updated 8/14/2007 11:31:13 AM ET 2007-08-14T15:31:13

Guests: Wayne Slater, Mike Huckabee, Joe diGenova, Melanie Sloan, Amanda Carpenter, Peter Boyer, Josh Green

CHRIS MATTHEWS, HOST:  Can President Bush think without the man they call his brain?  What about all those great ideas, like dividing the country over Iraq and leaving New Orleans to drop into the sea?  A country without Karl Rove calling the shots?  Let‘s fear for the republic.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL.  Tonight, in the big story, Rove resigns.  He was called the boy genius by his friends and an evil genius by enemies.  Karl Rove, the political architect of the Bush White House, announced today he will be leaving at the end of the month.  But what did Karl Rove really build?  The Democrats now control Congress.  The president‘s approval ratings are in the basement.  And the administration‘s big plans for Social Security and immigration fell flat.  For the last few years, Rove has worked under a cloud of suspicion for his role in the CIA leak case and the firing of those eight U.S. attorneys.  More on this top story in a moment.

In the second story tonight, Republican presidential contender Mike Huckabee is the Cinderella man out of the weekend‘s GOP straw poll out in Iowa.  Mitt Romney spent a bundle to win the poll, while Huckabee cruised into second place on a shoestring.  We‘re going to talk to Mike Huckabee, who everybody seems to like, in just a moment.

In tonight‘s debate on HARDBALL: Should Congress be able to force Karl Rove to talk, now that he‘s leaving the White House?  That‘s the HARDBALL debate.  He‘s going to go out and make a fortune on the lecture circuit.  Do you have to pay to get the truth from Karl Rove?

Anyway, David Shuster‘s got an interesting report right now on Karl Rove‘s resignation.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  After once predicting a permanent Republican majority, now with the GOP in its worst shape in 20 years and the president facing the lowest approval rating of any president in 30, today Karl Rove called it quits.

KARL ROVE, PRESIDENT BUSH ADVISER:  Today, I submitted my resignation as deputy chief of staff and senior adviser effective the end of the month.  Mr. President, I‘m grateful for the opportunity you gave me to serve our nation and you.

SHUSTER:  President Bush thanked Rove and offered this.

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  We‘ve been friends for a long time, and we‘re still going to be friends.  I would call Karl Rove a dear friend.

SHUSTER:  The president and Karl Rove have worked together since the beginning of George W. Bush‘s political career.  And as a ruthless strategist, Rove has had plenty of political success.  He helped get Mr.  Bush elected governor of Texas and positioned him for a White House run.  Then in the 2000 presidential campaign, he helped Mr. Bush exploit the nation‘s fatigue with the Clinton-Lewinsky scandal.

BUSH:  To lift this nation‘s spirit, I will also swear to uphold the honor and the integrity of the office to which I have been elected, so help me God!

SHUSTER:  Rove orchestrated another successful Bush presidential campaign in 2004.  He helped the president pass tax cuts, and he was part of the group that marketed and sold the Iraq war to the American people.

ROVE:  And I‘m grateful to have been a witness to history.  It has been the joy and honor of a lifetime.

SHUSTER:  But while Rove has sacrificed years to George W. Bush, Rove, like the president, has also been at the center of several failures.  There was the effort to privatize Social Security, multiple attempts to pass immigration reform, and the botched federal response to Hurricane Katrina.  And right up until the 2006 congressional elections, Rove insisted that Republicans in Congress would hold onto their majority.  They did not.

Even more memorable, however, have been Rove‘s legal controversies.  In the summer of 2003, after Joe Wilson undermined the administration‘s nuclear case for war with Iraq, White House officials hit back by outing the identity of Wilson‘s wife, a covert agent at the CIA.  Rove insisted he was not involved, and he used Scott McClellan, the presidential spokesman at the time.

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  If anyone in this administration was involved in it, they would no longer be in this administration.

SHUSTER:  And when McClellan was asked specifically about Rove...

MCCLELLAN:  I made it very clear that it was a ridiculous suggestion in the first place.  I‘ve said that it‘s not true.  And I have spoken with Karl Rove.

SHUSTER:  But Rove had actually provided information about Valerie Wilson to two reporters, Robert Novak and Matt Cooper, and Rove‘s rolling disclosures in the course of five separate appearances to the CIA leak grand jury prompted prosecutor Patrick Fitzgerald to consider criminal charges against Rove, according to Rove‘s own attorney.

This spring, Karl Rove and his White House colleagues became enmeshed in a scandal over the seemingly political firings of these eight federal prosecutors.

ALBERTO GONZALES, ATTORNEY GENERAL OF THE UNITED STATES:  Senator, Mr.

Sampson has testified this was a bad idea, and it was a bad idea.

SHUSTER:  Justice Department documents revealed heavy involvement by the White House political office led by Karl Rove.  Rove insisted that all of the prosecutors were fired for performance or policy reasons, and he repeatedly pointed to U.S. attorney Carol Lam and the issue of immigration prosecutions.

ROVE:  There was a principal decision by the woman who was the U.S.  attorney for San Diego, southern district of California, that she would not commit resources to prosecute immigration offenses.  She made a decision that that was not going to be her priority of office.  The U.S. Justice Department asked her to make it so.  She did not.

SHUSTER:  But Lam, under oath, contradicted him.  Documents revealed she had actually been praised by the Justice department on immigration, not criticized, and Democrats accused Rove of lying to hide his own role in the firings of the U.S. attorneys.  Rove has since then refused to answer questions publicly or under oath.  So a few weeks ago, Congress issued a subpoena to Rove, an order the White House is fighting.

(on camera):  The news that Karl Rove is leaving was greeted with regret by other White House officials.  They said Rove will be missed.   Democrats said good riddance and argued that Rove had put the interests of the Republican Party ahead of the interests of the American people.  Left unclear is whether Rove will ever be forced to testify about the controversies or whether he will simply ride into the sunset as a Bush White House defender.

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.

