updated 7/15/2008 2:04:07 PM ET 2008-07-15T18:04:07

Guest: Ryan Lizza, Ron Brownstein, Eamon Javers, Todd Harris, Steve McMahon, Chrystia Freeland, Michelle Bernard, John Heilemann, Jim Cramer

CHRIS MATTHEWS, HOST:  Pushing back ignorance or just pushing it? 

That “New Yorker” cover.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in San Francisco.  Welcome to HARDBALL.  What‘s wrong with this picture?  Did “The New Yorker” magazine cross a line with this cartoon cover?  Check out Barack Obama in the turban, fist-bumping a gun-toting Michelle Obama, with a burning American flag under this handsome portrait of Osama bin Laden.  It‘s satire, says “The New Yorker.”  It‘s offensive, say both the Obama and McCain campaigns.  And I agree.

Also, for all of you who never have heard of Fannie Mae or Freddie Mac, this is your wake-up call.  When the U.S. government has to step in to save the two institutions that own about half the country‘s—catch this -

$12 trillion—that‘s trillion with a T—mortgage market, you know there‘s a problem.  CNBC‘s Jim Cramer joins us to talk about it and about President Bush‘s lifting of the ban on off-shore drilling. 

Plus, the HARDBALL “Power Rankings” are back.  Tonight, our two top political strategists help us rank the leading contenders in the veepstakes.

In the “Politics Fix” tonight, a new poll that shows just how many misconceptions there are about Barack Obama, which may explain why his campaign is very unhappy about that “New Yorker” cartoon cover.

And in the HARDBALL “Sideshow” tonight, which big-name McCain supporter said, Sure, I‘d be happy to serve in Obama‘s cabinet.

But first I‘m joined by Ryan Lizza, who wrote the cover story in this week‘s “New Yorker” magazine, called “Making It: How Chicago Shaped Obama.”  Also joining us is “The National Journal‘s” Ron Brownstein.

Let‘s start, Ryan, with something I think you had no hand in, and that‘s the cover of the magazine.  Here‘s Barack Obama being asked about that “New Yorker” cover I just showed you.


QUESTION:  It shows your wife, Michelle, with an afro and an AK-47, and the two of you doing the fist bump, with you in a sort of turban-type thing on top.  I wondered if you‘ve seen it or if you want to see it or if you have a response to it.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  I have no response to that.


MATTHEWS:  I have no response to it.  That question raises the question, Ryan, about the politics of this thing.  Ryan?

RYAN LIZZA, “THE NEW YORKER”:  Well, look, first of all, when he was being—when that was being thrown at him, he hadn‘t seen the cover.  He didn‘t know the context.  So what‘s he going to say, right?

Look, Chris, there are two ways that you can deal with lies and misinformation.  One way is through a lot of careful reporting and explaining who Barack Obama is, and “The New Yorker” has been doing that since day one when this guy was on the political scene.  Another way, traditionally in this country and in journalism, is through political satire, and that‘s what this cover was about.  It was trying to show the absurd view of this guy and to point out how far from the truth this is.  And sometimes, you need to hold up a mirror to the absurdities to drive the point home and just to sort of poke fun of them.  And that‘s—and that‘s what was going on here.

MATTHEWS:  You know, the trouble is, to many people, it reminds of a Thomas Nast cartoon of the 19th century, where they showed Irish immigrants as monkeys.  You know, you can say on a sophisticated level that everybody gets the joke, but people who see that picture of him in a turban and his wife carrying an AK-47, and a big picture, a loving picture of Osama bin Laden, an American flag burning in the fireplace—I‘ll bet you any money that the right will be using that as T-shirt material within the next couple weeks.

LIZZA:  Listen, Chris, the standard is—when you do satire or when you write anything, when you do any form of art, the standard is not, Will everyone get it?  If that was the standard, nobody would take any risks, artists wouldn‘t do anything on the cutting edge.


LIZZA:  So you can‘t use that as a standard as a magazine editor, as a journalist, as an intellectual.

