updated 4/15/2008 11:09:17 AM ET 2008-04-15T15:09:17

Guest: Marcel Groen, James Burn, Jr., Harry McGrath, John Harris, John Heilemann, Eugene Robinson, Howard Fineman

CHRIS MATTHEWS, HOST:  I can‘t believe it‘s not bitter.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL, tonight from my hometown of Philadelphia.  Just eight days until the Pennsylvania primary, and the focus of everyone‘s attention today was Barack Obama‘s so-called “bitter” comments about small-town America.  Since Friday, when this story broke, Hillary Clinton has been hammering Obama, and today was no exception.  Clinton is hitting Obama hard, hoping that this is the moment she‘s been waiting for, where she can make Obama an unwinnable candidate.  Will this episode do lasting damage to Obama, or is it just another short-term media frenzy?  In a moment, we‘re going to go straight to the people to find out how this is playing in Pennsylvania and beyond.

Also, at last night‘s televised “compassion forum” in Pennsylvania, Clinton said that Obama‘s comment put him in the same company as Vice President Al Gore and Senator John Kerry, two Democratic nominees for president who lost in part because, she said, they were seen as elitists.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  We had two very good men, and men of faith, run for president in 2000 and 2004.  But large segments of the electorate concluded that they did not really understand or relate to, or frankly, respect their ways of life.

(END VIDEO CLIP)

MATTHEWS:  Later, we‘ll get the word on what Hillary and Bill Clinton are whispering to fellow Democrats about Obama, things they‘re not willing to share publicly.

And tomorrow‘s our big “HARDBALL College Tour with Republican senator John McCain—he‘s, of course, the presumed Republican nominee for president this year—at Villanova University at 5:00 o‘clock tomorrow night and 7:00 o‘clock.  We‘re going to get a close look at him tomorrow night.  We‘re going to begin it tonight.  By the way, tonight, a whole hour with John McCain, with me asking questions.  I hope they‘re hard enough.  And the students will ask even harder questions, I hope.

Plus our “Politics Fix” with our pros tonight—Andrea Mitchell,

Howard Fineman, who‘s written a beautiful new book—I‘m just starting it

and Eugene Robinson.  We‘re going to tell you about, by the way, the senator who‘s happy he will not be called upon to speak.  That‘s an interesting story.

But let‘s go now to Allegheny county chairman Jim Burn, Montgomery County chair Marcel Groen—they‘re both Clinton supporters—and Harry McGrath of Lackawanna County.  He‘s the chair up there.  He‘s an Obama supporter.

Let‘s listen to Hillary Clinton, by the way, going after Obama today.

(BEGIN VIDEO CLIP)

CLINTON:  He was explaining to a small group of his donors what people who live in small towns right here in Pennsylvania are like and why some of you aren‘t voting for him.  But instead of looking at himself, he blamed them.  He said that they cling to religion and guns and dislike people who are different from them.  Well, I don‘t believe that.

(END VIDEO CLIP)

MATTHEWS:  And here‘s John McCain, Senator McCain, hitting Obama, as well, on the same topic.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I think those comments are elitist.  I think that anybody who disparages people who are hard-working, honest, dedicated people who have cherished the 2nd Amendment, saying that‘s because they‘re unhappy with their economic conditions—I think that‘s a fundamental contradiction of what I believe America is all about.

(END VIDEO CLIP)

MATTHEWS:  And here‘s Barack Obama responding to the attacks by both Clinton and McCain.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  Senator Clinton and Senator McCain are questioning my respect for the workers of Pennsylvania.  Let me tell you how I think you demonstrate your respect.  You do it by telling the truth and keeping your word, so folks can know where you stand today is where you‘ll stand tomorrow.

(END VIDEO CLIP)

MATTHEWS:  Marcel Groen, how is this playing in the communities around Philadelphia, in Montgomery County, right outside the city?

MARCEL GROEN, CHAIR, PA MONTGOMERY COUNTY, CLINTON SUPPORTER:  I think outside in the suburbs where we are, it‘s not going to have a significant impact.  What it will do is, I think there was a lot of building momentum towards Senator Obama.  I stopped that.  I think those people that were inclined to vote for Senator Clinton will solidify.  Those voters that were inclined for vote for Senator Obama will solidify with that.

I think what people realize is they‘re not going to be too concerned about the word “bitter.”  They recognize that people that are out of work get angry, they get frustrated.  But they do—they don‘t understand what the connection is between that and owning guns and being religious because there isn‘t any.  And that was obviously a bad mistake (ph).

MATTHEWS:  You know, I‘ve heard the joke in Pennsylvania, some of these guys with guns, my brother, Bruce, is one of them, who lives up near Allentown—if he had more money, he‘d buy more guns.

GROEN:  That‘s true.

MATTHEWS:  Let me go to Jim Burn out in Allegheny County, which includes Pittsburgh.  Mr. Burn, tell me about this.  What‘s the reaction in the city of Pittsburgh and elsewhere in the area to this comment by Barack Obama that people who are poor or hard up in Pennsylvania buy guns and go to church because they‘re upset with the failure of government?

JAMES BURN, JR., CHAIR, PA ALLEGHENY COUNTY, CLINTON SUPPORTER:  I

think the use of the word “bitter” was inappropriate, obviously.  I think there‘s going to be a little bit more of a hit out here in the numbers versus what you might see in the east.  It‘s evidence, in our opinion, that Senator Obama needed to spend more time in western Pennsylvania.

