updated 11/1/2007 10:51:26 AM ET 2007-11-01T14:51:26

Guests: Gerald McEntee, David Axelrod, Roger Simon, Anne Kornblut, Eugene Robinson, Jennifer Donahue, John Neffinger

CHRIS MATTHEWS, HOST:  Hillary gets caught in a hedge.  Will her push for driver‘s licenses for illegal immigrants be her downfall?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL tonight, and happy Halloween from Philadelphia.  Last night, the Democratic presidential candidates engaged in a useful debate.  And today frontrunner Hillary Clinton had some explaining to do.  Was this a turning point in the 2008 elections?  Later, we‘ll talk to Senator Barack Obama‘s top adviser.

But let‘s get right to the action from the debate at Drexel University last night with HARDBALL‘s David Shuster and the highlights from the fight in Philly.

(BEGIN VIDEOTAPE)

REP. DENNIS KUCINICH (D), PRESIDENTIAL CANDIDATE:  It was an unidentified flying object, OK?  It‘s, like—it‘s unidentified.  I saw something, yes.

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over):  On a night when Dennis Kucinich said he once saw a UFO, Hillary Clinton may have been seeing stars thanks to the pounding she got from most of her Democratic rivals.

JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE:  I think that if people want the status quo, Senator Clinton‘s your candidate.

SEN. CHRIS DODD (D-CT), PRESIDENTIAL CANDIDATE:  The fact of the matter is that my colleague from New York, Senator Clinton, there are 50 percent of the American public say who they‘re not going to vote for her.  I‘m not saying anything that people don‘t know already.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  Bill and I would be in that category.

SHUSTER:  The Clintons have a reputation of being slippery and hard to pin down.  Last night, Clinton underscored that on the issue of whether illegal immigrants should have driver‘s licenses.  First, Clinton seemed to endorse a New York plan.

CLINTON:  So what Governor Spitzer is trying to do is fill the vacuum.

SHUSTER:  Then she seemed to oppose it.

CLINTON:  I did not say that it should be done, but I certainly recognize what Governor Spitzer is trying to do.

TIM RUSSERT, MODERATOR:  Do you, the New York senator, Hillary Clinton, support the New York governor‘s plan to give illegal immigrants a driver‘s license?

CLINTON:  This is where everybody plays gotcha.

DODD:  You said—you said yes, you thought it made sense to do it.

CLINTON:  No, I didn‘t, Chris.

EDWARDS:  Unless I missed something, Senator Clinton said two different things in the course of about two minutes just a few minutes ago.

SHUSTER:  Clinton created another opening when she refused to endorse the release of her White House records being kept under seal at the Clinton library in Arkansas.

RUSSERT:  Would you lift that ban?

CLINTON:  Well, that‘s not my decision to make, and I...

SHUSTER:  This time, it was Barack Obama who pounced.

Sen. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  Not releasing, I think, these records at the same time, Hillary, that you‘re making the claim that this is the basis for your experience I think is a problem.

SHUSTER:  Obama also accused Clinton of conveniently flip-flopping on NAFTA, torture and the Iraq war.

OBAMA:  Now, that may be politically savvy, but I don‘t think that it offers the clear contrast that we need.

SHUSTER:  Clinton defended herself but kept the focus on the GOP.

CLINTON:  I have been standing against the Republicans, George Bush and Dick Cheney, and I will continue to do, and I think Democrats know that.

SHUSTER:  The sharpest exchange of the night came over Iran.  Last month, Clinton supported a Senate resolution declaring Iran‘s Revolutionary Guard corps a terrorist organization.

EDWARDS:  In fact, she voted to give George Bush the first step in moving militarily on Iran, and he‘s taken it.

CLINTON:  I prefer vigorous diplomacy, and I happen to think economic sanctions are part of vigorous diplomacy.

DODD:  I believe that—that this issue is going to come back to haunt us.  What you didn‘t learn back in ‘02, you should have learned by now.

Sen. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE:  This was bad policy.  The president had the ability to do everything that that amendment, that resolution, called for without us talking to it.

CLINTON:  We‘re not, in my view, rushing to war.  We should not be doing that, but we shouldn‘t be doing nothing.

EDWARDS:  So the way to do that is to vote yes on a resolution that looks like it was written literally by the neocons?  I mean, has anyone read this thing?  I mean, it literally gave Bush and Cheney exactly what they wanted.

SHUSTER:  Edwards also targeted Clinton on Iraq.

EDWARDS:  If you believe that combat troops should remain stationed in Iraq and if you believe there should be no actual timetable for withdrawal, then Senator Clinton‘s your candidate.

CLINTON:  I stand for ending the war in Iraq, bringing our troops home.  But I also know it‘s going to be complicated and it‘s going to take time.

SHUSTER:  Clinton has been criticized repeatedly by the Republican presidential candidates, and last night, she tried to leverage their attention.

CLINTON:  You know, the Republicans and their constant obsession with me demonstrates clearly that they obviously think that I am communicating effectively about what I will do as president.

SHUSTER:  But her top Democratic rivals then raised the issue of electability.

OBAMA:  Part of the reason that Republicans, I think, are obsessed with you, Hillary, is because that‘s a fight they‘re very comfortable having.  It is the fight that we‘ve been through since the ‘90s.

EDWARDS:  Senator, they may actually want to run against you and that‘s the reason they keep bringing you up.

SHUSTER (on camera):  Targeting another candidate aggressively does carry something of a risk.  Democratic caucus goers in Iowa have a history of punishing candidates who are perceived to be going too negative, and yet many Democrats have been clamoring for the kind of confrontations that emerged last night, and expect more of it in two weeks at the next Democratic debate.