MATTHEWS:  Ron Brownstein, you‘re an expert, and you don‘t work for “The New Yorker,” you work for “The Atlantic.”  Let me ask you this question.  We have 12 percent of this country who believe that Barack Obama took the oath of office as U.S. senator on the Quran.  We‘ve got 19 percent of other Americans, adding up to 31 percent, who really have doubts about his religious background, who do think he might be a Muslim.  This picture with him and the turban on, what‘s it going to do?

RON BROWNSTEIN, ATLANTIC MEDIA:  Well, first of all, as Ryan said, it‘s intended to be a comment on a comment.  If you look at the subscription list of “The New Yorker,” I am guessing that short of Prius owners, it‘s going to be hard to find a consumer demographic group that has been more inclined toward Barack Obama.  So I think they certainly felt that their readers were going to get that they were attempting to invalidate the right‘s portrayal of Obama by taking it to what they saw as the logical extreme of the arguments that are being made.

Now, whether people try to use the argument in another way, I don‘t know.  But clearly, the intent here is to disqualify these arguments by raising them to a level of absurdity.  And I‘m guessing, for their audience, that people who got that, people who subscribe to “The New Yorker” probably are going to get that.  Now, whether others, you know, take it differently, we can‘t say.


BROWNSTEIN:  But you know, the underlying point, though, Chris—I mean, slightly separate from the cover, which you just got to—is that there is still—you know, we talked last week about these Pew numbers showing an incredibly high percentage of people paying attention to the election.  There‘s still a lot of people paying attention without a lot of deep information about these candidates.  And the challenge for Obama certainly is to not only deal with those misconceptions but fill out the portrayal of himself.

MATTHEWS:  Well, the problem—the problem, Ryan, is—and you‘re as smart as I am about this.  Let‘s fact it, there are a lot of people out there who want to believe he‘s a Muslim, who want to believe that he‘s too exotic to vote for, for a lot of ethnic reasons.  They prefer to think of guy named Osama bin Laden—not Osama -- (INAUDIBLE) I make the mistake—

Barack Obama, with the middle name Hussein, as a Muslim, as someone exotic and un-American.  It‘s useful to them to have this kind of art.

LIZZA:  One way you push back against that, Chris, is to lampoon it...


LIZZA:  ... is to make fun of this idea, is to show people that it‘s absurd.  And look, for the people that didn‘t get the joke, that didn‘t understand...


LIZZA:  ... the cover, I think the fact that it‘s been on cable wall to wall for all day today and all over the Web and having people...


LIZZA:  ... from the magazine explain if it—you know, we‘re trying to help people get the joke for people who...


BROWNSTEIN:  Chris, real quick, I‘m guessing “The New Yorker‘s” intent here was not political in any direction...


BROWNSTEIN:  ... that they‘re basically—they‘re a media publication, trying to get noticed.  And in this wall-to-wall media environment, the way you get noticed, whether it‘s on cable, talk radio, the Internet or even in print, is to be a little more outrageous than everybody else.  They pushed the envelope here with an attempt to make a statement.  And you know, I think they were pretty clear.  I think it‘s pretty clear why they were making this statement.

But ultimately, I look at this more as a kind of a product of the—as much a product of the media environment we‘re in, in which everybody is trying to get noticed in this vast sea, and it does encourage you to push the envelope in a way that sometimes can have a little bit of a backlash.

MATTHEWS:  Well, I should know...


MATTHEWS:  Everybody knows—go ahead.

LIZZA:  I promise you that it was not an attempt to get noticed.  I promise you, Ron, it was not an attempt to get noticed.  That‘s not why David Remnick, the editor of the magazine, decided to do this.

MATTHEWS:  Here‘s David Remnick, talking about the cover today.  Here he is, the editor.


DAVID REMNICK, EDITOR, “THE NEW YORKER”:  I don‘t think this satire went too far.  I think if you take into account its title, what I‘m describing as its intentions, and also the unbelievably over the (INAUDIBLE) on the cover.  It‘s all about accusations of Obama being insufficiently patriotic or soft on terrorism, or Michelle Obama somehow being a ‘60s-style revolutionary.  All this is nonsense, and that‘s what the cover is trying to say, that it‘s nonsense.