If you look at the heritage of the immigrants who came here to work in the mills two, three generations, their faith, their 2nd Amendment rights have always been issues that are very important to them.  So to the extent Senator Obama tried to connect frustration, bitterness with an economic downturn or recent developments in the nation—those passions for religion and for the 2nd Amendment go much further back than that.

And what we‘ve seen is a reflection in the polls, obviously, 20 points in some polls for Senator Clinton.  Senator Obama outspent Senator Clinton almost four to one in the last two weeks, and yet the numbers are pulling away to the advantage of Senator Clinton, I think, significantly, in part, because of the statements he made.

MATTHEWS:  OK.  Jim, thank you.  Let‘s go to Harry McGrath up near Scranton way in Lackawanna County.  Mr. McGrath, you‘re for Barack Obama.  So is your newspaper up there.

HARRY MCGRATH, CHAIR, PA LACKAWANNA COUNTY, OBAMA SUPPORTER:  Yes, I am.

MATTHEWS:  So is the senator from up there, Bob Casey.  Well, what do you want to say in defense of it?

(CROSSTALK)

MATTHEWS:  You want to defend Barack on this?

MCGRATH:  I want to tell you what the people of Lackawanna County have said.  Yesterday, we had our Lackawanna County Democratic breakfast that comes about once a year at this time, and I went around and talked to a lot of people.  And the word “bitter” never came up.  They are frustrated.  Both gentlemen before me used the word “frustrated,” and I think that‘s what people are.

I think that in Lackawanna County, it‘s not going to have a great effect on the ultimate outcome of the vote here.  As you know, Mrs. Clinton likes to claim she‘s from here.  She has a lake house in the vicinity.  But she‘s not really from here.

Chris, I think the issues will speak for themselves, and I think this comment will come and go.  I think it‘s more an issue that the press is playing up than it is on the street.  And I take that, again, from my conversations just yesterday with about 250 party regulars.

MATTHEWS:  Well, let me go back to Marcel.  I don‘t think the press has built this up beyond what Hillary Clinton has done.  She jumped on this pony on Friday night and has been riding it now for three days, isn‘t that true?

GROEN:  Yes, she...

MATTHEWS:  This is a big issue with Hillary.

GROEN:  It is, and she does have to be careful that she doesn‘t overplay it because I think—I don‘t think that anyone really believes that Senator Obama is an elitist, and I‘m a Clinton supporter.  Having said that, I think they are concerned about misstatements and then trying to correct it and not doing a very good job in terms of doing that.  What he should have done, quite frankly, is say, I made a mistake, and there‘s no linkage between being out of work, being frustrated because things are going bad and because I can‘t—because I have a gun or I‘m pro-life.  There isn‘t any.  There never has been.

I agree with what Jim Burn said.  There‘s a long history in Pennsylvania and western Pennsylvania of people who believe very strongly and they‘re fairly conservative in social issues and they‘re very Democratic on economic issues.  And that‘s really what he didn‘t understand, I think.

MATTHEWS:  But you know, Jim, it seems to me if you look at Barack Obama‘s complete statement—and of course, politicians never get their complete statement read by their enemies.  But let‘s try to be fair.  He was trying to tell a bunch of elite people in San Francisco, about 50 of them, contributors, well-off people—when he was asked about, apparently, Why those people are against you in Pennsylvania, the working people, he said, It‘s not about race, it‘s about culture.  It‘s about the experience of these people.  He was trying to justify the opposition to him in much of Pennsylvania as being non-racially based, and he ended up looking like he was taking a shot at the very people he was sort of trying to defend.

BURN:  Exactly.  And again, it gets back to what Marcel said.  It gets back to what my other colleague has said.  It‘s really about taking one or two words and probably, hindsight being 20/20, using other words in their place.  Again, it goes back to something else that I had said.  Senator Obama, with all due respect, had he been in western Pennsylvania a little more than he was and spent some time in some of these smaller towns and learned a little bit more about the demographic, he would have seen where the genesis of the compassion (ph) comes for religion and the 2nd Amendment and those statements would not have been said.

I mean, Senator Obama comes from a very remarkable upbringing.  He has come from, in a way, small-town community needs, wants, and issues, so he knows as well as Senator Clinton or any other Democrat what the needs of these small communities are.  Again, this going to—it had some legs.  It‘s going to have some legs for a little while here.  But as long as he‘s a little better in his clarification of what he said, and once we get past this whole process, we are very fortunate on the Democratic side to have two powerful, remarkable, talented candidates to take into November.

MATTHEWS:  Harry McGrath, it has always struck me that Pennsylvania, especially once you get out of Philadelphia and perhaps out of Pittsburgh, you get into the real heartland of Pennsylvania, that people are culturally traditional, conservative in many ways.  There are many—I guess mostly pro-life, pro-2nd Amendment, very religious, very traditional.  It hasn‘t changed a whole lot in 50 years, if you look at the American political almanac.  Is that something that he just ought to understand and say it‘s not because there‘s been economic hard times, it‘s just who the people are?

MCGRATH:  No, I think he understands completely, Chris.  Two weeks ago, he was in Dunmore, Pennsylvania, a small town, approximately 14,000 occupants.  That‘s where I grew up, right outside of Scranton.  And he was met by throngs of people.  They couldn‘t get in the place.  He, in my opinion, connected to them immediately.

I think Barack Obama knows what the people of the United States are looking for, and that‘s change.  And I‘m not talking about small town, big town, middle-sized town.  I‘m talking about right across the United States of America.

