updated 2/22/2008 11:40:52 AM ET 2008-02-22T16:40:52

Guests: Bob Bennett, Frank Foer, Deroy Murdock, Linda Douglass

CHRIS MATTHEWS, HOST:  “The New York Times” runs a front-page story quoting former aides that John McCain had a romantic relationship with a lobbyist and then did official favors for her.  Is it true?  That‘s the question.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  And welcome to HARDBALL.  Scandal or no scandal?  Today‘s “New York Times‘” front-page report on Senator John McCain reads as follows, quote, “A female lobbyist had been turning up with him”—John McCain—“at fund-raisers, visiting his offices and accompanying him on a client‘s corporate jet.  Convinced the relationship had become romantic, some of his top advisers intervened to protect the candidate from himself, instructing staff members to block the woman‘s access, privately warning her away and repeatedly confronting him, several people involved in the campaign said on the condition of anonymity.”

Well, simply put, the story implies that Senator McCain had an affair with a lobbyist and did official favors for her.  Senator McCain responded this way this morning.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I‘m very disappointed in “The New York Times‘” piece.  It‘s not true.

(END VIDEO CLIP)

MATTHEWS:  Well, the editor of “The New York Times” said the story, quote, “speaks for itself.”  So what‘s the truth?  In a moment, we‘ll talk to John McCain‘s attorney in this matter, Bob Bennett.

Plus, let‘s not forget the Democrats tonight.  Senators Clinton and Obama get ready for a debate in Texas tonight.  What‘s at stake, and who‘s got more to loose?  We‘ll be coming back with a special edition of HARDBALL tonight at 11:00 Eastern.  All that and more later in this program on the “Politics Fix.”

But first the McCain story.  We‘re joined by NBC‘s David Gregory and Andrea Mitchell.  Anyone who covers politics is saddened by this story.  This is a story about a respected legislator who‘s been accused in the most serious way, on the front page of “The New York Times,” the nation‘s public record—paper of record, suggesting in the strongest possible way, A, he had a relationship with a female lobbyist, and B, he did officials favors for her.  How does this story develop over the next couple of days, David Gregory?

DAVID GREGORY, NBC CORRESPONDENT:  So far, there doesn‘t appear to be a lot of traction.  You don‘t find McCain‘s rivals trying to use this against him, namely Mike Huckabee, who‘s still in this campaign.  He backed away from it.  Do the Democrats pick up on this tonight?  Does Barack Obama or Hillary Clinton, you know, try to grab a piece of this story and suggest that he‘s not clean?

I mean, that‘s the issue here, is John McCain unclean, is he a hypocrite?  That was the suggestion in the piece.  It‘s not proven by the piece.  However, questions are raised.  What do we know today that we didn‘t know yesterday?  Not a whole lot based on this piece.  That will determine whether there‘s any real political impact here.

MATTHEWS:  It seems to me, if you read what I read to the public just now on the program, Andrea Mitchell, about this romantic relationship alleged by his former top aides or former aides, it‘s hard not to escape the implication here of a very bad decision by him, if it happened, to help someone he had a romantic relationship with.  Is that the story?  Is it proved in the article, or is that yet to be proved by “The New York Times”?

ANDREA MITCHELL, NBC CORRESPONDENT:  I think it has to be proved by “The New York Times,” but certainly, there will be people going after this, chasing this story.

At the same time, I think that it does raise questions about the journalism involved not just at “The New York Times,” but the whole way this kind of thing ricochets.  And it could be used to McCain‘s benefit.  They‘ve already put out a fund-raising appeal to try to beat up on “The New York Times,” the so-called liberal establishment media, ironically, of course, because he has long been accused by conservatives in the party of having the liberal “New York Times” and the rest of the establishment media in his pocket.

That said, I think he can use to it become a more sympathetic character to the Democrat—excuse me, to the Republican base.

GREGORY:  It is interesting, Andrea saw this morning, you did, you know, Pat Buchanan, and then there was Rush Limbaugh, saying that this is the liberal “New York Times” after the conservative Republican John McCain.  The only person who this doesn‘t fit for is John McCain, OK?  He has been a media darling who‘s got a great relationship with the press, who actively courts the press, the “Straight talk express,” his campaign buses.  You know, the idea that the same paper, you know, that endorsement—that endorsed him was laying in wait so they could take him out—I‘m just not one of those people who subscribes to that level of conspiracy thinking.

MITCHELL:  Well...

GREGORY:  They arrived at this...

MITCHELL:  ... I think that‘s why...

(CROSSTALK)

MATTHEWS:  Andrea, go ahead.

MITCHELL:  That‘s why you heard him say he was disappointed.

GREGORY:  Right.

MITCHELL:  Although his lawyer and his office put out the statement that it was a smear...

MATTHEWS:  OK...

MITCHELL:  ... he said that  he was disappointed in “The New York Times.”  He wasn‘t going to go after them as hard as his supporters...

(CROSSTALK)

MATTHEWS:  Well, here comes the artillery because, as David just suggested, everyone went to battle stations, including Pat Buchanan this morning.  They went to general quarters, as they say on battleships.  Here‘s Rush Limbaugh, the captain of the ship.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  The important question for John McCain today is, Is he going to learn the right lesson from this?  And what is the lesson?  The lesson is liberals are to be defeated.  You cannot walk across the aisle with them.  You cannot reach across the aisle.  You cannot welcome their media members on your bus and get all cozy with them and expect eternal love from them.  You are a Republican.  Whether you‘re a conservative Republican or not, you are a Republican.

(END VIDEO CLIP)

MATTHEWS:  Andrea, David, stick with us for a minute.