MATTHEWS:  Well, let me go back to Ron.  First of all—let me go back to Ryan on this because you do write beautifully for the—let‘s get to your piece in one second.  But before we do, is it possible that in directing this satire to your sophisticated readers—and I agree they are very sophisticated, the people that read “The New Yorker” and pay for it, they don‘t get it off the newsstand, they read it because they subscribe to it—that that audience would get the joke, they‘d get the satire.  This is over-the-top ridicule, really, of the ridicule.

But what about the people watching it who are going to see it on the front pages of newspapers tomorrow?  They‘re going to see it in some of the more tawdry tabloids.  They‘re going to see it all over the place the next couple of days, including on this network and other networks.  What are they—what‘s the reaction of those people going to be, from those people?

LIZZA:  I don‘t know...


LIZZA:  I don‘t know what the reaction‘s going to be, Chris.  But I do know that when you publish a piece of art or a piece of satire like this, that can‘t be your primary concern.

MATTHEWS:  It can‘t be?

LIZZA:  It can‘t be your primary concern, right?  You can‘t take into account the potential reaction of every subgroup when you publish something.  Just like when you comment on this show, Chris, you can‘t take into the reaction everyone‘s who‘s going to be offended by something you say.


MATTHEWS:  You know what you‘re telling me right now?  You‘re telling me that I shouldn‘t have done what I shouldn‘t have done, but the fact is, I did it.  But the fact is, I‘ve learned the hard way that people take offense even when it‘s unintended, the offense.

BROWNSTEIN:  Right.  And...


BROWNSTEIN:  That is part of this environment.  People are going to take offense.  Everything anybody puts out in the media is going to offend someone.  And I think Ryan is right.  Ultimately, you can‘t sort of drive -you have to—either from an artistic or a journalistic point of view, you have to put forward what you believe is true and an accurate assessment...


BROWNSTEIN:  ... of where things are, and you know, let it—let the chips fall because, ultimately, in this environment—I used to say that on any given day, there was a chance (INAUDIBLE) that your wife and kids would be mad at you.  Now we‘ve sort of expanded to an infinite universe of people who can be disappointed in you on any given day.  And in fact, many of them will be.

MATTHEWS:  Well, let‘s take a look at the latest “Newsweek” poll for a hard check on how this campaign stands now.  You can go first, Ron.  Let‘s get off the magazine and talk about the facts out there.  There‘s only a 3-point differential now between the two candidates.  There had been a 15-point differential.  I wonder whether that is explainable to some extent by the attitude about the background of this candidate, whether he is a Muslim, whether he is somewhat exotic in his background, because all the metrics out there show a double-digit determination that we get some political change in this country.

LIZZA:  Yes, but Chris, this “Newsweek” poll‘s had some problems.  The way they did those two samples is—someone that understands polling a little bit better than I can explain it, get into the weeds.  But I don‘t -every blip in a poll does not necessarily—is not necessarily explained by...


LIZZA:  ... you know, what everyone is talking about at the moment.  And those polls are going to bounce all over the place.  The truth is, Obama‘s been up by, you know, single digits since day one, and that really hasn‘t changed.  And the fundamentals favoring him haven‘t changed in this election.

BROWNSTEIN:  Chris, if I could just jump in?  I think Ryan is right, but your underlying point is clearly correct.  I mean, if you look at all the—“Newsweek” is basically trying to make a change between a poll that was way out of line and one that‘s now come back into line.  But when you look at where we are, with a small—a steady but, you know, relatively small lead for Obama in this polling, not as large as you would—as would be suggested by the underlying attitudes, the gap there is clearly doubts about Obama.


BROWNSTEIN:  Whether it‘s experience or his background or his qualifications, there is a portion of—the hinge of this election are the voters who are ready for change, but not yet convinced that they can trust Obama to be president.  And you know, you‘ve analogized it, and I agree, to 1980, where you had a similar dynamic through most of the election, where you had a lot of dissatisfaction with Jimmy Carter, but the race stayed close because of doubts about Ronald Reagan.