Chris, there‘s a change in the air, and he has presented that option

to the people of not only Dunmore and Scranton and Lackawanna County, but

Pennsylvania and the United States as a whole.  And I think that‘s the

reason why you see him moving so strongly.  Pennsylvania was a dead-bang

winner for Mrs. Clinton some four or five weeks ago.  Since that time, his

those numbers have diminished, and I think by the end, it will be in single digits.  I think he‘s doing a remarkable job across the country, getting out a message of truth and change.

MATTHEWS:  It‘s a great honor to have all three of you men.  They‘re real—you‘re real political people.  You‘re keeping people involved.  Thank you very much for joining us and giving us a real sense from people in Pennsylvania about how this story is moving.  James Burn of Allegheny County, Marcel Groen of Montgomery County and Harry McGrath of Lackawanna, up in Scranton.

Coming up: What Hillary Clinton wishes she could say about Barack Obama and the Democratic race as reported in Politico.  The Clintons are saying things to their fellow Democrats they‘re apparently not willing to say publicly.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  In an article in Politico, in Politico, headlined “What Clinton wishes she could say,” John Harris and Jim VandeHei write, quote, “Our conversations with Democrats who speak to the Clintons make plain that their public comments are the palest version of what they really believe, that if Obama is the nominee, a likely Democratic victory would turn to a near certain defeat.”  The article continues, quote, “Rip off the duct tape, and here is what they would say.  Obama has serious problems with Jewish voters—good-bye Florida—working-class whites—good-bye Ohio—and Hispanics—good-bye New Mexico.

John Harris of Politico co-wrote the article with Jim VandeHei.  Do you know—thank you very much, John, for joining us.  Do you know if the Clintons—are the Clintons telling people, their superdelegate friends or fellows—are Bill and Hillary Clinton telling them that these things are true...

JOHN HARRIS, POLITICO.COM:  Well, they‘re telling...

MATTHEWS:  ... that Barack Obama would lose the election because of a loss of Jewish support of working class support, of Hispanic support?

HARRIS:  They‘re telling close confidants, certainly, that they don‘t think Obama is a likely winner.  I don‘t think they‘re making the case with people they don‘t know as well quite that bluntly because in order to do it, you have to say some impolitic things that a lot of Democrats would not necessarily be that receptive to, Chris.  But I can tell you that the Clintons, I believe, do firmly believe this.  It‘s not just a political argument.  They don‘t think that Obama is the electable candidate.  They think Hillary Clinton is.

MATTHEWS:  How does any—let me ask you—well, let me ask you one more time, John, because I‘m skeptical.  How does anybody know what somebody else thinks?  How do you know the Clintons aren‘t just transmitting this fear, poisoning the water to make the sale very difficult for Barack now and in November?

HARRIS:  Well, fair enough, but I‘ve been hanging around this crowd and these particular politicians for a good long time, Chris, so I feel I have confidence.  But I mean, I think you‘re—anybody‘s quite within their rights to be skeptical.  If they believe these things, they could say them publicly, and the fact is, they don‘t.

The point VandeHei and I were making in this article is the idea that this has been, you know, kind of, throw the kitchen sink, every last argument out there, no matter what kind of harm it does to the Democratic Party—we don‘t buy that.  I don‘t think this campaign has been that rough by historical standards.  What‘s more, I believe that the Clinton campaign has fundamentally been engaged often in an exercise in self-censorship.

MATTHEWS:  Yes, but you wrote a book...

HARRIS:  There‘s a lot of things they believe that...

(CROSSTALK)

MATTHEWS:  Yes, except, John, that you wrote a book called “The Survivor”...

HARRIS:  Right.

MATTHEWS:  ... and you know the Clintons will survive at all cost as nominees for the Democratic Party.  If Barack Obama wins the presidency, Hillary Clinton will never be president.  They can‘t let her win—let him win, can they?

HARRIS:  Well, not if they want her to be president, which they very, very much do.  But I don‘t think that they‘re saying everything that they actually believe.  That‘s my point.  And I‘m not endorsing what...

MATTHEWS:  OK, I just...

HARRIS:  ... these political arguments, but I‘m saying I don‘t believe...

MATTHEWS:  No, I‘m putting together...

HARRIS:  ... that they‘re throwing the kitchen sink...

MATTHEWS:  OK, I‘m putting...

HARRIS:  ... at Obama.

MATTHEWS:  OK.  I‘m putting together what you‘re saying—Bob—you get in here Bob Shrum.  I‘m putting together what John‘s saying.  If the Clintons truly believe that Barack Obama can‘t win the general for these various reasons, then, of course, they‘re hopeful that they can come back and win next time because he‘s not going to be president.

BOB SHRUM, DEMOCRATIC STRATEGIST:  Well...

MATTHEWS:  It just makes sense to me that they‘re following that strategy, if that‘s what they think.

SHRUM:  Yes.  Well, when you‘re in a tough race, you always try to come up with a way to justify yourself.  You and I have both been there, and we‘ve seen that.  But I think this is ultimately a self-defeating argument for Senator Clinton because if Barack Obama earns the nomination in the primary process with the pledged delegates—and he‘s pretty close to doing that—I—for the superdelegates to overturn that result on the basis of this kind of argument would drive away major portions of African-Americans, a lot of younger voters, and I don‘t think Senator Clinton could win the general election.

What she has to do now is win Pennsylvania big.  And I suspect the Obama people welcome this kind of outlier poll that says she‘s winning by 20 points because it sets their expectations low.  She has to win Pennsylvania big, do very well in all the rest of these primaries and come close in North Carolina to even begin to get to the point where she can make a really credible claim for the nomination.

