they are nurturing, as Judy Giuliani has been with her husband during his bout with cancer, as Michelle Obama has been with her husband, she appears to, you know, have the whole package.  She—it‘s been—people and women in particular pay close attention to that sort of thing. 

BACKUS:  But I...

BARNICLE:  Quickly, Jen.

BACKUS:  I will go back to your point, Mike.  I think, actually, women are so concerned about the state of the world, that they are looking at the candidate first.  I think spouses are an asset.

MORGAN:  Well, that‘s—I agree with that.

BACKUS:  And—but I think, with what is happening with the war, whether or not, you know, kids are dying, those are issues that women are really reacting to.

And I think it‘s going to be very interesting on both sides in the primaries.  Women, unmarried women, single women, and married women, are going to be big key voting blocs inside both of these primaries.  And people should, like, be listening to what they say.

BARNICLE:  So, I‘m off the hook.  It‘s not just a guy thing.

MORGAN:  And I would like to add on to that.

BARNICLE:  Quickly, go ahead.

MORGAN:  I would like to add on to that.

You know, a lot of liberal women seem to think that—and particularly the spouses of the people that we have seen so far out on the campaign trail, seem to think that, if we just use our words, that we‘re going to become safe from terrorists overseas.  And they‘re all—many of them, at least—are demanding that we leave the battlefield in Iraq before victory has been obtained.

And I think that that is—the difference between the women on our side and the women on their side, conservative women and Republican women understand that we not only have to protect our children, but our grandchildren.  And that is going to be a very key deciding bloc in this ‘08 election cycle. 

BARNICLE:  Melanie Morgan, Jenny Backus, thanks very much.

Is Fred Thompson, the aforementioned Fred Thompson, having trouble raising the money he hoped to raise, while Oprah Winfrey has to turn them away from the fund-raiser she‘s hosting for Barack Obama? 

Up next: the HARDBALL panel on the day‘s top political stories. 

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

BARNICLE:  Coming Up:  Fred Thompson isn‘t officially running for president yet, but is his campaign fizzling out before it can begin?

HARDBALL returns after this.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.  Time now to dig into the hottest political headlines and the hottest political video of the day.  And here to do it is our political panel; NBC News political director and pathetic Dodgers fan, Chuck Todd, the “Chicago Sun Times‘” Lynn Sweet and Mark Leibovich of the “New York Times.”  NBC News announced today, by the way, that we will be collaborating—NBC News—with the “New York Times” throughout the 2008 election.  So Mark, welcome.

MARK LEIBOVICH, “THE NEW YORK TIMES”:  Thanks, Mike.  I am a little insulted you didn‘t identify me as a Red Sox fan.

BARNICLE:  There you go, Red Sox fan. 

LEIBOVICH:  Assert my credentials right off.   

BARNICLE:  First topic, Fred Thompson, is he tanking?  Although he has not officially entered the race yet, actor, Senator Fred Thompson has gotten a ton of media attention, but apparently not a ton of cash.  During the month of June, he collected just 3.5 million dollars, nowhere near Rudy Giuliani or John McCain.  To make matters worse, “Washington Post” columnist Richard Cohen went after Fred Thompson today over his stance on guns.

It is Richard Cohen‘s second anti-Thompson column in the last couple of weeks.  What is the deal?  Is Thompson the great conservative hope, or will he fade before he even gets going?  Mark, where is he?  Where is he going?

LEIBOVICH:  Well, first of all, with all due respect to Richard Cohen, who I‘m a big fan of and who I admire a lot, I do not think Republican primary voters have been following his lead that closely.  I also think—

Again, with all due respect to Richard.  I think Fred Thompson, clearly, -- there are very high expectations around him at this point, as there were for Wes Clark four years ago, and as there often are for people before they get in. 

And then people actually look at whether they‘re meeting benchmarks and meeting expectations and so forth.  I mean, look, three million dollars before you have even announced for president is nothing to sneeze at.  Does it satisfy the pundits who tend to pay attention to these things at this point, maybe not.   

BARNICLE:  Chuck, that is exactly what I was thinking.  It was reported—how pathetic is this, only three million dollars?  Yet, that is a lot of money for a guy who is not even in the race.

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  That‘s right.  I mean, the problem that the Thompson people have with this number is that they created their own expectations on this.  They were flirting with this idea—on June 4th they had something called first day founders.  We were hearing whispers that they were going to raise three million dollars in a day or in a week. 

So, they created their own absurd expectations.  Because Mike, on the surface, you are absolutely right.  Three million dollars and they‘re not even running yet, and imagine when he actually announces.  He should get a windfall of the other easy money that there is to get when a candidate announces.  So it should be a better number.  But this goes back to the organizational problem that the Thompson people had from the get-go.  That is, they set their own expectations here, and they missed it. 