Wayne Slater has been watching George W. Bush and Karl Rove for a long time.  He‘s a reporter for “The Dallas Morning News” and the author of—it‘s the name of his book—“Bush‘s Brain.”  Pat Buchanan, of course, is an MSNBC political analyst.

Let me go to Wayne right now.  Do you think that Bush can operate without his brain, as you call him?

WAYNE SLATER, CO-AUTHOR, “BUSH‘S BRAIN”:  Sure, he can, because there‘s not much to do.  Basically, Karl understands and the president understands this is the end.  All presidents get to the end.  They become lame ducks, to one degree or another.  There really are no more reelection campaigns.  There are no more fundamental campaigns.  The Republicans are trying to distance themselves from Bush.  And ultimately, there are no more initiatives, which is what Karl was involved with.  This was the time to go.

MATTHEWS:  Do you think he really was Bush‘s brain, or is that just a metaphor?  I mean, do you really believe that he was almost a brain and mental transplant that the president used, like trainer wheels, to make big decisions, or did he advise the president?

SLATER:  I think he advised the president.  You know, look, I‘m one of these guys who knew George Bush back in—when he ran for governor and before.  I recognize he‘s not a stupid person, despite what his critics say.  What Karl was is his intellectual brain, this sort of strategic and tactical political brain.  He brought to the Bush equation something that Bush didn‘t have.  Bush had a lot that Karl didn‘t have.  Together they were very formidable.  Gosh, they made it to the White House.

MATTHEWS:  You know, Pat Buchanan, I think the Democrats—I can tell you that, and you know this—they think of him as Moby-Dick, the great while whale.

(LAUGHTER)

MATTHEWS:  They believe that he stole the White House from them, he stole the governorship from Ann Richards, he divided the country over Iraq, and every screw-up in this administration is Karl Rove‘s fault and everything that was menacing and predatory he was behind.  Was he that big?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  I think Karl Rove is a very important political figure and that he is responsible for the most successful political career since Ronald Reagan, two straight governorships of a great state, the presidency of the United States twice.  So he‘s a tremendous success.

Where he failed, Chris, is he talked in a new governing majority for the Republicans.  The problem is the Nixon-Reagan majority was that, and that was disintegrating, and he did not stop the disintegration.  The president did not stop it.  They did loose both Houses of Congress, but so, too, did Bill Clinton.  We are just in a new era where neither party is America‘s party.  He couldn‘t prevent that.  But personally, what he did for Bush is a tremendous success.

MATTHEWS:  How big a role did he play in the big decisions, Wayne?  In other words, the big decision to go to Iraq, which is the most, obviously, pivotal decision of our recent American history.  Most presidents I don‘t think would have gone to Iraq.  He did.  Was that Karl‘s call, or did he just live with it?

SLATER:  No, he lived with it.  I think those of us on the inside who‘ve talked to Karl and talked to others around him know that his job was really to market that decision, which I think was pushed on Bush by Cheney, Rumsfeld, other neocons.

MATTHEWS:  I agree, or I think that.

SLATER:  But look, he was in the middle of the deal and pushing, basically, marketing the idea because he understood that it fed a larger theme that really has been a Rove theme: How do you divide and conquer?

That‘s part of his legacy.  It‘s the politics of division.  All politics, you put one side on the one side...

MATTHEWS:  Right.

SLATER:  ... the other guys, your guys on your side.  But Rove mastered this, made this a very efficient effort.  And he really raises a question.  Do you run a successful politics that‘s successful in getting you elected, but in so doing end up with a failure or an inability to govern?

BUCHANAN:  I think—I think that gives too much responsibility to Rove.  The president of the United States was converted to neoconservatism between 9/11 and the “axis of evil” speech.  He embraced it.  He still talks about it today.  He‘s got the zeal of the convert.  He‘s an evangelist for it.  I think Rove had to merely explain and go along with that program.

George Bush is a character in his own right, and I think he himself is responsible for his failures and successes.  You take immigration.  He‘s the driving force behind that.  Trade policy, Bush is the driving force.  Iraq, Iran, Bush and Cheney are the driving force behind that.  I think Rove goes with the program.

MATTHEWS:  How come Rove wasn‘t marched out of the White House, frog-walked, as Joe Wilson said he should have been?  How did he escape the judge in the Iran-contra—not the Iran-contra, the CIA leak story, even though it‘s on the record, the judicial record, that he leaked—helped leak it to a couple of reporters?  Wayne?

SLATER:  Well, you know, he—I was going to say he was involved.  You know he was involved.  David Shuster made it very clear and your program has made it very clear his involvement.  He wasn‘t legally culpable, but he wasn‘t marched out because, I think, in part, there‘s this loyalty thing between Bush and his closest advisers, especially the guy who knew that George Bush was going to be governor before he did, the guy who was there from the very beginning...

MATTHEWS:  Yes, but Bush, the president, said that, Any one of my people involved with leaking this will be taken care of.  Is that what he meant by today‘s ceremony, the bear hug and everything?  Is that being taken care of?  I mean, I‘ve never seen a staff aide be as signed off on at the presidential helicopter with such majesty.  It was almost regal today, like he was knight being the guy.  And he said he was going to take care of this bum, anybody that leaked in the CIA case.  Well, this how he took care of him.

SLATER:  And it really tells you the difference...

MATTHEWS:  He knighted the guy.

SLATER:  Well, look, it tells you the difference between Karl Rove, political operative like any other political operative, and Karl Rove this instrumental figure within the White House.  I think Bush thought at the time, A, you don‘t look like you cut your losses right after the midst of this investigation or at the very end of it.  Secondly, I think Bush and Rove felt there were still things to be accomplished, and by and large, that hasn‘t happened.

BUCHANAN:  But sure, if you save Alberto Gonzales, for heaven‘s sakes, you‘re going to save Karl Rove.  Before this is over, Chris, he‘s going to get a Medal of Freedom.  You watch.

(LAUGHTER)

BUCHANAN:  He will get it in January...

MATTHEWS:  Alberto Gonzales!

BUCHANAN:  No, not...

MATTHEWS:  Oh, Karl Rove will.

