updated 10/17/2007 10:33:56 AM ET 2007-10-17T14:33:56

Guests: Sen. John McCain, Stan Brand, Ed Schultz, Ron Christie, Jonathan Capehart, Julie Mason, Matt Continetti

CHRIS MATTHEWS, HOST:  Will the next president be more hawkish than Bush?  And will Larry Craig be the official greeter at next year‘s Republican convention?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Seattle, on my book tour for

“Life‘s a Campaign.”  Welcome to HARDBALL.  In our top story tonight:

Senator John McCain‘s running for president, but is Senator McCain an all-out ally of President Bush on the war issue?  Could it cost him the presidency to be so hawkish?  We‘ll talk to Senator McCain about Iraq, Iran, and who‘s the genuine article in this Republican fight.

And in our second story tonight, let‘s take a peek at that Matt Lauer interview with Senator Larry Craig that‘s coming up tonight on NBC.

(BEGIN VIDEO CLIP)

MATT LAUER, “MATT LAUER REPORTS”:  June 11, you are commuting back from here to Washington.

SUZANNE CRAIG, WIFE OF SEN. CRAIG:  Like every weekend.  Very routine. 

That‘s exactly what happens every week.

LAUER:  And you end up stopping in a bathroom.  It may be the most famous bathroom stop...

(LAUGHTER)

SEN. LARRY CRAIG ®, IDAHO:  I think you‘re right now.

LAUER:  ... of the last 10 years.  You end up stopping in a bathroom in what‘s called North Star Crossing.

SEN. LARRY CRAIG:  Yes.

MATTHEWS:  Were you aware at all, Senator, of the reputation of that specific bathroom?

SEN. LARRY CRAIG:  Well, I certainly am now.

LAUER:  Were you prior?

SEN. LARRY CRAIG:  No, not at all.  I walked into a bathroom.  I walked into an entrapment and a sting that was going on.  And I go to bathrooms to use bathrooms.

(END VIDEO CLIP)

MATTHEWS:  Plus, Russian leader Vladimir Putin was in Iran today and warned the United States not to use any former Soviet states to stage an attack on Iran.  Has America‘s prestige deteriorated since we invaded Iraq?  As America‘s top diplomat, has Secretary of State Condi Rice been a success or a failure?  That‘s our debate tonight.

We begin, however, with HARDBALL‘s David Shuster and this report on Senator McCain‘s 2008 run for the White House.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  On a day when Russian president Vladimir Putin visited Iranian President Ahmadinejad in Teheran, today it was Republican presidential candidate John McCain who delivered the most stringent campaign pledge.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  At the end of the day, we cannot allow the Iranians to acquire nuclear weapons.  And as president of the United States, I will not allow it to happen!

SHUSTER:  Russia‘s president Putin says Iran has a right to a peaceful nuclear energy program, and earlier, he urged the United States not to threaten the Iranian leadership or its people in the very manner McCain did today.  But McCain has been outspoken, and he supports possible military action now against Iranian forces aiding insurgents in Iraq.

MCCAIN:  I would at minimum consult with the leaders of Congress because there may become a time where you need the approval of Congress, and I believe that this is a possibility that is maybe closer to reality than we are discussing tonight.

SHUSTER:  McCain has also been outspoken about keeping the Iraq war going, and today the news there was again challenging.  Insurgents in Baghdad detonated a car bomb, killing at least six people.  And a series of attacks aimed at security forces and tribal leaders killed a dozen others.

Foreign policy concerns used to help Republican presidential candidates.  This year, voter frustration with the Republican world view is helping the Democrats.  According to the latest fund-raising reports, the top four Democrats in the presidential race now have $104 million in cash on hand.  The top four Republicans together have just $36 million.

John McCain reported $3.5 million in the bank, but after factoring in his debts and the funds he can only use if he‘s the nominee, McCain finished the third quarter $94,000 in the red.  To put that figure in perspective, Mitt Romney by comparison has had enough money to spend about $50,000 a day just on television ads.

MITT ROMNEY (R-MA), PRESIDENTIAL CANDIDATE:  It‘s not fair that you have to pay taxes when you earn your money, when you save your money, and then when you die.

SHUSTER:  And since February, Romney has aired more than 10,000 television spots.  Still, McCain is beginning to surge again in New Hampshire, the state that ignited his campaign seven years ago.  Polls show he is now up to 18 percent, up from single digits earlier this summer.  And McCain is on the attack.  Last week, Mitt Romney claimed to be the GOP‘s real Republican.  This weekend, McCain hit Romney hard.

MCCAIN:  He ran in Massachusetts as a very liberal Republican.  He said he didn‘t support President Reagan.

SHUSTER:  McCain also went after Rudy Giuliani for the former mayor‘s opposition to the line-item veto.

MCCAIN:  This is in direct contradiction, I think, to a fundamental Republican principle of being economic conservatives.

SHUSTER:  The latest “USA Today”/Gallup national poll of Republicans shows Giuliani leading at 32 percent, followed by Thompson at 18, McCain at 14 and Romney at 10.  But it is Romney who leads in Iowa and New Hampshire, and most Republican strategists say the overall race right now is unpredictable.

(on camera):  And that could benefit McCain, who is trying to recapture the old magic he had in his 2000 campaign.  Back then, McCain harped on the connections between lobbyists, lawmakers and legislation.  Now McCain is talking tough about Iraq and Iran.

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.  With us now, Arizona senator and presidential candidate John McCain.  Senator McCain, you‘re the only Republican candidate at the top of the list who‘s had military background.  You‘ve been in the armed services for so many years.  You served so nobly and sacrificially, I must say, in Vietnam.  Do you think you have an edge on knowledge in this area?

MCCAIN:  Oh, there‘s no doubt about it, Chris.  We‘ve been talking about a person who was mayor of a big city and did an admirable job and a person who was governor of a state.  And Fred Thompson had much more limited experience in the Senate.