I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.  Pat Buchanan‘s an MSNBC political analyst.  Roger Simon is with “The Politico.”  And Anne Kornblut is with “The Washington Post.”

Pat Buchanan, what do you make of Hillary‘s proposal that we hand out driver‘s licenses to people as they pass under the fence at the Mexican border?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, I think the driver‘s license and her, again, re-endorsement of the amnesty bill—Chris, that is something that is long-lasting because that is the one domestic issue.  It is powerful.  It is emotional.  It has reach among working Americans, Democrats, independents, as well as Republicans.  That‘s one that could turn a presidential election.  I think that‘s the one issue, rather than the papers, for example, that could really hurt Hillary in the general election.

She took a bad beating last night.  I think the Democrats were hurt because their presumptive candidate was really hammered and beaten bloody and she came off as a little bit shrill and defensive.  And so I think the Republicans had a good night and Hillary had a very bad night.

MATTHEWS:  By the way, here‘s her statement, her campaign, whatever the campaign is—I love the way campaigns put something out without anybody‘s signature on it.  Quote, “Senator Clinton supports governors like Governor Spitzer who believe they need such a measure”—that means giving driver‘s licenses to illegal people—“to deal with the crisis caused by this administration‘s failure to pass comprehensive immigration reform.”

There she is, putting her feet in the concrete.  Let‘s take a look at this first go (ph) back-and-forth between Senator Clinton and Chris Dodd.

(BEGIN VIDEO CLIP)

CLINTON:  What Governor Spitzer is trying to do is fill the vacuum left by the failure of this administration to bring about comprehensive immigration reform.  We know in New York, we have several million at any one time who are in New York illegally.  They are undocumented workers.  They are driving on our roads.  The possibility of them having an accident that harms themselves or others is just a matter of the odds.  It‘s probability.  So what Governor Spitzer is trying to do is to fill the vacuum.

DODD:  The idea that we‘re going to extend this privilege here of a driver‘s license I think is troublesome, and I think the American people reacting to it.  We need to deal with security on our borders.  We need to deal with the attraction that draws people here.  We need to deal fairly with those who are here.  But this is a privilege.  Talk about health care, I have a different opinion.  That affects the public health of all of us.  But a license is a privilege, and that ought not to be extended, in my view.

CLINTON:  Well...

(CROSSTALK)

CLINTON:  I just want to add, I did not say that it should be done, but I certainly recognize why Governor Spitzer is trying to do it.

DODD:  Now, wait a minute.  Wait a minute.  Wait a minute.

CLINTON:  And we have failed.  We have failed.

DODD:  No, no, no.  You said—you said, yes...

CLINTON:  No...

DODD:  ... you thought it made sense to do it.

CLINTON:  No, I didn‘t, Chris.  But the point is, what are we going to do with all these illegal immigrants who are driving on the roads?

DODD:  Well, that‘s a legitimate issue.  But driver‘s license goes too far.

CLINTON:  Well, you may say that.  But what is the identification if somebody runs into you today who is an undocumented worker?

DODD:  There‘s ways with dealing with that.

CLINTON:  Well...

DODD:  This is a privilege, not a right.

CLINTON:  Well, what Governor Spitzer has agreed to do is have three different licenses, one that provides identification for actually going onto airplanes and other kinds of security issues, another which is an ordinary driver‘s license, and then a special card that identifies the people who would be on the road.  So it‘s not...

DODD:  That‘s a bureaucratic nightmare.

CLINTON:  ... the full privilege.

RUSSERT:  Senator Clinton, I just want to make sure what I heard.  Do you, the New York senator, Hillary Clinton, support the New York governor‘s plan to give illegal immigrants a driver‘s license?  You told the Nashua, New Hampshire, paper it made a lot of sense.  Do you support his plan?

CLINTON:  You know, Tim, this is where everybody plays gotcha.  It makes a lot of sense.  What is the governor supposed to do?  He is dealing with a serious problem.  We have failed.  And George Bush has failed.  Do I think this is the best thing for any governor to do?  No.  But do I understand the sense of real desperation trying to get a handle on this?  Remember, in New York, we want to know who‘s New York.  We want people to come out of the shadows.  He‘s making an honest effort to do it.  We should have passed immigration reform.

(END VIDEO CLIP)

MATTHEWS:  Roger, it seems to me that she uses this phrase, “undocumented workers,” rather than illegal immigrants.  It‘s obviously pandering.  It doesn‘t tell you anything.  “Undocumented worker” can mean anything.  She doesn‘t use the actual language of reality.  These people are in the country illegally.  And then she seeks to solve the problem by giving them documents, as that—as if that‘s their only problem.  They‘re in the country illegally.  She wants to give them driver‘s licenses.  By the way, she finally went full circle again today and said, Yes, give them driver‘s licenses.

The problem is that Governor Spitzer wants to give them real ID cards to get on airplanes, to go to government buildings, to pretend they‘re in this country legally.  Spitzer wanted to go all the way with this fraudulence, and it was Chertoff at Homeland Security that stopped him.  Looks to me like Hillary‘s totally with Spitzer here.

ROGER SIMON, POLITICO.COM:  She was at her most incomprehensible over this issue.  Only not can you not understand exactly what she‘s saying, but in one fell swoop, she not only grasped this third rail issue, driver‘s licenses for illegal aliens, which to a large extent cost Gray Davis in California his job...

MATTHEWS:  Exactly.

SIMON:  ... he was recalled over this and Arnold Schwarzenegger was elected because he promised to repeal the law granting a driver‘s license to illegal aliens.  She not only does that and grasps this, but then she raises the whole issue of integrity, whether can you trust what she says, whether she reverses herself within a two-minute period.  It was her worst moment not only of the evening, but her worst moment of the campaign.