BUCHANAN:  Karl Rove will.  You watch.  I mean, Bush‘s father did it with Rumsfeld and all those guys before they left.  You watch.

MATTHEWS:  I mean, Whittaker Chambers is one thing...

(LAUGHTER)

MATTHEWS:  ... but this guy—I mean, let me ask you the question—how do you rate a guy‘s success if he‘s on such a losing team right now, Pat?  The president doesn‘t have popularity in the country.  His immigration bill, which you didn‘t like, went down the drain.  His social Security plan, to make it voluntary, to create personal accounts, went down the drain.

BUCHANAN:  I think...

MATTHEWS:  Everything he‘s tried to do except the initial tax cut and war in Iraq.

BUCHANAN:  The Bush second term is shaping up as a very big and

possibly historic failure.  To some degree, Rove gets the credit or

responsibility for that.  But his main responsibility is to put George Bush

in the governorship twice and to put him in the White House once and then

re-elect him.

MATTHEWS:  OK.

BUCHANAN:  He did that.  That‘s the big test for a political adviser.

MATTHEWS:  Well, my big question—we‘re going to debate this later, but why should Karl Rove go out and make tens of thousands of dollars per speech, maybe 50K a speech, and tell everybody (INAUDIBLE) answer any question they put to him in these speeches...

BUCHANAN:  Right.

MATTHEWS:  ... because as you know, Pat, and I know, you have to answer the questions when they‘re paying you...

BUCHANAN:  Right.

MATTHEWS:  ... and yet he won‘t answer any questions on Capitol Hill. 

A legitimate constitutional body cannot him questions, but if you pay up...

BUCHANAN:  Well, look—look...

MATTHEWS:  ... you can get the information from him.

BUCHANAN:  If Jefferson can defend his office from the FBI, Rove ought to be able to defend his conversations with the president.

MATTHEWS:  Bill Jefferson?

BUCHANAN:  Bill Jefferson, the guy with 90 grand in the freezer.

MATTHEWS:  That‘s below the belt.  That‘s below the belt.

(LAUGHTER)

MATTHEWS:  That cold cash.

BUCHANAN:  No, no.  It is.  It‘s separation of powers.

MATTHEWS:  (INAUDIBLE) how quickly he goes right for below the gut. 

He goes after Bill Jefferson, who has no supporters out there...

BUCHANAN:  No, but he won the case.  He won the case in law, and he should have.

MATTHEWS:  Hey, you know what, Wayne?  Get your book out, another edition.  I think you‘ve still got a story there, by the way, because he‘ll be out on the campaign trail giving lectures right now, making good money.

SLATER:  Hey, look...

MATTHEWS:  You could have a complimentary book to hand out.

SLATER:  Chris, he‘s not only going to be out there on the lectures, he‘s going to be the number one advocate, you could say explainer, you could say rehabilitator of the Bush legend.  He understands that the legacy of George Bush and Karl Rove depend on what historians say.  Rove sees himself as an historian.  Look for the Rove book at your newsstand pretty soon.

MATTHEWS:  OK.  It‘s pretty good when you get—you get people to applaud and give you 50K besides.

Anyway, thank you—or more.  Thank you, Wayne Slater. 

Congratulations on describing Bush‘s brain before we even knew these guys. 

Anyway, Pat Buchanan, as always, playing defense on rough turf.

(LAUGHTER)

MATTHEWS:  Up next, the Cinderella man—the Cinderella story of the Iowa straw vote.  Former Arkansas governor Mike Huckabee—he scored second place behind Romney, who paid for most of his votes by busing people in at 35 bucks a pop and a thousand bucks a volunteer and 200,000 bucks in radio and TV.  And here‘s old Mike Huckabee, man of the people.  We‘re building this guy up here tonight.  He came in second and obviously did with charm and I think because he looks like Kevin Spacey.  I‘m not sure.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Mitt Romney won Saturday‘s Republican straw poll out in Ames, Iowa, but the man who got second place is getting all the attention.  Mike Huckabee is the former governor of Arkansas.  Well, you‘re the Cinderella man.  What‘s it like to come in second to a guy that spent $2 million and apparently was hiring volunteers at a thousand bucks a pop?

MIKE HUCKABEE (R-AR), PRESIDENTIAL CANDIDATE:  Well, you know, Chris, for us, it was kind of like “Rocky.”  You lay there and you think, I don‘t know if I can beat the guy, but I can go the distance.  And that‘s what we showed, and it really was a victory for us.  I mean, we spent less than $90,000 on the day.  We went against people with paid TV, with buses that they hauled folks in and giving away T-shirts.  And basically, we gave away Hope watermelons from my home town and rock-and-roll music from my rock band, and had more voters than we even bought tickets for.  It was a big day for us, and I think it proves that if we just had, you know, some money, that this campaign would be on the top of the mountain and not crawling up the side of it.

MATTHEWS:  Suppose over in Iraq right now, where we‘re trying to build a democracy, we heard that the way of picking the next prime minister of Iraq was you got to pay 35 bucks to vote, the money really is about who can get people there to vote because it‘s not really a democracy.  Wouldn‘t it look kind of offensive to us?  Wouldn‘t we say we‘re wasting our blood and treasure for something that doesn‘t look like democracy?  Does this way of picking an American president pass the smell test?

HUCKABEE:  Well, if we were actually picking the president that way, it wouldn‘t pass the smell test.  But this is an exercise really in political ground game, and it‘s for the Republican Party of Iowa.  Frankly, they‘re pretty smart to come up with a great fund-raising tool.

MATTHEWS:  Yes.

HUCKABEE:  But it shows whether a candidate has a message that‘s connecting with voters that will get them to dive four hours and stay all day in 105 degree heat.  That‘s really the test.

MATTHEWS:  You know, “The New Yorker” magazine this week has just come out with a big 20-page story, huge story, basically making the case that Rudy Giuliani has tremendous appeal in the rural parts of America, despite his position on social issues, including abortion rights, that he comes across as tough, an SOB, if you will, a guy that‘s willing to clean the streets in the worst—toughest way.  What do you say to that?