Bob Bennett‘s, of course, the well-known attorney in Washington here who represents Senator John McCain in this matter.  Bob, thank you very much for joining us.  You‘re also the author of a new book, “In the Ring.”  We want you back to talk about your book because you have been one of the celebrated attorneys in this city.

Let me ask you about this “New York Times‘” story.  Is it false?  Period.  It implies a sexual relationship between John McCain and this lobbyist, Vicki Iseman.  It suggests that John McCain returned sexual favors—that‘s the way the papers usually write these things, for—in the form of official misconduct, if you will.  Is either true, either end of this deal true?

BOB BENNETT, ATTORNEY FOR SEN. JOHN MCCAIN:  No, I think—I think it‘s a very bad story.  And it‘s like a big piece of cotton candy, which it looks attractive, but when you bite into it, there‘s nothing there.

I sat down with the reporters, and I, and along with staff members, provided “The New York Times” with about a dozen examples of where Senator McCain rejected or declined requests from Ms. Iseman and her firm.  And yet not one of them makes its way into the story.

I think they—the core of the story is absent.  There is no showing that Senator McCain ever breached the public trust or that he ever decided an issue contrary to his beliefs.  So you know, I think it‘s an unfortunate story.  I‘m not charging them with any kind of conspiracy, but the two—the only two specifics of any moment in this story go back—one, the “Keating five” case goes back 20 years.  And incidentally, I was counsel to the Senate Ethics Committee, and after investigating Senator McCain for a year-and-a-half, I concluded he was a very honest man and suggested he be exonerated.

The other—the other instance is this Paxson business, this writing of a letter.  I think that‘s seven or eight years old.  And there is nothing wrong with the head of a committee nudging the bureaucracy to make a decision.  It‘s important, Chris, to understand that he did not ask them to make any decision one way or the other.  He simply said, Look—to the effect—you‘ve taken twice as much time as you normally take.  These people are entitled to a decision.  There‘s nothing wrong with that.

MATTHEWS:  Did she—did the staff of John McCain ever tell this woman, this female lobbyist, to stay away?  Did they ever warn her she was exploiting a relationship or friendship and she ought to cool it and back off and stop bragging about her relationship with the staff of the Senate Commerce Committee?  Did that ever happen?

BENNETT:  Well, I don‘t know, of course.  I wasn‘t there.  But all I can tell you is when I talked to the staff of the senator‘s committee, they say it never happened.  And I understand today that Mr. Weaver, who is one of the people quoted in the story, is saying that when he told her to back away, it was based on his concern of certain statements that she had been making.

But Chris, that‘s another problem with this story.  They raise, you know, this—you know, you mention my book.  My book is all about the scandal machine...

MATTHEWS:  Yes.

BENNETT:  ... and—and attacking people by raising these kinds of issues.  They rely on anonymous sources, and they have no corroboration.

MATTHEWS:  Who are these two former associates?  Have you been able to nail them?  Are they Democratic staffers on the Commerce Committee?  Are they actually former aides to John McCain, or who are they?  Can you tell?  Who are the sources for this story?

BENNETT:  Chris—Chris, I‘m going to be fairer to those people than “The New York Times” was to Senator McCain.  I think I have a pretty good idea, but I don‘t have enough proof or evidence that I‘m comfortable identifying them either by name or by position on the air.  I don‘t think...

MATTHEWS:  “The New York Times” has a rule, Bob, that they identify sources whenever they can, and when they don‘t identify the source by name, they identify a reason for not giving the source‘s name.  They didn‘t do that today in this story.  They didn‘t give any reason for not identifying the sources.  What do you make of that?  Why didn‘t they say, For a reason we‘re not telling you who these people are?

BENNETT:  Well, I—you know, I have felt from the first day I talked

to the reporters that they had suspicions but they had no evidence.  And

while I don‘t believe, Chris, it was a conspiracy on their part that—you

know, that they tried to purposely time it a certain way, I believe they

never had the evidence.  All they had was innuendo.  But they were worried

I think they were worried they were going to get scooped.  And while I have great respect for your profession, sometimes I feel that reporters would rather be scooped than be wrong.  And I think...

MATTHEWS:  Well, that‘s a bad judgment obviously.  You‘ve nailed them, if that‘s the case.  That is up in the air, that question.

BENNETT:  Yes.

MATTHEWS:  If “The New York Times,” the best paper in the country did this, that is a problem.  No evidence it did.

Let‘s look at this line here.  Is this what you‘re saying, when “The

Times” puts on the front page, the top of the fold, the following:

“Convinced the relationship had become romantic, some of his top advisers intervened to protect the candidate from himself.”  Is that weasel words, as you‘re putting it?  Are you saying they couldn‘t say he had a romantic relationship, your candidate—your client, John McCain, so they said the aides were convinced the relationship had become romantic, and that‘s weasel language.  Is that what you‘re saying?

MITCHELL:  Yes, it‘s weasel language.  And again, it deflects from the real issue.  Members of Congress are very friendly from—from A to Z, to various lobbyists.  The issue isn‘t whether they have friendly relationships, the issue is, Do they make decisions based on favoritism, or do they make their decisions on the merits?  And there is no evidence...

MATTHEWS:  Have you ever asked McCain...

BENNETT:  ... no evidence—no evidence...

MATTHEWS:  Have you ever asked your—OK.  Have you ever asked your client, John McCain, if he had a romantic relationship with Vicki Iseman?  Have you ever asked him that question?

BENNETT:  Chris, you know, I have a practice, I never talk about my conversations with my clients.  John McCain has adamantly denied it.  The lady has adamantly denied it.  And that‘s—you know, “The New York Times” really just reports a lot of suspicion, doesn‘t name the sources and doesn‘t even corroborate those sources.

