updated 1/15/2008 6:43:39 PM ET 2008-01-15T23:43:39

Guests: Roger Simon, Jonathan Capehart, Rep. Sheila Jackson Lee, I.S. Leevy

Johnson, D. Taylor, Terry Hickman, John Ensign, John Ralston, Jill Zuckman

                CHRIS MATTHEWS, HOST:  The 2008 presidential contest heats up as race

becomes an issue in the Democratic campaign.  And Senator John McCain

emerges as the GOP leader in national polls.

                Let`s play HARDBALL.

                Good evening.  I`m Chris Matthews.  Welcome to HARDBALL.  Two new

national polls have surprising results tonight, including a new leader on

the Republican side.  More on the polls later.

                And it`s getting ugly out there.  Once again, the issue of race has

reared its head in the Democratic contest.  On Sunday, BET founder Bob

Johnson, one of Hillary Clinton`s most prominent supporters, criticized

Barack Obama.

                (BEGIN VIDEO CLIP)

                BOB JOHNSON, BET FOUNDER:  As an African-American, I am frankly

insulted that the Obama campaign would imply that we are so stupid that we

would think Hillary and Bill Clinton, who have been deeply and emotionally

involved in black issues when Barack Obama was doing something in the

neighborhood -- that I won`t say what he was doing, but he said it in his

book -- when they have been involved.

                (END VIDEO CLIP)

                MATTHEWS:  Was Bob Johnson hinting there about Obama`s acknowledged

drug use when he was a young man?  Johnson has denied this in a statement,

and Barack Obama`s had to refuse comments -- actually, has refused comment. 

But will this fight over race divide the Democratic Party?  More on this

hot topic later.

                Plus, the Michigan Republican primary is tomorrow.  It`s a must-win

for Mitt Romney.  HARDBALL`s David Shuster`s in Michigan and will have a

live report tonight.  And we`ll talk about the state of the Republican

Party politics with Nevada senator John Ensign.

                And Tuesday night -- that`s tomorrow night -- Brian Williams with Tim

Russert will moderate NBC`s Democratic debate in Las Vegas at 9:00 PM

Eastern.  The event airs on MSNBC, and HARDBALL will be there with live

coverage at 5:00 and 7:00.  And then Keith Olbermann and I will be here

right here on MSNBC with post-debate coverage from 11:00 to 1:00 o`clock in

the morning Eastern.  You don`t want to miss the first Democratic debate to

feature just the top three candidates, Clinton, Obama and Edwards.  It`s

like a fight card.  So make sure you tune into MSNBC for your political

news and information.  That`s an advertisement.

                We begin with "The Politico`s" Roger Simon and "The Washington Post`s"

Jonathan Capehart.  Gentlemen, I have to talk about this, so let`s take a

look at the latest Washington/ABC poll.  This is the ABC poll right now. 

It`s got Hillary down by 11 points and Obama up by 14.  She`s now beating

Obama by just 5.  Great stuff, right?

                ROGER SIMON, "POLITICO":  Right.

                JONATHAN CAPEHART, "WASHINGTON POST":  It is great stuff.  It means

that we still have a race going on, Chris.

                MATTHEWS:  OK, now let`s look at the "New York Times" poll, just to

completely confuse things, because that shows Hillary Clinton up by 15

points, 42 to 27.  Roger, do we believe polls anymore after last week`s

debacle?  I mean, here we have two completely against each other.

                SIMON:  After -- after New Hampshire, I think you`d have to be crazy

to believe the polls.  I don`t believe anything anymore.  I`m waiting to

hear -- for the people to speak themselves and willing to accept their

judgment.  I think we can do analysis, I don`t think we have to do poll-

watching.

                MATTHEWS:  Well, let`s take a look.  OK, Mr. Tom Brokaw!

                (LAUGHTER)

                MATTHEWS:  That`s what he said the night of.  He said that to me. 

Let`s talk about the interesting thing here...

                CAPEHART:  A distinct resemblance.

                MATTHEWS:  Let`s talk about this thing, Johnson with race.  I mean,

everybody knows race is like the San Andreas fault in this country.  You

grew up with it.  I grew up with it, somewhat remotely, but it`s there.

                CAPEHART:  Right.

                MATTHEWS:  The fact is that now we see Bob -- Bob Johnson, a very

prominent guy, a billionaire -- I think he`s the first African-American

billionaire, he started BET, he sold it to a big conglomerate.  He has

raised the issue not just of the Clintons being unfairly abused as not pro-

black but raised the issue of Barack Obama`s youthful drug use.  There`s no

doubt in my mind, was there in yours, what he was talking about?

                CAPEHART:  There is no question in my mind what Bob Johnson was saying

and what he was alluding to, despite what he says -- what he said in that

statement that the campaign -- that he released through the campaign

yesterday.

                (CROSSTALK)

                MATTHEWS:  ... that the campaign wrote for him probably.

                CAPEHART:  He had it right.  Three quarters of the three way through

what he was saying, that the idea that the Clintons, both Bill and Hillary

Clinton, are somehow not friends of the African-American community...

                MATTHEWS:  That`s BS.

                CAPEHART:  ... doesn`t ring true.

                MATTHEWS:  Right.

                CAPEHART:  But then to say, Well, we knew what he was doing in the

neighborhood -- I mean, just the way he said it, the look on his face.  How

many times have I seen relatives of mine do that look, that sort of wink

and nod to say, I`m saying something, but I`m not saying it, but you know

what I`m saying.  Know what I`m saying?

                MATTHEWS:  Very Nixonian, actually.  That just...

                (LAUGHTER)

                MATTHEWS:  Let me ask you, Roger, it seems to me that was manifestly

true, that he was alluding to the same thing that other people in the

Clinton world have been doing, trying to nail this guy as a youthful drug

offender.

                SIMON:  When Bill Shaheen did it a few weeks ago in New Hampshire, a

big Hillary supporter, he had to resign for saying it.  No one`s asking Bob

Johnson to take back his comments.  And of course, he says he didn`t mean

it, but I totally agree his denial is not believable.