MATTHEWS:  Let‘s take a look, Anne Kornblut—by the way, before we get any further, just think about all the illegal driver‘s licenses, how many driver‘s licenses the guys who killed us on 9/11 were carrying at the time.  Tons of them.

Here‘s Edwards and Obama attacking Hillary for her non-answer on driver‘s licenses for illegal immigrants.  Let‘s take a listen.

(BEGIN VIDEO CLIP)

EDWARDS:  Unless I missed something, Senator Clinton said two different things in course of about two minutes just a few minutes ago, and I think this is a real issue for the country.  I mean, America is looking for a president who will say the same thing, who will be consistent, who will be straight with them, because what we‘ve had for seven years is double talk from Bush and from Cheney, and I think America deserves—deserves us to be straight.

BRIAN WILLIAMS, MODERATOR:  Senator Obama, why are you nodding your head?

OBAMA:  Well, I was confused on Senator Clinton‘s answer.  I can‘t tell whether she was for it or against it.  And I do think that is important.  One of the things that we have to do in this country is to be honest about the challenges that we face.

(END VIDEO CLIP)

MATTHEWS:  You know, last night, Anne, I thought Hillary Clinton was playing a pretty good game of eightball in pool, and then she scratched at the end.  She was the one that put the cueball in the hole, in the pocket.  She committed the self-inflicted wound of coming out for driver‘s licenses, documentation for people in this country illegally.  I don‘t know how she wins on this.  What do you think?

ANNE KORNBLUT, “WASHINGTON POST”:  Well, I absolutely agree with you and also with what Roger said earlier.  I mean, not only did she seem to waffle, she did waffle right there in a couple of minutes, and then today had to come out and put out a clarifying statement, but she did so on a deeply unpopular issue that perhaps, if she had just come out in the debate, said what she thought, said, Yes, we need to have these driver‘s licenses, I know it‘s unpopular, but at least I stand for something, at least then she might have gotten points for taking a tough stand.

The way she approached it, she gets points for neither.  And it also plays into this larger narrative about her being unable to do anything that isn‘t first tested in the political winds...

MATTHEWS:  Yes.

KORNBLUT:  ... both on this issue and the secrecy issue that you mentioned before.

MATTHEWS:  Do you think that her staff blew it or she didn‘t  study this issue, or what happened here?

KORNBLUT:  Look, this is a candidate who takes great pride in doing all of her homework and the staff and preparing her for everything.  It‘s very hard—I mean, I think at the end of the day, all of them will take the blame because they all take the credit when things go well.

MATTHEWS:  Yes.

KORNBLUT:  But I think part of the problem for her is it has been so flawless and she does get so much credit for when she does well.  So when the opposite occurs, the reverse happens for her.

MATTHEWS:  I think she‘s ready to switch again, Pat.  We‘ll be right back.  I swear she switches on this like a top in the next couple of months.  Anyway, Pat Buchanan, Roger Simon and Anne Kornblut all staying us with.

And later: Barack Obama and John Edwards led in scrutinizing Hillary Clinton last night, but will they make gains in the polls?

I‘m sticking on this issue.  I find it fascinating that she made this answer the other night and sticks with it today.

We‘ll talk more when we have more with this when we come back with our panel.

You‘re watching HARDBALL on MSNBC.

(BEGIN VIDEO CLIP)

OBAMA:  Senator Clinton, in her campaign, I think, has been for NAFTA previously.  Now she‘s against it.  She has taken one position on torture several months ago, and then most recently has taken a different position.  She voted for a war, to authorize sending troops into Iraq, and then later said this was a war for diplomacy.  I don‘t think that—now, that may be politically savvy, but I don‘t think that it offers the clear contrast that we need.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI ®, FMR NYC MAYOR, PRESIDENTIAL CANDIDATE:  That answer on illegal immigration and license plates is one of the most extraordinary ones in American presidential debates.  She answered it diametrically opposed within one minute.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with Pat Buchanan and Roger Simon and Anne Kornblut.  Rudy Giuliani has made it clear this is going to be an issue this campaign, this general election campaign.

Pat, it looks to me like Hillary Clinton has brought on the issue of electability now.  The Republicans already have the issue of her pushing for a tax increase—in other words, to roll back the Bush tax cuts.  Now they‘ve got the hot button issue.  It seems to me, in the Republican Party, your former party, the hottest issue isn‘t the war.  The hottest issue in the Democratic Party is the war.  The hottest issue in the Republican Party is illegal immigration.  And now Hillary has sided with illegal immigration.

BUCHANAN:  Chris, the hottest issue in the country is illegal immigration.  You got the whole establishment rolled (ph), President Bush, McCain and in addition to Teddy Kennedy and the Chamber Of commerce and everyone on this issue.  In New York state, Chris, 72 percent of all New Yorkers are against Spitzer‘s handing out driver‘s licenses to illegals.  This and amnesty are two issues on which Hillary‘s on the wrong side that could take her down in middle America and defeat her.

I agree with what you said earlier.  She has got to get off this position.  She‘s got to get off this defense of Spitzer.  Nobody knows who he is.  All they know is this is the guy that hands out driver‘s licenses to illegal aliens.  I think this is a blazing issue.  I think she‘s going to move.

MATTHEWS:  I think, Anne Kornblut, I‘m going to have to write another one of my proposed speeches for one of these candidates tomorrow.  And the proposed speech is going to be Hillary Clinton, Get off this, because—let me go to you.  You know Iowa.  Does Hillary know Iowa and the fact that people in the middle part of the country are only now being exposed to masses of illegal immigrants and they don‘t like it?  Is she up on that or not?