MATTHEWS:  You know, it‘s interesting, John, this reporting itself is going to have a lot of impact because you reported—and you‘re very credible—that if you know what the Clintons are thinking and telling people, it‘s going to be used by the other side to say that they‘re poisoning the water.

HARRIS:  Well, maybe so.  But I think Bob is quite right.  They can‘t make this argument publicly.  That‘s why they‘re not making it.  It‘s...

MATTHEWS:  Well, you‘re making it public—John...

HARRIS:  Right, but I‘m doing it by reading...

MATTHEWS:  ... you‘re arguing in a circle here!  John, you‘re making...

(CROSSTALK)

HARRIS:  I‘m doing it by reading the smoke signals and relying on my own authority as somebody who‘s been around the Clintons for a while.

(LAUGHTER)

HARRIS:  That‘s a lot different than Senator Clinton coming on your show and saying...

MATTHEWS:  No, but...

HARRIS:  ... these things publicly.  Bob‘s quite right.  It would backfire, if she did those things. 

(CROSSTALK)

SHRUM:  I think it‘s not only if she does them.

If, somehow, the superdelegates use this as a rationale for overturning the results, I think that she‘s is in a world of trouble if she becomes the nominee in November. 

There are a couple of other things here.  I think, if they‘re really thinking some of the thoughts that you put down on paper, they‘re a little off base.  I do not see Hillary Clinton, for example, having a comparative advantage on the gun issue.  I just don‘t think she‘s a credible person on that.  She‘s been for gun safety measures for a long time.  So has Obama.  Those are facts.

HARRIS:  Right. 

MATTHEWS:  Can you tell me about your tradecraft, John, how you go do the donut?  How close do you get to the Clintons to find out what they‘re thinking? 

HARRIS:  I can‘t reveal the secret sauce, Chris, here on HARDBALL. 

(LAUGHTER)

(CROSSTALK)

MATTHEWS:  Well, do you talk to their relatives?  Do you talk to their intimates?  Do you talk to people they pay money to?  I mean, how close can you get to their thinking? 

HARRIS:  Enough so that, based on my own authority, I‘m pretty confident this is what they think. 

Again, that is not the same as them getting up and saying these things publicly.  What‘s more, it wasn‘t just an article trying to read their minds through ESP.  It was looking at some actual facts on the ground. 

The vote so far has been highly polarized, Chris.  Lower-income whites are already voting for her disproportionately.  Jewish voters in a number of states, a double-digit advantage for Senator Clinton.  The argument is, if she doesn‘t tap—can‘t command that historic Democratic coalition, it‘s very hard to win some of these swing states with just his two—his two main bases now, which are upper-income whites and—and African-Americans. 

MATTHEWS:  Well, OK.  What‘s going to happen now is, their best friends are going to call them up the next couple days, because of you and VandeHei, and if they‘re Jewish people, they‘re going to call them up and say, is it true you think we‘re not voting for the Democratic nominee, even though we have always done it?  And Hispanic voters will say this.  Latinos will say the same thing. 

President Clinton and Senator Clinton, are you telling the world that our people are not going to stick with the coalition? 

Aren‘t they going to be challenged on what you have reported here? 

HARRIS:  Well, look, politics is at the margins.  There‘s no question that those voting groups are going to probably vote, most of them, Democratic. 

MATTHEWS:  Yes. 

HARRIS:  But are they going to do so in sufficient margins...

MATTHEWS:  Yes. 

HARRIS:  ... to be—allow the Democratic nominee to assemble the historic Democratic coalition? 

MATTHEWS:  Yes. 

HARRIS:  I mean, I think there‘s reason to doubt that, not necessarily in—Obama has got answers to these questions.  I can assure you I have heard them all today.  But I think they‘re legitimate questions that the Clinton allies are raising about the arithmetic. 

(CROSSTALK)

SHRUM:  Chris, I think it‘s a huge mistake to assume that, because Latinos, for example, voted very heavily for Hillary Clinton so far in this process, she‘s more familiar to them, they like President Clinton, that they‘re not necessarily going to vote Democratic in the fall. 

The other thing—and I have great respect for John and for the Politico—if you slice this different demographically, if you look at in terms of age, then he is winning these blue-collar economic groups who—among people who are under 45 years of age. 

Then you say, how is this going to play out with senior citizens? 

MATTHEWS:  Yes. 

SHRUM:  I think it‘s going to play out very badly for John McCain, who has an economic adviser who the other day suggested the solution to Social Security is to cut benefits. 

(CROSSTALK)

SHRUM:  I think you have to wait until this gets engaged.

MATTHEWS:  Bob Shrum, thank you, sir. 

Thank you, John, for bringing us this story.

SHRUM:  Thanks, Chris. 

MATTHEWS:  I love chewing on stories like this. 

And thanks to VandeHei, your co-writer.  Thank you very much, both of you.

HARRIS:  See you soon.

MATTHEWS:  Up next: the “Saturday Night Live” take on the Iraq hearings last week. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

So, what else is new in politics?  Well, for years, politicians have eaten cheesesteaks and soft pretzels to win voters here in Philly.  Hillary Clinton has now gone to where no politician has gone before. 

He she is at the Bronco Restaurant and Lounge in Crown Point, Indiana, over the weekend, taking a shot of Crown Royal Whiskey Crown Royal whiskey, with a couple of beers as chasers. 