                But there was a part of it that you didn`t show that`s maybe even

worse, where Bob Johnson says Barack Obama is trying to be this reasonable,

likable, Sidney Poitier type.  Well, I think we know what the message of

that is, it`s back to the old accusation that Barack Obama is not black

enough.

                You know, this is really uncomfortable stuff.  Even at the best of

times, we don`t like talking about race in this country, and in the super-

heated atmosphere of a presidential campaign, it becomes even more

uncomfortable.

                CAPEHART:  And you know, Chris, this is really unfortunate, that here

we are at the -- we`re really at a moment, a very historic moment in the

country, but particularly for the Democratic Party, where you could have --

you have the first viable female candidate for president, the first viable

African-American candidate for president, both seeking the nomination for

the Democratic Party to run for president, and things seem to be running

off the rails over this issue of race.  And I think both sides need to put

the lid on this...

                MATTHEWS:  Who`s guilty?

                CAPEHART:  ... while it`s hot.

                MATTHEWS:  Who`s guilty of raising the issue verbally?  We know it`s

there, but who`s guilty of ripping the scab off this thing?  Is it the

Clinton people, for talking about Martin Luther King not being able to get

the job done and LBJ...

                CAPEHART:  No, no, no, no, no, no...

                MATTHEWS:  I don`t think that`s a fair rap, myself.

                CAPEHART:  No, Chris.  That -- you know, it`s not Senator Obama, it`s

the Obama supporters who are whipping up sort of the hysteria over, you

know, She`s trying to denigrate the good work of the Martin Luther King.

                MATTHEWS:  That was a bad call.

                CAPEHART:  That was a bad call.  That`s not what she was saying.  And

then I think the most egregious is sort of whipping up the flames over

whether President Clinton saying "fairy tale" was about the full campaign,

as opposed...

                MATTHEWS:  Well, let`s play referee, which is what I like to do, since

we`re not playing pundits or prognosticators anymore, Roger.  Let`s take a

limited role here.  On the issue, who`s guilty, who`s not?  Are the

Clintons guilty in any way of abusing the memory, the legacy of Martin

Luther King, in saying Lyndon Johnson had to do the dirty political work of

getting the bill passed through Congress, getting Republicans to vote for

it -- rather largely, they did vote for it -- getting the job done after

Martin Luther King had started it?  Is that an attack on Martin Luther

King, or is that a phony foul, a fake foul, that there was nothing said

that was wrong there?

                SIMON:  No, I think what was said was wrong.  I think it was

unfortunate to take on the iconic figure of Martin Luther King and use it

in this political way and to denigrate in some way what he accomplished in

his life.

                (CROSSTALK)

                CAPEHART:  Roger, I`m sorry, you can`t -- Roger, that`s not -- that is

not true.  She was not denigrating what -- what Martin Luther King did.  I

mean, when you study Civil Rights history...

                SIMON:  She said, Look, you know -- you know (INAUDIBLE)  She said

dreaming is one thing and accomplishing is another.

                CAPEHART:  Yes, and then she also...

                SIMON:  She drew a bright line between dreaming the dream and

accomplishing.

                CAPEHART:  But Roger, she also said that Dr. King...

                SIMON:  And I think most people -- many people would agree...

                CAPEHART:  ... he marched, he was gassed...

                SIMON:  ... that Dr. King accomplished a lot.

                CAPEHART:  ... he was arrested, he was beaten and he went to jail for

all these things.  And remember the "I have a dream" speech was not the

beginning of the Civil Rights movement.  That was the high point of the

Civil Rights movement, with Dr. King standing there on the Lincoln

Memorial, facing the Capitol, saying to the nation and to Congress, You

must do this for me and for our people and for our nation.  And he knew

that...

                SIMON:  And I think if she had said all those things...

                CAPEHART:  ... he needed -- he needed President Johnson to get this

done because that`s why -- in the equivalent today, Dr. King had Lyndon

Johnson on speed dial.  He knew he needed to have a legislative -- had to

have laws...

                MATTHEWS:  Roger, your response to that?

                CAPEHART:  ... to make his dream a reality.

                SIMON:  Jonathan, if I can interject for a moment here?

                CAPEHART:  I`m done.

                SIMON:  If Hillary Clinton had made the case that you just made and

made it in the way you just made it, there`d be no controversy today.  She

didn`t do it.  And in a campaign where every word is parsed carefully,

studied, focus -- grouped and polled and decided upon in a conference call

that morning, it`s hard to believe the choice of words she made was

accidental.

                MATTHEWS:  OK, let`s take a look at her choice of words.  Here`s

Hillary Clinton on Fox last week.  Let`s take a look.  This is the

objection of discussion here.

                (BEGIN VIDEO CLIP)

                SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  Dr.

King`s dream began to be realized when President Lyndon Johnson passed the

Civil Rights Act of 1964.

                (END VIDEO CLIP)

                MATTHEWS:  And here`s what she said on "Meet the Press" with Tim

Russert.

                SIMON:  So where`s all the high-flowing language?

                MATTHEWS:  Let`s take a look at this -- more of this -- more of this

right here.

                SIMON:  Yes, where`s all the high-falutin` language?

                MATTHEWS:  Well, I guess that was it.  Go ahead, Jonathan.

                CAPEHART:  Well, the point -- I mean, Roger does make a very good

point in saying that when talking about -- when talking about race, and

particularly about Dr. King, that you do have to be careful.  You do have

to be more mindful of the fact that people are going to construe what

you`re saying in all sorts of ways...

                (CROSSTALK)

                CAPEHART:  But you know -- but you know what?  Here`s the thing that

we haven`t talked about.  For the longest time, the Clintons have, for lack

of a better description, owned the African-American vote.  Remember,

President Clinton is -- is affectionately called "the first black

president."

                MATTHEWS:  Toni Morrison said that.

                CAPEHART:  Toni Morrison, the Nobel laureate, was the first one to say

it, and people adopted it.  But now the Clintons have to -- I think have to

adjust to this new terrain.  They don`t have this terrain to themselves

anymore.  They have Barack Obama there.