SLATER:  Well, I think if he had really come across to rural America, he‘d have played in Iowa last week.  The fact that he and John McCain forfeited indicates that they didn‘t think they would do very well.  And if you can‘t do well in middle America, despite “The New Yorker‘s” endorsement, you‘re going to have a hard time becoming president.

MATTHEWS:  Let me ask you about Mitt Romney.  You know, I watched him on the “Today” show this morning.  He looks like a million bucks.  Everything is perfect.  Everything about him is perfect—his look, his manner, everything, the shirt, never rolled-up sleeve, the tie always tied.  That perfection—is that the Republican Party of the 21st century?  Is that what we‘re looking for, the perfect efficiency expert?

HUCKABEE:  Well, if it is, I‘m not going to get the nomination, because I‘m far from perfect. 

(LAUGHTER)

HUCKABEE:  I‘m the guy that—I have got a bald spot on the back of my head.  My life has been one of nothing but struggle in many ways.  But I think that is why I will end up being the nominee. 

There a lot more people that can relate to people like me.  And, frankly, last week, when I was on the program and you had the guy on there named Steve from Chicago...

MATTHEWS:  Yes. 

HUCKABEE:  ... you know, there‘s a lot of people like Steve out there in America. 

I can relate to Steve, and Steve can relate to me.  I know what lava soap feels like.

MATTHEWS:  Skvara.  Mr. Skvara, that‘s right. 

HUCKABEE:  Yes.  And that is powerful. 

And I truly believe that what happened to us this weekend in Iowa, there were a lot of people who realized that they need a president who has really walked where they have walked and who has some empathy for life sort of at the bottom of the mountain, not necessarily at the top. 

MATTHEWS:  OK.

You are outpolling everybody the most—you‘re listed, by the way, in Washington—I was looking at “The National Journal,” our partner in many affairs in Washington.  “The National Journal” lists you as the most underrated Republican.  That‘s based on a poll of professionals.  You were right up there as number one. 

Look at it, 46 percent of people who just quickly named you and said, this guy is better than he looks.

When are you going to meet expectations?  When are you going to—Oh, what‘s the right word? -- overcome expectations? 

(LAUGHTER)

HUCKABEE:  I think, Chris, it‘s starting to happen.

MATTHEWS:  I guess you have done it. 

(CROSSTALK)

MATTHEWS:  You did it over the weekend. 

HUCKABEE:  Well, we did. 

And, you know, the only thing people have ever said about me was that, you know, he—he would be a great guy if he just had the money.  And I have been saying that we have got the message, and the message ought to produce the money. 

You know, a lot of donors told us that, if we got some traction, they would help us.  Well, I‘m telling them, we have got the traction.  You need to send the check.  And, once that happens, this campaign is totally different.  That‘s the only thing that has lacked.

MATTHEWS:  Right. 

HUCKABEE:  And—and it is because we got a later start.  But ideas are going to win the presidency, not a bank account. 

MATTHEWS:  Well, if we had wings, we could fly. 

(LAUGHTER)

MATTHEWS:  Let me ask you, do you think you might accept the V.P. with Giuliani?  Is Giuliani-Huckabee just too long a name?  Or is it Rudy and Mike or what?  Is that even feasible? 

HUCKABEE:  I think the real question is, would I pick Rudy to be the running mate?

I still believe, Chris, that this is a long way off.  And we are talking about the hot days of August of 2007.  Let‘s take another look at that in about November or December, and then we will—we will talk about who should be on the top of the ticket. 

MATTHEWS:  OK. 

Well, I don‘t want to rain on your parade.  You did well out there. 

You beat out a lot of other cultural conservatives.  You are the number-two guy.  And you didn‘t have the money.  You only spent $87,000.  The other guy spent $2 million.  I think your ratios are much better.  You have delivered.

Congratulations. 

Even on HARDBALL, we congratulate. 

Congratulations, Mike Huckabee.

HUCKABEE:  Thank you, Chris. 

(CROSSTALK)

MATTHEWS:  ... done so well with so little money.  It is what you do with what you got that counts.  That is what Walt Disney said, anyway.

Up next: more on what is happening in the news today, with Karl Rove‘s going away and Mike Huckabee‘s second place. 

Plus, Hillary Clinton hits the airwaves in Iowa, but could she be a drag on other Democrats?  Some Democrats are whispering that she could bring them all to defeat next year, when they all have to run together. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  It is the end of an era in Washington.

As we said, Karl Rove, the president‘s most trusted adviser, has resigned effective August 31.  Rove is a political warrior, as we know, who played politics like a blood sport.  And the big question tonight is, where will he go next?  Will he work on the 2008 campaign?  Will he continue to be a ramrod in Republican politics?

He won‘t talk to Congress, as we know.  But odds are that he will be out there on the lucrative lecture circuit.  So, if you want to hear what Karl Rove has to say, you might have to pay him. 

And this week‘s “New Yorker” magazine takes a look at how Rudy Giuliani just might be able to win the party faithful.  The big question posed by the 20-page piece is—quote—“Is what New York never liked about Rudy Giuliani exactly what the heartland loves?”

We‘re going to get into that later with the author.

Is Hillary a drag?  The Associated Press has talked to 40 top Democrats about what a Hillary nomination would mean for the party.  By and large, these Democrats, almost—almost all of them talking without using their names, believe that a polarizing politician like Hillary could cost the party some congressional seats in 2008.

Still, Senator Clinton remains the clear front-runner.  And she begins to air her first TV ad in Iowa. 

Here it is.  Check it out.

(BEGIN VIDEO CLIP, CLINTON CAMPAIGN AD)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  As I travel around America, I hear from so many people who feel like they are just invisible to their government. 

ANNOUNCER:  Hillary Clinton has spent her life standing up for people others don‘t see. 

CLINTON:  You know, if you are a family that is struggling, and you don‘t have health care, well, you are invisible to this president. 

If you are a single mom trying to find affordable child care, so you can go to work, well, you are invisible, too. 

