updated 6/23/2008 12:15:44 PM ET 2008-06-23T16:15:44

Guests: David Shuster, Margaret Brennan, Michelle Bernard, Jill Zuckman, Chris Cillizza, Wayne Slater, David Corn, Danny Diaz, Karen Finney, Hilary Rosen, Rich Masters

DAVID SHUSTER, GUEST HOST:  Obama and Clinton set a date for next week, but the tensions linger.

Let‘s play HARDBALL.

Good evening, everybody.  I‘m David Shuster, in tonight for Chris Matthews.  Flip-flop politics.  Barack Obama was for public financing before he was against it.  John McCain was against off-shore drilling before he was for it.  Or at least, that‘s the way it seems.  Hypocrisy or smart political positioning?

Also, Senator Obama announced today that he and Hillary Clinton will campaign together next week.  This comes on the heels of Clinton urging her top fund-raisers to work tirelessly for Obama, and Obama pledging to help Clinton with her campaign debt.  But among the Clinton and Obama faithful, the wounds from the primary battle remain raw.  We will take a closer look.

Plus, it was a bizarre scene on Capitol Hill today, former White House press secretary for President Bush Scott McClellan being hailed by Democrats and hectored by Republicans.

(BEGIN VIDEO CLIP)

SCOTT MCCCLELLAN, FORMER BUSH WHITE HOUSE PRESS SECRETARY:  I‘d like to make a point...

UNIDENTIFIED MALE:  And Richard Armitage...

MCCLELLAN:  Could I finish my—could I finish...

UNIDENTIFIED MALE:  Armitage has admitted that he was the source.  Do you agree with that, or do you question...

MCCLELLAN:  He was the initial source for Robert Novak.  Karl Rove was the...

(CROSSTALK)

UNIDENTIFIED MALE:  And that was the first time...

MCCLELLAN:  ... Ari Fleischer—can I finish my response?

UNIDENTIFIED MALE:  And that was her first time her name...

MCCLELLAN:  He also revealed her identity to other reporters prior to being...

UNIDENTIFIED MALE:  Right, but that was...

MCCLELLAN:  ... published publicly...

UNIDENTIFIED MALE:  ... her name was ever published...

(END VIDEO CLIP)

SHUSTER:  What we learned about the CIA leak case in a few minutes.

Also, could it happen again?  The experts are crunching the numbers and saying watch out, Barack Obama could win the popular vote and still lose the general election.  That and more in the “Politics Fix.”

And advice from former interns of a certain congressman: open doors for him and eat what his wife tells you to.  Who is it?  Check out the HARDBALL “Sideshow.”

But we begin with the flip-flops this week from both Barack Obama and John McCain.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  We‘ve made the decision not to participate in the public financing system for the general election.

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.

(END VIDEO CLIP)

SHUSTER:  Danny Diaz is the communications director for the Republican National Committee and Karen Finney is the communications director for the democratic National Committee.

And I want to start with some of the most—some of the flip-flops we‘ve been coming up with, and here they are, the top three.  First of all, Barack Obama—public financing.  He said he‘d meet with McCain to talk about public financing.  Now he won‘t.  Reverend Wright—Obama said he couldn‘t denounce Reverend Wright, then he did.  Social Security—Obama said he‘d support tax increases for everyone to help pay for Social Security in the future.  Now he says just the rich.

And here‘s John McCain.  Oil drilling—McCain opposed off-shore drilling.  Now he supports it.  On Reverend Falwell—he called Reverend Falwell an “agent of intolerance” in 2000, then said he wasn‘t.  And on the Bush tax cuts, McCain voted against the Bush tax cuts twice.  Now he supports them.

Danny, be honest with us.  If John McCain had the kind of fund-raisers that Barack Obama has, John McCain would opt out of public financing, too, wouldn‘t he?

DANNY DIAZ, RNC COMMUNICATIONS DIRECTOR:  John McCain is a man of his word, and I think that‘s the distinction here.  When he tells the American people he‘s going do something, he follows through.  He committed to public financing, and that‘s exactly what he‘s doing.  Barack Obama, simply stated, broke his promise to the American people.

SHUSTER:  A man of his word.  Well, what about his word on oil drilling?  John McCain said, you know, no, we shouldn‘t drill in coastal areas.  Now he wants—he says it‘s up to the states.  And now it‘s even unclear if John McCain still supports not drilling in Alaska.  Now he seems to be open to it.  How do we know what his word is, Danny?

DIAZ:  John McCain has been very clear on this issue.  Families are hurting.  They need relief right now.  John McCain has put forward a proposal for short-term, mid-term and long-term relief.  There‘s a clear distinction with Barack Obama.  Barack Obama has no plan that he‘s moving forward that‘s going to help working families.

There‘s a reason the two most popular politicians in Florida, Jeb Bush and Charlie Crist, are standing with John McCain on this drilling measure, because it‘s important.  Now, the key provision here is states are going to make the decision for themselves, not the federal government, just as it should be, and Senator McCain is putting that forward.  Barack Obama does not have a stance that will help families.

SHUSTER:  Karen...

(CROSSTALK)

SHUSTER:  First of all, Karen, if it‘s OK for Barack Obama to change his word on public financing, why isn‘t if OK for John McCain to change what he said about oil drilling?

KAREN FINNEY, DNC COMMUNICATIONS DIRECTOR:  I mean, look, John McCain changed his mind on so many issues that they‘re certain to rack (ph) up.  I mean, one of the ones that actually you left off your list is immigration reform.  He was a big immigration reformer.  There‘s a bill that bears his name that he‘s now said he won‘t even vote for.  Then he has a secret meting with Hispanic leaders.  And what is it that he couldn‘t say that he had to say behind closed doors?

But you know, when we talk about...

DIAZ:  John McCain‘s position on immigration...

FINNEY:  When we talk about...

DIAZ:  ... is the same today as is tomorrow...

FINNEY:  When we talk about...

DIAZ:  ... as it is the next day, Karen.