Here‘s what Barack Obama had to say about it. 

(BEGIN VIDEO CLIP) 

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  They will promise you anything.  They will give you a long list of proposals.  They will even come around with TV crews in tow and throw back a shot and a beer. 

(END VIDEO CLIP)

MATTHEWS:  Well, that shot and beer routine by Hillary might just have been a dig too far. 

Anyway, now to late-night politics.  “Saturday Night Live” took on the Iraq hearings this weekend with send-ups of Obama, Clinton, and McCain.  Let‘s watch. 

(BEGIN VIDEO CLIP, “SATURDAY NIGHT LIVE”)   

FRED ARMISEN, ACTOR:  General Petraeus, let me begin by saying, I thank you for your service to this country.

WILL FORTE, ACTOR:  Senator, I have read both of your books several times.

(LAUGHTER)

FORTE:  And I can‘t tell you how much I admire them.

ARMISEN:  Well, thank you.  You are very kind.

FORTE:  Really.  And I‘m not just saying that because you‘re going to be the next president.

(LAUGHTER)

FORTE:  No offense.

AMY POEHLER, ACTRESS:  Whatever.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  Anyway, I guess they figure he‘s the next president. 

John McCain is coming to the rescue of his former opponent, who is now an enthusiastic ally, Rudy Giuliani.  McCain‘s campaign manager sent an e-mail to top campaign contributors, urging them to send money to Giuliani‘s finished-up campaign in order to bail them out of debt.

By the way, I do hear that Rudy is on that V.P. list, although not at the top. 

Senator David Vitter catches a break.  The Louisiana Republican, as you remember, was caught doing business with a Washington escort service.  Vitter had been on notice for more than a week that he might have had to testify in the D.C. madam‘s trial, which would have been a tad embarrassing.  Lucky for Vitter, word came down just today that his testimony will not be required. 

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

According to the new Gallup poll just out, President Bush just sunk to his lowest job approval level ever.  How bad is it?  Twenty-eight percent.  Just 28 percent approve of the president‘s job performance in this country, a rough new number for President Bush—tonight‘s “Big Number.” 

Up next: HARDBALL‘s David Shuster on the McCain campaign. 

And don‘t forget, tomorrow is our big HARDBALL “College Tour” with Senator John McCain at Villanova University for a full hour, with all those students there.  I will be there with some good questions, I hope.  The students will definitely have good questions for the full hour.

You‘re watching HARDBALL tonight, only on MSNBC.  

(COMMERCIAL BREAK)

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

Stocks closed the week and—closed the start of the week slightly lower, as investors await earnings reports later on this week from some big names, including Intel, J.P. Morgan Chase, Merrill Lynch, and IBM. 

The Dow Jones industrial average fell 23 points, the S&P 500, you see there, down four-and-a-half, and the Nasdaq off by 14 points.

Wachovia posted an unexpected first-quarter loss of $350 million today.  In response, the nation‘s fourth largest bank says that it will raise $7 billion through a stock sale, cut its dividends 41 percent, and cut 500 investment banking jobs. 

Meanwhile, CNBC‘s Charlie Gasparino has learned that massive layoffs at Bear Stearns will begin today or tomorrow.  The investment bank is being purchased by J.P. Morgan Chase and could eliminate at least half of its 14,000 employees. 

And oil closed at another record high of $111.76 a barrel, after gaining $1.62 in New York‘s trading session. 

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

MATTHEWS:  Welcome back to HARDBALL. 

While Hillary Clinton and Barack Obama keep whacking at each other, John McCain is watching and waiting.  Is the Democrats‘ slugfest making McCain stronger for November? 

HARDBALL‘s David Shuster reports. 

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE:  Well, Senator, thank you very much for joining us today. 

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  Thank you. 

DAVID SHUSTER, NBC CORRESPONDENT (voice-over):  Today, at a forum with the Associated Press, John McCain relished the ongoing Democratic fight and weighed in on Barack Obama‘s remarks about small-town voters. 

MCCAIN:  I can only look at his remarks—and I have seen them now several times—and say that those are certainly not the vision that I have of America and its strength and its greatness and what its fundamental values and beliefs are. 

SHUSTER:  In recent weeks, McCain has been quick to criticize Obama and slow to harp on Hillary Clinton, most recently following her fib about the Bosnia trip. 

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

remember landing under sniper fire. 

SHUSTER:  Republicans familiar with McCain‘s campaign strategy say he is putting aside for now any Clinton criticism, in the hopes she can still wrestle away the Democratic nomination. 

McCain is convinced, according to the operatives, he would have am easier time with the polarizing Clinton as the Democratic nominee and a harder time in the fall facing the Obama message of change. 

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  We can change this country.

SHUSTER:  When it comes to working across the aisle for the greater good, that image is something McCain wants all to himself.  He has taken on wasteful spending, voted against the Bush tax cuts, pushed for comprehensive immigration reform, and joined Democrats to break an impasse over judicial nominees. 

Eight years ago, at his first presidential campaign, the Arizona senator took on right-wing evangelicals. 

MCCAIN:  Neither party should be defined by pandering to the outer reaches of American politics and the agents of intolerance, whether they be Louis Farrakhan, or Al Sharpton on the left, or Pat Robertson or Jerry Falwell on the right.  

SHUSTER:  Since then, McCain‘s rhetoric and his record has evolved.  Unlike his first White House run, in this campaign, McCain went out of his way to court evangelicals.  And his Senate record is now clearly conservative. 