                MATTHEWS:  OK.  I`m trying to find objectivity here.  I guess I can`t

find it.  Let me go to you, Roger, on one last thing.  Do you agree the

people around Clinton -- Bob Johnson, work our way backwards through Mark

Penn on this program, working further backward to Billy Shaheen -- that

these people tend to be pushing the line?  We should be focusing on this

young man`s youthful indiscretions in the drug area, that that`s

purposeful?

                SIMON:  I think that is the effect.  I think that`s what`s happened. 

You can judge their motivations.  We can`t -- we can`t look into their

souls and see why they did it.  But certainly, that`s what the effect has

been.  They constantly raise this issue.

                And look, from Hillary Clinton`s point of view, this is what was in

danger of happening, that Barack Obama was making the case that voting for

him was a redemptive act, that Americans could feel good about themselves,

about their country and about their image in the world if they voted for

this black man.  From her point of view, Obama has raised race from day

one, and she is just doing what he has always done by raising it again.

                MATTHEWS:  Last word, Jonathan.

                CAPEHART:  I just think that the Democratic Party and both Senator

Clinton and Obama and their surrogates just need to cut it out because I

think the damage could possibly be irreversible.

                MATTHEWS:  You know what I`m thinking, weirdly enough?  This fight may

require that they form a ticket as the only way to seal this after this

bloodletting.  After this kind of talk, it seems to me the only way to

satisfy those who lose this race eventually is to put it together.

                CAPEHART:  Well, if they don`t put a lid on it now, if it keeps going

the way it`s going -- it looks like it`s going, you might be right.

                MATTHEWS:  Would you agree with me, Roger, if they don`t stop this

now, it`s going to be very hard to heal the wounds short of a national

compact between the two of them on a ticket together?

                SIMON:  I do.  I wrote months ago, even before the race stuff started

as heated as it is now, that there`s going to be enormous pressure if

Barack Obama does not win the nomination, and he might, to put him on the

ticket...

                MATTHEWS:  Right.

                SIMON:  ... depending on if he really wants to spend the next four or

eight years going...

                MATTHEWS:  Right.  OK.  Got to go.

                (CROSSTALK)

                MATTHEWS:  Oh, don`t put down the vice presidency here.  It`s been a

very powerful job for a man named Dick Cheney.  Anyway, thank you,

gentlemen, Roger Simon...

                SIMON:  It`ll be a very powerful one for Bill Clinton.

                MATTHEWS:  OK.  Jonathan Capehart.

                Coming up, much more on the fight between Hillary Clinton and Barack

Obama --  it`s getting a little ugly out there -- and the issue of race.

                And by the way, don`t forget, tomorrow at 9:00 PM  Eastern, for the

first time on our stage, only the top three Democrats debate.  It`s Clinton

versus Obama versus Edwards.  The field is narrowing.  This is the game of

"Survivor."  Live from Las Vegas, and what happens in Vegas won`t stay in

Vegas, thanks to MSNBC.

                Plus, all the results from the Michigan primary tomorrow and that big

battle between Mitt Romney and John McCain.

                And in one hour tonight, it`s the brand-new HARDBALL "Power Rankings." 

That`s 7:00 o`clock Eastern.  We`ve got interesting rankings for you.

                You`re watching HARDBALL only on MSNBC.

                (COMMERCIAL BREAK)

                (BEGIN VIDEO CLIP)

                Sen. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  And we also have to

have a tax code and a set of laws that are responsible and make sure the

people who are working and not making huge amounts of money, that they are

able to make ends meet and live out the American dream.  And that

increasingly is fading away for a lot of people.  So that`s one of the

reasons I`m running for president.

                (END VIDEO CLIP)

                MATTHEWS:  That looks like an exciting meeting.

                Anyway, welcome back to HARDBALL.  Senator Obama called Hillary

Clinton`s remarks about Martin Luther King and LBJ, quote, "unfortunate and

ill-advised."  I love the language people use.  Hillary accused his

campaign of distorting her comments.  And BET founder Bob Johnson, well,

seemed to allude -- let`s put it lightly -- to Obama`s youthful drug use at

a Hillary event and referred to him as Sidney Poitier -- in other words,

the perfect black man in "Guess Who`s Coming to Dinner."

                Will the issue of race divide the Democratic Party?  U.S.

Congresswoman Sheila Jackson Lee of Texas is the national campaign chair --

co-chair for Hillary Clinton, and former South Carolina state senator (SIC)

I.S. Leevy Johnson is the Obama supporter -- is an Obama supporter.  There

are many of them, obviously.

                Congresswoman, thank you very much for joining us.  What do you make

of Bob Johnson`s role here, saying a positive thing about the Clintons,

Don`t accuse them of not being concerned and supportive of black causes and

black aspirations in this country, but then to go on and make an allusion,

a pretty clear-cut allusion, to Barack Obama and youthful drug use?  Was he

right in the beginning and wrong at the end?

                REP. SHEILA JACKSON LEE (D-TX), CLINTON CAMPAIGN NATIONAL CO-CHAIR: 

Well, first of all, tomorrow is Dr. Martin Luther King`s birthday, and

State Representative, I`m so proud of your leadership in South Carolina. 

Obviously, South Carolina is one of the seats of the Civil Rights movement.

                But I think the importance of Dr. King`s holiday tomorrow and the

national celebration next week really should move all of us to take

people`s words as they have indicated and to bring to a conclusion any

divide on the question of race and to move these campaigns toward the real

issue.

                I have a book on Dr. Martin Luther King, and I have seen nothing in

here, in fact, that would suggest Dr. King didn`t understand the value of

politics and politicians and moving them.  In fact, a speech that he gave

in 1957, "Give us the ballot, and we will change the South."

                Senator Hillary Rodham`s Clinton is a heart that admires and loves Dr.