KORNBLUT:  Well, I—look, she hasn‘t spent the time there that other candidates have spent there, certainly not as much time as John Edwards has and Barack Obama, being from right next door.  But it‘s not as if her campaign hasn‘t studied this issue, and I think that‘s precisely why you saw her equivocating last night.

Her answer was the answer of somebody who knew exactly how explosive this issue was, and she tried not to take a position.  Today she did take a position, finally, and eventually, she was going to have to.  But at this point, it‘s very hard for me to imagine how she could back down, back away from her home state governor‘s position after taking his side.  That would be, it would seem to me...

MATTHEWS:  Yes.

KORNBLUT:  ... the ultimate flip-flop.

MATTHEWS:  You know, Roger, it seems to me that the Republican Party, like it did back in the ‘60s on Civil Rights, now has a weird advantage.  Since they‘ve blown it with Latino voters, they have an opportunity now to simply go for broke in backing those who don‘t like illegal immigrants, who aren‘t as sensitive to the possible ethnic aspect to opposing illegal immigrants.  They can just say, Look, we don‘t have to say phrases like “undocumented workers,” we can say “illegal immigrants” or even “illegal aliens,” because that‘s going to be our politics.  What have they got to lose now, people like Fred Thompson and Rudy?

SIMON:  Well, they don‘t have much to lose in this election.  They might have something to lose in the future. 

But Pat is right.  This is an issue that is becoming a national issue. 

And what‘s so perplexing about Hillary‘s answer was, there is a good answer

or at least an answer that could have gotten her through the evening. 

She could have pointed out that 18 states in this country specifically do give driver‘s licenses to undocumented workers or, you know, illegal immigrants, whatever you want to call them.  Twenty states specifically forbid it. 

All she had to say was, you know what?  This is an issue for the states to decide.  And she...

(CROSSTALK)

MATTHEWS:  Well, wait a minute.  No, it isn‘t.  I want to stop you there. 

When you get on an airplane that travels interstate and you show a driver‘s license, that damn well better be you and it better be a reliable indicator of your status, unless you disagree. 

(CROSSTALK)

SIMON:  But—no, I don‘t disagree, but there is nothing easier to buy in the United States than a phony driver‘s license.  Ask any college kid how tough it is to get a phony driver‘s license. 

MATTHEWS:  Right. 

BUCHANAN:  But, Chris—Chris, look, look, the—those 9/11 guys, 19 of them had over 60 driver‘s licenses among them. 

MATTHEWS:  Right. 

BUCHANAN:  In Middle America, 47 percent of Hispanics in Arizona voted to cut off all welfare benefits, social welfare benefits of any kind to illegal aliens. 

This is an issue which Hispanics—not all of them, but a number of them agree.  African-Americans are against illegal immigration, working-class people, especially.  It is only the elites who are for this amnesty bill. 

MATTHEWS:  OK. 

Let‘s move on to one—let‘s take a look at what—this other issue. 

Pat, you don‘t think it‘s that important.  So, I will let you take it on first.  Let‘s take a look at this archive issue and how Hillary addressed it yesterday.  This question, she has been bragging about her experience as first lady.  Here she is asking about—being asked about it, but not willing to provide any evidence about her expertise in the White House. 

(BEGIN VIDEO CLIP)

TIM RUSSERT, MODERATOR:  In terms of your experience as first lady, in order to give the American people an opportunity to make a judgment about your experience, would you allow the National Archives to release the documents about your communications with the president, the advice you gave?  Because, as you well know, President Clinton has asked the National Archives not to do anything until 2012. 

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  Well, actually, Tim, the archives is moving as rapidly as the Archives move.  There‘s about 20 million pieces of paper there.  And they are moving and they are releasing as they do their process. 

And I‘m fully in favor of that.  Now, all of the records, as far as I know, about what we did with health care, those are already available.  Others are becoming available.  And I think that, you know, the Archives will continue to move as rapidly as its circumstances and processes demand. 

RUSSERT:  But there was a letter written by President Clinton specifically asking that any communication between you and the president not be made available to the public until 2012.  Would you lift that ban?

CLINTON:  Well, that‘s not my decision to make, and I don‘t believe that any president or first lady ever has.  But, certainly, we‘re move as quickly as our circumstances and the processes of the National Archives permits.

(END VIDEO CLIP)

MATTHEWS:  What is this, Pat?  Dodgeball?  That‘s not a position for the first lady?

(LAUGHTER)

MATTHEWS:  I mean, her husband is the guy she is using as her number-one trolley to the White House here, and she can‘t give him a call and say, hey, dear, why don‘t you release those documents, so I can brag about my record at the White House? 

BUCHANAN:  Let me tell you something, Chris.  She doesn‘t want the documents out. 

MATTHEWS:  Thank you.

BUCHANAN:  She doesn‘t want a document—she doesn‘t want a document dump two months before the Iowa caucuses, with thousands of pages of everything she wrote, every reporter in America, Republicans and Democrats all over those documents. 

Take the hit.  She‘s doing the right thing politically on this one.  I don‘t think it‘s going to hurt her that bad.  I think she did the right thing. 

MATTHEWS:  OK. 

Anne Kornblut, can she continue to brag about her experience in the White House if she won‘t document it? 

KORNBLUT:  Well, sure.  She can do anything she likes. 

But, at some point, the documents in that library and her husband‘s documents will be made public, whether it‘s now or 2012. 

MATTHEWS:  Yes. 

KORNBLUT:  And the longer they stonewall on this, or at least refuse to cooperate in trying to get it out, the bigger a deal it will be when they finally do come out. 