FINNEY:  Danny, I let you have your say.  Why don‘t you let me have mine.  Here‘s the thing.  John McCain is in absolutely no position to talk about keeping his word because he didn‘t keep his word when it came to the commitment he made to the public financing system in the primaries.  And actually, he‘s illegally decided that he, on his own, can just disobey the law and opt out of the system.

Then this week, we learned that he‘s taken, you know, rides on a corporate jet he hasn‘t properly reimbursed for.  And then today, another violation with the Hatch Act with his trip to Canada and his campaign couldn‘t even say it was a campaign trip, but, oh, but the campaign paid for it.  I mean, they ended up having to, embarrassingly, I suppose, have to cancel part of their events.

So you know, John McCain is in no position to talk about keeping his word.  Senator Obama has taken a very principled position when it comes to transparency on his campaign.  And I understand, given the enthusiasm for Senator Obama and the people-powered nature of his campaign and the small donations, why the RNC and Senator McCain are afraid of that.

DIAZ:  You know, David, I imagine his principled stands don‘t count on NAFTA.  I imagine it doesn‘t count on corporate taxes...

FINNEY:  Well, I think it counts...

DIAZ:  ... or Iraq, or even the death penalty...

FINNEY:  ... on NAFTA when you‘re talking about creating jobs for people, Danny.

DIAZ:  Even the death penalty for Osama bin Laden.  And the reality is this.  When you have a record as shallow as Barack Obama‘s, when you have as little experience as he does, you have no record of reaching across the aisle, you know, you have to kind of make these absurd arguments.

FINNEY:  Well, you know, Danny, unlike...

DIAZ:  John McCain has been a leader...

FINNEY:  Unlike John McCain, Barack Obama...

(CROSSTALK)

FINNEY:  ... new ideas of his own.  He‘s not walking in lockstep with George Bush.

DIAZ:  ... and I think the American people understand that .

SHUSTER:  Well, let‘s get to something here, Karen.  Regarding Reverend Falwell, I know that a lot of Democrats criticized John McCain...

FINNEY:  Sure!

SHUSTER:  ... when he embraced Reverend Falwell.  Why was that criticism placed on John McCain, when, after all, there was Barack Obama, who had the flip-flop on Reverend Wright essentially the other way, saying, you know, I can‘t disown Reverend Wright, but then he did?

FINNEY:  Well, again, I think—the difference—the distinction that I would make is that, you know, John McCain actively, you know, very passionately campaigned against that in 2000 and called him the “agents of intolerance,” and then very actively sought the support of people like Reverend Hagee and Falwell.

And again, we know that that is a part of a political year conversion that he made.  And I‘ve said this before, the John McCain of 2000 probably wouldn‘t even vote for the John McCain of 2008.  I think with Senator Obama, it‘s a very different situation.  I mean, obviously that was a, you know, difficult decision that he made.  And I—you know, I respect that decision.  And again, it‘s not the same thing as actively courting the support of people you once called the “agents of intolerance.”

SHUSTER:  And Danny, on that issue of people who are advising you spiritually, will Republicans therefore give Barack Obama a break on Reverend Wright, given that he eventually did what you wanted him to do, and that is he essentially cut all ties with Reverend Wright?  Now, maybe that was a flip-flop from his original position, but in the end, he did what you wanted, right?

DIAZ:  Well, look, I think at the end of the day, I mean, people look at John McCain, they see someone with experience, someone who has a unique skill set to address the challenges we face.  They look at Barack Obama and there‘s a question mark, a complete unknown.  What has he done?  What has he achieved?

FINNEY:  Danny, you and I both know that the American people...

(CROSSTALK)

FINNEY:  ... they see the policies of George Bush.

DIAZ:  ... and done the hard things.  And I think, ultimately, when they look at Barack Obama, they‘re going see someone that does not have the qualifications to lead, and they‘ll look at John McCain and say, This man is prepared to be president.  And I think that‘s what it‘s going to come out to.

SHUSTER:  Danny, speaking of trying to understand what the word is, this week, Barack Obama was hammering John McCain on the issue of Social Security, saying that John McCain position has flip-flopped, that originally, John McCain supported the idea of raising payroll taxes.  Now it‘s not clear.  Clarify for us.  Does John McCain support raising payroll taxes to save Social Security or not?

DIAZ:  John McCain doesn‘t support raising taxes.  And you don‘t have to take my word on it for Senator Obama‘s position on Social Security.  Take Hillary Clinton‘s.  Largest tax increase in American history, $1 trillion.  That‘s what she said, that‘s not what I said.  Barack Obama‘s position is pretty consistent on taxes, at least.  I‘ll give him that.  He‘s for taxing anything that walks, anything that talks, day in day out.

FINNEY:  Danny, you know that‘s just not true.  I know it‘s a great...

DIAZ:  And American families are going to be hurt...

FINNEY:  ... sound bite for you, but it‘s just not true.

DIAZ:  ... if Barack Obama becomes president...

(CROSSTALK)

SHUSTER:  All right, but Karen, the truth of the matter is that Barack Obama did originally say, You know what?  When it comes to the Social Security payroll taxes, we‘re going to lift it beyond $102,000.  Now he says, Well, we‘ll lift it and put it on people who are making more than $250,000...

(CROSSTALK)

FINNEY:  Unlike John McCain, what Barack Obama is doing is talking about fresh ideas for the future.  He‘s not talking about...

DIAZ:  Fresh ideas to raise taxes on families.

FINNEY:  He‘s not talking about privatizing Social Security, as John McCain is.  I mean, John McCain has no new ideas.  He‘s basically running on the failed ideas of George Bush, which is why, you know, it‘s pretty clear he offers a third term of George Bush.

(CROSSTALK)

FINNEY:  Privatizing Social Security is a bad idea that‘s already failed once, Danny, and you know it.

(CROSSTALK)

FINNEY:  That‘s not a new idea, that‘s an old idea, and it‘s a bad old idea.