But the point is that I have the qualifications.  I have the knowledge.  I‘ve been involved in decision-making on every major conflict that we‘ve been in in the last 20 years, and I know the issues.  I was the only one who‘s running who severely criticized Rumsfeld and that failed strategy and advocated the one that‘s succeeding now.  At the time I criticized Rumsfeld, I was accused of being disloyal.  I knew what needed to be done, and I know what‘s being done now.

And by the way, being a, quote, “hawk” on Iraq, I believe we‘re succeeding.  I know we‘re succeeding.  I know it‘s long and hard and tough.  As far as Iran is concerned, I have said 50 times, including I believe at a debate that you moderated...

MATTHEWS:  Right.

MCCAIN:  ... that I said we cannot allow Iran to have nuclear weapons.  But I also said we need to do a lot of other things we can do before we have to make that decision, and that is get countries together so we can impose meaningful sanctions and restrictions on Iran, which I think can have a beneficial effect.

MATTHEWS:  Well, let‘s talk about that because you did surprise me during that debate, and I don‘t think you got enough press coverage.  You said, I believe that this is a possibility, the conflict with Iran, that is maybe closer to reality than we are discussing tonight.  Do you know things that the other guys don‘t know, the other candidates don‘t know?

MCCAIN:  No, I don‘t know, Chris.  It‘s a matter of public knowledge that, in the view of many experts, that the Iranians are about two years away from a tipping point where they‘ve amassed, assembled enough material, enough capability, enough technological know-how that they are on the inexorable path to building a nuclear weapon.

You just saw, and it‘s now been on the front page of “The New York Times” and other newspapers, what the Israelis felt they had to do about a Syrian—a facility in Syria, which according to public reports, was assisted by North Koreans.

MATTHEWS:  Right.

MCCAIN:  So look, if the Iranians acquire a nuclear weapon, every nation in the region will acquire a nuclear weapon.  And I‘m not sure they‘d put it on a missile aimed at Israel, but I have every confidence they would give it to a terrorist organization.  This is important stuff.  But we are not yet at the point where we have to invoke the military option.

MATTHEWS:  Let me ask you about the consequences immediately if the Russians, Putin, or—whether he‘s prime minister or president at the time, whatever, he and his people decide they want to fight us on this, they‘ll say probably it‘s a peaceful nuclear program, probably, because they‘re favorable to Iran.  What do we do when they challenge us on the facts at the moment of decision?

MCCAIN:  Well, I think we‘ll have the sufficient information.  We‘re already assembling that information.

But a word about Putin.  The Russians and the Chinese are blocking us from taking action in many parts of the world, whether it be genocide in Darfur in the case of the Chinese, whether it be the case of North Korea for a long time, whether it now be the Chinese over Burma, the Russians over Iran and other issues.  And that‘s why we need to go outside the U.N.  Security Council.  We should form a league of democracies that can act with great influence and power, both economically and militarily.

We cannot allow the Russians, and the Chinese to a lesser degree, although the Chinese have been particularly unhelpful in Burma, to gridlock and prevent us from taking steps that are necessary to the future of our nations and the world.

MATTHEWS:  What do you make of Putin‘s threat to pull the other former Soviet republics together in a kind of a league against us if we try anything against Iran?

MCCAIN:  I think that Mr. Putin wants to restore the days of the Russian empire.  I look into his eyes and I see three letters, a K, a G and a B.  And obviously, I‘ve known all along that he was going to try to perpetuate himself in power.  The only thing that‘s propping up their country is the oil.  They have now assumed government control of most of the major industries.  They‘re smaller.  They have aging problems and age problems.

So we‘re not going to see a reignition of the cold war, but we are going to continue to see problems with Putin and his KGB apparatchiks.

MATTHEWS:  If we have to strike—if you believe we have to strike at the Iranian nuclear facilities some time in the next of couple years, what happens if they cut off the oil and the Russians join them in some sort of an embargo?  Won‘t that wreak havoc here?

MCCAIN:  Oh, I think, look, any scenario is fraught with enormous challenges and crises, Chris.  I don‘t underestimate the difficulty of this.  It‘s one thing to take out an Iraqi nuclear facility, as the Israelis did years ago.  This is a very, very tough challenge.  And that‘s why I say let‘s try to get these European nations together, impose the sanctions.  They‘ve got a weak economy.  They‘ve got a restless population.  But I still say, at the end of the day, a lot of challenges.

MATTHEWS:  OK.  On a lighter note, let‘s talk party politics.  I‘d like to ask these questions of you in the form of, say, well, comparative politics or comparative religions on the questions of who‘s the real Republican.  Now, the issue has come up here with Romney saying that he‘s from the Republican wing of the Republican Party.  He stole the phrase, obviously, directly from Howard Dean, who said he was the Democratic wing of the Democratic Party.  Is that a fair claim?

MCCAIN:  I don‘t think so.  I think it‘s very clear that then Governor Romney, when he was running in a liberal state, said that—supported Paul Tsongas for president.  He said that he didn‘t want to go back to the Reagan years, that he was not a Reagan Republican.  He contributed to a Democrat candidate in New Hampshire.  And he had liberal positions on virtually every issue, ranging from abortion to immigration.

So look, we‘ve got to earn the voters‘ respect, and that‘s what it‘s all about.  And we‘ve got to respect the voters before we earn their respect.  I don‘t see how you can make the case, when his record is rather clear, understandably in many ways, of running as a liberal in a very liberal state.

MATTHEWS:  Senator, when you‘ve had to compromise to get support from some Republican factions that may not normally be with you because you‘re quite a maverick, you‘ve looked like you‘ve had a tortured look on your face when you had to do it.  Remember what you said about the flag in South Carolina, you didn‘t really feel happy about that.  It doesn‘t look like Romney has a problem with doing this stuff.

MCCAIN:  No, but I have to—I‘m sorry you brought it up because I have to quickly say what I said about the flag in South Carolina was an act of cowardice on my part.