MATTHEWS:  Well, maybe she is playing for time. 

(LAUGHTER)

SIMON:  Concealment doesn‘t work in the long rung, or even in the short run.  Candidates who won‘t release their tax records, candidates who won‘t release their medical records always end up being forced to do so before Election Day, because concealment doesn‘t play well with the American people. 

If you conceal something, they want to know what you‘re hiding.  If you won‘t tell them, they assume you‘re hiding something.  And they don‘t like it. 

MATTHEWS:  Release the tapes.

(LAUGHTER)

MATTHEWS:  Anyway Roger, Pat, and Anne, we heard that call before. 

BUCHANAN:  Burn the tapes.

(LAUGHTER)

MATTHEWS:  Release the tapes. 

(LAUGHTER)

MATTHEWS:  That‘s right, Pat.  You said burn the tapes. 

(LAUGHTER)

MATTHEWS:  So, what else is new in politics today? 

Rudy Giuliani delivers a deadly response to Joe Biden.  Hillary‘s union friends try to come to her rescue.  And then there‘s this, courtesy of Dennis Kucinich. 

(BEGIN VIDEO CLIP)

RUSSERT:  Now, did you see a UFO?

KUCINICH:  I did.  And the rest of the account—I didn‘t—it was an unidentified flying object, OK?  It‘s, like, it‘s unidentified.  I saw something.  Now, to answer your question, I‘m moving my—it‘s—and I‘m also going to move my campaign office to Roswell, New Mexico, and another one in Exeter, New Hampshire, OK?

And also, you have to keep in mind that more—that Jimmy Carter saw a UFO, and also that more people in this country have seen UFOs than I think approve of George Bush‘s presidency.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

So, what else is new out there in politics? 

Here is Senator Biden going at Republican Rudy Giuliani last night. 

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D-DE), PRESIDENTIAL CANDIDATE:  Rudy Giuliani, probably the most underqualified man since George Bush to seek the presidency...

(LAUGHTER)

BIDEN:  ... is here talking about any of the people here.

(APPLAUSE)

BIDEN:  Rudy Giuliani—I mean, think about it.  Rudy Giuliani—there‘s only three things he mentions in a sentence: a noun and a verb and 9/11.  I mean, there‘s nothing else.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  That is a clever set piece, no doubt about it.  But the trouble with a set piece is that it sets up your target to return the fire, with a vengeance. 

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI ®, PRESIDENTIAL CANDIDATE:  Did he read that? 

(LAUGHTER)

GIULIANI:  I think somebody wrote that for him.  Remember, Joe doesn‘t write his own material. 

(END VIDEO CLIP)

MATTHEWS:  Well, that nasty counterpunch was a direct shot at Biden‘s plagiarism back in 1987, when he was tagged for offering the biography of a British politician as his own experience. 

Wow. 

Speaking of surprises attacks, here we went again last night. 

(BEGIN VIDEO CLIP)

MATTHEWS:  She has given the Republicans the biggest issue they‘ve got so far.

UNIDENTIFIED MALE:  All U.S. troops out of Iraq now.  No more blood for oil!

(END VIDEO CLIP)

MATTHEWS:  Here we go.  Same thing happened in the last presidential election.  We had someone jump onto the set up in New York.  As I said last night, I agree with that anti-war sentiment and the freedom to express it. 

Just, please, keep it nonviolent. 

On a day when she‘s stuck defending her support for issuing driver‘s licenses to people who are in the country illegally, Senator Clinton was given a break today from one of the most dynamic unions in the country, the American Federation of State, County and Municipal Employees. 

Gerry McEntee is president of AFSCME, and he joins us right now. 

Mr. McEntee, Mr. President, why did you endorse Hillary today? 

GERALD MCENTEE, PRESIDENT, AMERICAN FEDERATION OF STATE, COUNTY AND

MUNICIPAL EMPLOYEES:  We took—we took about four polls.  We had two different forums, of which you were the emcee at one of them.  We talked to our members.  We tried to—we tried to dig deep into our rank-and-file, so it would be a rank-and-file endorsement. 

So, after four polls and many meetings, we had a national presidential search committee that was involved, that talked in great depth to all the candidates, found that many of their positions were relatively the same.  And then we did something that I don‘t think any other union has tried or done. 

And that was, we did a situation of robo-calls, where we ended up talking to about 45,000 of our members.  And they were by far, whatever the state happened to be, with the exception of Illinois and Hawaii, they were for Hillary Clinton. 

So, we dug deep, and we found out that Hillary Clinton was the favorite of our entire membership. 

MATTHEWS:  Mr. McEntee, who came in second?  I would love to know. 

MCENTEE:  Well, it couldn‘t be done that way.  It was done—it was a motion from our national presidential search committee to endorse Hillary Clinton.  And, as a result, that was the vote. 

It carried our international executive board by 72 percent, 23-10.  So, it was 72 percent.  It was more than a supermajority in our particular union, and represents the feeling of our people.  We have 1,400,000 and 250,000 retirees. 

MATTHEWS:  OK. 

MCENTEE:  So, we—we think that‘s—that‘s really a good sign. 

MATTHEWS:  Well, that was the good news for her today.  It wasn‘t a great day for her today, after her comment about driver‘s licenses for illegal aliens. 

But I must say, AFSCME endorsing her is a big move for her. 

Thank you very much, Gerald McEntee, the president, the international president of AFSCME. 

Up next:  Barack Obama is finally taking on Hillary Clinton, but can he catch her?  We will see. 

David Axelrod, the top strategist for the Obama campaign, joins us up next. 