King, as she has said.  And if anyone can point to me in her past life or

political life, her public life, where she said one denigrating comment

about a diverse person, then that`s the real question about this candidacy,

not the words of surrogates, not the words that are interpreted by other

campaigns, but frankly, what is in Senator Clinton`s heart?

                Many of us know what`s in her heart, including John Lewis...

                MATTHEWS:  Yes.

                LEE:  ... who certainly marched across the Edmund Pettis Bridge and

was a bloodied not victim, but victor of the Civil Rights movement.  He is

supporting Senator Hillary Rodham Clinton.

                MATTHEWS:  I.S., there tends to be a pattern here, however, of Clinton

people, starting with Shaheen up in New Hampshire, then her message

director, Mark Penn, and then Bob Johnson, certainly a brilliant guy, a

billionaire, knows what he`s talking about -- all brought up that drug use

issue.  What is that about, as you see it?

                LEE:  Well, I think, you know...

                MATTHEWS:  No, I want to go to I.S.  I.S.

                I.S. LEEVY JOHNSON (D-SC), FORMER STATE REPRESENTATIVE:  The fact that

he`s a billionaire does not mean that he`s brilliant.  His comments fueled

an issue that is diverting us from the real important issues in this

campaign, and it needs to be brought to a close.  It is important in this

election for the issues that are affecting the public to be debated.  And

what we`re doing now is detouring away from those important issues.

                Here in South Carolina, there is some support for Hillary Clinton. 

However, there`s more support for Obama.  And the people in South Carolina

are more interested in education, economics, a reference -- you know, what

Bob Johnson said was appalling.  But, more importantly, his body language,

the way he said it really underscored that he was making a statement that

he now regrets.

                And a reference to what he -- what Barack Obama did as a youth, it

does not make one iota of a difference now.  Now he`s matured.  Now he`s a

graduate of Harvard University, was head of "Law Review." 

                He is imminently qualified to be the next president of the United

States.

                MATTHEWS:  Congresswoman?

                JACKSON-LEE:  I am delighted to agree with the state representative --

former state representative -- on a portion of his remarks. 

                Absolutely, we need to move forward.  We need to heal.  We need to

come together in the spirit of Dr. Martin Luther King, who fully understood

his movement helped to move Lyndon Baines Johnson and the United States

Congress toward the passage of the Civil Rights Act and the Voter Rights

Act.

                However, we need to take people at their words.  I didn`t hear what

Bob Johnson said that had to do with any drug use.  It said something about

what people were doing in the neighborhood.  You could be organizing in the

neighborhood.

                We need to stop agreeing to innuendo and really listen to facts. 

                MATTHEWS:  OK. 

                JACKSON-LEE:  And when the gentleman from New Hampshire, Mr. Shaheen,

made those comments, our campaign was quick to denounce him and remove him.

                However, when the Barack campaign -- Barack Obama`s campaign mentioned

or gave innuendo to the fact that Senator Clinton might have had something

to do with former Prime Minister Benazir Bhutto`s death, nothing was done. 

                But I want to stop that now.  Let us heal this bridge, if you will,

and tell the American people that a woman can represent all of the people,

and, yes, the candidacy of Senator Obama can, as well.  We believe our

candidate is ready to lead, ready to serve and has the ideas to heal the

pain of America, the economic solutions. 

                MATTHEWS:  OK. 

                JACKSON-LEE:  We believe she is ready to solve those problems for

Americans.

                MATTHEWS:  Well, Congresswoman, this is what Bob Johnson said that --

let`s watch Bob Johnson talk for himself.

                Congresswoman, you decide whether you think this is, in any way,

unclear what he is talking about.

                (BEGIN VIDEO CLIP)

                BOB JOHNSON, FOUNDER, BLACK ENTERTAINMENT TELEVISION:  As an African-

American, I am, frankly, insulted that the Obama campaign would imply that

we are so stupid that we would think Hillary and Bill Clinton, who have

been deeply and emotionally involved in black issues...

                (APPLAUSE)

                B. JOHNSON:  ... when Barack Obama was doing something in the

neighborhood that I won`t say what he was doing, but he said it in his

book, when they have been involved.

                (END VIDEO CLIP)

                MATTHEWS: "When he was doing something in the neighborhood, and I

won`t say what he was doing."

                What do you mean -- you think he meant by that, Congresswoman?

                JACKSON-LEE:  Well, I think, again, we should, Chris, look to the

hearts of the candidates.  There is nothing that I see in Senator Clinton`s

heart that would suggest that she would say anything negative about

African-Americans, Latinos, women, or Senator Barack Obama.

                An African-American male in the name of Bob Johnson is supporting this

campaign.  I`m enthusiastic about that.  Why?  Because men, women, of all

races, colors and creeds are supporting this campaign, and that`s the only

bottom line.

                Why don`t we ask Senator Clinton if she has any comment as to the

background of Senator Obama?

                MATTHEWS:  Yes. 

                JACKSON-LEE:  And you would get an absolute, resounding no.

                I agree with the gentleman from South Carolina.  There are supports of

Senator Clinton in South Carolina, supporters of Senator Barack Obama. 

                MATTHEWS:  Yes. 

                JACKSON-LEE:  We`re not going to leave any stone unturned to get

voters, and we`re going to show them our heart.  We`re going to tell them

we care about them, and we`re going to tell them that we, too, admire and

love and have an affection for Dr. King. 

                MATTHEWS:  OK. 

                JACKSON-LEE:  He is an icon and he helped save America.

                MATTHEWS:  OK.  Thank you. 

                Thank you very much, Congresswoman. 

                Thank you very much...

                L. JOHNSON:  But nobody -- but nobody can ignore the fact that we

understood what Bob Johnson was referring to.  You canned Shaheen.  Why

don`t you can Bob Johnson?  And what was...

                MATTHEWS:  How do you can a billionaire who`s not working for you?

                L.  JOHNSON:  Well, he`s a surrogate.  Don`t put him on the campaign -

- on the campaign trail.  He`s out there speaking for the campaign.

                MATTHEWS:  Well, they made him -- they force-fed him to read that

statement.  They had to put that statement out in his name.  Of course they

have already bugged him.  I`m sure he`s not happy about having to put that

statement out.  That`s probably as far as they got.