McCain has voted to restrict abortion and limit gay rights.  He‘s opposed gun control.  He now says the Bush tax cuts should be made permanent.  And he is President Bush‘s strongest supporter in Congress for the Iraq war. 

MCCAIN:  If we withdraw prematurely from Iraq, al Qaeda and Iraq will survive, proclaim victory, and continue to provoke sectarian tensions. 

SHUSTER:  At the moment, Iraq is not hurting the way it is impacting President Bush.  The president‘s approval rating, driven in part by Iraq, has dropped to 28 percent. 

But McCain‘s approval rating is more than twice that.  And polls show voters trust McCain more in Iraq than they trust either Obama or Clinton. 

(on camera):  All of this despite a string of recent mistakes by McCain, confusing Iraqi Shiites and Sunnis.  But with Obama and Clinton ripping each other apart, McCain is floating above it all, and hoping the Democratic fight keeps going. 

I‘m David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Good piece, David Shuster.

Chuck Todd is NBC News‘ political director, and John Heilemann has the cover story this week of “New York” magazine.  The title of his story is, “Is John McCain Bob Dole?” 

Heilemann, is he happy to hear this comparison?  Have you gotten the word back from the campaign that he‘s another Bob Dole, who did lose in ‘96? 

JOHN HEILEMANN, “NEW YORK”:  I do not think there‘s anybody in McCain world that is going to be happy to hear this comparison. 

In fact, in the piece, I quote a couple people pushing back on it pretty hard. 

MATTHEWS:  So, you know they‘re mad at you now?

SHRUM:  Well, I—I think the piece also goes into a fair number of weaknesses that the Democratic candidates will have against him.  So, I think there‘s some leavening to that—to that anger.  But I can‘t say that I think that this would be the piece they would have wished for in their dreams. 

MATTHEWS:  Let me go to—let me go to Chuck Todd. 

It seems to me that John McCain is a mystery man.  And, actually, he‘s a miracle man, because, although he shares support for the war with the president, who, as David Shuster just said, is really drowning in the numbers, 28 percent approval, he‘s way up there with majority support.  How do you explain it?

BRIAN TODD, CNN CORRESPONDENT:  Well, I think he has a lot of reservoir in the bank with voters, going back to 2000.  And, so, there‘s just sort of reserve, you know, trust. 

He really—won—won is the wrong word.  But, if you recall, I would argue John McCain ended up the most popular politician out of the 2000 election, more popular than Bush or Gore or Bill Bradley, the foil for Al Gore.  And part of that was, he came across as the most honest and trustworthy.  It‘s the one who Democrats, after they were disappointed by the election, they seemed to say good things about him in poll ratings.

So, he has a deep reservoir of support that is—that is—that I think is benefiting him now.  And it‘s really frustrating Democrats, because I think they‘re having a hard time painting him as a Bush conservative. 

MATTHEWS:  Do you think that there‘s a real possibility that the Democrats up here in Pennsylvania, where I‘m at right now, Chuck, will see him as sort of the default number to go to if one of their candidates—if their Democrat doesn‘t win the Democratic fight, whether it be Hillary or Barack? 

TODD:  I think it depends on which John McCain ends up campaigning. 

I mean, don‘t forget, you‘re going to have a different John McCain, depending on who his opponent is.  And I think all this whispering, for instance, on Clinton, it‘s not that I think that the McCain folks think that Clinton is easier to defeat than Obama.  It‘s that it will allow McCain to be in his comfort zone if his opponent is McCain (sic) than—than if it‘s Obama. 

If it‘s—if his opponent is Clinton, he gets to be maverick again.  He gets to try to figure out how to position Clinton as part of the establishment.  And he can run against her.  He can run—be the—the guy reaching across the aisle, as the package noted.

Against Obama, he‘s got to become a little bit more of the incumbent, defend a little bit more...

MATTHEWS:  Yes. 

TODD:  ... of Republican policy.  It‘s just harder.

And I think that that‘s—this is not about what‘s easier to do—you know, who is easier to defeat.  It‘s which John—you know, which position will John McCain be more comfortable in?  And I think he‘s more comfortable running against Hillary Clinton. 

MATTHEWS:  Here‘s the thing that I‘m going to try to work on tomorrow.  And I will give it away freely now, if his people are watching, or he‘s watching—I doubt it.

John Heilemann, this is it.  If he is Eisenhower, which you allow the possibility, Eisenhower was elected in ‘52 with the promise, “I will go to Korea.”  He faced an extremely unpopular war, with vastly more casualties than we have faced in Iraq.

HEILEMANN:  Right. 

MATTHEWS:  And he went in there and he signed the armistice and protected for years a very difficult DMZ at the 38th parallel.  Our guys weren‘t getting killed.  I think in the whole half century since the end of that war, the armistice, we‘ve lost about 100 guys, most of them in one bad year, ‘66 I think it was. 

Can John McCain deliver like Ike did, an armistice, and an end to the fighting war and some kind of reasonable presence of our military for years to come in Iraq as he has suggested? 

HEILEMANN:  I think that‘s obviously the most optimistic scenario for him.  The problem he‘s going to have is getting there, which is to say that as Democrats go forward, as we eventually get a Democratic nominee, it‘s clear that part of the frustration that Chuck referred to is that it‘s not the Democrats have been failing to define John McCain, it‘s that they are not able to in a concerted way train their fire on him.  And one of the ways in which they are clearly going to do that, as soon as they choose a nominee, is by defining him as a George Bush clone on the question of Iraq. 