SHUSTER:  Danny, finally, what about the Bush tax cuts?  What changed between the time when John McCain voted against the Bush tax cuts and now the time that he says, Well, you know what?  We should make the Bush tax cuts permanent.  What changed?

DIAZ:  Senator McCain was speaking of fiscal restraint when the Bush tax cuts came through.  He‘s speaking to fiscal restraint today.  He‘s not going to support the largest tax increase in American history.  You know, he‘s going to support tax cuts that help families.  He‘s going to support fiscal restraint...

FINNEY:  Really?  Like the richest families...

DIAZ:  ... just as he has throughout...

FINNEY:  ... in America, Danny?

DIAZ:  ... his entire career.  And I think when you juxtaposition (SIC) that versus Senator Obama, who would raise taxes on families who make less than $32,000 a year...

FINNEY:  That‘s just not true, Danny!

DIAZ:  Explain to them how that would help them.  He will tax their retirement.  He will tax their Social Security.  He will tax their investments.  He will tax their payroll.  That‘s not going to help grow jobs.

FINNEY:  You know—you know, Danny...

(CROSSTALK)

SHUSTER:  Danny Diaz and Karen Finney...

(CROSSTALK)

SHUSTER:  Danny Diaz and Karen Finney, all I can say is this is going to be a great election.  We thank you for coming on today.

We‘ll be back with you more, I‘m sure, in the weeks to come.

Up next: It was unthinkable a few weeks ago, but Hillary Clinton and Barack Obama have made plans to campaign together.  But will Clinton supporters be there for Obama in November?

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to HARDBALL.  Barack Obama‘s campaign today announced that he will campaign alongside Hillary Clinton next week in an effort to unite Democrats after a long, hard primary fight.  But will Clinton supporters turn out for Obama in November?

Rich Masters is a Democratic consultant, and Hillary Rosen is the political director for the Huffingtonpost.

And I want to start by getting your reaction for something that happened earlier this week.  Take a look at how a pro-Obama crowd in Detroit reacted to Michigan governor Jennifer Granholm when she mentioned that she had supported Senator Clinton.  Watch.

(BEGIN VIDEO CLIP)

GOV. JENNIFER GRANHOLM (D), MICHIGAN:  And I just have to say that for all of those who, like me, supported Senator Clinton, we recognize that Senator Clinton...

(BOOS)

GRANHOLM:  ... Senator Clinton...

(BOOS)

GRANHOLM:  Come on, now!

(BOOS)

GRANHOLM:  She‘s a great American...

(END VIDEO CLIP)

SHUSTER:  Wow.  And here‘s Barack Obama‘s response when he took the stage.  Watch.

(BEGIN VIDEO CLIP)

OBAMA:  I heard when Jennifer Granholm talked about Senator Clinton.  I want everybody here to be absolutely clear—I want everybody to be absolutely clear—you up there—Senator Clinton is one of the finest public servants we have in American life today.

(END VIDEO CLIP)

SHUSTER:  Hilary Rosen, Let‘s start with you.  What‘s your reaction to that?  Quite the crowd in Detroit.

HILARY ROSEN, HUFFINGTONPOST.COM:  You know, I just feel like it was a you know, we‘ve come a long way from Monday to Friday, actually.  I think for the most part, the party‘s getting together really well.  We see the polling increasing, you know, Obama support, particularly over McCain, but in core groups that, you know, Hillary Clinton had support from, particularly white women.

You know, this was a process, you know, and everybody said it would take time, and I guess everybody was right because this past week has been important.  And now they‘ve announced that they‘re going to campaign together next week.  I think that, mostly, people are getting over it.  And Hillary Clinton is going be his best surrogate.

SHUSTER:  Rich Masters, you were a supporter of Barack Obama during the primaries.  A number of Clinton supporters were infuriated this week when the Obama campaign announced that Patti Solis Doyle, who was the former campaign manager for Senator Clinton, was joining the Obama campaign to help run the vice presidential ticket.  Knowing full well that Patti Solis Doyle and Hillary Clinton are not on speaking terms, this was taken at a shot in the eye at the Clinton supporters because it seemed to underscore from the Obama campaign, We are not putting Hillary Clinton on the ticket.

Was it a mistake for the Obama campaign to make this move this week?

RICH MASTERS, DEMOCRATIC CONSULTANT:  Well, you know, I‘m kind of curious as to why they did it.  I mean, I think, in some—outside the Beltway, it may come off and seem like it was even an olive branch to say, you know, Listen, one of Hillary Clinton‘s top leaders is going to come onto our campaign, and the reaction inside the Beltway was surprising.  So you know, in hindsight, it may not have been the wisest move to make.

But I think Hillary Rosen is absolutely right.  I think we‘re all going to get past this stuff.  I mean, you know, there‘s nothing better than when you win a campaign.  There‘s nothing worse than when you lose a campaign.  It‘s very, very tough, I think, for a lot of the Clinton supporters to really kind of understand that they aren‘t going to quite reach there, even though they ran an amazing campaign.

And for the Obama folks, a lot of harsh things were said, and I think it‘s time for the Obama folks to get over it.  We need to rally as Obama supporters and become Democrats because the stakes are just too great in this election.  And I think the campaign appearance, the joint campaign appearance, is a great first step, and I expect to see a lot more of it this campaign.

SHUSTER:  Hilary, you were a Hillary Clinton supporter.  There‘s a group, a PAC that‘s been formed by some Hillary Clinton supporters.  It‘s called Womencount.com.  And they have a list of issues that they are demanding that the Obama campaign address: Gender bias in the campaign, reform of the nominating process, reflecting the increase in the number of women in elected office, representing the 18 million voters who supported Hillary Clinton.

Is it wise for supporters to Hillary Clinton to be making demands right now on the Obama campaign?

ROSEN:  Well, you know, people are going to do that they‘re going to do.  I think the critical piece here is whether this is something that Hillary Clinton supports or not.  And I think that we‘re going to see her, I predict, over the next couple of days, and most specifically, when she makes her public appearance with Barack Obama, saying, you know, There might be a lot of anger out there, but it doesn‘t reflect me.  I‘m not angry.  I want to get to work and support Barack Obama for president.