I think the fulcrum of this race is whether Obama can satisfy enough of the voters, who are clearly ready for a different direction...


BROWNSTEIN:  ... that he is someone they can trust to provide it.  And until he does that, we are going to see a lot of volatility—until—until or whether he does that, you‘re going to see a lot of volatility in the polls, and you know, an inability of Obama to run as well as a generic Democrat in this environment.

MATTHEWS:  Ryan, we‘ll have to get you back on to talk about your piece in the magazine this week, which has been somewhat overshadowed.  It‘s a hell of a piece, a lot of footwork on your part.  I‘ll pay tribute.  Go read “The New Yorker.”  Go to the article by Ryan Lizza to find out what a regular politician, if you will—Ryan, isn‘t that your point?  This guy‘s a pol who worked his way up the usual way, through political strategizing and networking.

LIZZA:  That‘s one of the point, yes.  It‘s a sort of political biography of Obama, concentrating on his years in Chicago.

MATTHEWS:  Well, great.  We‘ll have you back to talk more about that.  Ryan Lizza of “The New Yorker” for the defense this week, and Ron Brownstein.  It‘s great having you all, both of you.

It‘s good to remember, by the way, the good times.  Many years ago, I sat with Tony Snow, who just passed away, through a long evening of fun and absolute joy.  It was, as P.J. O‘Rourke lampooned one evening, the spendthrift follies of the federal budget.  It was at a Republican retreat.  We were both, Tony and I, running opinion columns back then.  And through all the years of knowing Tony and enjoying his great friendship, I always recalled that long ago evening of sharing our mutual appreciation of the absurdities of real-life government.

And all these years and all this time that he was press secretary to President Bush, we kept in touch as friends over the phone a lot of times, just staying in touch.  And all the time, he knew and I knew we were in different positions in terms of our work.

But what a great guy.  Well, obviously, everybody knows that.  What a great guy, Tony Snow, and what a great sadness to lose him.  I wish so well for his family.  What a great guy.  There he is, and that‘s what he was like, laughing, a happy guy.

We‘ll be right back after this.



GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  Today I‘ve taken every step within my power to allow off-shore exploration of the OCS.  All that remains is for the Democratic leaders in Congress to allow a vote.  The American people are watching the numbers climb higher and higher at the pump and they‘re waiting to see what the Congress will do.


MATTHEWS:  Welcome back to HARDBALL.  President Bush is ready to drill us out of an economic hole, obviously.  Can he dig us up some new mortgage money?  Jim Cramer is the host of CNBC‘s “Mad Money,” and Eamon Javers is with “The Politico.”

Jim Cramer, somebody said to me the other day that the American people are now jeopardized with regard to big pillars of the American dream, the mobility you get from getting in a car on a Sunday afternoon, or maybe just going to work and getting behind the wheel and the freedom of this big continent we all love.  Secondly, the dream of the American home ownership.  If you don‘t have a car and you can drive when you feel like it, if you don‘t have a home you can feel secure in, you‘re in jeopardy.  Is that where we‘re at right now?

JIM CRAMER, CNBC‘S “MAD MONEY”:  No.  It is not.  I agree with the notion that unless you buy a smaller car—and by the way, SUVs have suddenly become obsolete in the last three months—that you will not be able to go from town to town without feeling the pain.  But in terms of home ownership, look, I got to tell you, there‘s going to be plenty of mortgage money, and home prices are actually being more affordable.  However, I will say this.  Those are the only two positives I can possibly ever talk about when it comes to banking and houses.

MATTHEWS:  Eamon, let me talk about the politics of this thing.  If I look at these realities out there—James Carville the other day said to me—we were sitting next to each other on a plane.  He‘s a smart guy.  And he said, You know, a lot of people just don‘t have any money left. 

They‘re out of money.  That‘s a pretty profound reality for a voter.