The problem for him is that he is on the wrong side of the public on

this issue and has been for quite a long time, as he is also on the wrong

side of the public on the question of economy.  So the question right now -

I totally agree with Chuck that McCain‘s—the reservoir of good feeling towards him from 2000 is very much there.  But as David Shuster pointed out, the John McCain of 2008 is very different from the John McCain of 2000.  The Democrats haven‘t had a chance to start making that case yet.  When they do, things are going to get a lot more difficult for him on both the foreign policy question and the economic question. 

MATTHEWS:  Chuck and John, send me questions on e-mail tonight.  I‘ll need them tomorrow at 5:00 in the afternoon.  I‘ve got to go up against this guy.  He‘s a tough customer.  We‘ve had town meetings with him before.  He‘s always, I must say, at his most impressive the harder the questions. 

So maybe it will be a good night for everybody to watch.  Thank you very

much, Chuck Todd and John Heilemann

Up next, we‘ve got the HARDBALL round table coming up with the politics fix.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  There‘s been a lot of talk in this campaign over the last few days over who‘s in touch with the workers in Pennsylvania.  Senator Clinton and Senator McCain seem to be singing from the same hymn book, saying I‘m out of touch; I‘m an elitist because I said a lot of folks are bitter about their economic circumstances.  It may be that I chose my words badly.  It‘s not the first time.  It won‘t be the last. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back do HARDBALL.  It‘s time for the politics fix.  “Newsweek‘s” Howard Fineman, who has written a brilliant new book, is an MSNBC political analyst.  The “Washington Post‘s” Eugene Robinson is also an MSNBC Political analyst.  And, of course, NBC‘s Andrea Mitchell—we‘re lucky to have her today.  She‘s been covering the Clinton campaign.

Let me ask you a tough question, Andrea: has Hillary Clinton taken a dig too far by getting the shots and beers out?  She‘s been accused of being Annie Oakley.  Is this Annie Oakley versus the dude in town?  Is this a cowboy scene that‘s gotten a little too rich?

ANDREA MITCHELL, NBC NEWS POLITICAL ANALYST:  The bar scenes from “Star Wars?”  Shouldn‘t say that.  But, man, it has really gone, some people say, over the top.  The Clinton people feel that they really have an opening, that this is not so much reaching out to the voters of Pennsylvania, Indiana, and North Carolina, but reaching to the super delegates, freezing them in place, telling them, look, this is another culture war and this is another attempt that the Republicans will have to define the Democratic nominee, if it is Barack Obama. 

They think they can communicate this to the super delegates and that this is one of their best openings, perhaps their last best opening, given how far behind they are. 

MATTHEWS:  Gene?

EUGENE ROBINSON, “THE WASHINGTON POST”:  This is bizarre, really, because this is not a fight of who is or is not elitist.  This is a fight who best seems not to be elitist.  You have a candidate whose family earned 109 million dollars since it left a White House, lives in two big mansions on the east coast, you know, portraying herself as, you know, just a regular gal who downs shots and beers at the corner bar every weekend, when she‘s not out duck hunting.  I mean, there‘s a surreal nature to this argument that I don‘t think, frankly, will be lost on voters in Pennsylvania.  We‘ll see. 

MATTHEWS:  Howard? 

HOWARD FINEMAN, “NEWSWEEK”:  Well, in talking to Clinton campaign people, they think this is affecting the numbers in Pennsylvania.  There‘s one poll that seems to show that.  But the Obama people say they haven‘t seen much disturbance in the force yet.  I do think what this does is kind of freezes things in Pennsylvania.  I think the bottom line of it, in terms of the horse race, is it probably means that this thing is going to go on and on and on, and any hope that Obama had of trying to shut it down with a surprise victory in Pennsylvania is probably lost.  That‘s the bottom line, horse race part of this. 

MATTHEWS:  Howard, again, does this mean that the numbers don‘t matter as much as this damage impact, this commentary by him? 

FINEMAN:  I think so.  I think what he‘s trying to argue and what the Clintons are trying to oppose is the idea that he‘s the best candidate to win in November.  While he didn‘t have to lock up the rural vote and the small town vote—he wasn‘t going to be Jim Webb from Virginia or even Mark Warner from Virginia, but he was going to try to make a strong showing in areas, in the deer hunter counties not only of Pennsylvania, but of West Virginia, of Ohio, of that scene there, where he needed to neutralize John McCain. 

I think this makes it somewhat more difficult because he didn‘t separate economics from culture.  He really didn‘t.  He was talking about guns and religion, but also sort of accusing the people in those small towns of being afraid of people who are different from them because of their economic problems in those small towns, so he really laid a pretty heavy load on them.  It may not matter that much in Pennsylvania, but it does affect things down the road if he‘s the nominee, I really think so. 

MATTHEWS:  Andrea, you worked here in Philadelphia for years.  I think you know what I know about the sensitivity of this state, Pennsylvania.  You get outside of Philadelphia and Pittsburgh, it doesn‘t get that much national attention.  And then at this point when it‘s just getting all this national attention, it gets what looks like a knock from one of the candidates.  I would say it‘s particularly sensitive to that. 

MITCHELL:  I have to say people are sensitive to that.  We‘ll have to see how it really plays with voters, but what the Clinton people at least feel is that he has been disparaging; he‘s been patronizing.  They think it‘s more than a verbal gaff.  What they‘re telling the super delegates, what‘s going on behind the scenes is, they‘re saying, look, this is who he really is.  He is elite. 