Obama wants to reform the nominating process, so that‘s not a big thing.  And I think he‘s obviously going to have to talk about the campaign and what it meant to her supporters when they‘re out there together.  So they‘ll probably get a lot of what they want when they‘re out there campaigning.  And I think that we‘re going to see Senator Clinton distance herself from some of this intense anger.

SHUSTER:  Rich Masters, is it OK with you that there‘s a group out there making these demands?

MASTERS:  Yes.  Absolutely.  I mean, I think that the truth of it is, Barack Obama is—as Hilary said, has already talked about reforming the nominating process.  There‘s no question that several women senators also supported Barack Obama, Claire McCaskill, Janet Napolitano, Kathleen Sebelius.  So he clearly has an agenda in which he would love to see more women elected to office, Democratic women in particular.  So I think he‘s already addressing a lot of those issues.  And for them to bring those to the forefront, I think, at the end of the day, is a really good thing.

SHUSTER:  And Hilary, what do you need to see with Hillary Clinton and Barack Obama together, to convince you that all the tensions are gone, that they really are working together, they really are both committed to joining forces in this election?

ROSEN:  You know, I‘m not the audience.  I‘m, like, an insider.  I‘m already there for Obama.  It‘s not people like us, me and Rich.  It‘s that waitress in the diner who connected with Hillary Clinton because she want going to fight for them and that woman just instinctively knew it.

You know, Obama‘s going to get out there and he‘s going to get on the road and he‘s going to make that same connection.  You know, one of the things we saw this week, which I think is making all Democrats nervous, is this McCain campaign is going to be tough.  They‘re going to be aggressive.  They‘re going to be mean.  And they‘re going to be watching every step.  If he thinks he had a rough primary, it‘s nothing compared to the general, and we‘ve all got to coalesce around him.

SHUSTER:  Hilary Rosen and Rich Masters, thank you both very much.  We appreciate it.

Up next: The McCain campaign goes for the youth vote with their spin on MTV‘s “Cribs.”  And name that veep.  Who‘s the Southern conservative Democrat that may bring balance to Obama‘s ticket?  The answer‘s next in the HARDBALL “Sideshow.”

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  And welcome back to HARDBALL.  Time now for the HARDBALL “Sideshow.”

Last night, Conan O‘Brien gave us his take on Michelle Obama‘s appearance on the view. 

(BEGIN VIDEO CLIP, “LATE NIGHT WITH CONAN O‘BRIEN”)

CONAN O‘BRIEN, HOST, “LATE NIGHT WITH CONAN O‘BRIEN”:  Yesterday, on “The View”—I don‘t know if you saw that—Barack Obama‘s wife, Michelle, did the fist bump with all the co-hosts. 

(LAUGHTER)

O‘BRIEN:  She did that, yes.  And then she said the fist bump is the new high-five.  That‘s what she said, yes. 

(LAUGHTER)

O‘BRIEN:  Yes.  After hearing this, John McCain asked, what the hell is a high-five? 

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

SHUSTER:  It sure sounds like those McCain age jokes might become the late-night punchline of the political season.

I guess it‘s no surprise, then, that the campaign is trying to spruce up John McCain‘s image.  You know that MTV show “Cribs,” where budding celebrities invite cameras into their homes and parade around their driveways and pool houses?

Well, the McCain campaign has seen it.  And they know what the kids want to see.  Check it out. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  And this is one of several Straight Talk Express tour buses that the senator has.  It‘s 45 feet long, about 13, 3 inches high. 

We actually bought our first bus on eBay in August of 2007 for an undisclosed price.  It‘s got eight tires sitting on 22-inch rims. 

Take that, Hollywood. 

This is really the heart and soul of the campaign.  As it rolls down the road, it‘s John McCain unfiltered.  It‘s where he is at his best.

(END VIDEO CLIP)

SHUSTER:  John McCain unfiltered and down home with the MTV crowd. 

Right. 

And summer means swarms of interns here in Washington.  Well, Capitol Hill‘s newspaper “The Hill” unearthed his intern survival guide to Republican Congressman Don Young‘s office.  Some of the suggestions?  The boss, he expects you to open doors for him.  The wife?  Eat what she tells you to eat.  And the kicker?  Always put calls from the so-called A-team of lobbyists through to any staff member they ask for. 

Young‘s office tells “The Hill” that the memo was created by several former interns, not staff.  Well, it sounds to me like those interns have as firm a grasp on the way things work in the halls of power as anyone. 

And now it‘s time for “Name That Veep.” 

The Associated Press today profiles a former senator and potential Obama number two, writing—quote—this person “would bring national security credentials to the ticket, having served as the longtime Armed Services Committee chairman.  He is a conservative Democrat who supported school prayer and opposed gays in the military, while Obama tends to have a more liberal viewpoint.  He will turn 70 in September.”

So, who is this experienced conservative son of the South?  Former Georgia Senator Sam Nunn.  Senator Nunn has been out of the political scene for some time.  But I imagine one phone call from Obama would bring him right back. 

And now for tonight‘s “Big Number.” 

Congress finally heard Scott McClellan‘s testimony today, but there‘s still a piece of the puzzle missing in the CIA leak investigation, the interviews prosecutor Patrick Fitzgerald conducted with President Bush and Vice President Cheney. 

Last year, Fitzgerald said the transcripts could be released, and then Congress asked the Bush administration Justice Department to do just that.  But, so far, the Bush administration has done nothing—no reaction to the request, no response, nothing. 

So, just how long has it been?  Two hundred days.  It‘s been 200 days since Congress asked for the CIA leak investigation interviews of President Bush and Vice President Cheney.  My bet?  We‘re not going to see those doctors for at least another 214 days, the time until a new administration comes into office -- 200 days and counting, tonight‘s “Big Number.” 