And I never thought I would see that our soldiers who serve in Iraq and Afghanistan would be treated as though they were invisible as well. 

Americans from all walks of life across our country may be invisible to this president, but they are not invisible to me.

(APPLAUSE)

CLINTON:  And they won‘t be invisible to the next president of the United States. 

(APPLAUSE)

CLINTON:  I‘m Hillary Clinton, and I approve this message. 

(END VIDEO CLIP)

MATTHEWS:  Well, as you just heard, when she uses it well and modulates it, she has a beautiful voice. 

Anyway, Mike Huckabee is riding a big wave of publicity after his second-place victory—second-place finish out in the Iowa straw poll this weekend.  Mitt Romney, of course, won, but spent a fortune to do it.  The big question now is, can Huckabee turn his newfound fame into fortune and raise the kind of money he needs to stay competitive in the race, especially out there in the mid part of the country?

And, finally, the president‘s war czar, Douglas Lute, raised the ugly head of a return to the military draft when he appeared on NPR. 

Let‘s take a listen.

(BEGIN AUDIO CLIP)

LIEUTENANT GENERAL DOUGLAS LUTE, U.S. ARMY:  I think it makes sense to certainly consider it, and I can tell you this has always been an option on the table, but, ultimately, this is a policy matter between meeting the demands for the nation‘s security by one means or another.

Today, the current means, the all-volunteer force, is serving us exceptionally well.  It would be a major policy shift, not actually a military, but a political policy shift to move to some other—some other course. 

(END VIDEO CLIP)

MATTHEWS:  Should the country reinstate the draft?  That is our HARDBALL debate tomorrow night.

Up next, tonight‘s HARDBALL debate:  Karl Rove is leaving the White House, but should he be forced to testify to the U.S. Congress?

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MILISSA REHBERGER, NBC CORRESPONDENT:  I‘m Milissa Rehberger with your CNBC “Market Wrap.”

Stocks ended the day about where they started.  The Dow Jones industrial caught—lost three points.  The S&P 500 was down a fraction.  And the Nasdaq fell about two-and-a-half points. 

The Federal Reserve added another $2 billion to the banking system, helping investors set aside some concerns about tightening credit.  It followed moves today by the Bank of Japan and the European Central Bank to inject more cash into their banking systems. 

Goldman Sachs also announced a $3 billion bailout of one of its hedge funds.  Its Global Equities Opportunities fund had lost about 30 percent of its value this month. 

Some better-than-expected economic news:  Retail sales were up three-tenths-of-a-percent last month, raising hopes consumers will continue spending, despite the troubled housing market. 

And oil prices were up slightly, rising 15 cents in New York, closing at $71.62 a barrel. 

That is it from here—now back to HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Is Karl Rove leaving his job at the White House so he can avoid congressional scrutiny, or is he going to face more now that he‘s exposed and outside the White House?  Will he be forced to testify on his role of the firing of those—those eight or nine U.S. attorneys and the CIA leak investigation, of course, which is ongoing up on the Hill?  That is today‘s HARDBALL debate. 

Joe diGenova is a former U.S. attorney, a big guy in this town.  He served as former independent counsel.  He was all over the place here, big social figure here.  And Melanie Sloan is the attorney for Joe and Valerie Wilson, of course.  She‘s also executive director of CREW, which is Citizens for Responsibility and Ethics in Washington. 

You start, Melanie.

Why should Karl Rove have to testify?  He is out of the White House. 

He‘s claiming executive privilege.  He‘s a free man.

MELANIE SLOAN, EXECUTIVE DIRECTOR, CITIZENS FOR RESPONSIBILITY AND

ETHICS IN WASHINGTON:  He should have to testify because the American people deserve to know the truth about so many scandals that Karl Rove has been involved in.  And that includes the U.S. attorney scandal, the leak of Valerie Plame‘s identity, and also the political briefings that he was engaged in, in order to benefit Republicans in the 2006 midterm elections. 

MATTHEWS:  OK. 

Are those criminal matters? 

SLOAN:  Well...

MATTHEWS:  Is this like Watergate, where the president is involved in a criminal conspiracy, where you can say, it‘s like he has to be the same as any other citizen; he has to be susceptible to testifying and being a material witness?  Or is it just a—a congressional exploration? 

SLOAN:  No, there are actual criminal laws that may have been violated here.  Terrorist are penalties associated with the Hatch Act that may have been violated.  And, if the White House was orchestrating the firing of U.S. attorneys for the political reason of trying to interfere or obstruct justice in certain cases, that, too, could be actual criminal matters. 

MATTHEWS:  For the defense, Joe diGenova. 

JOE DIGENOVA, FORMER FEDERAL PROSECUTOR:  Well, of course, he doesn‘t have to testify.  Even though he‘s leaving the White House, the executive privilege argument will follow him, because what matters is what he did while he was working for the president. 

So, the White House will continue to insist on executive privilege.  There will be that invocation.  And then Congress will have to decide what it wants to do in all of these areas, where—whether it wants to proceed to contempt citations against him and others.  That, of course, is a...

(CROSSTALK)

MATTHEWS:  Can they issue a bench warrant and go chase him with the... 

(CROSSTALK)

DIGENOVA:  Theoretically, Congress can execute its own contempt citations and have a trial in the well of the House.  They can arrest people.  They can hold them in the little cell that exists in the well of the—under the Capitol. 

But they eschewed doing that many, many years ago because it was time-consuming and it was politically very, very bad for them.  And, so, they will have to rely on the judicial process through the U.S. attorney in the district, which raises all sorts of issues about whether or not anything would ever come of that.  But I don‘t even think they are going to get to that point. 

MATTHEWS:  Do you think Karl Rove had a role in—in forcing the resignation of U.S. attorneys, those eight attorneys we keep talking about?

DIGENOVA:  Oh, well..

MATTHEWS:  Do you think he played a role in that?

DIGENOVA:  Well, I—you know, nobody knows who played what role at this point. 