MATTHEWS:  Well, what‘s he doing?  What‘s Romney doing?  He has flipped on everything.  Well, I don‘t want to put the words in my mouth.  If he‘s pro-choice in Massachusetts to get elected, now he‘s pro-life to win a national Republican referendum, what is he?

MCCAIN:  I think that‘s for the voters to determine, but I think we all run on our record.  I am a proud conservative Republican.  Are there other conservative Republicans in the race?  I don‘t lay claim to the mantle.  I do lay claim to the strength of my credentials and knowledge and background on national security issues, which I think is the transcendent challenge of our time, radical Islamic extremism.  I‘m the most prepared, I believe.  At least my qualifications, I hope, have earned me the voters‘ consideration.

MATTHEWS:  Let me ask you about New Hampshire.  Everybody loves New Hampshire.  Everybody in the press loves it.  I think the candidates love the state.  It‘s small.  It‘s gritty.  It‘s a little cranky sometimes, but it‘s real.  They look for the real person.  They usually find the person that‘s overlooked, whether it‘s Henry Cabot Lodge or somebody else, and surprise the country.  Do you think you can knock off the neighbor state governor up there?  Can you knock off...

MCCAIN:  Oh, yes.

MATTHEWS:  Can you beat Mitt Romney in his own region?

MCCAIN:  Oh, there‘s no doubt about that.  We‘re seeing a lot of renewed enthusiasm in the town hall meetings.  I had one the other night.  I was very nervous about it.  It was during a Red Sox game, and we still had a big turnout.  I‘m very confident.  We‘re doing well.  Look, it‘s long and hard and tough, and it should be, but I‘m happy with the way we‘re going and I‘m pleased with our progress, but I don‘t underestimate the challenge, my friend.

MATTHEWS:  So you‘re better off with the Diamondbacks out of this thing?

MCCAIN:  Oh, I‘m so sad!

(LAUGHTER)

MCCAIN:  They shouldn‘t be playing in that weather.  But you‘ve got to hand it to the Rockies.

MATTHEWS:  I know.  Where‘d they come from?  They didn‘t win the division.  They didn‘t think they were going to win the wild card.  They knocked out San Diego.  They beat the Phillies.  God, where did they come from?  Cinderella.

MCCAIN:  That‘s why they play the game...

MATTHEWS:  So are you rooting for the regional favorite out there, the Colorado Rockies, being from Arizona, against the Red Sox?  How are you going to do this thing?

MCCAIN:  Sure, I am.  But Curt Schilling is a good friend and a great person, and Ted Williams was my childhood hero.

MATTHEWS:  Well, those are good men.  I hope Schilling stays in there. 

He‘s representing the older folks.

Thank you very much, Senator John McCain, for coming on HARDBALL.

MCCAIN:  Thanks for having me on.  And good luck with the book.

MATTHEWS:  Thank you.

Coming up: Larry Craig‘s lawyer on that interview tonight with Matt Lauer.  We‘re going to show you some snippets of this interview.  It‘s a little creepy at times, but then again, the whole story‘s creepy.  We‘ll be back with HARDBALL on MSNBC.

(BEGIN VIDEO CLIP)

LAUER:  You can resign, Senator, and you know what?  It would probably go away.

SEN. LARRY CRAIG:  Uh-huh.

SUZANNE CRAIG:  It wouldn‘t be the same.

SEN. LARRY CRAIG:  And Matt, that‘s the easy way out.  You‘ve talked about my history and my record.  You know I‘m a fighter, that I don‘t just walk away from a fight.  This is the toughest fight of my political life.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Senator Larry Craig is keeping up the fight.  He‘s appealing a judge‘s decision not to let him withdraw his guilty plea to that disorderly conduct charge in that airport men‘s room.  Senator Craig and his wife did an interview with Matt Lauer of the “Today” show, which airs tonight on NBC as part of “Matt Lauer Reports.”  It‘s going to be on the “Today” show tomorrow, but here‘s an early clip.

(BEGIN VIDEO CLIP)

LAUER:  June 11th, you are commuting back from here to Washington.

SUZANNE CRAIG:  Like every weekend.  Very routine.  That‘s exactly what happens every week.

LAUER:  And you end up stopping in a bathroom.  It may be the most famous bathroom stop...

(LAUGHTER)

SEN. LARRY CRAIG:  Yes, I think you‘re right now.

LAUER:  ... of the last 10 years.  You end up stopping in a bathroom in what‘s called North Star Crossing.

SEN. LARRY CRAIG:  Yes.

LAUER:  Were you aware at all, Senator, of the reputation of that specific bathroom?

SEN. LARRY CRAIG:  Well, I certainly am now.

LAUER:  Were you prior?

SEN. LARRY CRAIG:  No, not at all.  I walked into a bathroom.  I walked into an entrapment and a sting that was going on.  And I go to bathrooms to use bathrooms.

(END VIDEO CLIP)

MATTHEWS:  Stan Brand represents Senator Craig before the Senate Ethics Committee.  Stan, here‘s what I don‘t get.  If you claim that you were entrapped, you‘re admitting actual guilt because you were entrapped to do something you wouldn‘t normally do.  How can he make a consistent case like this?  It‘s not consistent.

STAN BRAND, ATTORNEY FOR SEN. LARRY SEN. LARRY CRAIG:  Well, he‘s not a lawyer, and he‘s using entrapment in a vernacular sense.  What he means is he was set up.  And I think, at this point—you know, he entered the plea.  We all know that.  The question is, Was the underlying activity a crime or not?  And the—you know, the...

MATTHEWS:  Whoa!  Stan, he‘s denying anything improper here!

BRAND:  I agree.  Yes. 

MATTHEWS:  He‘s denying he did anything besides go to the bathroom. 

He‘s denying any kind of pandering, solicitation, any kind of sexual intention at all.  He‘s denying everything in that interview. 

BRAND:  Well, he denied that to the police officer in the interview. 

So, that‘s not inconsistent. 

MATTHEWS:  Well—well, let‘s go back. 