Up next:  Scott McClellan testifies on Capitol Hill, saying President Bush needs to come clean on the CIA leak case and that the White House is still covering up.  What does this mean for the 2008 election and John McCain‘s presidential hopes? 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

A tough week ends on a low note, as concerns about the auto industry and financial stocks, along with the price of crude oil, all create a lot of worry for investors.  The Dow Jones industrial average lost, a triple-digit decline here, down 220 points, the S&P 500 down nearly 25. 

The Nasdaq also seeing a significant 56-point drop, all of that due in part to word that General Motors shares plunged 15 percent, after Standard & Poor‘s warned that automakers could face big money problems early next year, amid slumping sales due to high gas prices.  Ford shares were already trading lower after the automaker announced it was delaying the instruction of the redesigned F-150 pickup truck because of declining demand for that gas-guzzling vehicle. 

Financial shares fell in part due to concerns about investment bank Merrill Lynch and its profits.  And Washington Mutual announced that it is cutting 1,200 jobs nationwide.  The country‘s largest savings and loan says some of the losses will come in its home loan business. 

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

HARDBALL. 

SHUSTER:  Welcome back to HARDBALL. 

Former White House Press Secretary Scott McClellan took the publicity tour for his new book to a new level today, testifying before the House Judiciary Committee.  Not surprisingly, Republicans tried to discredit him, while Democrats embraced his account of the Valerie Plame CIA leak case inside the White House. 

Here‘s McClellan on a conversation he had with Scooter Libby about Libby‘s involvement in leaking Plame‘s name to the press. 

(BEGIN VIDEO CLIP)

REP. LINDA T. SANCHEZ (D), CALIFORNIA:  Who do you think in the administration should have been fired if Bush had adhered to his initial...

SCOTT MCCLELLAN, FORMER WHITE HOUSE PRESS SECRETARY:  Well, if he had adhered to his word, then Karl Rove wouldn‘t have longer been in the administration.

MCCLELLAN:  I think I think he should have stood by his word.

(END VIDEO CLIP)

SHUSTER:  Well, that, of course, was in Congresswoman Sanchez talking about Karl Rove. 

But, for more on this, we‘re joined by Wayne Slater of “The Dallas Morning News” and David Corn of Mother Jones. 

And, David, Scott McClellan all but said that there are unanswered questions involving President Bush and Vice President Cheney.  And it seems like the political aim of the committee put more pressure on the White House to release these interview transcripts that Fitzgerald, in the investigation, conducted with Vice President Cheney.

How does that really help Democrats, though, in a case that is so confusing and when it seems so clear that the White House is not going to give up these doctors? 

DAVID CORN, AUTHOR, “THE LIES OF GEORGE W. BUSH”:  Well, the question is, can you put any pressure on a White House when the public already believes that the president lied the country into war—that‘s according to polls—and when Dick Cheney has said time and time again, I‘m not going to give you this, I‘m not going to give you that, I‘m not going to give you this? 

The White House is obviously trying to run out the clock.  And the Democrats are making a last-minute attempt here to get as much information out of the Justice Department, out of Fitzgerald‘s investigation that they can in the few months remaining. 

But Henry Waxman, who of course is the chairman of the House Government Oversight Committee, is quoted in “The Hill” today throwing up his hands in certain ways.  He‘s asked for other information about Cheney.  And the White House keeps saying no. 

So, all that John Conyers, who is the chairman of this committee, the Judiciary Committee, and other Democrats can do is keep bringing this to light and just reinforcing the public perception that‘s already been formed, while Republicans, you know, get out there defending Bush on the matter of whether he told the truth or not. 

It‘s a political win for the Democrats to have this out like this.  But I think it‘s going to very be hard, at the end of the day, for them to get that information out of the White House.

SHUSTER:  And, again, the leverage comes from Scott McClellan saying there are unanswered questions in the White House.

But Wayne Slater, what was so intriguing today is, there was Scott McClellan, who, for a couple years, was taking tough questions from the press and hammering Democrats in Congress.

And, today, McClellan was on the receiving ends.  And it was the Republicans who were asking him the tough questions.  Talk about how much or how little, I suppose, but how much this has divided Republicans in the state of Texas, where McClellan is from.

WAYNE SLATER, COLUMNIST, “THE DALLAS MORNING NEWS”:  Well, it really has. 

And the interesting thing is that folks I talk to here in Austin—and these are Republicans who worked with George Bush, who are part of the administration, who still love George Bush, are really amazed about how badly this administration has gone when you talk to them privately. 

And, frankly, when I talk to folks here about Scott‘s book and the statements that he‘s made in this book, nobody‘s really surprised.  Many Republicans who are among George Bush‘s biggest supporters even today, because of their personal link to him, don‘t think that Scott has really said much in that book that is not true, or at least defensible.

But where they differ, I think, and where I see a difference among different Republicans is, do you talk about?  Do you actually break the code and talk about what happened? 

And I think what you see is that, in a case like this, when you break with the Dalton Gang, you become the lone ranger.  And that is what Scott has become.  Among Republicans here in Austin, and in Texas, as well as everywhere else, they don‘t like him.  Among Democrats who think it took too long for him to get there, they‘re not real sold on him. 

Scott McClellan is a man by himself.  And Republicans are stuck saying, George, come back here to Texas.  Come back home.  This was not really a good eight years. 

SHUSTER:  Well, here now is Scott McClellan on that conversation he had with Scooter Libby about Libby‘s involvement in leaking Plame‘s name to the press. 

Watch. 

(BEGIN VIDEO CLIP)

MCCLELLAN:  I got on the phone with Scooter Libby and asked him, point blank, “Were you involved in this in any way?”  And he assured me in unequivocable terms that he was not, meaning the leaking of Valerie Plame‘s identity to any reporters. 

(END VIDEO CLIP)

SHUSTER:  David, we know from the trial that Vice President Cheney was directing Scooter Libby‘s action, that vice president was deeply involved in this. 

But, again, the Democrats, even with Scott McClellan‘s testimony, aren‘t really moving the ball forward, because there weren‘t really any new revelations today.

CORN:  No, there were no new revelations. 