Gene has pointed out they have 109 million dollars.  He‘s still just finishing paying off his student loans with his book earnings, so there‘s a wide gap there.  But she has over the years better understood the tonality of the people she‘s appealing to.  In all of the states, with the exception perhaps of Wisconsin, she‘s appealed to the worker class voter, the blue collar voter more than he has.  Once again, she thinks she‘s more in tune with them. 

MATTHEWS:  OK, well, here‘s an audience that doesn‘t like it.  Here‘s Senator Clinton getting apparently booed today in Pittsburgh.  Let‘s see what we can make of this scene.   

(BEGIN VIDEO CLIP)

CLINTON:  I understand my opponent came this morning and spent a lot of his time attacking me.  Well—well, you know, I know that many of you, like me, were disappointed by recent remarks that he made.  And I think it‘s important that, you know, we give people the chance to really compare and contrast us.  You know, I am well aware that at a fund-raiser in San Francisco, he said some things that many people in Pennsylvania and beyond Pennsylvania have found offensive. 

(END VIDEO CLIP)

MATTHEWS:  I didn‘t hear the booing.  I heard some rustling and activity.  Let me go to Gene.  The question here is can you connect the dots here?  One line that bothered me that Obama spoke recently talked about a girl having a pregnancy, mid teenager, 15 years or 14 years, having been punished or being punished with a baby.  That struck me as not a misstatement, but an attitudinal comment about an attitude about early pregnancy like that.  I wonder whether this doesn‘t connect to that, this attitude about small town people that it does look elitist. 

ROBINSON:  I actually thought the punished by the baby remark was much more problematic than anything he said about working class Pennsylvanians, because it goes to the, you know, goes to the abortion issues.  It goes to moral values.  And there is a kind of a looking down your nose tone about that, that frankly I‘m not sure a lot of people are going to get from the bitter comments.  I could be wrong, but, you know, I think it‘s kind of patronizing to think that all working class Americans are so kind of stupid that they, you know, they can‘t be talked to with words of more than two or three syllables. 

You know, I think that‘s patronizing, but the punish with the baby thing I think could boomerang more sharply on him than this other remark. 

FINEMAN:  Can I make a point here?  I think what‘s interested me is not so much what we said initially, although that was fascinating, as  What his initial reaction was and the initial reaction of his campaign.  I was Black-berrying furiously with the Obama circle on Friday night when it all came down, writing a story for “Newsweek;” and their first reaction, I don‘t think they got it initially.  Obama‘s first reactions Saturday morning were defiant, as if how dare anybody question him.

And he‘s got to watch this.  He has a tendency to do this sort of chin in the air defiance when he‘s questions about what he said.  That‘s part of his character.  That‘s part of the confidence that makes him appealing.  I would note for the future, that‘s a thing to mark down and watch as he proceeds in this campaign. 

MATTHEWS:  People are testy about this.  Go ahead, Andrea. 

MITCHELL:  What happened in Pittsburgh today, by the way, according to the Clinton people—there‘s a lot of disagreement about what happened in that audience today.  There were some SEIU people, Obama supporters.  Some of them made some noise when she started talking about what Obama said.  But she also had supporters in that crowd.  It was a mixed thing.  It‘s very hard to tell without physically being in the room, exactly what happened.  Reports from the scene said it was a mixed kind of audience. 

MATTHEWS:  We‘re all very testy right now in Pennsylvania it seems. 

We‘ll be right back with the round table with more of the politics fix. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the round table for the politics fix.  I want to ask everyone the same question.  I got John McCain tomorrow night for an hour on HARDBALL on the college tour with a lot of students around me to help me out.  What‘s the toughest question I can hit him with?  What‘s his vulnerability?  Howard, you first; where is John weak? 

FINEMAN:  I would ask him if he can honestly say, even though we haven‘t been attacked here in America, whether we really are safer and more secure in the world than we were six or seven years ago.  I know he‘s going to defend the war, but can he honestly say that we‘re really safer?  I don‘t know. 

MATTHEWS:  OK, Andrea?

MITCHELL:  I would ask him about Iran, because we‘re hearing so many signals now from the administration.  He is trying to distinguish himself from the Bush White House on Iraq and the way the war has progressed.  But what is the difference between the way he would approach Iran?  I think he might say some things about Iran that would be rather controversial to an audience out there in Villanova. 

MATTHEWS:  You know what, I don‘t think I‘m going to have to bring up Iran with John McCain.  I think he‘s going to be on that baby from the first minute.  You‘re right, I want to get the nuance with him and Bush. 

MITCHELL:  Let him define his terms. 

MATTHEWS:  That‘s interesting.  Eugene, what do you think about John McCain?  He‘s getting a pretty good ride lately.  Let‘s take it into a depo and check it out. 

ROBINSON:  Ask him about the economy.  Ask him about Social Security. 

Does he want to privatize Social Security.  See what he says? 

MATTHEWS:  That‘s a great one.  Thank you very much, Eugene Robinson, Andrea Mitchell, Howard Fineman.  By the way, I‘m going to be on “The Colbert Report” tonight.  Pray for me.  Join us again tomorrow night at 5:00 and 7:00 Eastern for the HARDBALL college tour, from the home of the Wildcats, Villanova University, a big five team here in Philadelphia, with Senator John McCain, the man who may well be the next president of the United States.  And the odds are about 50/50 it‘s going to be him or whoever the Democrats bring out of that bracket of theirs. 

Now it‘s time for RACE FOR THE WHITE HOUSE with David Gregory. 

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

END   

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