Let‘s take a listen to the audiotape of his discussion with that police officer, where he talks about putting his palm up, rather than down.  And he says, all right.  He‘s acknowledging it.  Let‘s listen. 

(BEGIN AUDIO CLIP)

DAVE KARSNIA, INVESTIGATIVE SERGEANT:  OK?  And then with the hand. 

How many times did you put your hand under the stall?

CRAIG:  I don‘t recall.  I remember reaching down once—there was a piece of toilet paper back behind me—in picking it up.

KARSNIA:  OK.  Was your—was your palm down or up when you were doing that?

CRAIG:  I don‘t recall.

KARSNIA:  OK.  I recall your palm being up.  OK?

CRAIG:  All right.

KARSNIA:  When you pick up a piece of paper off the ground, your palm would be down, when you pick something up.

CRAIG:  Yeah, probably would be.  I recall picking the paper up.

KARSNIA:  And I know it‘s hard to describe here on tape, but, actually, what I saw was your fingers come underneath the stalls.  You were actually touching the bottom of the stall divider.

CRAIG:  I don‘t recall that.

KARSNIA:  You don‘t recall...

(CROSSTALK)

CRAIG:  I don‘t believe I did that.  I don‘t.

KARSNIA:  I saw—I saw...

CRAIG:  I don‘t do those things.

(END AUDIO CLIP)

MATTHEWS:  Stan, what does “All right” mean? 

BRAND:  Well, you know, Chris, the beauty of this case is, it doesn‘t matter, because putting your palms up or tapping your foot or doing any of that stuff isn‘t a crime. 

What he pled guilty to was disorderly conduct, which is defined in the Minnesota statute as boisterous, loud conduct. 

MATTHEWS:  Right. 

BRAND:  So, honestly, legally, who cares? 

(CROSSTALK)

MATTHEWS:  I‘m just asking you whether he‘s claiming actual innocence or legal innocence in that interview with Matt.  It sounds like he‘s claiming actual innocence.

BRAND:  Yes. 

MATTHEWS:  He didn‘t do anything wrong; he was falsely accused. 

Totally innocent, that‘s his claim. 

BRAND:  Well, I think he is.  I think, again, if you look at the totality of the tape, what is the criminal conduct that he is alleged to have engaged in?  He admitted...

MATTHEWS:  Soliciting sex in a men‘s room. 

BRAND:  No.  He admitted—he admitted to disorderly conduct because it was expedient and because he wanted to get out.

MATTHEWS:  No, I know.  But, in the interview...

(CROSSTALK)

MATTHEWS:  ... listen to the tape again where he says, was your palm up?  And he says, “All right.”  What‘s that mean? 

BRAND:  I don‘t know what it means.  It means he said his palm was up. 

MATTHEWS:  It means he didn‘t have you standing next to him, is what it meant, Stan. 

(LAUGHTER)

BRAND:  Well, you know, that was a mistake he made, which he said he lived with.  And that‘s the problem with not seeking counsel in a coercive situation. 

MATTHEWS:  Yes. 

Let me ask you about the politics of the Senate Ethics Committee.  Can you tell us now if his fellow senators, the chairman—who‘s the chair of that committee?  Boxer and the other—who‘s the Republican co-chair?

BRAND:  John Cornyn. 

MATTHEWS:  He‘s from Texas.  Are the Republican and Democratic chairs of that committee going to do something here? 

BRAND:  I don‘t know. 

Again, I don‘t know why they would, given the precedents of the Senate, which is not to take jurisdiction over these types of matters, and opening a Pandora‘s box to every misdemeanor and petty offense. 

MATTHEWS:  Right.  That‘s your case.  But that means he‘s home free. 

He serves out his term. 

BRAND:  Well...

MATTHEWS:  If they don‘t act, there‘s no reason for him not to stay right to the end. 

BRAND:  I think that‘s right.  I think that‘s what we have learned in the last four weeks, is that this is not the crime of the century.  This is not something...

MATTHEWS:  Right. 

BRAND:  ... that did—causes him to be unfit to serve. 

MATTHEWS:  Let‘s show a picture here.  It‘s kind of a human interest story, because you always wonder and feel for the—the spouse in these situations, because you have no idea what‘s really going on.  And I don‘t think anybody does, except maybe the wife herself. 

But here‘s a clip from the Matt Lauer interview coming on tonight. 

(BEGIN VIDEO CLIP, “THE TODAY SHOW”) 

SUZANNE CRAIG, WIFE OF SENATOR LARRY CRAIG:  When Larry told me that this story was going to break, and he hadn‘t told me about it before that, I felt like the floor was falling out from under me. 

It happened right here, in this room.  And I felt like—almost like I was going down a drain for a few moments.

MATT LAUER, CO-HOST, “THE TODAY SHOW”:  Why didn‘t you tell her?

L. CRAIG:  It was a tough call, Matt—a very tough call.  And, all of a sudden, this exploded on me.

I have never been arrested in my life.  I was very, very embarrassed about it.  I wrestled with it.  I didn‘t want to embarrass my wife, my kids, Idaho, and my friends.

I sought no counsel.  I made a very big mistake.  I should have told my wife.  I should have told my kids.  And, most importantly, I should have told counsel.

(END VIDEO CLIP)

MATTHEWS:  OK, Stan, I guess what he—well, what is he saying there?  He—if he had had counsel, he would have denied everything, he would have denied all the facts, as well as the illegality of what he might be exposed for? 

BRAND:  And I think, most importantly, he would have pled not guilty, and there would have been a contest over whether these facts made out a case for a misdemeanor or not. 

MATTHEWS:  Do you—do you know of any case history or—I know you have checked up on this, as an attorney for this fellow, this senator.  Is it normal if somebody stands up and says, you can threaten me with whatever you want; I already have a bad reputation; I don‘t care what happens to me;

I‘m not pleading?

What happens?  What do the cops do then? 

BRAND:  Well, then they charge you.  And...

(CROSSTALK)

MATTHEWS:  What, with lewd conduct?  What‘s their—what do they throw at you? 