But having Scott McClellan come out and say, I was lied to by Scooter Libby and Karl Rove, that‘s not insignificant.  We already had pretty good evidence that Karl Rove had lied to Scott McClellan when he said he had not been involved in the leak, when of course he had leaked the information to Matt Cooper and confirmed the information to Bob Novak.  You and I remember that from the trial.

But—so, I think, you know, having an insider confirm that, you know, raises, again, the whole issue of veracity and the Bush White House.  Karl Rove now works for FOX News.  He writes a column for “Newsweek.”  He writes a column for “Wall Street Journal.”  And Scott McClellan has called him a liar, with the evidence, I think, on McClellan‘s side.  What does that say about one of the major commentators in the news these days?

SHUSTER:  And, Wayne, what does that say about the credibility of the president and vice president?  I mean, where you are, and people in Texas, is Scott McClellan considered more credible than Vice President Cheney and President Bush? 

SLATER:  Not more credible than Vice President Cheney.  I think there‘s a sense among a number of folks who liked George Bush and still do—that they want to give Bush the benefit of the doubt, that they feel he was not well served by a number of people, including the vice president. 

Dick Cheney comes here and shoots people, as you know, in the face. 

(LAUGHTER)

SLATER:  But he‘s someone that I don‘t think is well thought of.  He‘s a good, solid Republican and has stood by the team.  And that‘s a good thing. 

But I think he is someone that, here, folks who are Republicans and moderates here in Texas think has not served this president well.  He has a black hole.  Basically, his office is a black hole, as David has written about with Mike Isikoff in their very good book. 

So, I think Scott is seen as a credible person.  And George Bush is seen as a sympathetic person.  Vice President Cheney is not seen in either way. 

CORN:  You know, the interesting thing today was that Scott McClellan did try to make that distinction that Wayne just did between the president and the vice president. 

I asked whether there was a cloud hanging over the president because of the Valerie Plame case.  He said, well, it‘s more over Dick Cheney.  He still has a personal connection to President Bush, but Dick Cheney, he‘s ready to get rid of. 

SHUSTER:  And, David, as the Democrats are able to get in their shots at Dick Cheney, how does that effect John McCain?  Or is it a wash because viewers just can‘t keep all this straight? 

CORN:  Right now, 82 percent of the country says that the nation is going in the wrong direction.  They believe that Bush was not honest about the war. 

Any more—anything else that reinforces those type of ideas, whether it‘s about Dick Cheney or George W. Bush, is bad for John McCain, and makes it harder for Bush and Cheney to use the power of the White House and the power of fund-raising to help him. 

SHUSTER:  David Corn, I agree.  I think any time it reinforces this idea that there‘s a credibility problem in the White House, I think it does hurt John McCain and help Barack Obama.  But we will see how the Democrats play it.

Again, thank you, Wayne Slater and David Corn. 

Up next:  It‘s a real possibility this year that Barack Obama could win the popular vote, but lose the election. 

That‘s next in the “Politics Fix.”

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

SHUSTER:  Coming up, Barack Obama‘s big campaign war chest could keep him in the game in states Democrats haven‘t won in years.  What does John McCain do to keep up?  The “Politics Fix” when HARDBALL returns.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to HARDBALL and the “Politics Fix.” Tonight‘s roundtable: Jill Zuckman of The Chicago Tribune, MSNBC political analyst Michelle Bernard, and Chris Cillizza of The Washington Post.

And I want to start, Michelle, with a brand new Newsweek poll that just came out.  Obama, among registered voters, over John McCain 51 to 36, a 15-point lead.  The last time this was taken, 46 to 46.  What do you attribute it to?

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  Well, I—it‘s a couple of things.  I think—we were looking for the bounce—or looking for a much larger bounce right after Hillary Clinton, you know, basically dropped out of the Democratic race.  So this is sort of a long time coming. 

But I also think that Barack Obama has got new ads out.  He‘s beginning to tell more of his story.  And I think that this is—this is just a snap shot in time.  We really don‘t know what‘s going to happen between now and November. 

I would suspect that the numbers will continue to go back and forth between he and McCain as Obama introduces himself to new voters, and McCain does the same thing. 

SHUSTER:  And, Jill, when you couple this news with the idea—with the news that Barack Obama is out of public financing, he‘s going to spend as much as it takes, what are you thinking right now if you‘re in the McCain campaign? 

JILL ZUCKMAN, THE CHICAGO TRIBUNE:  Well, first of all, I‘m thinking this poll is a little bit of an outlier, because we‘ve had a whole bunch of other polls only showing a 3- to 4-point margin between the two of them. 

In terms of public financing, the McCain campaign has got to be nervous about this.  But they watched as Senator Clinton got outspent three to one, four to one in states like Ohio, Pennsylvania, Indiana, and she still managed to win.  And McCain has always run as an underdog without a lot of money. 

So I guess they figure they‘re going to just keep on, you know, taping it together with tape. 

SHUSTER:  And, Chris Cillizza, one cautionary tale on this poll.  John Kerry, back in July of ‘04, at this point he was up by 6 points over George W. Bush. 

CHRIS CILLIZZA, THE WASHINGTON POST:  Well, David, you‘re exactly right.  And I think Michelle touched on it and sounded the exact sort of appropriate notes of caution, which is, a poll is a poll.  You‘ve got to look at the broad cross section of where things are.  My guess, it certainly seems, if you look at that vast majority of polling, Obama is ahead, but I don‘t think he‘s ahead by 15. 

One other quick thing, Michelle mentioned this as well, Obama‘s new ads are fascinating.  It‘s a 60-second ad running in 18 states.  These are states that include places like North Carolina, Georgia, Montana, heck, Alaska is in that list, David.  That‘s a state that John Kerry lost by 30 points in 2004. 

It shows how Barack Obama is going to use his financial advantage to expand that playing field.  And even if he doesn‘t win in some of these states, if he can force John McCain to spend significant money in them, that takes away money that John McCain can spend in places like Michigan, Ohio, and Pennsylvania. 