EAMON JAVERS, POLITICO.COM:  Yes.  And that‘s why Congress and Washington are moving so quickly this week.  You‘re seeing a lot of action here in the nation‘s capital because home ownership is really the source of Americans‘ wealth, and if your home value‘s going down, you don‘t feel rich.  I don‘t care how much cash you have in the bank, if your house is under water, you‘re in a bit of a panic.  And what members of Congress are really trying to do here is to forestall that feeling of panic as best they can because when consumers start to panic, that‘s when things get really bad.

MATTHEWS:  Jim, when people have a house that they‘ve overestimated the value of and they see the market going down—this is an average person sitting on a house, maybe a retiree or he‘s thinking of going to Florida or Arizona or moving to a condo—they say, This house is worth a million dollars, or half a million dollars, and then they realize it‘s not, but they sit on it, saying they‘re waiting for it to come back to the value they thought it had.  When‘s that—when are those people going to give up?

CRAMER:  You know, this is a very interesting question because it‘s so much like what happened with the NASDAQ in 1999, 2000.  They never came back.  I mean, houses are not kids at the mall and the parents come back.  Houses are just houses.  They‘re pieces of property.  You‘re going to have to live in them forever, at this point.  We are not returning to the heyday of housing.  It ain‘t happening!

Not only that, but you know, you ought to be thinking more about where your money is at your bank.  It‘s going to be safe as a deposit, but the bank that you got the mortgage is a great stock to sell right now.

So I‘ve got to tell you, a lot of things going wrong here.  And Congress may be acting swiftly—oh, man, but there isn‘t anything in Washington that‘s swift enough.  Nothing.


JAVERS:  Swift in relative terms, right?  Swift for Congress.  I mean, it takes them a few months to do anything.  But they are acting right now, and the reason is because Freddie and Fannie are sort of the doomsday machines of the American economy.  If they were to melt down, which nobody expects right now—but if they were...


JAVERS:  ... it would have implications across the planet, and that‘s why they really have to do something now.

MATTHEWS:  OK.  Jim, let‘s get back to the exact situation we‘re in right now.  It‘s July.  We have an election in November. 

Give me a projectile from now to November.  Will the unemployment rate go up?  Will the dollar go down?  Will—will the economy, in terms of the Dow Jones, go up or down?  Where are we going now between now and the day people vote on all the big numbers? 

CRAMER:  Well, let‘s see.  Unemployment goes up.  Dollar goes down.  Dow Jones goes down, because it‘s got Citigroup in it.  It‘s got Bank of America in it.  It‘s J.P. Morgan in it. 

By the way, all those banks, every bank in America, without the exception of Hudson City Savings Bank, is actually in trouble here.  And I think that we are just beginning to realize, with IndyMac collapsing this weekend, that maybe the FDIC needs money. 

Here‘s my prediction -- $1 trillion.  We didn‘t act last year.  Last July, we had our chance -- $1 trillion worth of banking bailouts coming.  I‘m being very conservative.  I calculated $1.2 trillion.  But I knew I was coming on your show.  I didn‘t want to scare him anybody. 



Let me go to Eamon.


JAVERS:  Yes.  ... I want a very sober statement here.

JAVERS:  I will try.

MATTHEWS:  Either candidate, which one offers us hope for the next couple years, not a quick savings of our lives economically, but will we be better off at the end of the next four years because of which of these candidates and why? 

JAVERS:  Well, it depends on what you think about taxes, really. 

What John McCain is saying is that he want to come in, extend the Bush tax cuts.  That‘s the huge difference between these two candidates right now, is whether or not we would keep those tax cuts going.  They‘re set to expire, most of them, in 2010.  If you believe that low tax cuts are going to boost the economy, then you should be a McCain person. 


MATTHEWS:  But we already have that.


MATTHEWS:  Wait a minute.


MATTHEWS:  We already have those low tax rates, and we have a recession.  So, how can you say that‘s a solution?


CRAMER:  We need a tax to be able to have a fund to pay all the banks when they—we have got to have a tax for the FDIC.  Everybody wants to cut taxes.  For heaven‘s sake, I just want Washington Mutual to open on Monday. 



MATTHEWS:  Well, is that policy you‘re yelling? 

CRAMER:  Policy?  Cut taxes.  Cut taxes.  Cut taxes?