MATTHEWS:  Do you believe if they‘re going to suggest there was a romantic relationship between your client, Senator McCain, and Vicki Iseman, they should have substantiated it?

BENNETT:  Well, you know, there are some people—yes, Chris.  There are some people who say the press should never use anonymous sources.  I don‘t agree with that because sometimes you have to.  But in those cases, especially where you are making allegations of a sexual nature or a romantic relationship, you sure better have some strong corroboration, and that seems to be—that seems to be absent.

You know, in my book, Chris, you know, in “The Ring,” I emphasize—you know, I almost was prophetic about this.  I say, If you really want to hurt somebody, what you do is you charge them with impropriety and you toss in a sex angle.  And that‘s exactly what they did here, without any real hard evidence.

MATTHEWS:  What would be their motive?

BENNETT:  Well, I—I don‘t attribute some vast conspiracy.

MATTHEWS:  You said, “if you want to hurt somebody.”  You said, If you want to hurt somebody, you do the following, and then you described what they just did.

BENNETT:  Yes, well, these reporters got very far down—you know, if the storyline, Chris—if the storyline is good enough, reporters get sucked in.  I just played a role, as you know, in the Duke lacrosse case.  Not a major role, I should add.  The storyline was so great, the reporters didn‘t look at it carefully.  The storyline here is so great that reporters went before they really had evidence to go.

MATTHEWS:  OK.  What legal action—last question, Bob Bennett. 

You‘re an attorney, one of the top ones in Washington, in the country.  What legal recourse do you have for your client, John McCain, to force “The New York Times” to reconsider, re-retrofit, if you will, what‘s the right word, modify, retract, whatever the word you‘re looking for—can you get them to pull back on their story, yes or no?

BENNETT:  Well, in the real world, no, because John McCain is a public figure.  You would have to show that they had actual malice...

MATTHEWS:  Or reckless disregard, sir.

BENNETT:  ... or reckless disregard.  But should you bring—should you bring a cause of action—and I think, arguably, there is a cause of action, all that would accomplish is derailing Senator McCain from his message.  He‘s running for the presidency of the United States.  We don‘t want to do that.

Now, I haven‘t spoken to him about that issue, but you know, I‘d recommend against legal action because it would be successful in derailing him from being on message, and the press would just be focusing on the litigation.

MATTHEWS:  You know, this paper runs in Britain.  Can you run a libel case over there?

BENNETT:  Well, the libel laws in Britain are much—are much looser

and better.  But again, the decision the senator would have to make would

be, Does he really want to spend his time and effort and detract—detract

from running for the presidency of the United States?

MATTHEWS:  OK.  Thank you very much, Bob Bennett, for joining us. 

We‘ll have you back to talk about “In the Ring,” your new book, next week.

Coming up, much more on the McCain story.  Why did “The New York Times” run this story today implying that John McCain had a relationship, a romantic relationship with a female lobbyist?

And later: Hillary Clinton only has a few more chances to change the Democratic race.  Tonight‘s one of those chances in a big debate tonight.  What does she need to do to catch Barack Obama?  Tonight‘s debate and much more on John McCain coming up.

You‘re watching HARDBALL, only on MSNBC.

(BEGIN VIDEO CLIP)

MCCAIN:  At no time have I ever done anything that would betray the public trust, nor make a decision which...

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LIMBAUGH:  There‘s a great opportunity here for Senator McCain to learn the right lesson, understand who his friends are and who his enemies are.  And he‘s had that backwards for way too long.  He has thought “The New York Times” is his friend.  He has thought Chris Matthews and these other people in the drive-by media are his friends.  They aren‘t.  That‘s the lesson today.

(END VIDEO CLIP)

MATTHEWS:  Welcome back, and thank you for that notation there, Rush Limbaugh.

(LAUGHTER)

MATTHEWS:  Welcome back to HARDBALL. 

So, why did “The New York Times” run this McCain article?  Why did they do it today?  The McCain camp speculates that “The Times” didn‘t want to be scooped by “The New Republic,” which had been doing a story about the story and how it was being prepared.

Frank Foer knows all about it.  He‘s the editor of “The New Republic,” a great magazine, I must say.  And Mike Barnicle, a great reporter, he‘s joining us.  He‘s up in Boston.  He‘s an MSNBC political analyst.

I want to go to Frank and then back and forth, both of you guys, back and forth on this. 

To some extent, this is a story about journalism. 

FRANK FOER, EDITOR, “THE NEW REPUBLIC”:  Yes. 

MATTHEWS:  You run a front-page story in the paper of the record, “The New York Times,” the...

FOER:  Right. 

MATTHEWS:  ... the gray old lady, or whatever, and it says, basically, a romantic relationship by the Republican presumptive nominee for president with a lobbyist, and then he did favors for this girl...

FOER:  Right. 

MATTHEWS:  ... this woman, he was having a relationship with. 

FOER:  Right. 

MATTHEWS:  That is—that is huge. 

FOER:  Right. 

The sex was the lead part of the story.  And I think that‘s become the

thing that‘s been far—is obviously the most controversial

MATTHEWS:  The artwork, by the way—the selection of the artwork I found very interesting, in an evening gown. 

FOER:  Right. 

MATTHEWS:  I mean, I just—the way it‘s done, it adds up.

FOER:  Right, right, right. 

And, you know, you go and look at the—the nuts and bolts of the story and the part about lobbying and Paxson and McCain‘s tenure as chairman of the Senate Commerce Committee, I think that there is—there‘s a totally legitimate, important story there that goes to the core of his political identity and could have been very damaging to him. 

But “The Times,” the way they led the story off, they took it straight into the sex direction, which has been the thing that all of the McCain campaign, Limbaugh, the other people attacking you in the drive-by media, are saying sends this thing into the gutter. 