BARNICLE:  Lynn Sweet, is there any similarity in the Thompson fledgling campaign and the John McCain campaign, in the sense that, as Chuck just mentioned, people leaving the campaign before it begins, and John McCain obviously, not running into the ground, has had clear administration problems in his campaign.  Any similarities in the two? 

LYNN SWEET, “THE CHICAGO SUN TIMES”:  Obviously, Mikes, the ones that you mentioned, when you have staff turnover.  The issue with Fred Thompson is that this is a campaign that has to be born.  One of his confidants told me it has to be born as an adult.  There is no infancy.  The difference is that McCain is an experienced campaigner.  He‘s been through this before.  If there‘s a way to rebound, McCain is in the better position to figure it out than Thompson because of his experience. 

Thompson, by playing this late entry into the race game, has got to come out—he has to have a faster start.  That is why this unorganized start is very damaging to him.  Also, it means that the endorsement game is going to be harder for him to play, because those big names are being scooped up daily.  And pretty soon people are just going to make commitments to run for delegates, which, after all, is the name of the game in the primary, to get nominated.  And there is a process that he has to start paying attention to.   

BARNICLE:  Mark, what about this stupid Mike theory that I have though, that Fred Thompson perhaps the longer he delays in announcing, the better of he will be, because many people are sitting out there in their campers, on their front porches—it‘s the middle of the summer—they are sick of all of these people right now.   

LEIBOVICH:  Right, clearly there is a benefit to not being in the race.  There is a real art to running while not running or not running while running, whatever you want to call it.  Clearly, at some point, and probably not that long in the future, he has to get in or get out.  He has to make a decision and actually subject himself to the scrutiny that presidential candidates do. 

BARNICLE:  Topic number two, did Bill save Hill.  Much has been made about the fight between Hillary Clinton and Barack Obama over whether or not to meet with foreign enemy leaders.  Perhaps the most telling piece of the story is Bill Clinton‘s decision to insert himself in the debate.  Take a peek. 

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FORMER PRESIDENT OF THE UNITED STATES:  I

do not want to get in the middle of that little spat Hillary and Senator Obama had.  But there is more than one way to practice diplomacy.  You can make up your own mind about that.  The point I want to make is that they, and all of our other Democrats, had a vigorous agreement on the big question, which is should we have more diplomacy.  The answer is yes.  Then, you can parse their answers to the specific questions and decide who you think is right.  

(END VIDEO CLIP)

BARNICLE:  So, why did Bill Clinton get involved?  Did he and the campaign determine that Hillary was losing this one to Obama?  We will find out when we come back.  We will be back with the panel. 

(COMMERCIAL BREAK)

BARNICLE:  We are back with NBC‘s Chuck Todd, Lynn Sweet of the “Chicago Sun Times” and Mark Leibovich of the “New York Times.”  So, we were talking about Bill Clinton getting into this tilt between his wife and Barack Obama over whether or not to talk to people, like the heads of Iraq, the heads of Iran.  Why do you think former President Clinton, Mark, jumped in on this issue yesterday? 

LEIBOVICH:  You can look at it two ways.  You could probably look at it 20 ways, and I am sure people in Washington are looking at it all 20 ways.  On the one hand, it is a way to stand above the fray and also support your wife at the same time.  On the other hand, there is some theory within the strategic circles that maybe he perceived his wife to be losing this, to have this story just end.  So he decided to weigh in.  I think it six of one, half dozen of another. 

BARNICLE:  Chuck, what do you think?  Is it that they hear Obama‘s foot steps, or is it because they thought it would be good to keep the story going for two or three more days to her benefit.

TODD:  Look, this is Bill Clinton and, as Mark said, it is a parlor game to read between the lines.  There are a lot of us who believe there is never free lancing going on anywhere when it comes to the Clintons.  That said, I think sometimes there is a Hillary Clinton wing of the Clinton clan and a Bill Clinton wing.  And sometimes there are people in the different wings who may disagree on strategy. 

There has been some strong indication that there was some disagreement on how the whole Obama/Clinton spat had played out, and that possibly the president was freelancing, as far as Hillary Clinton‘s campaign was concerned, but maybe doing what he thought was the best thing to do. Who knows?  There is nothing that drives the Clinton folks crazier than when we try to psychoanalyze their positions. 

This is what we have come to do for the last 15 years for these folks.  It is hard not to see that there was some deliberation here in what the president decided to do and say.  I think it clearly stopped—Put it this way, if Obama wanted to keep the story going, then he was going to have to attack the former president in order to keep it going.  You could look at it that way too. 

BARNICLE:  Lynn, you know Senator Obama pretty well.  You know the campaign pretty well, covering it on a daily basis for the “Sun Times.”  What is going on within the Obama campaign with relation to this one specific incident? 

SWEET:  Well, I feel it‘s like the question—this specific incident, no other incidents, with no preconditions, Mike, as the question was.  I think that they think that everything went their way, that they met their mark and they were able to open a front for the first time on Hillary Clinton because she gave them an opening.  I think they have been wanting to see how Obama would do on the offensive. 