MATTHEWS:  Are you yelling policy now?

CRAMER:  I mean, we need to raise taxes so bad to save the banking system right now. 

This is, like—this is as bad as the telephone tax in Vietnam, if anyone is old to remember that. 

MATTHEWS:  Well, you know what you sound like, Jim?  A guy who‘s got his wealth in the bank.  You have already made all your money.  And the guy out there who is still trying to climb the stairs is saying, I have got to pay taxes, so Cramer feels better about the bailout. 

CRAMER:  I have always favored higher taxes for the rich, including myself.

But I do believe that we have to be worried, Chris.  Chris, it‘s 1990.  Every bank I had my money in, in Brooklyn opened in one day and then closed.  And, then, the next day, it was a different bank. 


CRAMER:  Where‘s the FDIC going to get the money?  Where? 


MATTHEWS:  Let me ask you.  Let me ask you that question in the same frame.

Years ago, when we had the S&L bailout, and the federal government came out with $100 billion from nowhere to pay off all these guys‘ country club fees and all the tuition money they spend, because all that money was gone, because it was stolen by the S&L operators, and Mario Cuomo asked a very good question.  Where was that $100 billion the day before the S&L crisis?  Where did come from, this magical $100 billion?

And you‘re asking the same question, prospectively.  Where‘s the money going to come from to secure all these institutions, Freddie Mac, Fannie Mae, et cetera, et cetera, and the banks? 

CRAMER:  It‘s called a printing press.  And we have got them running 24 hours down there.  And we‘re going to run them more than ever.  That‘s why the dollar‘s going to go down in value.  We have no choice, Chris.  We have got to start printing left and right.  And I‘m not talking about Confederate dollars.  By the way, everyone in Washington know this stuff.  But they all like they come—they refused to acknowledge it.

MATTHEWS:  Am I talking to Robert Mugabe here?  You sound like Zimbabwe here, where they have got trillion-dollar loafs of bread.  You‘re kidding me, right? 

CRAMER:  I have got a wheelbarrow behind me.  No, I am not kidding. 

It‘s a deflationary event, though, when your house declines in value.  I am saying, look at these bank stocks today.  Is anyone in Washington paying any attention?  No, they ought to cut taxes.  Well, that‘s what we ought to do, cut taxes.  That‘s going to save Washington Mutual.  Citigroup gets saved by cutting taxes. 



MATTHEWS:  Can we slow this down?  Can we get back to 33 1/3 here, Jim? 


MATTHEWS:  What do you do if you have to choose between the two candidates in. 

CRAMER:  For the financials? 


CRAMER:  What, to save the economy? 


CRAMER:  They‘re both so radically undersophisticated about it, it‘s a little bit freaky. 

I know that—I saw Obama actually mention Fannie and Freddie.  But he had the wrong position.  Actually, right now, I will take McCain, because he seems to be so over his head that he has got three months to figure it out. 

MATTHEWS:  And, you, Eamon, what is the smart money in terms—is it raising or lower taxes at this point in our cycle or trend? 

JAVERS:  Well, I think Wall Street, generally, it typically favors lowering taxes.  I think Jim Cramer just talked himself out of a job advising John McCain. 

CRAMER:  Amen. 

JAVERS:  But a lot of people on Wall Street would like to see lower taxes going forward.  But Barack Obama says, you know, exactly the opposite. 


MATTHEWS:  I will make a prediction. 


CRAMER:  ... job with McCain.

MATTHEWS:  I will make a prediction.


MATTHEWS:  When we have these national debates on all the networks, broadcast and cable, and every single person faces the roadblock that night, I recommend that everybody watch those debates, because, in one night, it‘s going to be economics.  It‘s going to be an hour-and-a-half of exhaustive questioning.

And we‘re going to hear what these two fellows are made of in terms of our future, because what they say they‘re going to do is probably what they‘re going to do.  So, we better decide who we want. 

Anyway, Jim Cramer, Eamon Javers, thank you, gentlemen.

CRAMER:  Raise taxes. 


Up next—well, then you are for—are you for Obama or McCain? 

Which one, Jim? 