(CROSSTALK)

MATTHEWS:  I have been trying to understand this story.  I have not been on either side of this fight, except to read the paper. 

Mike Barnicle, who is that used to—La Guardia (ph) -- all I know is what I read in the papers?

A female lobbyist has been turning up with him at fund-raisers.  The staff thought it was a romantic relationship.  They pushed her away.  What do we make of this as journalism? 

MIKE BARNICLE, NBC ANALYST:  Well, God—God, I hate this story, Chris.  I hate it for what it does....

MATTHEWS:  I hate it, too. 

BARNICLE:  I hate for the process—what it does to the process of politics.  I hate it for what it does to the process of journalism.

“The New York Times” and no other paper ought to be on the ballot.  They are now on the ballot, so to speak, people voting up or down on “The Times,” what they did today.  “The New Republic” piece, incidentally, which is on the Internet this afternoon, is a terrific piece about this—about this whole thing. 

The—the problem with the piece, Chris, is what you just referenced talking to Frank.  There are hundreds of smaller papers across the country that get “The Times” news service.  It‘s a 3,000-word story.  They don‘t have space for that.  They‘re going to cut it down to about 850 words.  Guess which 850 words they‘re going to choose?  They‘re going to pick out the sex stuff and put it up. 

And I don‘t know what it means.  I‘m reading it, a couple of anonymous sources.  If you‘re a newspaper editor and someone comes to you and says, hey, I have got two anonymous sources, they think there‘s a suspicion of sex between a United States senator and a New York lobbyist, what do you say?  You say, yes, please.  Come back later.

That‘s not front-page stuff.  But it‘s front-page today.  

FOER:  Right. 

MATTHEWS:  Several people involved in the campaign said, on the condition of anonymity—again, I want to repeat “The New York Times” rule book.  The style book says you have to identify all sources or explain why you‘re not identifying them.  They don‘t do it here. 

FOER:  Yes.  No, the methodology is what troubles me. 

I trust—I actually have a lot of faith in Bill Keller.  And the four reporters who worked on the story are... 

MATTHEWS:  I do, too.  I think he‘s a great editor. 

(CROSSTALK)

MATTHEWS:  ... great reporter.

FOER:  The four reporters who worked on the story are great reporters. 

MATTHEWS:  OK. 

And would Keller stake—stake the world on...

MATTHEWS:  Well, I will tell you what goes on.  And we all know it goes on in journalism. 

When you know information off the record, on background...

FOER:  Yes.  Yes. 

MATTHEWS:  ... but you know it...

FOER:  Yes. 

MATTHEWS:  ... it guides the way you judge...

FOER:  Yes. 

MATTHEWS:  ... the way you choose, as Ben Bradlee would put it. 

FOER:  Right. 

MATTHEWS:  If—if it affects your choices...

FOER:  Right. 

MATTHEWS:  ... maybe you have to explain why it did.  But it certainly does. 

FOER:  I mean, as a consumer of this story, it becomes problematic.  I‘m investing a lot of faith in these guys because of their reputations, because of their backgrounds.  But they‘re not leading me through the story in a way that is making it clear how they know what they are writing with so much authority. 

(CROSSTALK)

MATTHEWS:  You know, with Gary Hart, Mike—and I hate to go back over this, but I am going to do it.  Gary Hart, when they nailed him back in, what, ‘87 on a relationship with that woman, they had—they had a guy who staked out the house for the party that night, was there all night, caught him there.  They and got a picture of him with her on his lap. 

I mean, if you want to nail down a story, I guess that‘s what you do.  But, here, they did not even try to do that, “The Times.”  They simply had two former staffers—or they could be Democratic staffers who didn‘t like the guy because he‘s a Republican—we don‘t know—saying that they think he had this affair. 

(CROSSTALK)

BARNICLE:  That‘s—that‘s what I‘m saying.  They had a suspicion that there was something going on. 

The Gary Hart thing, I mean, Gary, unfortunately, begged the press to follow him.  He challenged the press to follow him around.  And they followed him around.  And they found Donna Rice at the end of the trail. 

But—but this particular story here, Chris, again, the problem is the anonymous sources.  It‘s—it‘s a huge issue, I mean, in terms of, if it‘s on the front page of “The New York Times,” it‘s magnified beyond all proportion. 

MATTHEWS:  Yes.

Does anybody here, of the two of you guys, not think it‘s a—it‘s a deal-breaker to have a story that‘s true, that he had a sexual relationship with a lobbyist, and then did favors for her?  Is that a deal breaker for a nominee for president, yes or no, Frank? 

FOER:  I think it is. 

(CROSSTALK)

MATTHEWS:  Is it a deal-breaker, Mike, if it‘s true? 

BARNICLE:  Yes.  Yes. 

MATTHEWS:  I think it‘s—and that‘s the problem.  That is the problem. 

BARNICLE:  For John McCain—for John McCain, it is.

MATTHEWS:  This story, as you just said Michael, so well, it‘s such a big indictment that, if it‘s true, it carries all the weight of the world.  And, if it‘s not true, we shouldn‘t be reading it.  That is all I‘m saying. 

FOER:  The reason—the reason—the reason it‘s a deal-breaker...

(CROSSTALK)

FOER:  ... is the reason—I mean, they framed it this way in the piece—is, the guy has built up this—this political persona that has a lot of...

MATTHEWS:  Straight talk. 

FOER:  ... has a lot of appeal to a lot of people who don‘t necessarily agree with him on a lot of issues. 

MATTHEWS:  OK. 

Why didn‘t he talk to “The New York Times” before this story ran? 

FOER:  He did.  He called—he called—he called...