This has not just been a matter of rhetoric, but the campaign has incorporated and Obama has incorporated the naive charge that she hurled at him.  He has used it in speeches to throw it back at her and in some advertising they‘re doing.  So, perhaps one of the reasons President Clinton tried to slow it down is that they wanted to see what the impact is of Obama going for the first time—going negative for the first time. 

BARNICLE:  Mark, what is your sense?  Does this have any legs out in New Hampshire and Iowa, this story? 

LEIBOVICH:  I don‘t think—I think it is a Washington political insider story at this point.  But still it is interesting and I think it does telegraphs how the two of them might be running their campaign in the future. 

SWEET:  May I jump in though?  And say one other thing?  The details perhaps are something that you have to be a devote—I don‘t think it is necessarily Washington, it is for people who are tuning in.  It‘s not a Washington story.  It‘s a story for people who want to follow it, just as if you are covering baseball and want to know every detail of your team right now, or you just want to know who won or lost a game. 

What is important here is—and the milestone that happened last week is that for Obama, who argued for his campaign to talk about being above the fray, he did engage.  The campaign manager told me that they are running an aspirational campaign.  What this means, really, we are learning.  And one of the things we have learned is that Obama thinks that you run an aspirational campaign, and you still do not leave a flank exposed when you‘re accused of something. 

People do come away that there was some dispute for the first time on the campaign.  I do not know if everyone is paying attention, but of those that do, this last week could not have gone unnoticed. 

BARNICLE:  Let‘s move onto other aspirations, Rudy Giuliani‘s and his better half.  This month‘s “Vanity Fair” drops a truck on the tough, often critical look at Rudy Giuliani‘s wife, Judith Nathan.  The long piece depicts Judith as a social climbing, self important, political liability.  In one anecdote, Hillary Clinton remarks on the nerve of Judith Nathan for showing up at a Ground Zero event with four secret service agents. 

The article talks about the Giulianis refuses to speak about how they met and about the campaign‘s unclear picture of who she really is.  Today, Rudy responded, calling the portrait very incorrect.  Bottom line, will she help or hurt Rudy Giuliani?  Mark? 

LEIBOVICH:  Bottom line, I don‘t know.  That‘s the bottom line.  I think, certainly, I agree with your portrayal of the profile that I read today.  It is a pretty tough profile.  I think clearly it depends on how she conducts herself in the future and what she says.  Ultimately, the question of what political spouses—except for maybe Bill Clinton—are going to say on issues is ultimately what‘s important to voters. 

BARNICLE:  Chuck, my sense of it is that Rudy Giuliani‘s campaign, his image, who he is, who he wants to be running for president, is so wound up in September 11th that his wife really does not matter a lot in the scheme of events.  Do you agree? 

TODD:  Well, that‘s interesting.  I certainly think she is not going to matter in the primary.  However, with this one exception; the Romney campaign is intent—they are desperate for the story to be written that compares Anne Romney, Judy Nathan—Judith Giuliani and Jeri Thompson.  They think that they will win the sort of family values type voter if that is somehow a story line and Anne Romney becomes more prominent on the trail.

That said, I think in a general is where we get to know the spouses.  Look, Theresa Heinz Kerry was not an issue for John Kerry during the primaries.  But I think on the margins—and this is where the hate email is going to come—I think he hurt her with some voters on the margins in the general election.   She hurt him, I‘m sorry.

BARNICLE:  Lynn Sweet, this is an impossible question for you to answer.  I understand that.  What do you figure the over/under is on the number of Republican delegates who subscribe and/or read “Vanity Fair?”  Less than six or more than six?

SWEET:  But there is an echo chamber, and we are part of it right now.  And here are some other practical points though about a political spouse that Giuliani might not have.  In fund raising, it might be hard for her to have her independent schedule.  Where is her base?  I can see where Anne Thompson goes.  Michelle Obama has been a terrific fund raiser. 

You need other assets.  Giuliani does not have children.  His son is not going to campaign for him whole-heartedly.  There is—the point of family values and talking about this is that it is a little harder to talk about if your current wife is likely to have been your mistress, which is the heavy suggestion that is out there, when you started dating before you were divorced.  I think that message somehow gets through to people. 

There is, in a Republican primary, a segment that very much cares about that.  But that might be counter weighed by the people he brings in the Republican primary being the only abortion rights supporter.  And he will bring in some people for that.  So it is a balancing act.  

BARNICLE:  Yes, my sense is that he can bring in all the people he wants to, but if he has difficulty with his own kids, that‘s more important than the wife.  Thank you Chuck Todd, Lynn Sweet, Mark Leibovich.  Tomorrow on HARDBALL Democratic presidential candidate Joe Biden.  See you then.

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

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