And I can‘t imagine—I can‘t imagine that he wasn‘t consulted, because, as you know, these are very, very important political decisions, who is appointed U.S. attorney. 

MATTHEWS:  Right. 

DIGENOVA:  And, so, I wouldn‘t be a bit surprised if Karl Rove was involved in those, because the political office is consulted on every nomination, judicial...

MATTHEWS:  OK. 

DIGENOVA:  ... U.S. attorney.

SLOAN:  Well, we know for sure that he was involved in at least one. 

And that is of the Arkansas U.S. attorney, Bud Cummins, because he wanted him to be replaced with a former staffer to—to Rove himself. 

MATTHEWS:  Right. 

SLOAN:  So, we know he was involved there. 

DIGENOVA:  That is correct.  That‘s exactly right.

And, as a matter of fact, the president has the right to remove any U.S. attorney for any reason. 

And, so, your—your initial question was—is, have any criminal laws been broken?  There‘s absolutely no evidence whatsoever of that in any of these areas.  And that‘s one of the...

SLOAN:  I don‘t think that‘s true.

DIGENOVA:  Excuse me.

And that is one of the reasons that the Congress is going to have a very, very difficult time in piercing executive privilege. 

MATTHEWS:  OK. 

What—give me probable cause, if you will, or whatever the right legal term is.  Give me a crime that Karl Rove, you believe, broke, committed.  Give me a crime he committed. 

SLOAN:  I would say that he leaked information in the Valerie Plame case.  He...

MATTHEWS:  In a—in a felonious way?  He broke a federal law? 

SLOAN:  Yes, I think he broke a federal law by—by giving out Valerie Plame‘s identity to reporters. 

I think that he also has been involved in obstructing justice in the U.S. attorney scandal.  I think he is trying to hide behind executive privilege, so that the American people don‘t learn the truth about the firings of the U.S. attorneys, including David Iglesias and John McKay, who both were contacted by members of Congress because they were not doing enough politically to help Republicans in those districts. 

DIGENOVA:  All I have got to say is, I‘m glad Melanie is not a federal prosecutor, because she is not playing hardball.  She is playing spitball. 

This is the goofiest stuff I have ever heard. 

MATTHEWS:  Well, what about...

(CROSSTALK)

DIGENOVA:  There is not one scintilla of evidence that any criminal law has been broken in any of these areas.  Congress is going to have to meet that threshold to pierce executive privilege. 

MATTHEWS:  Well, why do we have a case involving the president—the president‘s assistant for national security, the vice president‘s chief of staff, in which the vice president refuses to testify, the defendant refuses to testify, so they don‘t have to give away any information?  So, they have escaped...

(CROSSTALK)

DIGENOVA:  Those are called constitutional rights, Chris, in our system. 

MATTHEWS:  But they have avoided telling the public what role they played.  That‘s what—now they are using executive privilege to deny it.  And the vice president often uses this argument:  No matter what meeting I have, it is a secret meeting. 

DIGENOVA:  You know, Chris, every...

MATTHEWS:  Isn‘t there an awful lot of secrecy in this administration?

DIGENOVA:  Every president has used executive privilege to shield information and to keep it secret, Jimmy Carter...

MATTHEWS:  Right. 

DIGENOVA:  ... Bill Clinton.  It‘s—it‘s...

MATTHEWS:  OK. 

(CROSSTALK)

MATTHEWS:  Has any other president ever—well, I‘m not going to get on your case.  I‘m going to try to help. 

You know, it seems to me that—that—that the Karl Rove...

(CROSSTALK)

DIGENOVA:  By the way, Karl Rove was not charged with a crime in the Valerie Plame matter.

(CROSSTALK)

MATTHEWS:  I know he wasn‘t.

DIGENOVA:  So, any suggestion that he broke the law—there is no evidence...

MATTHEWS:  OK. 

DIGENOVA:  ... that, by talking with reporters, he violated any law. 

MATTHEWS:  Let me ask you about Karl Rove and the question—now I have lost my question. 

Go ahead, Melanie. 

(LAUGHTER)

DIGENOVA:  Sorry.

MATTHEWS:  No, it seems to me...

(CROSSTALK)

MATTHEWS:  It seems to me that Karl Rove is basically claiming that any conversation he has, even without the president in the room—his executive privilege claim is that:  If I‘m talking to anybody in the Justice Department, anybody who works for Alberto Gonzales, anybody there who had to do with the firing of those judges, that is executive privilege. 

I thought executive privilege meant conversations with the president. 

DIGENOVA:  Actually, the Clinton cases in the D.C. Circuit expanded it beyond conversations with the president, much to the dismay, by the way, of many people who were against president Clinton.  The D.C. Circuit expanded executive privilege in the Clinton cases, and whether or not it would work its way through to that, ultimately to force testimony, no one knows. 

SLOAN:  Let me just say that in the Clinton years 31 different top officials in the White House testified 51 times in front of Congress.  This is a far cry from what this administration did. 

MATTHEWS:  Were they subpoenaed or did they voluntarily testify? 

SLOAN:  They voluntarily testified, which is what we should be seeing Karl Rove do to clear up the truth of the matter.  This is a Democratic system of government. 

(CROSS TALK)

MATTHEWS:  -- had to give a speech somewhere, and you show up and raise your hand, because he has to answer the questions. 

DIGENOVA:  Melanie, as I understand it, is representing the Wilsons in a civil suit in which Karl Rove is a defendant.  Let‘s get that on the table.

MATTHEWS:  We put that on the table almost every time she‘s here. 

DIGENOVA:  But Melanie has all sorts of reasons to want witnesses in here case to talk.  And many of us who might represent some of those cases, which I don‘t, would find many, many reasons we would not want our witnesses to talk.  And she understands the system. 

SLOAN:  That is a different matter.  Of course it‘s unfair, because even if you are putting aside Valerie Plame, there‘s still the U.S.  attorney matter, the political briefings matter and the RNC email accounts. 