MATTHEWS:  He did once a while—several months ago.

(CROSSTALK)

FOER:  He called Keller.  Yes, he called Keller.

BARNICLE:  No, Chris...

FOER:  And his lawyer, Bennett, who you just had on the show, talked to them some more. 

And, no, but I think that there are conspicuous parts of the story that he hasn‘t confronted head on or denied head on. 

MATTHEWS:  Like what? 

BARNICLE:  But—but...

FOER:  I mean, you know, I think that—that various aspects of flying on the plane...

MATTHEWS:  Yes. 

FOER:  ... the relationship to her, just the—the proximity that he had to her over time. 

And, you know, he was—she was a lobbyist.  He was the chairman of the Commerce Committee.  He‘s running on this—this—this platform of being super-ethical.  To have that kind of tight relationship with a lobbyist, even if there was no funny business, is very suggestive.

MATTHEWS:  OK.  Let me read...

(CROSSTALK)

MATTHEWS:  On behalf of “The New York Times,” here‘s the statement by Bill Keller, executive editor of “The New York Times.”

Quote: “On the substance of this story, we think the story speaks for itself.  On the timing, our policy is, we publish stories when they are ready.  ‘Ready‘ means the facts have been nailed down to our satisfaction, the subjects have all been given a full and fair chance to respond, and the reporting has been written up with all the proper context and caveats.  This story was no exception.  It was a long time in the works.  It reached my desk late Tuesday afternoon.  After a final edit and a routine check by our lawyers, we published it.”

(CROSSTALK) 

MATTHEWS:  Michael.

BARNICLE:  Chris, you know, Bill Keller‘s is a great editor.  This is the best paper in the country, four reporters working on this story. 

This—for Bill Keller to say this story reached me Tuesday afternoon, that‘s a little sleight of hand.  His fingerprints had to have been all over this story for the past eight or 10 weeks, however long they have gathered the news.  This story clearly, from reading it in the paper, was put through an editorial Cuisinart.

And, you know, that‘s bothersome, too. 

MATTHEWS:  OK. 

BARNICLE:  The other aspect that is bothersome about the story, as you say, why didn‘t McCain speak to “The Times”? 

MATTHEWS:  Well, the good news is that “The New York Times” has more editions to follow.  They can fix and correct and refine and work and work, work even harder to find the truth, which is not clear at all right now. 

Frank Foer, thank you for joining us. 

FOER:  Thank you. 

MATTHEWS:  A great magazine, by the way, “The New Republic”. 

FOER:  Thank you. 

MATTHEWS:  I love the new layout. 

FOER:  Thank you.  Thank you. 

MATTHEWS:  I love the PDF.  I love the glossy version.  I love the whole thing, the great writing. 

FOER:  Thank you. 

MATTHEWS:  Mike Barnicle, as always. 

Hillary Clinton may need to go for the gut in tonight‘s debate.  But, after losing 10 in a row, states, she‘s turning to a brand-new zinger against Obama out on the campaign trail.  And she‘s using it often.  It‘s that he‘s not ready to be president.  We will get to that next in the “Big Number.”

And you‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

So, what else is going on out there politically in the world? 

Well, Harry Truman said that, if you want a friend in Washington, get yourself a dog.  Well, “The New Orleans Times Picayune” reports today that John McCain maintains an impressive menagerie, an English springer spaniel, a mutt, a cat, a couple of turtles, three parakeets, 13 fish, and a ferret. 

Who is this guy, Ramar of the jungle? 

Now to Las Vegas.  Janet Huckabee, wife of the presidential candidate, caught a prizefight in Sin City this past weekend.  So, where did she stay? 

The Bellagio, the MGM Grand, Mandalay Bay?  None of the above.  Janet

Huckabee stayed at the Hooters Casino Hotel.  It was the candidate‘s wife -

it was, the candidate‘s wife, said the only hotel in town with a room. 

There we are with Hooters. 

And now we head down to Texas.  When Ted Kennedy campaigns for you, he really campaigns for you.  Take a look at this show-stopping performance before an Obama crowd of Latinos down in Laredo, Texas. 

(BEGIN VIDEO CLIP)

SEN. EDWARD KENNEDY (D), MASSACHUSETTS:  (SINGING IN SPANISH)

Laredo, will you help us out?  Will you vote for Barack Obama? 

(CHEERING AND APPLAUSE) 

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS:  The last hurrah, maybe. 

And, as you know, here on HARDBALL, we have been giving you all the highlights of President Bush‘s big Africa trip this week.  It‘s been, let‘s say, a treasure trove of good material for us, which is why we now present you with part four of our series: President Bush and the first lady watching a Rwandan skit on abstinence. 

You can just feel the awkwardness jumping out of this picture, can‘t you?  It‘s still somewhat charming, I guess.

Anyway, President Bush may not get much love around the world, but they do like him, apparently, in this part of Africa.  Maybe it‘s the foreign aid.  Maybe it‘s the good dancing.  Here he is in Liberia alongside that country‘s president.  Isn‘t this the sort of thing that Prince Charles does? 

(LAUGHTER)

MATTHEWS:  And now it‘s time for the HARDBALL “Big Number.” 

Tonight, there‘s another big Democratic debate, of course.  And we will be doing a post-coverage HARDBALL right here at 11:00 Eastern tonight on MSNBC. 

Hillary Clinton will clearly be looking for a zinger, a game-changer, something dramatic tonight.  But she‘s also been out there on the trail with an escalating assault on her rival, that voting for Barack Obama means, as she puts it, you‘re not looking at things for real. 

Listen up. 

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  But it is time to get real, to get real about how we actually win this election, and get real about the challenges facing America. 