BRAND:  I guess, in this case, they were throwing this invasion-of-privacy claim for...

MATTHEWS:  Yes.   

BRAND:  ... you know, peering next to you. 

MATTHEWS:  Right. 

BRAND:  The question would have been, could they have proven that at trial?  Could they have sustained their legal burden of beyond a reasonable doubt?  And, if you have tried these cases, as I have, these disorderly conduct cases, they are very difficult to prove. 

MATTHEWS:  What happens when the cop who does this for a living—I mean, it must not be the nicest duty in the world, to have to sit in a john somewhere, waiting for somebody to try to pick you up.  But what happens to these guys?  Don‘t they learn the lingo, the sign language, the behavior patterns of people having sex in these men‘s rooms, and they‘re very convincing in court? 

BRAND:  Well, no, because, you know, they‘re not—they‘re not subject to cross-examination, typically. 

When a good trial lawyer gets them on the stand, you know, the case doesn‘t look so great.  Where is it written, and how are people to know that tapping your foot on the floor is a signal for something, if indeed it is?  That‘s something that he would have to prove. 

MATTHEWS:  Yes.  Well, I assume that‘s what he was doing for a living. 

I guess he can do it. 

Anyway, Stan, good case.  You‘re winning this, baby. 

(LAUGHTER)

BRAND:  Thank you. 

MATTHEWS:  You‘re going to skate all the way to January ‘09. 

(LAUGHTER)

MATTHEWS:  Congratulations. 

Anyway, we‘re going to see Matt Lauer‘s exclusive interview tonight, if you want to watch it, on “Matt Lauer Reports” at 8:00 p.m. Eastern on NBC, and again tomorrow on “The Today Show.”  They have got all this exclusively. 

Up next, the day‘s political headlines, they‘re coming here on HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Time now for some exciting politics. 

Fifty percent, half of all Democratic voters now, that‘s how much national support Hillary Clinton is getting in the Democratic fight for the nomination.  That‘s according to the Gallup poll that just came out. 

Now, here‘s the rub.  Fifty-one percent of male voters told the Zogby poll this May that they will never vote for Hillary Clinton.  I think the battle over gender, if it comes, is coming in the general election next November.  Believe me, the Democratic Party still tilts towards women and women‘s issues in numbers and in points of view.  The Republican Party tilts toward gun rights, capital punishment, and hard-line foreign policy, guy stuff. 

And Barack Obama‘s doing what I said he had to do if he wants to overtake Hillary.  That‘s take on her husband.  Quote—this is what he said—“We have had enough of triangulation and poll-driven politics,” he says.  “That‘s not what we need right now.”

Well, that means he doesn‘t want Bill around.  Well, that‘s what he has to do.  If he takes on Hillary, Bill will come down from the Hill, like the U.S. cavalry or like a chivalrous husband, and play the role of good guy defender.  If you‘re going to take on her, you have got to take on him eventually.  It‘s better to do that right away, and that‘s what Obama‘s doing, taking on Bill Clinton. 

Anyway, that‘s what you have to do if you‘re Barack right now. 

We started the show talking to John McCain about his battle for New Hampshire with Mitt Romney.  He‘s not the only guy gunning for Mitt. 

Here‘s Rudy Giuliani making his case to a Jewish Republican audience that Mitt doesn‘t get it when it comes to the bad guys.  Giuliani reminded the crowd how he refused to let Yasser Arafat into a U.N. concert at Lincoln Center. 

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI ®, PRESIDENTIAL CANDIDATE:  I didn‘t call for a team of lawyers to, you know, tell me, well, on the one hand, you can throw him out, but, on the other hand, you can‘t. 

(END VIDEO CLIP)

MATTHEWS:  Rudy‘s also working the country boys and everyone else.  Giuliani just got a nice boost from the NASCAR crowd.  New fund-raising reports show big contributions from leading NASCAR drivers Jeff Gordon and Jimmie Johnson, plus a slew of NASCAR executives.  Leaders, that‘s who they like out there on the track. 

Up next;  Iraq‘s a mess.  There‘s still no Palestinian state.  Iran‘s getting high-profile help from Russia now.  And Turkey is even threatening to attack Iraq, all of which leads to tonight‘s HARDBALL debate.  And it‘s a hot one.  Is Secretary of State Condoleezza Rice a failure? 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

SCOTT COHN, CNBC CORRESPONDENT:  I‘m Scott Cohn with your CNBC “Market Wrap.”

Stocks sank for a second straight day, as oil prices continued to soar.  The Dow Jones industrials dropped almost 72 points, the S&P 500 down 10 points.  And the Nasdaq lost 16 points. 

Oil traded above $88 for the first time, but closed in New York at $87.61 a barrel, after gaining $1.48 in the session.  That was still another record closing high. 

A slew of major earnings news after the closing bell.  IBM reported, profits rose more than 6 percent in the third quarter and earnings met analyst estimates.  In after-hours trading, shares of Big Blue were down more than 1 percent. 

Meantime, computer chipmaker Intel reported, quarterly profits jumped 43 percent.  Earnings beat analyst estimates by a penny.  In after-hours trading, Intel shares are up 5 percent. 

And Yahoo! reported, third-quarter profit fell 4.8 percent, but earnings were better than expected.  So, after hours, Yahoo! shares are up 10 percent. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Iraq is embroiled in chaos four-and-a-half years after the U.S.  invasion.  Middle East peace remains a talking point between Israelis and Palestinians.  And, after rebuking Secretary of State Condoleezza Rice in Moscow early this week, Russian President Vladimir Putin just made his first trip to Iran and invited Iranian President Ahmadinejad to Russia for talks. 

Has Condoleezza Rice been an effective secretary of state or a failure? 

Ron Christie is a former deputy assistant to the president.  and Ed Schultz is a radio talk show host. 

Ron, is—can you point to any accomplishments by Condoleezza Rice? 

RON CHRISTIE, FORMER ADVISER TO VICE PRESIDENT DICK CHENEY:  Yes, I can. 