DIGENOVA:  By the way, if you‘re calling her Valerie Plame; Joe Wilson corrected me the other day, said it is Valerie Wilson.  I don‘t know where he gets that.  But you better call her Valerie Wilson or Joe Wilson is going to be after you. 

MATTHEWS:  He did walk out of the White House today.  He got almost a knighthood from the president with that big hug. 

DIGENOVA:  Karl Rove? 

MATTHEWS:  Yes.  He didn‘t walk out frog marched.

DIGENOVA:  After six years of warfare—

MATTHEWS:  Who won this fight?

DIGENOVA:  Which fight? 

MATTHEWS:  The fight over whether Karl Rove should have to explain himself? 

DIGENOVA:  Karl Rove did win and will continue to win.  The law is going to be on his side in this matter, and the president‘s. 

MATTHEWS:  Melanie, who won this?

SLOAN:  Well, I think the battle is still ongoing and we will see.  I still hope to see Karl Rove forced to testify in front of Congress. 

MATTHEWS:  I know you do.  Thank you for coming on.  Any time, Joe Digenova, my pal.   

DIGENOVA:  Thank, Chris. 

MATTHEWS:  I don‘t think we agree on too many things, but I like having you on this show. 

DIGENOVA:  We agree on a lot. 

MATTHEWS:  You are with Fred Thompson?  Right?

DIGENOVA:  He is my man. 

MATTHEWS:  I would have thought you would be with Rudy.  Up next, our HARDBALL round table on Karl Rove‘s exit.  The other Giuliani, the one that everybody likes in the south, and much more.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Time now to hash through the hottest political stories, sift through the best political news.  And here to do it is our panel tonight, our round table; TownHall.com‘s Amanda Carpenter, Josh Green, who writes about Karl Rove in this month‘s “Atlantic Monthly,” and Peter Boyer, who has written an amazing piece about Rudy Giuliani in the “New Yorker Magazine.” 

First up, Rove calls it quits.  This morning, the man known as Bush‘s brain, the president‘s closest adviser, announced his resignation effective the end of the month.  Why now and what does it mean for the president, mired in political trouble, in the Iraq turmoil?  Will Karl Rove remain a ram rod in the electoral politics of the Republican party and will he still help to manage the legacy of the president.  Josh Green?

JOSH GREEN, “THE ATLANTIC”:  I think he is on board to an extent.  But I think he chose to leave now because it‘s clear now that he‘s not going to accomplish what he set out to accomplish, which was the idea that he would create this lasting Republican majority.  And everybody expected Rove to be there through the very end.  And the fact that he‘s throwing in the towel now and leaving, I think, is as clear a signal as any that that‘s not going to happen. 

MATTHEWS:  Yes, he lost on immigration, lost on Social Security reform, lost the House, lost the Senate and now has a president who is down around 30-something.  Your thoughts, Amanda. 

AMANDA CARPENTER, TOWNHALL.COM:  Well, he could turn to the Medicare prescription drug.  But he also did help President Bush pick up—

MATTHEWS:  He did pass prescription drugs. 

CARPENTER:  That‘s what got the backlash from Republicans. 

MATTHEWS:  So has Karl Rove been a plus or a negative for the American people?  Is he a good American or a bad American? 

CARPENTER:  I wouldn‘t call him a bad American, certainly.  He served his country nine years in the Bush White House, which is a tremendous job and I think an accomplishment for anybody.  You know, he has been there nine years.  He has hung on.  And we heard that from Josh Bolten; if you are not going to hang on past Labor Day, it may be time to go. 

MATTHEWS:  Yes, but he said he was going to leave before Bolten put his dictum down there.  Let me go to Peter Boyer; what do you make of the disappearance now of Karl Rove, the man whose brain, apparently, Bush has relied on? 

PETER BOYER, “THE NEW YORKER”:  Frog marched himself out of the White House.  What he is, more than anything else, is a political strategist and a pretty smart political strategist, who created two Bush presidencies, I mean, Bush Jr. one and two.  And whether or not—to be judged on whether or not he built a lasting Republican majority, I think anybody who has read a chapter of American history understands that that was impossible and wouldn‘t happen. 

Listen, I think he leaves pretty much under as good a circumstances as he can, considering everything. 

MATTHEWS:  Peter, next up, the other Giuliani; in the latest issue of the “New Yorker Magazine,” our own round table member, yourself, Peter Boyer, takes a look at Rudy Giuliani‘s courtship of the heartland and Republicans across the country.  As the piece asks, is what New York never liked about Rudy Giuliani exactly what the heartland loves?  Will voters focus on Rudy‘s record of cleaning up liberal urban New York and will his toughness against enemies overshadow his stance on social issues. 

I have a belief, apparently you‘ve written it, that Rudy Giuliani has appeal in the south beyond where his values of abortion rights and perhaps gay rights prevail. 

BOYER:  Absolutely.  So, I live in New York.  I grew up in south Mississippi.  I was at an Ole Miss-LSU game a few years ago.  John McCain, whose granddaddy had gone to school at Ole Miss, was there and he stopped by before the game.  And people were polite and glad to see him and shook his hand.  And he left and people started asking me about Rudy Giuliani.  Is Giuliani going to run. 

And the thing they said was, he can beat Hillary.  And that is what I have heard in South Carolina, all through the heartland, this is the guy who can beat Hillary Clinton.  The other piece of it is, he‘s, of course, famously the mayor of America for the September 11th heroics.  But I was surprised by the degree to which so many people outside of New York knew about the pretty radical reform that he effected in New York City.  And that counts a lot to a lot of people outside of the city. 

MATTHEWS:  Amanda, I have my own views, which I will share at this moment, which is that anybody can end crime as a menacing factor, a big factor of life in the big city, is going  to be a hero to people—even people who don‘t live in the cities.  They want the cities cleaned up so they can visit them. 

CARPENTER:  Absolutely, there‘s an impression if he can clean up New York, liberal New York City, he can come to Washington and clean that up.  And I think there‘s an appeal that Giuliani, even though he does have these issues with marriage and abortion, he will tell you what he is going to do, even when you don‘t want to hear it; compared to Mitt Romney, who does have a credibility issue at this point in time.  We know what we are going to get with him.  He is up front about it. 