This is HARDBALL, only on MSNBC. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  Some of this stuff gets over-hyped.  In fact, I think this has been the most hyped fight since Rocky fought Apollo Creed, although the amazing thing is, I‘m Rocky in this situation. 

(END VIDEO CLIP)

(COMMERCIAL BREAK)

BERTHA COOMBS, CNBC CORRESPONDENT:  I‘m Bertha Coombs with your CNBC “Market Wrap.”

Stocks posting big gains after the Federal Reserve cut interest rates again, as expected.  The Dow Jones industrials gained 137 points.  The S&P 500 was up 18 points.  And the Nasdaq gained 42. 

The Fed cut its benchmark interest rate a quarter-of-a-point.  The move follows a half-point cut last month.  But, in a statement, policy-makers signaled that they may be done easing rates for now. 

Earlier in the day, the Commerce Department reported, the economy grew in the third quarter at a stronger-than-expected rate of 3.9 percent.  That‘s the fastest pace in a year-and-a-half. 

Meantime, oil prices surged again today, after the government reported an unexpected drop in inventories this week.  Crude gained $4.15 in New York, closing at a record high of $94.53 a barrel.  In fact, they touched over $95 a barrel in after-hours. 

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

HARDBALL. 

(BEGIN VIDEO CLIP)

OBAMA:  I am against a rush to war.  I was the first person on this stage and one of the very first in the Congress to go to the floor of the Senate back in February and say George Bush had no authority to take any military action in Iran.

Secondly, I am not in favor of this rush for war, but I‘m also not in favor of doing nothing.  Iran is seeking nuclear weapons.  And the Iranian Revolutionary Guard is in the forefront of that, as they are in the sponsorship of terrorism.

So, some may want a false choice between rushing to war, which is the way the Republicans sound—it‘s not even a question of whether; it‘s a question of when and what weapons to use—and doing nothing.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

How did Barack Obama do last night in that debate in Philadelphia? 

And will his challenge to Hillary Clinton pay off? 

David Axelrod is chief strategist for the Obama campaign. 

David, it seems to me that most Americans, especially Democrats, believe that this country is in a rut in our war in Iraq that seems endless.  They‘re in a rut toward another war in Iran. 

Will Barack Obama get us out of that rut? 

DAVID AXELROD, CHIEF OBAMA CAMPAIGN STRATEGIST:  Well, I think that is really what this race is about, Chris. 

I think that, you know, if we do the same old things and the same old kind of calculating politics that we have seen, then we‘re going to end up in the same place.  And what he‘s saying is, we have to think differently.  We have to challenge some of these policies. 

He obviously was opposed to the war from the beginning.  He strongly opposed the resolution that Senator Clinton voted for that might allow the president leeway to expand the Iraq war into Iran.  It was a terrible—a terrible mistake. 

I think he would—he would make a marked departure.  And I think you saw some of that last night in the debate.  He would mean a marked departure from the kind of foreign policy that we have seen under this administration. 

MATTHEWS:  Do you believe he carved a difference between himself and Senator Clinton last night? 

AXELROD:  I think he did. 

And I think, look, one of the fundamental differences is that he‘s someone who is forthright, who answers questions, and who lets people know what he thinks.  He—he says what he means, and he means what he says.  And I think people want that in a president. 

And I think there was a distinction there last night, as everyone could see.  Senator Clinton always runs her answers through this political filter.  And, as a result, you never quite know where she is on some of these questions. 

And, you know, given the stakes in this election, I don‘t think that is the kind of leadership people are looking for. 

MATTHEWS:  Would Senator Obama have voted for Kyl-Lieberman, had he been present, of the—the targeting of Iran as a terrorist organization, the Revolutionary Guard?  Would he have voted for that? 

AXELROD:  Absolutely not.  He made that clear that day.  And I would venture to say that had he been there and voting on that, that perhaps Senator Clinton would not have voted that way either, because, you know, Chris, lately every time he votes, she seems to vote after him, and seems to vote the same way.  So maybe we could have spared her some of these difficulties. 

But, yes, he strongly opposed it for the reasons that he stated.  There is language in that resolution that would essentially tie our troop presence in Iraq to the movements in Iran.  And it could prolong the war.  It could give the Bush administration encouragement to take military action in Iran.  And, as you know, George Bush and Dick Cheney don‘t need much encouragement in that regard.  We should be going the other way. 

MATTHEWS:  Does Senator Obama support giving driver‘s licenses to people in the country illegally? 

AXELROD:  He made—he made that, you know—he answered that question last night, Chris.  He said that he did support that as a public safety measure, because you don‘t want people—there are 12 million undocumented workers in this country.  If you don‘t want people running around without license -- 

MATTHEWS:  So he‘s with Hillary on that?  He‘s with Hillary. 

AXELROD:  I don‘t know.  I gather Hillary stated a position on this today? 

MATTHEWS:  Yes, she said she‘s for it. 

AXELROD:  Last night—because last night it wasn‘t exactly clear what her position was.  But I guess this is what a good night‘s sleep will do for you. 

MATTHEWS:  Take a look.  Let‘s take a look at what the Clinton campaign is putting out.  Hillary put this out today.  It is a new Internet advertisement playing off of last night.  Let‘s take a look at what you think of that, if you watch. 

(BEGIN VIDEO CLIP)

OBAMA:  Senator Clinton—

EDWARDS:  Senator Clinton—

Senator Clinton—

OBAMA:  Senator Clinton—

BIDEN:  Senator Clinton—

EDWARDS:  Senator Clinton.

DODD:  Senator Clinton.

EDWARDS:  Senator Clinton—

Senator Clinton—

Senator Clinton—

Hillary—

Hillary—

Hillary—

OBAMA:  Hillary—

BIDEN:  Hillary Clinton. 