So, yes, let‘s get real.  Let‘s get real about this election.  Let‘s get real about our future.  Let‘s get real about what it is we can do together.  Let‘s get real.  Let‘s get real about whether...

(CHEERING AND APPLAUSE) 

CLINTON:  ... our brave veterans are given the care and the respect they deserve.  Let‘s get real about not just talking family values, but valuing families, by strengthening the middle class, creating good jobs, providing universal health care, making college affordable, taking care of our senior citizens.

(CHEERING AND APPLAUSE) 

(END VIDEO CLIP)

MATTHEWS:  Well, that was the speech. 

In just one speech, Senator Clinton “get real” 10 times -- 10, that‘s our “Big Number” tonight, the number of times Senator Clinton said “get real” today. 

Up next, we turn to the Democratic presidential race.  After 10 straight losses, what does Senator Clinton need to do in tonight‘s big debate in Austin, Texas, to get back in the game? 

And, at 11:00 Eastern tonight, I‘m going to be back with a special edition of HARDBALL tonight.  We are going to look at the highlights of tonight‘s debate.  So, you can skip the debate and watch our show tonight.  At 11:00 tonight, we‘re going to talk—I don‘t mean that.  You should watch all these debates between Senator Clinton and Barack Obama, one on one tonight, between 8:00 and 10:00. 

We will be back at 11:00 to talk about the whole shebang. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

A sell-off triggered by new data raising recession anxiety in the market today.  The Dow Jones industrial average plunged almost 143 points.  The S&P 500 fell 17.  And the Nasdaq dropped by 27 points. 

Raising recession concerns was the Philadelphia Federal Reserve, reporting its lowest reading on manufacturing activity since 2001.  Also, the index of leading economic indicators dropped for the fourth straight month.  On top of that, the Labor Department reported that the number of people receiving unemployment benefits hit a two-year high this month. 

Meantime, 30-year mortgages crept up this week to a nationwide average of 6.4 percent.  That‘s the highest level in seven weeks. 

And oil prices eased on concerns about the U.S. economy, plus a larger-than-expected increase in inventories this week.  Crude fell $1.47, closing at $98.23 a barrel. 

That‘s it from CNBC, America‘s business channel—now back to Chris and HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Hillary Clinton and Barack Obama face off tonight in a big debate in Austin, Texas.  And, after Obama‘s 10 primary victories in a row, including those caucuses, and pledged delegate lead which he has right now, what does Senator Clinton do tonight to change the course of history? 

Let‘s turn to two radio talk jocks, Ed Schultz in Fargo, North Dakota, and Kevin Miller in the original radio station in America, KDKA, which started it all. 

Kevin, you start since KDKA started it all in Pittsburgh.  What does Senator Clinton have to do tonight to change the course of history? 

KEVIN MILLER, KDKA RADIO:  Chris, I think she has to speak two audiences, one in Texas, and certainly getting Obama to commit what he‘s going to do with the undocumented or illegal immigrants.  He‘s been very vague on it.  He‘s all things to all people.  And, of course, talking about the job loss, as you well know, here in Pennsylvania, and more importantly to the folks in Ohio. 

A lot of people are tired of the rhetoric.  They want their jobs.  And they‘re tired of the loss of their manufacturing jobs and that‘s what Clinton that‘s do tonight to really rally the base here. 

MATTHEWS:  Does she do a full pander like Mitt Romney did, saying I‘m going to save the auto industry because I said so?  Full pander?  Is she going to bring back the steel industry full force 1948 level?  Is that what he‘s going to do? 

MILLER:  I hope so. 

MATTHEWS:  OK, you mean that‘s good?  Full pander is what you like up there? 

MILLER:  Well, look, we need the jobs, Chris, you know that. 

MATTHEWS:  But do you need the pander?  Do you need the pander? 

MILLER:  The truth hurts, yes.  I think you‘ll see that, and I think she‘ll press Obama specifically on his job programs and what, you know—again, behind the rhetoric, the flash behind the rhetoric.  That‘s what I think Clinton will do tonight. 

MATTHEWS:  Ed Schultz, the prompt for Hillary Clinton if she gets into the trade area or into the industrialization or re-industrialization of America, what‘s unfortunately happened the last 50 years, she has to defend NAFTA or trash NAFTA, which she has to share in because her husband pushed it? 

ED SCHULTZ, RADIO TALK SHOW HOST:  Yes.  I don‘t think she‘s—she‘s got to defend NAFTA.  But you know what, Chris, I think Hillary tonight has to come out and show the American people that she‘s not down after losing ten straight, that she is a fighter, that she is not phased by this losing streak, that she does not have a confidence problem.  And she has to be the most quoted tomorrow on the talking heads. 

She has to come out and say things like, I am far more qualified than Barack Obama.  I think that she doesn‘t have to go negative.  She just has to sell the American people again that she is the person for the job.  I don‘t think it‘s a program.  I don‘t think it‘s education.  I don‘t think it‘s health care.  I mean, I think it‘s a confidence problem at this point. 

MATTHEWS:  Well, let‘s take a look at what she‘s been saying right now.  Here‘s what she might say tonight. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE:  One of us has a plan to address the growing foreclosure crisis; the other doesn‘t.  One has a plan to revive our economy right now with millions of new, clean energy jobs.  And one of us has actually taken on the special interests for years and years, standing against them, fighting against them, making progress against them. 

And, finally, one of us has faced serious Republican opposition in the past, and one of us is ready to do it again. 

(END VIDEO CLIP)

MATTHEWS:  Ed and Kevin, I got to believe that Campbell Brown, as she moderates the debate tonight, will ask the question to each of the candidates, how do you respond to today‘s “New York Times‘” story implying that John McCain had a romantic relationship with a female lobbyist for whom he did official favors in his capacity as Chairman of the Senate Commerce Committee? 