MATTHEWS:  All the liberals I work with all say the Republicans will never buy Rudy because he is pro-choice.  Maybe because I grew up in a Republican family, I know the Republicans.  Democrats like meetings, Republicans like leaders.  They are a different culture.  They want somebody to give them the orders.  They don‘t want to have another collegiality session, or tea group.  They want a boss, a leader.  And Rudy, whatever you think of him, gives orders. 

GREEN:  They felt the same thing about George W. Bush.  This guy isn‘t bright enough. 

MATTHEWS:  He had his day.

GREEN:  I think with Giuliani it could be a case of underestimating.  And the other thing that liberals, I don‘t think, take into consideration is the fact that the better Hillary Clinton is doing as the Democratic nominee—the likelier it looks she will be the nominee, the better chance that liberal leaning Republicans like Giuliani and like Mitt Romney, I think, have, because, when push comes to shove, I think almost any conservative, regardless of where they fall on the spectrum, would rather have any Republican as president than President Hillary Clinton. 

MATTHEWS:  Let me ask you, Peter, about something in the book, that I must say here—it‘s almost book length—your piece in the “New Yorker” that scared me a little bit.  Norman Podhoretz has been brought aboard, the leader, one of the founders, if not the founder of neo-conservatism.  And he‘s apparently pushing action against Iran.  One lesson we learned from Iraq was don‘t occupy an Islamic country and play defense henceforth. 

Is he really going to talk Rudy Giuliani into attacking Iran, so we would have Afghanistan, Iraq and Iran to occupy and defend for the rest of the century? 

BOYER:  Well, I don‘t think he is necessarily going to talk Giuliani into anything.  I think Giuliani is going to do what Giuliani decides.  But I do think it is interesting that Rudy Giuliani chose to pick, of all people, Norman Podhoretz as his senior foreign policy man. 

MATTHEWS:  Is it tactical?  Was it policy? 

BOYER:  I think you‘re right.  I think it was tactical partly.  I mean, the beltway, mainstream media, the conventional wisdom is neo-conservatism is dead.  It‘s poison.  It‘s tainted.  You don‘t want to get anywhere near that particular stank.  So what does Rudy do but go out and pick Mr. Neocon as his policy advisor.  I think, to the degree that policy advisors mean anything, at least part of what they mean is a message they send to the base, and that is sending a pretty clear message. 

MATTHEWS:  The only thing worse than having the American army stuck in Arabia is to have what is left of the reserves plunked down in Persia, a frightening prospect.  We will be back with the round table.  Lots more to talk about tonight.  You‘re watching it, HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with TownHall.com‘s Amanda Carpenter, the “Atlanta Monthly‘s” Josh Green, and the “New Yorker” Magazine‘s Peter Boyer.  Next up, -- this is a hot one—Is Hillary a drag on her party?  The Associated Press today looks into the affect that Hillary Clinton‘s candidacy could have on Democratic congressional candidates in 2008.  In more than 40 interviews with top Democrats, the piece shows a party worried about the damage from such a polarizing politician.  That‘s what they say. 

With her unfavorability numbers high in places with key races, how much of a liability is she, Josh?  Is Hillary going to bring down the Democratic Congress?

GREEN:  I don‘t know if she‘s going to bring down the Democratic Congress.  But if you talk to Democratic strategists in purple states—

I‘ve been out in Colorado.  I‘ve been in Virginia.  These are -- 

MATTHEWS:  Purple states?  Half in half?  Red and blue, like in crayons?   

GREEN:  These are the states where Democrats got their majority in 2006.  It was folks like Jim Webb.  It was people in Colorado, like Salazar, who were knocking off—

MATTHEWS:  But that‘s where Hillary hopes to win.  She hopes to win in places like Nevada and Colorado and New Mexico. 

GREEN:  Well, if you talk to strategists there, there is a lot of nervousness about that fact.  They think that one of the reasons Democrats won in 2006 was because there wasn‘t a, quote, unquote, polarizing liberal, a Clinton or John Kerry, at the top of the ticker.  If there is, a lot of those people think the dynamic could change a bit.  

MATTHEWS:  Peter, it‘s one thing to register a criticism of the current regime or government, as they did in 2006, it is another to pick a new commander in chief.  Isn‘t it? 

BOYER:  Yes, it is.  It‘s interesting.  I think, in a way, Hillary has

Mrs. Clinton has gone farther down the road of convincing people that she might be an effective commander in chief than she has in convincing Democrats that she can win.  And that is a real problem.  Josh is right.  Jim Webb was not exactly a Daily Kos Democrat in Virginia.  It is a pretty thin margin in both houses.  And Mrs. Clinton is—she is her own wedge issue. 

MATTHEWS:  It is interesting, because John Kennedy, who we all grew up

at least I grew up watching, was able to win the Democratic nomination by winning primaries and proving to the political experts that he could win.  He had to go out and prove it.  She has to too, right? 

BOYER:  I think that is still ahead of her.  And, you know, I hate to be impolite, but I think part of it—you talked about her first dad in Iowa, and a lot of it has to do with just superficial stuff, like how does she come across?  And there are people—I hear people over and over again folks in the Midwest and the south who just say, she is shrill, and that is a mountain to climb. 

MATTHEWS:  I guess shrill in New York meets a higher standard than shrill in Iowa.  I think if you are trying to catch a cab in New York, you have to be a little noisy.  Do you think she was modulating her voice?  Or do you think she was shrill?

CARPENTER:  I think she has gotten a lot better.  Sure, unfavorables

are high right now.  It is true, she has been unliked for a long time.  But

MATTHEWS:  Amanda, my unfavorables will be high if I don‘t get out of here.  Thanks.  Please come back.  We keep having you back.  Amanda Carpenter, Josh Green, good to see you again, Peter Boyer, hell of a piece in “New Yorker Magazine” this week, 20 pages—like a book.  Right now it‘s time for “TUCKER.”

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

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