First lady and now Senator Clinton. 

CLINTON:  I seem to be the topic of great conversation and consternation and that‘s for a reason. 

(END VIDEO CLIP)

MATTHEWS:  I don‘t know whether that is the marriage of Figaro (ph) or what that is.  What do you think of her making a joke out of the debate last night? 

AXELROD:  Well, I don‘t think it was very funny, if you were watching the debate.  You know, she always says, well these guys have an obsession with me.  Well, yes, you know, they pay close attention, because it‘s hard to follow what she‘s saying.  And I think that would be the reaction of most voters as well.  It‘s a serious issue that she doesn‘t seem willing to take firm positions on, fundamental things. 

As you pointed out in the earlier segment, she was really evasive about whether she would—she is running on her record as first lady, but she won‘t allow the American people to see the papers. 

MATTHEWS:  Do you think she is hiding something?  Do you think she‘s hiding something, that she did something during the administration of her husband that is embarrassing to her, and that‘s why she doesn‘t want the papers out? 

AXELROD:  I‘m not going to speculate as to what her motivation is.  But I must say she didn‘t seem very enthusiastic last night about expediting that process. 

MATTHEWS:  That is a fair assessment.  But I was just hoping you would suggest why you think it‘s important, David Axelrod, since you are the chief adviser to Obama, and he wants these papers out.  I‘d like to know why you think they‘re important for us all to see. 

AXELROD:  Well, I said why, Chris.  I‘ll say it again.  She‘s running on her record as first lady.  And these documents speak to the advice she has given the president during those eight years and the activities in which she was involved.  And it would be illuminating to see exactly what advice she did give.  And what were the projects that she worked on?  I would think she is proud of that record.  I would think she would want everyone to have a full accounting of what she did. 

MATTHEWS:  Apparently your sarcasm is right on target, because she‘s obviously not proud of it or she‘d be having it out right now.  She‘d be putting it out with popcorn and everything else.  Thank you very much David Axelrod. 

AXELROD:  Good to see you. 

MATTHEWS:  Up next, are we finally seeing the 2008 Democratic race for president?  Is it finally starting?  I think it might be.  The round table is coming up next.  This is HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The round table is here.  Jennifer Donahue is with the New Hampshire Institute of Politics.  Gene Robinson is a columnist for the “Washington Post.”  And John Neffinger is a Democratic communications consultant. 

Let me go to Gene Robinson.  It seems to me, Gene, that Chris Dodd and John Edwards have been spending a lot of time in Iowa.  I mean, Jackie Claig (ph), Chris Dodd‘s wife, lives out in Iowa right now.  Jill Biden lives out there now.  Senator Biden‘s wife lives out there now.  Are they more in touch with this illegal immigration issue than Hillary is? 

EUGENE ROBINSON, “THE WASHINGTON POST”:  They might be more in touch with it.  As you know, illegal immigration is just starting to become a big issue in the middle of the country.  It has really kind of captured people.  I‘m with you.  I am amazed—I will be amazed if Hillary Clinton is able to stick to this position on the driver‘s licenses, and really the same for Obama.  His yes to that question just kind of slipped into the middle of the whole kerfluffle (ph) last night. 

But I thought that was kind of amazing, too.  I don‘t think that‘s a tenable position going forth into a general election.  I don‘t think that works. 

MATTHEWS:  Let me go to Jennifer up there in New Hampshire.  I‘m not sure that‘s your only area of expertise, but start from there.  Is illegal immigration a cutting issue in the primaries or in the general either way up there? 

JENNIFER DONAHUE, NH INSTITUTE OF POLITICS:  It‘s playing out hard on the Republican side.  It‘s been a big problem, a thorn in McCain‘s side.  On the Democratic side, it hasn‘t really played out.  I think in part because Democrats are courting independents, who would be probably more apt to be silent on that issue, as well as Democrats.  And Hillary Clinton, for example, is appealing to independents right now. 

So I don‘t think that was a real loss or gain for any of them last night in that perspective. 

MATTHEWS:  Let me go to John.  It seems to me that the sides are choosing up—the sides are being chosen up here.  Republicans are saying look, we lost the Latino vote because the way we mishandled the whole immigration issue.  We may as well go with the people who oppose illegal immigration and not worry about sensitivities.  The Democrats, on the other hand, are basically in bed with Latino voters.  The Latinos are increasingly Democrat.  They have to use careful phrases like undocumented workers rather than illegal immigrants.  They have to be careful. 

They have to nestle and pander, if you will.  It seems like Hillary Clinton has made her bed.  She‘s going to be for the side of the illegal immigrants.  That‘s where she is. 

JOHN NEFFINGER, COMMUNICATIONS ANALYST:  Well, she certainly not going to say illegal immigrants, that‘s certainly not going to be her line.  Whether—I‘m not sure that I totally agree with the comment that independents aren‘t going to care about this issue in the end.  And Hillary may well live to regret this.  There is just a lot of—a very visceral reaction to having folks around who aren‘t used to—who don‘t look like the folks you‘re used to seeing around.  And that does touch a chord.  It‘s the kind of button that Republicans are very good at pushing in general elections. 

So whatever happens here in the primary, it may not look like it‘s a big problem.  But that one I think we will be hearing about quite a lot more. 

MATTHEWS:  You know what, Jennifer, it strikes me—

DONAHUE:  That‘s a good point. 