Ed, if they get asked that question, who does it help?  Does it help the big-change guy, Barack, or does it help Hillary, the one who says, I‘m better at this, fighting the Republicans? 

SCHULTZ:  Then you would be assuming that this is definitely a smear job.  I think the jury is still out with a lot of Democrats.  They want to see how this thing plays out with the story.  You‘ve got some pretty veteran reporter names on that story and you got the reputation of the Times on the line, if they want to factor in to being a credible source between now and the election. 

Now, I think this ethics story plays right into the hands of Barack Obama, Chris, because he was involved in ethics reform in 2007.  He can stand up there tonight and say, see that, this is what I‘ve been telling you about all along.  This is another inside baseball, Washington lobbyist story.  We‘re going to change this.  But Hillary is probably a little bit more dicey for her because she‘s a New York senator. 

MATTHEWS:  Kevin, how does Hillary use this story to her advantage? 

MILLER:  Chris, again, I think she goes back to the experience.  She‘ll say that, yes, it‘s unfortunate what has happened to Senator McCain, that‘s why we need lobbying reform and she understands that she can take these hard issues.  She can go after these folks, these entrenched lobbying interests and take them on because she‘s faced the heat.  I agree with Ed, Obama can say, see more of the same.  It‘s up to Clinton—

MATTHEWS:  You‘ve done something that drives me crazy.  Lobbying reform?  What lobbying reform would have prevented this type of misbehavior if this kind of misbehavior did, in fact, occur?  What reform would have stopped a senator from having a relationship with a lobbyist, if it was improper, if that‘s the case? 

MILLER:  Right, it‘s the impression, Chris. 

MATTHEWS:  But what lobbying reform?  I‘m so sick of people saying reform, bills, bills, bills, rules, rules, rules, more ethics, ethics, ethics.  It comes down to the people who have the responsibility.  Go ahead. 

MILLER:  Now what was the question? 

MATTHEWS:  The question is what should she say about the story on the front page of the “New York Times” and is driving the news tonight right into that debate tonight?  What should Senator Clinton say? 

MILLER:  If I‘m Senator Clinton, then I say that we need to take a look at the whole system. 

MATTHEWS:  Do you think that works Ed Schultz?  Is it a systemic problem?  Is it a candidate problem or is it no problem at all?  Either he‘s innocent or he‘s guilty.  if he‘s innocent, give him a break.  If he‘s guilty, it‘s a deal-breaker.  That‘s what I think.  What do you say, Ed? 

SCHULTZ:  Well, there‘s no doubt, the guy has come out today and said it‘s not true.  So, if there‘s more to come, he‘s a liar.  That will be just an absolute campaign killer for John McCain.  As far as ethics reform is concerned, why is he writing letters?  And it not being properly vetted?  I think that really is what—where Barack Obama can get an opening tonight. 

Stay away from the affair stuff.  I don‘t think that plays well with the American people at this point. 

MATTHEWS:  Yes. 

SCHULTZ:  I think, you know, the social conservatives aren‘t going to warm up to McCain anyway, so forget that. 

MILLER:  I think they are.  Chris—

MATTHEWS:  Yes, Kevin. 

MILLER:  I think they are.  I think this is a great uniting front.  We saw it on KDKA today.  You had people that were lukewarm to McCain.  They‘re all about him because they feel the “New York Times” has done a hit job.  Perceptionally, this has helped him with his base. 

MATTHEWS:  My enemy‘s enemies are my friends. 

MILLER:  Exactly. 

SCHULTZ:  You can‘t write a story like that without having more information. 

MILLER:  Where‘s the beef, Ed? 

SCHULTZ:  The beef is in the next article.

MATTHEWS:  If the “New York Times” doesn‘t have a front page tomorrow, I‘ll be amazed. 

I think it‘s the front page.  Let‘s look at top of the fold tomorrow.  If the “New York Times” has any guts, we‘ll have a story on the top of the fold tomorrow, front page, carrying this story further.  Thank you, Ed Schultz.  Thank you, Kevin Miller.  

Up next, the two huge political stories of the day.  John McCain, of course, we talked about that, and the big Democratic debate tonight, down in Austin.  We‘ve got them both covered in the politics fix tonight.  It‘s coming up for two segments.  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL and the politics fix.  Our round table tonight, Linda Douglass of the “National Journal,” the host of MSNBC‘s “TUCKER,” Tucker Carlson, and Deroy Murdock of the “National Review.”  We‘ve got a nice selection of journalists here. 

I want to start with Tucker.  I listened to you this morning.  My question on this is: why did the Times put this at the top of the fold, talking about a romantic relationship between a lobbyist and Senator McCain and him doing favors for that lobbyists, officials favors, if they don‘t believe it‘s true? 

TUCKER CARLSON, MSNBC ANCHOR:  They do believe it‘s true.  They do believe it‘s true.  The four reporters on this are well-regarded people.  My personal hunch, and I don‘t know the strict answer, is that once you get inside a story like this, you lose perspective on it and how it‘s going to look to other people.  I mean, whether—I mean, I think the average person looks at this and says, I‘m not interested in knowing whether he slept with this woman or not.  But the reporters are interested because they‘re working on the story. 

I think if they had stood back, I think the story would have looked a lot different.  But clearly, as you‘ve been pointing out all day, they think they know or they do know more than they have printed. 

MATTHEWS:  The story is John McCain, the straight-talk express man‘s in bed with a lobbyist.  That‘s the story. 

LINDA DOUGLASS, “THE NATIONAL JOURNAL”:  There are two things—

MATTHEWS:  Let‘s be honest. 