                Look, I`m not going to intervene here. 

                Thank you both.  This is a touchy time.  Everyone is touchy.  I hope

people aren`t using dog whistles to send...

                JACKSON-LEE:  Touchy-feely.  I hope -- I hope that we exude the love

of Dr. King.

                MATTHEWS:  OK.  I think you`re right.

                L. JOHNSON:  We`re not touchy.

                (LAUGHTER)

                MATTHEWS:  And we got to have guys who stop sending out dog whistle

signals, too, that some people -- the bad people hear, even if the good

people pretend they can`t hear them.

                Anyway, thank you very much, Congresswoman Sheila Jackson...

                JACKSON-LEE:  A lot of good people around, Chris. 

                (LAUGHTER)

                MATTHEW:  The majority, I hope, my lady.

                (LAUGHTER)

                JACKSON-LEE:  Thank you.

                MATTHEWS:  Thank you for coming on...

                JACKSON-LEE:  My pleasure.

                MATTHEWS:  ... Sheila Jackson-Lee of Texas and I.S. Leevy Johnson of

South Carolina.

                Up next: the HARDBALL "Big Number."  And, tonight, it`s a big example

of how bad this race has gotten.  We are going to talk about what we just

saw, with Hillary Clinton vs. Barack Obama, and what it`s become right now. 

                You`re watching HARDBALL, only on MSNBC.  

                (COMMERCIAL BREAK)

                MATTHEWS:  Welcome back to HARDBALL. 

                So, what other wild politics can we expose tonight? 

                Well, first, from the police blotter: two driving-under-the-influence

cases, one involving Cate Edwards, daughter of the Democratic presidential

candidate.  Her car was hit from behind at a stoplight the other day by a

driver who was charged with driving while impaired. 

                The other DUI case involves Sid Blumenthal, a senior adviser to the

Clinton campaign.  Fortunately -- and I don`t use that word lightly -- both

drivers must be relieved to know that no one was hurt in either accident. 

                For my friend Sid, it`s far better to short suffer a short, small-term

humiliation than what could have happened, and you may well -- and may well

inevitably happen again, if people drink and drive. 

                Let`s check in with some of the fun President Bush is having on his

whirlwind Middle East tour. 

                Our first stop, the United Arab Emirates, where President Bush got to

play with some trained hawks. 

                (BEGIN VIDEO CLIP)

                GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  You guys are making

him nervous. 

                (LAUGHTER)

                BUSH:  He`s never had a press conference before. 

                (LAUGHTER)

                (END VIDEO CLIP)

               

                MATTHEWS:  Well, that could be the most awkward presidential moment

since -- well, since this moment in Israel a few days later. 

                (BEGIN VIDEO CLIP)

                (MUSIC)

               

                (END VIDEO CLIP)

               

                MATTHEWS:  Well, I don`t what to make of that. 

                Anyway, we have been discussing -- as have been discussing, this

Saturday, we have the Nevada Democratic caucuses.  And, as you remember

from Iowa, those caucuses are interesting affairs.  Friends, neighbors and

colleagues actually gather together in homes and debate the candidates

before publicly declaring their allegiances. 

                Well, everything in Las Vegas, of course, is just a little bit more

fun. 

                (BEGIN VIDEO CLIP, "SWINGERS")

                VINCE VAUGHN, ACTOR:  You dig that?  We`re going to Vegas, Mike. 

 

                JON FAVREAU, ACTOR:  Vegas!

                VAUGHN:  Vegas!

                FAVREAU:  You think we can get there by midnight?

                VAUGHN:  Money, we are going to be up five hundy by midnight. 

                FAVREAU:  Yes, Vegas!

                VAUGHN:  Yes. 

                Vegas, baby!  Vegas!

                FAVREAU:  Vegas!

                (END VIDEO CLIP)        

                MATTHEWS:  Case in point, caucus-goers this weekend will descend upon

the famed Bellagio Hotel, which you have perhaps seen in movies like

"Ocean`s Eleven." 

               

                And amidst the cocktail waitresses and craps tables, they will come

together to pick a president. 

                Jack Kennedy used to say, nun are all Democrats and bishops are all

Republicans.  Well, do you think croupiers and waitresses are all

Democrats, and the pit bosses and casino managers are all Republicans?  I

wonder about those things. 

                And, finally, it`s time for the HARDBALL "Big Number" tonight.  It`s

been coming through this show.  As you know by now, Barack Obama admits in

his own memoir that he used cocaine when he was growing up.  Even if you

haven`t read the book, you probably know about it from all kinds of

sources, like the Clinton campaign. 

                Well, first, it was Billy Shaheen, Clinton`s national co-chair, who

brought up the cocaine issue.  He resigned from the campaign afterward, but

not before the damage had been done.  Then it was campaign adviser Mark

Penn who brought up the cocaine issue right here on HARDBALL. 

                Now, as we mentioned earlier in the show, its influential Clinton

backer and BET founder Bob Johnson who brought it up yet again.  How many

times is that in total?  Three -- three mentions of Obama`s cocaine use for

political gain, three, tonight`s "Big Number."  Will we hear four? 

                Up next: the union fight at the heart of the battle for Nevada. 

                And don`t forget tomorrow night`s Democratic debate live from Las

Vegas.  It`s the first debate limited to the top three, Clinton, Obama, and

Edwards.  The debate is at 9:00 Eastern. 

                And then stay with MSNBC for full coverage of the Michigan primary

results.  That`s also tomorrow, a doubleheader tomorrow night. 

                You`re watching HARDBALL, only on MSNBC.  

                (COMMERCIAL BREAK)

                REBECCA JARVIS, CNBC CORRESPONDENT:  I am Rebecca Jarvis with your

CNBC "Market Wrap."

                Stocks rallying today -- the Dow Jones industrials gained nearly 172

points.  The S&P 500 climbed 15.  The Nasdaq was up 48 points. 