SHUSTER:  Well, and, Chris, the other thing that does is that if he‘s able to make some of these states close but lose them, we‘re starting to get closer to the possibility Barack Obama wins the popular vote but loses the Electoral College.  And I want to put up a graphic on the screen that shows how he might do it. 

Suppose Obama gets huge votes in the coastal states, Illinois, and the South, but doesn‘t southern states.  McCain wins Republican states, Texas and Georgia, but by smaller margins.  McCain wins by small margins in North Carolina and Indiana.  Both of them split the Midwest.  Barack Obama wins Iowa, Colorado, Virginia.  McCain wins Michigan and New Hampshire.  Again, Obama runs up the score in the coastal states, California and New York. 

What happens, Michelle, if Barack Obama wins the popular vote but loses the Electoral College?  How will the country deal with that? 

BERNARD:  Well, I think it depends—we have done so much during this election cycle to talk about different demographics.  And I think you‘re going to see different reactions in different demographic groups.  I think, for example, African-Americans will generally be very, very upset about this. 

I think that, you know, after the last election cycle, most of the country was pretty unhappy it seems with just the way the system works.  You will see African-Americans very angered by the situation but I think will deal with it if that were to happen, because it is our system of government. 

I think, you know, maybe some voters in Appalachia, for example, will be quite happy with the way that the results turn out.  I think it‘s just going to—it‘s going to depend on who you‘re speaking with. 

ZUCKMAN:  You know, the fact is we went through this in 2000.  There‘s essentially a model for what happens when you win the popular vote but you lose the election.  And I think if that were to happen, the candidate who won the popular vote but lost the election would follow Al Gore‘s lead and get up there and do the right thing for the country.  And it would be incredibly disappointing for so many people. 

SHUSTER:  Well, and at the same time, Chris Cillizza, it would be so devastating for the Democratic Party for this to happen the second time out of the third election, if, in fact, this does play out this way. 

CILLIZZA:  It would, David.  But the point you just made I think is an important one.  I think it‘s an interesting possibility to talk about.  I don‘t think it‘s ridiculous to talk about.  But I also do think the fact it hasn‘t happened in 100 years, it happened in 2000, I‘m not saying it‘s not going to happen in 2008, I just think you look back and in 100 years of elections, it happened once. 

There‘s not that much to lead us to believe that in four, eight years it‘s going to happen twice.  It may.  And if it does, I think Michelle and Jill are both right.  I think it would cause a major fracture in the country.  And that‘s exactly what I think any of us who cover politics don‘t want. 

SHUSTER:  Chris, what are we seeing in term of these ads?  Barack Obama‘s first ad, he‘s running them in states like Montana, South Dakota, Alaska, places that I don‘t think Democrats have a prayer of winning in the fall.  Is this just a head fake to try to force John McCain to spend some resources in places he shouldn‘t normally need to? 

CILLIZZA:  Yes, you know, David, I think we won‘t know yet.  The Obama campaign insists that it is not a head fake, that they believe that they can be competitive in some of the states you just mentioned, including in places in the South like North Carolina and Georgia. 

Now the calculus in North Carolina and Georgia is heavily dependent on the fact that both states have a significant African-American population.  Barack Obama will do extremely well there, we‘ll probably historic levels of turnout. 

I don‘t know how committed they are to it.  And I don‘t think we‘ll know until we see three and four weeks on how much time and money they‘re going to spend in the state.  The thing I will say, though, is with him opting out of public financing makes it a lot easier for him to put $10 million or $15 million into a state that he thinks he might have a shot at but isn‘t sure. 

Because $10 million to $15 million, if you can raise $250 million or $300 million, is a lot different than $10 million or $15 million if you‘re operating on a $84 million budget, which he would be in public financing. 

SHUSTER:  Yes.

ZUCKMAN:  He also needs to find states to potentially offset losses in places like West Virginia, maybe Kentucky, maybe even Florida.  I mean, there are states where Democrats need to win in order to win the presidency that he has shown some weaknesses in and McCain has shown a lot of strength. 

So he has got to change the playing field around in order to make this all come together.  And I would just say that if you look at their strategy from the primaries, the way they went for all of those caucus states and came up with wins in places that Hillary Clinton didn‘t even think to go, you‘ve got to think that they have not lost sight of how you win a general election. 

BERNARD:  Yes, I think their aim is to turn as—at a minimum, turn as many red states purple as possible with the ultimate aim of turning as many red states blue.  And I think that you‘re going to—he is redrawing the electoral map.

And sort of piggy-backing on what Chris said, I think that you‘re going to see them really work very hard in the Deep South.  You know, I would say that if there‘s any time in our nation‘s history when the Democrats might have chance in some states in the Deep South, it is during this election because of the large number of African-Americans in states like Georgia, for example. 

SHUSTER:  And, Michelle, the polls numbers—and we started with the Newsweek poll at the top of the segment, does that number tighten when it becomes so clear that Barack Obama, he said, you know what, I‘m going to try to participate in the public finance system, I‘m going to meet with John McCain. 

He never met with John McCain.  He‘s not in the public finance system.  Will that hurt him a little bit in terms of the issue of him being a sort of different kind of politics? 

BERNARD:  I—you know, I don‘t think it‘s going to hurt him at all.  I think it might have hurt him more if he decided not to take public financing.  Yes—as much as so many Americans in the Democratic Party love Barack Obama, we‘ve actually also seen a lot of Republicans who changed their registration to Democrat to vote for him. 

Getting over the hump of being the first African-American president is going to be quite difficult for him, and I think a lot of people would have questioned his judgment given all of the things that he has going against him if he opted for public financing when he is going to need every dollar he can to try to win this race. 

SHUSTER:  Michelle, Jill, Chris, we‘ll be right back with you just on the other side of this break.  We‘ll be back with the roundtable for more of the “Politics Fix.” You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  And we‘re back with the roundtable for more of the “Politics Fix” with Michelle Bernard, Jill Zuckman, and Chris Cillizza. 