If you look at where the United States was in dealing with North Korea, for example, on the proliferation of nuclear material over there, the United States was integral in restarting the six-party talks, the six-nation talks with North Korea. 

If you also look at what‘s going on right now, the Australians are also getting involved to talk about the North Korean situation.  If you crisscross on the other side of the globe, Chris, you see what she‘s doing right now.  She‘s spent a lot of time in the West Bank, she‘s spent time in Israel, trying to broker a conference between the Palestinians and the Israelis, looking at issues such as East Jerusalem, looking at the West Bank, and looking forward to a conference coming up here in Annapolis, Maryland. 

So, I would say that those two specific areas, looking at proliferation of nuclear material, both in North Korea, as well as trying to broker a two-party state solution in the Middle East, she has been very, very integral and very successful in those endeavors. 

MATTHEWS:  Ed Schultz, has she been a success or a failure as secretary of state all these years? 

ED SCHULTZ, RADIO TALK SHOW HOST:  She is the worst secretary of state in my lifetime.  You cannot point to anything measurable that she has accomplished. 

We have got more adversaries than allies right now.  She‘s been an enabler of a failed policy in the Middle East.  Look where we are with the Russians.  Now, keep in mind, Condoleezza Rice is supposed to be the Russian expert.  Today‘s news doesn‘t show that. 

In fact, our relations with the Russians right now are just as strained as they were maybe back in the Reagan era, the Cold War.  I think that this is a situation where the country is sorely being disserved in—in many respects. 

And I don‘t—I don‘t—I‘m not saying that Condoleezza Rice is not a very intelligent person.  I think it‘s the way the White House has been run, with such a strong fist, that has really harnessed any kind of ability that she might have.  But I think she‘s been terribly ineffective. 

CHRISTIE:  Oh, Chris, and, see, here‘s the cynicism. 

You know, trust Ed to come be a Mr. Cynical yet again.  You can‘t look at a situation where the North Koreans, one of the greatest threats posed to the United States, and posing a threat to those democratization nations from around the globe, you get them to get down the negotiating table, it‘s working. 

If you look at the Russians, for goodness sake, Ed says, oh, well, she‘s a Russian expert; why isn‘t it working with the Russians? 

Dr. Condoleezza Rice has said, if the Russians are going to block the United Nations Security Council, which, I should say, she‘s been very instrumental in getting two resolutions through and trying to work with the United Nations Security Council, if that doesn‘t work, the United States and our allies must work with the European Union. 

So, Ed would rather point to, oh, well, gee, it‘s not working, when, in fact, the United States has taken a strong leadership role, has gone to the United Nations, and has used diplomacy effectively. 

SCHULTZ:  Ron, how—Ron, how do people around the world feel about us?  Do they feel like we‘re a good broker of peace right now?  Or do they feel that we‘re some kind of a country that could go off half-cocked and take a shot at the Iranians? 

Right now, the Russians are not with us in dealing with the Iranian situation.  That is a hot spot.  I don‘t see Condoleezza Rice coming in, trying to cool things off with the Turks and the Kurds.  I see nothing but friction in the Middle East right now. 

Now, you want to talk about North Korea.  North Korea can‘t even launch.  And it was the Democrats that set the table a long time ago in the Clinton administration on how to deal with them.  North Korea, if you call that a victory, we have a very low bar set for diplomatic—diplomatic...

CHRISTIE:  Well...

SCHULTZ:  ... successes in this country. 

CHRISTIE:  Well—and I‘m glad that I actually have a high bar of success, because, two years ago, the North Koreans actually did detonate a weapon.  They actually did launch a weapon.  So...

SCHULTZ:  I think it was 50 miles offshore. 

CHRISTIE:  Well, again, you said that they couldn‘t launch.  It shows, if you look at the facts, that they did launch.  And I‘d go back again and point to the Russians.  For goodness sakes, the Russians are allies of Iran.  It is in the Russians‘ best interests for the Iranian government to continue to proliferate weapons. 

(CROSS TALK)

MATTHEWS:  Gentlemen, I have to—I want to ask a question. 

CHRISTIE:  Just a minute.  One second.  What is good for us—

MATTHEWS:  No, I‘m not going to hang on one second.  I want to stop this right now.  I‘m want to ask you both the same question.  Is it fair to judge Condi Rice the way we‘ve judged previous secretaries of state?  I want to ask you this, Ed.  Since I don‘t believe that the State Department has the prestige in this administration that it‘s enjoyed in past administrations, certainly compared to Jim Baker, James A. Baker III, with George Bush, where he was the premier member of the cabinet—in this case, you know, I recall examples of when your former boss, Ron, was meeting with Netanyahu in the vice president‘s office while Colin Powell was trying to represent the United States with Prime Minister Sharon over in Jerusalem. 

Is it fair to say that Condi Rice has not had the full swag of a secretary of state in the last couple of years?  Ed. 

SCHULTZ:  I think that‘s a fair assessment.  But I also think that she has to be held accountable for her actions.  She has been an enabler for a failed policy and just walked in lock-step with the president.  That‘s not serving the president or the United States very well.  You can go all the way back to her days at the National Security Council.  She was the one on September 8th, 2002 that stepped up and talked about a mushroom cloud, which was completely irresponsible with the intelligence that we had—

MATTHEWS:  Ron, your chance. 

CHRISTIE:  Well, Chris, she‘s been secretary of state for a little bit more than 2.5 years now.  I think she has been extraordinarily effective, given the close relationship that she has with the president of the United States. 

SCHULTZ:  Which is a problem. 

CHRISTIE:  Hang on, Ed.  They speak on an almost daily basis.  When she goes abroad, people recognize that she speaks for him, that she speaks for the authority of the president of the United States.  And rather than suggesting that she walks in lock-step and lock barrel, she is a student of history.  She‘s a very good, renowned scholar when dealing with international affairs—

(CROSS TALK)

CHRISTIE:  And that‘s exactly what we have, is a diplomat.  And that‘s exactly why the United Nations—

MATTHEWS:  Ed, stop interrupting, please. 