                Stocks got a boost from a better-than-expected preliminary earnings

report by IBM.  The tech giant said its fourth-quarter profit jumped 24

percent.  IBM shares were up more than 5 percent today. 

                CNBC has learned that Citigroup plans to announce a write-down of as

much as $24 billion, and layoffs this year could reach 24,000.  Previously,

it was estimated the layoffs could reach 20,000.  It`s all because of

subprime and credit-related losses. 

                Gold climbing to another all-time high, above $910 an ounce, before

closing at a record high above $901 an ounce, up more than $5 for the day. 

                And oil rose $1.51 in New York, closing at $94.20 a barrel. 

                That`s it from CNBC, America`s business channel -- now back to

HARDBALL. 

                MATTHEWS:  Welcome back to HARDBALL. 

                In Iowa, caucus-goers assembled at neighbors` homes and community

centers and churches to decide whom to support.  In Nevada, caucus-goers

could go to meetings in such Vegas Strip hot spots as the Bellagio, Luxor,

Caesar`s Palace, this to accommodate shift workers, who otherwise might not

be able to attend a caucus, because they work on Saturdays.

                But a Nevada teachers union has taken issue and is suing to stop

caucusing at the casinos. 

                D. Taylor is with the Culinary Workers Union Local 226.  And Terry

Hickman is with the Nevada State Education Association. 

                First of all, D. Taylor, why is it important to your membership, your

rank and file, Mr. Taylor, to be able to caucus at places like Bellagio? 

                D. TAYLOR, CULINARY WORKERS UNION LOCAL 226:  Because they have to

work. 

                (LAUGHTER)

                TAYLOR:  I mean, here, we have a very busy weekend.  You know, our

membership is women, people of color.  They serve the food.  They cook the

food.  They obviously do the kind of work -- they make the beds.  It`s

very, very important.  The hotels understand that.  The Democratic Party

obviously understands that. 

                They approved this back in March of last year unanimously, no problem. 

The Democratic National Committee approved it in August, no problem.  All

the campaigns knew about it.  Two days after we endorsed Senator Obama,

five plaintiffs, three of them who had been on the committee to approve it

back in March, all of a sudden, who are tied with the Clinton campaign, are

opposed to this. 

                So, we know this is part of the Clinton campaign.  In fact, President

Clinton today said he`s against the at-large precincts.  What that will do

is disenfranchise the exact reason why the caucus came here, diversity and

union members.  So, the Clinton campaign has clearly shown they are

interested in disenfranchising the exact same people as the reason why the

caucus came here. 

                So, we`re saddened by that.  It reminds me of the tactics the

Republicans used in Florida.  But, obviously, our members are used to

fighting.  We have a diverse membership.  We`re very excited about this.  A

lot of our members just became citizens. 

                So, it would be the first time they could actually have a voice in the

presidency.  We have members who have been disillusioned with the political

process.

                MATTHEWS:  OK. 

                TAYLOR:  They are excited about it.  They would be disenfranchised,

too. 

                MATTHEWS:  Let me go to Terry.

                Terry Hickman, you`re the teachers union, the NEA, out there in

Nevada.  Why are you opposed to the caucusing at casinos, like Bellagio and

Caesar`s Palace, this Saturday?

                TERRY HICKMAN, NEVADA STATE EDUCATION ASSOCIATION:  Well, our issue

for caucuses is one of absolute fairness. 

                We believe that special accommodations are fine for some, they are

fine for everyone.  We don`t believe that where you work should determine

your ability to have access to the caucuses. 

                We have hundreds of employees who are members of the Nevada State

Education Association who are going to be working the caucus sites because

they`re in many schools.  They`re not going to be allowed to participate in

the caucus because it`s not their home caucus. 

                We think that everyone should have the opportunity, and that

opportunity should not be based upon any other thing than the opportunity

for fairness.  That is our issue. 

                MATTHEWS:  What...

                HICKMAN:  That is why we signed on to the suit.

                MATTHEWS:  What teachers will be working Saturday night? 

                HICKMAN:  Well, the Nevada State Education Association has over 10,000

members who are education support professionals.

                And when schools are open -- and they will be Saturday for a lot of

the day -- hundreds of custodians and others will be working those schools. 

And, when they are not able to participate, they are disenfranchised from

the very process they are there to help make work. 

                MATTHEWS:  Why didn`t you guys get on the job of this months ago, when

you saw this coming, and work to get equal opportunity for teachers and

educational administrators and support people?  Why didn`t you fight for

the same opportunities that the casino people have gotten? 

                HICKMAN:  Well, we became aware of this only in the last while. 

Unfortunately -- we wish we had been able to do it sooner.  But now that we

know about it, and now that we`re totally aware of it, we think that

disenfranchisement is an issue.  It is certainly something we believe in as

an association.  We believe that everyone can have that opportunity. 

                MATTHEWS:  OK, would you have raised this issue -- let me go back to

D. Taylor.  D., you`re saying that the reason they`re doing this,

complaining, is because Hillary Clinton didn`t get your organization`s, the

Local 226`s, endorsement. 

                TAYLOR:  Oh, yes, this is just a ruse.  We all know that.  Everybody

here in Nevada knows that.  You know, all politics is local.  Three of the

plaintiffs on this literally approved these rules back in March.  They are

tied with the Clinton campaign.  President Clinton today came out against

the at-large precincts.  So he is in support of disenfranchising thousands

upon thousands of workers, not even just our members. 

                So we don`t even -- listen, the Teachers Union is just being used

here.  We understand that.  This is the Clinton campaign.  You know, they

tried to disenfranchise students in Iowa.  Now they are trying to

disenfranchise people here in Nevada who are union members, people of color

and women, because they didn`t get the endorsement. 

                That`s why we supported Senator Barack Obama.  He`s talking about

inclusion, not division, not about excluding people. 

                MATTHEWS:  Do you think -- should teachers and other educational

support people be allowed to vote at the schools that they teach at and

work at?  Do you think that`s appropriate? 

                TAYLOR:  Of course I do.  But this is not a primary; this is a caucus. 