And, Jill, I want to start with you.  There was an Associated Press interview this afternoon with Republican Senator Chuck Hagel of Nebraska.  He‘s an outgoing senator, something of a maverick.  He has criticized the Bush administration on the war.  He was asked about if he was offered to be Barack Obama‘s running mate.  And he said: “If it would occur, I would have to think about it, you‘d have to consider it, it‘s the only thing you could do, why wouldn‘t you?” 

ZUCKMAN:  That is so devastating.  It‘s just so devastating.  He was one of Senator McCain‘s closest friends in the Senate.  They‘re both Vietnam veterans.  They‘re both highly decorated.  The war has just split them apart.  And you can see how estranged they are by the fact that he would say something like this. 

And on top of that, Senator Hagel‘s wife has made a contribution to Senator Obama‘s presidential campaign.  I mean, it looks like the whole Hagel family may be moving in the Obama direction.  And it‘s—I don‘t know, I think it‘s kind of a sad thing to see that friendship broken apart. 

SHUSTER:  And yet, Michelle Bernard, I know some Republicans who would say, look, Joe Lieberman was a Democrat.  He‘s going to speak at the Republican Convention.  Sure, Chuck Hagel is kind of off the reservation, we‘d expect him to say something like this. 

BERNARD:  I think there are people that will say that, but I think the more important story about Chuck Hagel is really what we see happening within the Republican Party.  We‘ve been talking about this for several months.  There is disunity in the Republican Party. 

We‘ve heard so many people say that the party, as a whole, will come and everybody will rally against—you know, rally around John McCain.  But we still don‘t see that happening.  And John McCain has a lot of work to do, not only within his base but also outside of his base.  And I think that Chuck Hagel‘s statement, today, really exemplifies just how much work he has to do within the Republican Party. 

And to—you know, if he wants to win all of the states that George Bush won in 2004, Chuck Hagel‘s statement today makes it even more difficult for him.  He has got a lot of work ahead of him to do.

SHUSTER:  Chris Cillizza, do you actually see Barack Obama seriously considering Chuck Hagel?

CILLIZZA:  I don‘t.  I just don‘t think Barack Obama needs that sort of long ball that—you know, pick a former—or, I mean, a current Republican and a guy who has been in line with the Republican Party on almost—on many issues with the exception of the war.  I don‘t think Obama needs to take that risk. 

The one thing I would say, though, in praise of Chuck Hagel, is at least he‘s honest about the fact that if he was asked about the vice presidency, if he was asked about it, he would consider it.  I feel like everyone we hear who is mentioned in the vice presidential sweepstakes these days seems to say, no, that wouldn‘t be anything I was interested in. 

Look, almost any politician, not any, but almost any politician would at least entertain the possibility.  So kudos to Senator Hagel for at least being honest about it. 

SHUSTER:  I want to ask you all about the big financial story this week in the world of politics, and that is Barack Obama opting out of campaign—public campaign fundraising. 

A number of Clinton supporters have suggested that the thing that they doubted about Barack Obama is that he would bring a gun to a knife fight.  They weren‘t sure if he had it in him to really do what it takes to win. 

Does Barack Obama now win over some of the Clinton supporters, Michelle, by the fact that, OK, yes, he‘s going to raise as much money as it takes? 

BERNARD:  I don‘t think that that is what is going to win over Clinton supporters for him, particularly when you‘re talking about white women over a certain age group.  I don‘t think that they‘re going to really care about that. 

That actually might send some of them over to the McCain camp because they will be thinking, we knew it all along.  He really isn‘t an agent of change.  He has, you know, done what we‘ve been hearing people say this week, which is a flip-flop. 

On the other hand, I think there are a lot of people who have seen that although Barack Obama sort of stays above the fray, he is fighting, keeps fighting hard, and he is absolutely fighting to win. 

If you think about the fact that 18 months ago no one had heard of him, no one really ever thought that he would be where he is today, you have to say, he is fighting.  He has brought the gun to the knife fight.  It‘s just that all of us were oblivious to what was happening. 

SHUSTER:  Well, Jill Zuckman, it could be that, you know, John McCain, he is going to get the $84 million, which is the amount of money he‘ll get from the convention until Election Day, those 10 weeks.  Barack Obama could conceivably have $150 million, $200 million, $250 million to spend. 

ZUCKMAN:  He can have as much as he wants. 

SHUSTER:  What does he do with all that money? 

ZUCKMAN:  He has proven it.

SHUSTER:  There‘s only so many ads you can run before... 

ZUCKMAN:  Well, that‘s right, I mean, at some point there‘s a point of no return.  You could over saturate the air waves.  I mean, people are going to absorb a certain amount.  But they have the security of knowing that if they want to play in North Carolina a bit or dabble in Georgia or Montana or Alaska, they can do it, and it‘s not a problem because they‘ll still have the money they need for Ohio, Pennsylvania, and Florida. 

The fact is, if he had gone into public funding, everybody would be saying, oh, what an idiot.  He had access to all of this money.  He‘s going to limit himself like this.  I don‘t think the public really cares about these processy-type things.  I just don‘t think that‘s an issue they‘re going to say, oh, he can‘t be trusted. 

SHUSTER:  I think you‘re right.  Chris Cillizza, last word on this.

CILLIZZA:  Just to add to Jill.  One thing I would say, I totally agree, I don‘t think the average person is engaged in this.  If McCain can extend this into a symbol of Obama‘s hypocrisy, he says one thing, but he doesn‘t follow through on action, that‘s when it becomes something that‘s potent as a political issue.  But right now people are not engaged in where the money for these campaigns come from. 

SHUSTER:  I absolutely agree.  And you know what it does, it‘s not only television ads, but the events are going to look better, the press is going to be treated nicer.  He‘s going to have all—he‘s going to be able to spend money on Bill Clinton and Hillary Clinton going out there, having great-looking events if he needs to.  It‘s a smart move by Barack Obama, even if he pays a short-term price. 

In any case, thank you, Jill Zuckman, Michelle Bernard, and Chris Cillizza.  Chris will return Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Right 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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