CHRISTIE:  Chris, let me finish my last thing.  That‘s why the United States has been criticized in years past for not going to the United Nations.  In her 2.5 years, Dr. Rice has consistently gone to the United Nations, forged compromises, and found allies around the world. 

MATTHEWS:  But you can point to North Korea.  And you argue, Ed, that that‘s not a fair claim. 

SCHULTZ:  Well, I don‘t think it‘s a fair claim.  I don‘t think it‘s a big accomplishment. 

MATTHEWS:  Well, I do, because I‘m worried about—I‘m worried about that crazy guy over there that‘s drinking Jack Daniels and he‘s got his pleasure girls and he‘s living on cloud nine.  And all the power he has.  And the fact that he‘s been corked up, it‘s been pretty good for us, hasn‘t it? 

SCHULTZ:  Well, thanks to the Chinese has held him in check as much as anybody else.  Ask yourself this question; how‘s the coalition of the willing working for you in Iraq?  Where are all these countries that are supposed to be on board with a failed policy? 

(CROSS TALK)

CHRISTIE:  Chris just asked you a specific question about whether or not it‘s good that the North Koreans—

MATTHEWS:  Let me explain how we‘re going to do debates on this show, if anybody wants to come back on the show again.  You listen to the other person; you respond to that person.  A painter needs a palette.  The other person‘s point of view is your palette.  You respond after you hear them.  That‘s the way it‘s going to work around here.  Anyway, thank you, Ed Schultz.  Thank you, Ron Christie. 

Up next, the HARDBALL round table on all the day‘s big news, including that one, that debate we just had.  This is HARDBALL, only on MSNBC. 

(CROSS TALK)

MATTHEWS:  Welcome back to HARDBALL.  Let‘s get to the top political stories right now of the day.  Julie Mason‘s with the “Houston Chronicle.”  Matt Continetti, of course, is with the “Weekly Standard.”  And Jonathan Capehart is with the “Washington Post.” 

Let‘s start with Jonathan of the Post.  It seems to me that if you look at the noise of the last two days or so for the Republican side, look at Mitt Romney, look at McCain, look at Giuliani, and of course Thompson, they‘re all outdoing themselves, especially in front of that Republican Jewish group, to try to show how tough they are on Iran.  Jonathan? 

JONATHAN CAPEHART, “THE WASHINGTON POST”:  I just lost that part of your question, Chris. 

MATTHEWS:  Well, let‘s go to Julie, who heard me.  Julie? 

JULIE MASON, “THE HOUSTON CHRONICLE”:  I didn‘t hear you, either, Chris.  I‘m sorry. 

MATT CONTINETTI, “THE WEEKLY STANDARD”:  I heard you, Chris. 

MATTHEWS:  OK, you answer, because Matt, you got the question, you get the answer. 

CONTINETTI:  They‘re tough on Iran.  Listen, the number everyone has to keep in mind here, Chris, is 70 percent.  That‘s the number of likely Republican voters who identify as conservatives.  And so now all of those big four candidates, whether it‘s Romney, Giuliani, McCain, or Fred Thompson, they want that conservative vote and they‘re all going at it in different ways.  The one way that Giuliani can appeal to them is by talking tough on foreign policy.  It seems to be working so far. 

MATTHEWS:  And when you say conservative, that doesn‘t mean Ron Paul conservative.  That means hawkish conservative, right? 

CONTINETTI:  It means—yes.  It means the big three issues.  Right?  It means strong defense, low taxes, and family values.  Giuliani is good on two of the three.  Romney is, policy-wise, is good on three of the three, but something isn‘t—he‘s got those leads in the early states, but he still hasn‘t broken out in the national polls. 

MATTHEWS:  Why not?  He‘s spending a ton of money in places like Iowa. 

He‘s got a local advantage in New Hampshire.  Why has he failed to prevail?  You know what I noticed about him before I get your answer?  He doesn‘t seem to do a lot of television where you really get to know him in a give and take situation, not much, anyway.  What do you think? 

CONTINETTI:  Not in those interviews, Chris, but he is the candidate who‘s run the most television ads on the Republican side, spent millions of dollars of his own money on television ads, helped him gain those leads in Iowa and New Hampshire.  But so far not in South Carolina, not in Florida. 

MATTHEWS:  Let me ask the same question to Julie.  It seems like they‘re all going down the Bush road.  They‘re all tying themselves to Bush. 

MASON:  Tying themselves to Bush? 

MATTHEWS:  Yes. 

MASON:  It seems like they‘re fighting against Bush.  They‘re ignoring Bush.  I mean, they don‘t seem to be mentioning him at all.  I don‘t understand what you mean. 

MATTHEWS:  Well, they‘re more hawkish than him.  How about that? 

MASON:  Oh, yes, they‘re far more hawkish than Bush.  They‘re making Bush look really soft, especially on Iran.  That‘s the big one lately.  And they went after the Democrats on that as well. 

MATTHEWS:  Jonathan, do you see that as the Republican party‘s notion of change in the year 2008, is to go to the right of the president? 

CAPEHART:  Well, I think Matt had it right when he put out that great killer number, 70 percent of the Republican vote is conservative and they‘re hawkish.  These guys are trying to get the nomination.  They‘re fighting for the primary nomination.  They‘re not doing a general election campaign.  Whereas, on the Democratic side, Hillary Clinton is clearly running a general election campaign.  The problem I think the Republicans are going to have once that person gets the nomination is tacking back to the center. 

MATTHEWS:  Yes.  Well, how about the reality once they get in there?  Matt, it seems to me that in my interview with John McCain a bit ago he was very nuanced.  He recognized the problem in the region if we have to confront Putin as well as Ahmadinejad.  If Putin‘s out there taking the other guy‘s side, they have a lot of firepower in terms of control of the oil resources in that part of the world.  This could be a very complicated and messy situation after an attack on a nuclear site. 