You only have two hours.   

                (CROSS TALK)

                MATTHEWS:  So if they`re working that weekend, you are saying they

should be able -- I`m asking you, I`m not telling you.  Do you think that

people that work at a school should be allowed to caucus at that school? 

                TAYLOR:  I don`t know.  I don`t know the rules of all the caucus.  I

just know the rules that affect our folks.  It is ironic to think about it

that we have a major move to disenfranchise people of color on Martin

Luther King weekend. 

                MATTHEWS:  I know.  Well, wherever -- as they say in Washington -- as

they say in Washington, where you stand is where you sit.  Anyway, thank

you very much, D. Taylor and Terry Hickman. 

                Up next, we`ll get the latest from the ground in Michigan with the hot

primary, which could decide if there is a future for Mitt Romney and what

kind of future John McCain is going to face after tomorrow night.  This is

HARDBALL, only on MSNBC.

                (COMMERCIAL BREAK)

                MATTHEWS:  Welcome back to HARDBALL.  well, tomorrow night`s actually

the big Michigan primary.  It`s a must-win for Mitt Romney.  The polls show

the race is a toss-up.  I mean it.  The McClatchty/MSNBC poll has Romney up

by eight.  Reuters has McCain ahead by three.  I just love these.  The

"Detroit Free Press" poll has Romney up by five.  The "Detroit News" has

McCain leading by one. 

                The nice thing about these polls is they are clearly in conflict, so

we don`t have to believe them, unlike last week in New Hampshire, where we

believed them because they were consistently wrong.  HARDBALL correspondent

David Schuster is in Michigan.  He joins us with more.  Not to blame the

pollsters, but Michigan seems to be all over the place.  David? 

                DAVID SHUSTER, MSNBC CORRESPONDENT:  Chris, that`s right.  One of the

hard things the pollsters have to do out here is try to figure out how many

independents and Democrats are going to participate, because the Democratic

race is totally meaningless.  The Democrats were essentially told not to

campaign here.  How many Democrats cross over, that will be crucial. 

                Mitt Romney, Chris, is laying everything on the line here in Michigan. 

He pulled his ads in other states so he could run heavier here.  Mitt

Romney`s father was governor of Michigan 40 years ago.  Romney`s been

talking about the Michigan`s concerns and how it`s personal to him and he`s

been talking about his family connections at every event.  Watch. 

                (BEGIN VIDEO CLIP)

                ROMNEY:  My dad didn`t finish college and yet his first great

accomplishment, in my view, was being able to go on and become the head of

a car company. 

                He ran a car company right here in Detroit.  And then -- and then he

went on to run for governor of Michigan.  And he became governor of

Michigan three times. 

                (END VIDEO CLIP)

                SHUSTER:  The economy here in Michigan stinks.  It has the highest

unemployment in the nation.  All the candidates are talking about that. 

Mitt Romney in particular has been criticizing John McCain for McCain`s

insistence on fuel efficiency standards.  That has not set very well, of

course, that position, with the auto industry.  But Romney is a free-trader

and that doesn`t sit very well with Michigan either. 

                As for John McCain, he`s been given a heavily dose of realism, saying

that jobs that left Michigan are not coming back.  McCain was under fire

today because of a mailer in South Carolina attacking Mitt Romney.  Here`s

the mailer; John McCain`s mailer essentially said that Mitt Romney raised

taxes in Massachusetts and essentially supported tax-payer funded

abortions.  McCain was on the defensive today here in Michigan, having to

explain why he`s going negative already in South Carolina.  Watch.

                (BEGIN VIDEO CLIP)

                SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE:  We will respond.  Now,

we won`t go tit for tat, but we will respond and we will make clear that

this kind of negative campaigning didn`t work for him in Iowa when he

attacked Governor Huckabee.  It didn`t work in New Hampshire when he spent

millions attacking me.  And I don`t think it will work in Michigan where he

spent millions attacking me.  And it won`t work in South Carolina. 

                (END VIDEO CLIP)

                SHUSTER:  Now, as McCain and Romney tear each other apart, the guy

that`s hoping to benefit is the economic populist on the Republican side,

Mike Huckabee.  He`s been talking about the great economic concerns here in

Michigan, has been saying that the federal government must step in and

help.  Here`s Huckabee. 

                (BEGIN VIDEO CLIP)

                MIKE HUCKABEE (R), PRESIDENTIAL CANDIDATE:  Michigan saved America. 

And now it`s time for America to return the favor and help save Michigan

when it`s in trouble, and it`s in trouble today. 

                (END VIDEO CLIP)

                SHUSTER:  And, again, Chris, the key issue here in Michigan, jobs. 

The state has lost tens of thousands of jobs, 25,000 Chrysler alone just

over the last year.  Michigan is in a very pessimistic mood going into this

primary.  Chris? 

                MATTHEWS:  Thank you, David Shuster in Detroit.  Now back to Nevada. 

We`re joined by Republican senator from Nevada, John Ensign.  Thank you for

joining us. 

                Let`s talk about the races coming up in the Republican party.  Right

now, you`ve got the race in Michigan tomorrow, between -- or among, I think

it`s fair to say, Romney, McCain and Huckabee.  Then we go to your state

for the caucuses, which have been diminished in importance for some reason

you can explain.  And then this same day, next Saturday -- this Saturday

rather, we`ve got the South Carolina caucuses. 

                Put it together.  Is this going to winnow the field for your party? 

                SEN. JOHN ENSIGN (R), NEVADA:  I`m not sure that we`re going to have a

nominee even after February 5th, Super Tuesday.  We may come down to a

convention.  I`ve never seen it this competitive, this long in -- at least

in my lifetime, or at least as long as I`ve been involved in politics.  So

it`s fascinating to watch. 

                MATTHEWS:  Is this Damascus on the road to St. Paul?  A reverse of the

biblical?  I mean, all the way to St. Paul, is it going to be chaos?  It

looks like it might be, unless McCain Wins tomorrow night.  In that case,

if McCain wins tomorrow night, does he become the clear front-runner, sir? 