MATTHEWS:  Nobody likes ethnic change.  It‘s always hard to deal with.  You try to be a liberal about it.  But when things change in your neighborhood, you have to get used to it and deal with it.  Nobody is thrilled by it, because it just happens in our country.  People, neighborhoods change.  Life changes.  But when you hate—when you see the federal government or the state government papering over a problem by giving people documents, driver‘s license, which they can use for all kinds of purposes, especially building a paper trail to establish a fact they should be here legally, it looks like the government has given up. 

It said, well, we can‘t stop illegal immigration, so we‘ll give everybody a driver‘s license.  It strikes me as a death blow, a death knell to government.  If you can‘t protect your border, you‘re not really a country, are you? 

DONAHUE:  Well, you know what is interesting, Chris is I think what you just articulated is where a lot of voters are on the issue.  What is ICE doing?  Why is this a random process?  Why do some people wait two months and others wait ten years to get legal entry into this country?  Now, in New Hampshire you have a lot of Canadian people coming in.  They don‘t look different.  It‘s not a hot button issue up here.  It‘s really—they sound and look like Americans. 

So while we have tons of immigrants, it doesn‘t really show.  I think the bigger concern, and the one that, you know, Giuliani and McCain and Clinton would be wise to take this issue on is that there is no national security without an accounting for who‘s in the country.  And ICE and the former INS have no idea who is in the country.  They have no idea how to get rid of them if they‘re not people who are doing good things.  So I think that‘s the bottom line issue.  This is a national security issue. 

And if Hillary Clinton is running in some ways as a national security Democrat, which I believe she is, she should grasp this issue, understand it and own it. 

MATTHEWS:  Every one of us travels and gets on airplanes.  What do we have to show?  Our driver‘s license.  We might as well show our Mickey Mouse Club Cards the way this is going, because they‘re just passing them out.  We‘ll be right back with the round table.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the round table.  Let‘s all take a look at this piece from last night.  This is Senator Edwards attacking Hillary Clinton on her Iran vote. 

(BEGIN VIDEO CLIP)

EDWARDS:  I was surprised by Senator Clinton‘s vote.  I‘ll be honest about that.  Then I saw an explanation of it in the “New York Times” for her vote, which basically said she was moving from primary mode to general election mode.  I think that our responsibility as presidential candidates is to be in tell the truth mode all the time.  We should not be saying something different in the primary than we say in the general election.  I think that‘s what Americans have been hearing from George Bush and I think they‘re looking for something different.  And voters have a choice in this election. 

WILLIAMS:  Senator Clinton 30 second rebuttal. 

CLINTON:  I need to rebut this.  I don‘t know where to start. 

(END VIDEO CLIP)

John Neffinger, what do you make of that?  Hillary Clinton looked pretty sad faced there about that shot at her character, whether she lies or not.  That wasn‘t about her policy.  That‘s about her. 

NEFFINGER:  That‘s right, and Bill Richardson was right when he said that this is a serious issue here, that they‘re now attacking her not on policy.  They‘re actually going after her character, and that‘s the kind of thing that can carry over into the general election.  Yes, she was not happy with that one bit. 

On the other hand, at that point—this was in the middle of the debate—at that point, when she got her turn, she was still very much in control.  She says, you know, I don‘t even know where to start, and that wasn‘t flustered at all.  That was her saying, hey, I‘m totally calm.  I‘m all right with this.  She still looked like she had it.  They hadn‘t drawn any blood at that point yet. 

MATTHEWS:  Jennifer, what do you think.  This is a gender issue to some extent.  A woman has to show certain kind of Elan when she‘s under attack.  Did she show enough? 

DONAHUE:  You are so right, Chris.  A woman does have to show that.  And it‘s a challenge that only a woman can really truly understand, I think.  She understands it.  She didn‘t write this play book in the Senate.  Some of her colleagues on the stage did.  She wrote her play book for how to win the presidency in Arkansas.  She knows how women are responded to.  She knows men and women and how they get along. 

She knows that she‘s got 18 percent of Republican women considering voting for her.  That‘s why she‘s in the middle on the foreign policy issues.  That‘s why she supported the non-binding Senate resolution on Iran.  She‘s pushed her opponents, Edwards and Obama, so far to the left on foreign policy issues that they can‘t get back to the middle in the general.  So Edwards can attack her character, but he can‘t do it as well as the Republicans can. 

MATTHEWS:  Let‘s take a look at Richardson singing her praises here.  Here is Bill Richardson.  Either he is running for V.P. or he‘s doing something here.  He‘s being a gentleman certainly. 

(BEGIN VIDEO CLIP)

GOV. BILL RICHARDSON (D), PRESIDENTIAL CANDIDATE:  Yes, we need to point out our differences.  And I have big differences with her over the war.  I would get all our troops out.  Over no child left behind; I‘d get rid of it.  I also have differences over Iran.  I think that was the wrong vote for her to cast, because I think it was saber rattling. 

But I think it‘s important that we save the ammunition for the Republicans.  If we continue, I believe, harping on the past and not focusing on the future—

(END VIDEO CLIP)

MATTHEWS:  Gene, I haven‘t seen her nodding so affirmatively since her husband spoke last.  That‘s that Hillary nod. 

ROBINSON:  She loves that one, yes.  I think Richardson—you know, I don‘t think he‘s going to be the vice presidential nominee.  But he might have scored some points.  But on Iran though, this is a serious issue. 

MATTHEWS:  We‘ve got to go, Gene.  I‘m sorry Gene.  OK, I think you‘re right.  I think Hillary is off base on that one.  I disagree with Jennifer.  I think Hillary is closer to the late Hubert Humphrey, perhaps, as a warrior.  Anyway, thank you.

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

END   

Copy: Content and programming copyright 2007 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2007 Voxant, Inc. (www.voxant.com) ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

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