CONTINETTI:  Well, absolutely.  It‘s a difficult situation, Chris.  But go flash forward to 2008.  Both parties are going to be making arguments about Iran.  One party, the Democrats, are going to be talking about negotiations.  They‘re going to be talking about well, maybe we can live with a nuclear Iran.  The other party, the Republicans, they‘re going to say there‘s no way they can live with a nuclear Iran.  The voters are going to have a very large choice to make.  And I have a feeling a lot of voters are going to side with that tougher rhetoric rather than go the negotiation route. 

MASON:  I disagree.  I think people are tired of war, they‘re frightened of armed conflict, and I don‘t think they want to get into a big mess with Iran.  I think people are going to want to see what negotiation could lead to. 

MATTHEWS:  I think Julie is right.  If the Democrats are able to draw the picture of what would be down the road if we conducted or commenced a military campaign against Iran, because once we start—we‘d certainly win the first round like we did with Iraq.  But those later rounds, when you have to perhaps invade or take territory, god help us if we have to take a part of Iran or the whole country.  We don‘t have the troops for it. 

We‘ll be right back with the round table to have a little more focus on Larry Craig, because he is going to be, I think, in a strange way the poster boy for the Democrats next year when we get into these moral values disputes.  We‘ll be right back with HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MATT LAUER, “THE TODAY SHOW”:  You could resign, senator.  And you know what?  it would probably go away. 

SUZANNE CRAIG, WIFE OF LARRY CRAIG:  It wouldn‘t be the same. 

SEN. LARRY CRAIG ®, IDAHO:  And Matt, that‘s the easy way out. 

You‘ve talked about my history and my record.  You know I‘m a fighter.  That I don‘t just walk away from a fight.  This is the toughest fight of my political life. 

(END VIDEO CLIP)

MATTHEWS:  That‘s Larry Craig in an interview that‘s going to be on tonight at 8:00 Eastern with Matt Lauer on NBC, also on the “Today Show” tomorrow.  We‘re back with our HARDBALL round ball, Julie Mason of the “Houston Chronicle,” Matt Continetti of the “Weekly Standard,” and Jonathan Capehart of the “Washington Post.”  Jonathan, it seems to me that this guy wants to go down in history as a guy who is not gay, who did nothing wrong in that men‘s room.  He wants actual innocence as well as legal innocence established. 

CAPEHART:  Yes, he clearly does.  And how he‘s going to get either is beyond me.  You know, his decision to appeal his guilty plea I don‘t think was terribly smart personally.  But also I think the real unsmart thing he did was to wait so many weeks before actually pleading guilty, and then not telling his wife until just before the story broke, and not telling anyone on his staff or even talking to a lawyer about this. 

MATTHEWS:  Julie, you know, I‘ve worked with politicians for years.  I‘ve covered them for years and before that I worked for them.  It seems to me a lot them—we keep forgetting the human factor here.  If a guy does something he‘s embarrassed by, whether it‘s his orientation, or whatever it is, his behavior, the last people they want to believe that is their family.  So they will lie in public if they have to, to make it seem like to the family they‘re telling the truth.  It‘s so ironic, but they have to lie publicly so they can lie in the household. 

MASON:  It‘s true what you say, Chris.  It seems like Larry Craig‘s family, his wife and his kids, are the last people who support him.  You brought up an interesting point before the break, which is that he could become the poster child for the Democrats.  But I wonder if his own party repudiating him and distancing themselves from him is going to inoculate them to a certain extent from being sullied by him in the long run. 

MATTHEWS:  The problem, Matt, is the law and the way it‘s worked in the Senate.  They haven‘t expelled a senator since people swore to the confederacy, swore an oath to the confederacy.  They were in at least technical treason to the country at the time, depending on your view of the war between the states.  But the fact of the matter is, they‘re not going to expel this guy.  He‘s going to be a senator right through the Republican convention in Minneapolis next summer, St. Paul next summer.  He‘ll be part of that have whole joke out there. 

CONTINETTI:  Larry Craig called the Senate‘s bluff, Chris.  The Senate leaders, Republican leaders thought they could pressure him out.  He said, no, no way.  And he called the bluff and he‘s going to stay there.  Forget about what he pleaded guilty to, just look at what Larry Craig has done over the past few months.  He pleaded guilty to a crime in a Minnesota court.  Then he waits until after it becomes a P.R. scandal to say, oh, no, I didn‘t mean to plead guilty to that.

Then he tells the voters of his state and America that he‘s going to resign from office effective September 30th.  Whoops, here we are in October, he hasn‘t resigned yet.  This is a man who really has broken just two fundamental promises, regardless of what he—what he did already. 

MATTHEWS:  What‘s the reporting on this everybody?  Is there any reporting on what the caucus is ready to do here?  Will Mitch McConnell go to the mattresses on this, so to speak? 

CAPEHART:  Oh, Chris. 

MATTHEWS:  You know in the Mafia, Godfather sense. 

CAPEHART:  You know, I don‘t think McConnell will.  As you said, the Senate hasn‘t expelled anyone for, what, a few hundred years or couple hundred years. 

MATTHEWS:  Back to the Civil War, yes. 

CAPEHART:  We‘re talking about a misdemeanor here.  Ultimately, I think it‘s up to the voters of Idaho, and actually up to Senator Craig‘s conscience as to how long he stays in the Senate.

MATTHEWS:  Well, anybody here think he‘s going to make it until January 2009?  Everybody, right? 

MASON:  Yes, probably. 

CAPEHART:  He probably will be there. 

CONTINETTI:  I think so. 

MATTHEWS:  You know, you got to hand it to the guy.  I‘d say he‘s got a certain kind of guts.  He‘s standing alone.  You know what, that Senate is so filled with problems probably that nobody wants to talk about that he‘s just saying, I‘m sticking.  Anyway, thank you Julie.  Thank you Matt.  Thank you Jonathan. 

CAPEHART:  Thanks, Chris. 

MATTHEWS:  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now 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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