                ENSIGN:  I`m not -- I`m not sure about that.  You will still have Rudy

Giuliani out there, who is playing all of his cards down in Florida, and

some of the other big states.  So I`m not exactly sure how it`s going to

come out. 

                The one thing that I think is exciting is, because there is no clear

front-runner, whoever`s going to come out of this is going to be battle

tested.  They are going to absolutely have to put on their game face in the

primary, and not just have to wait for the general election.  Sorry, I`m

having problem with my earpiece. 

                MATTHEWS:  I can hear you.  Let me ask you, senator, why do you think

the Democrats, 58 percent, just nationally polled, say they are very

enthusiastic about voting this fact, in fact more enthusiastic -- 58

percent of them -- more enthusiastic than before?  And on the Republican

side, only 32 percent of the people are unusually enthusiastic?  I`ve never

seen that kind of dichotomy?  Why is your party so un-thrilled with this

campaign? 

                ENSIGN:  Well, you know, I think that there are a lot of reasons out

there.  But, Chris, as you know, there is a long time between now and next

November.  I`d rather have our party a little behind now as far as

enthusiasm, but be ahead on enthusiasm when it comes down in November.  Six

weeks would be an eternity in politics, but this many months before the

election, it`s impossible to make predictions. 

                MATTHEWS:  Sometimes when I listen to my colleague, Pat Buchanan, I

listen to Karl Rove or read him in the "Wall Street Journal," I get the

suspicious -- maybe it`s not appropriate -- but the suspicion, as they

build up Hillary Clinton, that they want this big basted turkey for

Thanksgiving, that they want her because they think they can beat her.  And

I`m not sure they`re right. 

                Do you think some people in your party are happy with the prospect of

running against Hillary Clinton come November? 

                ENSIGN:  I`m actually happier that we have two candidates that are

going to have to really battle it out on the Democrats` side, spend a lot

of the money and not have a clear front-runner right now.  So, I think it`s

healthy for the American electorate to have clear choices, and to battle

out in the primary on both sides and then to have the, you know, top two

candidates face off in the general.  I think it is actually good for the

country.  You`ll be able to see in many, many debates -- you`ll be able to

test and see, are they consistent on their issues, so in next November we

can elect a person who would be best to lead the United States. 

                MATTHEWS:  OK, thank you very much, Senator John Ensign of Nevada.

                When we return, the round table will be here for the politics fix. 

You`re watching it, HARDBALL, only on MSNBC.

                (COMMERCIAL BREAK)

                MATTHEWS:  Welcome back to HARDBALL and the politics fix tonight. 

Tonight our round table, Jill Zuckman of "The Chicago Tribune" and John

Ralston of the "Las Vegas Sun." 

                Let me start in Las Vegas, John, with this debate.  How do we figure

out who is going to win the Nevada caucuses on the Democratic side this

Saturday night?  It is so close.  You have your poll out there at 32-30-27

among Obama, Clinton, and Edwards.  These are so close it is unbelievable. 

                JOHN RALSTON, "LAS VEGAS SUN COLUMNIST":  It`s hard to tell.  We have

never done this before out here in Nevada.  I mean, who knows what the

turnout could be with 9,000 four years ago on the Democratic side when we

were on Valentine`s Day.  How much interest is out there?  Harry Reid, the

majority leader who got the caucus here, says 100,000.  I think he is

living in a fantasy world. 

                But could they get half of that?  Maybe.  But where are these polls? 

Where are they coming from?  Who are they polling?  I don`t know if they

got the right universe.  But it is clear that --

                MATTHEWS:  How do you know it is going to go? 

                (CROSS TALK) 

                RALSTON:  The Culinary Union has a big impact.

                MATTHEWS:  Let me go to Jill.  This thing is big.  Everybody thought

about a week ago, you know, that Obama would win New Hampshire.  We all

did.  Let`s face it, we are looking at every single poll that said he

would.  Then we`re all looking at the fact the Culinary Union, the big

restaurant and casino union out there, was all going to endorse Barack.  So

he`s going to win two in a row.  Can he still win out there? 

                JILL ZUCKMAN, "THE CHICAGO TRIBUNE":  I mean, he could.  Nobody really

knows because this is such an untested area in Nevada.  I think the only

thing we can bank on right now is that it is going to be very chilly on

that debate stage tomorrow night between Obama and Senator Clinton. 

                MATTHEWS:  They are getting very personal.  Let me ask you about the

field.  How`s it sizing up out there, John, between the two?  Can you give

me the cut of the jib of the person backing Hillary and the same thing with

regard to Obama?  How is it splitting up back and forth.  Is it class?  Is

it ethnic?  What is it?

                RALSTON:  All the Democrats -- all of the Democratic party

establishment essentially -- I mean, Harry Reid has tried to stay out of

it, but his son, Rory Reid, who was the chairman of the County Commission,

managed to rope in a whole bunch of establishment endorsements, the state

Senate minority leader, former Governor Bob Miller.  They are all with

Hillary Clinton.  She has an amazing amount of free media just from all of

these endorsements. 

                She`s also making a pitch out here, though, Chris, to the Hispanic

community and she has a lot of support in the Hispanic community, including

a very prominent young assembly-man, Ruben Keewan (ph), who has been

escorting her around and trying to get support for her. 

                Obama, the Culinary Union Workers are really behind him now.  And you

talked a little bit about that lawsuit before.  The real interesting

political fallout from that is D. Taylor trying to energize his members. 

The Clintons are trying to go right to the heart of the Culinary Union

Membership, 40 percent or so Hispanic. 

                MATTHEWS:  John, out of time, buddy.  Thank you.  We will catch you

out there.  Thank you, Jill Zuckman.  Wish we had more time, John Ralston. 

Tomorrow night the Democrats debate in Las Vegas.  We`ll have complete

coverage starting at 9:00 Eastern. 

                Also, tomorrow, all the results from the Michigan primary, Republican

primary.  That`s the hot one.  See you then.

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

BE UPDATED.

END   

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