DOUGLASS:  Depending on what you mean there. 

MATTHEWS:  That‘s what I mean.  That‘s what I mean. 

DOUGLASS:  But there are two main points in the story.  Number one, that he‘s having a romantic relationship with this woman.  Number two, that he did an improper favor, bestowed favoritism upon her and her clients.  There is not proof of either of those things, which absolutely supports what Tucker said, which is that they may know something else. 

But as you also know, the “New Republic” magazine was about to do the story, exposing all the dissension that was inside the “New York Times” news room, and then they felt they were, I guess, in the position of having to defend why they didn‘t do the story.  And now—

MATTHEWS:  I don‘t get that. 

DOUGLASS:  Well, now what they‘ve done—

MATTHEWS:  It‘s the “New York Times.”  Why do they care what the “New Republic” says? 

DOUGLASS:  All of the journalistic and academic community is alarmed by this.  I mean, raising questions such as why would you confer anonymity upon the sources who really had nothing to lose by going on the record.  These were ex-staffers.  They weren‘t going to—

(CROSS TALK)

DOUGLASS:  And the McCain campaign probably knows who they are. 

MATTHEWS:  If you think this story is worthy of top-of-the-fold coverage in the middle of a campaign, on the front page, and you‘re asserting a romantic relationship with the lobbyist and favors done for the lobbyist as part of your official duties, isn‘t it worth getting an on-the-record source? 

DEROY MURDOCK, “NATIONAL REVIEW”:  I agree with you.  I think this story is a little bit like a Thanksgiving turkey that was pulled out of the oven about two hours early.  It may be edible, but barely.  Essentially what you have here is anonymous sources from eight years ago saying they think they might have seen something that perhaps was an affair.  A lot of question marks there, a lot of reasonable doubt. 

If you are going to have a front page, above-the-fold story going after the man who just may be the next GOP nominee, you ought to have it a lot better nailed down than that, given the level of the accusations being raised.  I think they did a great disservice both to Senator McCain and the profession of journalism with this story. 

CARLSON:  I agree in what you‘re saying in that I think it‘s sleazy and unbecoming of the newspaper.  I mean, you know, unless you can prove that he did favors for this woman specifically, it‘s not your business who he‘s sleeping with.  Let me just say, they have an on-the-record source, John Weaver.  Without John Weaver—

MATTHEWS:  And he said what on the record? 

CARLSON:  He said, quote, among other things, there was a discussion among the campaign leadership about Vicki Iseman.  That‘s—without that quote and quotes like it from John Weaver, on the record, this story would not run. 

MATTHEWS:  And he also said they went to this woman and told her to back off. 

CARLSON:  That‘s exactly right. 

DOUGLASS:  Which has been denied by McCain‘s chief aide, the one who has written all his books with him, Mark Salter, which says this isn‘t true.  We didn‘t sit down with McCain and warn him about this. 

MATTHEWS:  That is not the assertion.  The assertion by John Weaver is he went and told this lobbyist to stay out of the way and stop using the name of the senator, and never told the senator. 

CARLSON:  It says right here in the paper; there was a discussion among the campaign leadership about Vicki Iseman.  He‘s making that claim.

MATTHEWS:  They don‘t say the senator was—

CARLSON:  That‘s right.  But the campaign staff is saying that didn‘t happen.   

MATTHEWS:  When I see this picture over and over again with this woman in the evening gown here, looking all dolled up, it seems to me that‘s carrying the story here a step further.  What do you think, Deroy?  The way this story ran in the tabs definitely suggests hanky-panky. 

MURDOCK:  This is basically just peddling gossip, essentially.  I think one of the reason that this story seems so half baked this afternoon, having come out this morning, is to John McCain‘s credit.  He came out immediately with a press conference at 9:00 and denied all the allegations.  He has had his surrogate on the air denying it.  I believe they released some of these letters about which there were questions last night.

And I think one thing, as someone who as been very frustrated by the

Bush administration‘s almost complete inability to respond to its critics -

they just sort of dive under the table and dummy up—the McCain campaign jumped on right on top of this from the beginning, and I think that‘s why a lot of this looks so wet right now. 

MATTHEWS:  Why didn‘t he continue to fight the story personally before it ran? 

MURDOCK:  I know he spoke with Bill Keller about this.   

MATTHEWS:  Once.

MURDOCK:  I guess just once.  But certainly, from the point that this hit the Internet last night, they‘ve been all over it, have been denying it and I think that‘s part of the reason that this story does not seem to be gaining any altitude. 

MATTHEWS:  Why do you think he hired a lawyer to deal with his problem, Tucker? 

CARLSON:  He didn‘t just hire a lawyer.  He hired Bob Bennett, who is the guy you hire when you need to deal with the press.  There‘s really nobody better at understanding news cycles and dealing with editors, and frankly getting stories not to appear than Bob Bennett.  I mean that as a huge complement. 

MATTHEWS:  He said tonight on the program he will not sue, so whatever he can put will not—

DOUGLASS:  It‘s interesting that he didn‘t make that threat, because one would wonder, if you hire Bob Bennett for precisely the reason that you are going to threaten the “New York Times.”  I just want to mention one little thing in the story.  Newspapers like to do these stories because they shows hypocrisy.  It is obviously a story aimed at showing that McCain is not as pure on campaign finance. 

MATTHEWS:  That was his vulnerability.  Thank you, Linda Douglass.  He could be completely innocent.  Tucker Carlson, thank you.  Deroy Murdock.  Join us again for a special edition of HARDBALL tonight at 11:00 p.m.  Eastern.  We‘ll have the highlight of tonight‘s debate between Senator Clinton and Senator Obama.  Right now it‘s time for “TUCKER.”

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

END   

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