CRAMER:  And pronto.


Up next:  What big-name Republican says he would be open to serving in an Obama administration?  ~The “Sideshow” is next.

You‘re watching HARDBALL, only on MSNBC.  


MATTHEWS:  Welcome back to HARDBALL. 

Time now for the HARDBALL “Sideshow.”

Arnold Schwarzenegger may have endorsed Senator McCain early in the primaries, but, yesterday, he showed his willingness to serve the other guy.  Here‘s the governor on ABC‘s “This Week” responding to a “Newsweek” report that Barack Obama may want his help on energy policy. 


GEORGE STEPHANOPOULOS, ABC ANCHOR: “Newsweek” reported this week that he might want you to be his energy and environment czar.

Would you be interested?

GOV. ARNOLD SCHWARZENEGGER ®, CALIFORNIA:  You know something?  I don‘t think about taking on a national role, because there‘s so many challenges that we have here in California.

STEPHANOPOULOS:  But if he were president and he called?

SCHWARZENEGGER:  It‘s a hypothetical.  I‘m always ready to help in any way.

STEPHANOPOULOS:  So if he were president and he called, you‘d at least take that call.

SCHWARZENEGGER:  I would take his call now and I would take his call when he‘s president, any time. 


MATTHEWS:  Schwarzenegger also defended the presumptive Democratic nominee on an accusation.  Check it out. 


SCHWARZENEGGER:  In politics out there, they always say, well, now, I don‘t know anymore what he really stands for.  He has just changed his mind...

STEPHANOPOULOS:  Flip-flopper.

SCHWARZENEGGER:  ... and he‘s flip-flopping and all those kinds of things.

Let me tell you something.  Flip-flopping is getting a bad rap, because I think it is great.  As long as he‘s honest or she‘s honest, I think that is a wonderful thing.  You can change your mind. 


MATTHEWS:  OK.  That‘s right.  Changing your mind, moving to the center in just reasonable politics, he says..

Schwarzenegger wasn‘t the only McCain supporter to veer off message on the Sunday talk shows this week.

Listen to this painful exchange on CNN with this South Carolina Governor and V.P. hopeful Mark Sanford. 


BLITZER:  Are there any significant economic differences between what the Bush administration has put forward, over these many years, as opposed to, now, what John McCain supports? 

GOV. MARK SANFORD ®, SOUTH CAROLINA:  Yes.  I mean, for instance, take, you know—take, for instance, the issue of—I‘m drawing a blank, and I hate it when I do that, particularly on television.

Take, for instance, the contrast on NAFTA. 

BLITZER:  As far as NAFTA‘s concerned, McCain and Bush are on the same page. 

SANFORD:  They are, for free trade. 


MATTHEWS:  Well, McCain and Bush are on the same page.  And I don‘t think the campaign is too happy with how that one turned out with Mark Sanford.  Nobody wants to be on the same page as the current economy. 

For his part, Senator Obama, has, once again, separated himself from a supporter who just doesn‘t know how to give his support.  This time, it‘s comedian Bernie Mac. 

Yes, the funnyman apparently some unacceptable jokes while performing at an Obama fund-raiser in Chicago Friday night.  The Obama campaign moved quickly to stem any damage, saying, the senator—quote—“doesn‘t condone Bernie Mac‘s comments” and that he found the joke—quote—


Well, I‘m told that, if you ever listen to Bernie Mac‘s stand-ups, you should have expected exactly what Barack got. 

Time now for tonight‘s “Big Number.”  Senator Obama‘s getting heat from the left on Iraq, though, he‘s clearly committed to a fairly early pullout of combat forces.  In his “New York Times” op-ed piece this morning, just how many times did Obama pledge to end the war in Iraq?  Four.  That‘s right.  Obama made a point of saying he would end the war four times in an op-ed titled “My Plan for Iraq.”  He‘s not ceding the anti-war vote to anyone—four fresh mentions of ending the war—tonight‘s “Big Number.” 

Up next; the return of the HARDBALL power rankings.  We name the top three potential running mates for John McCain and Barack Obama—six big pieces of news coming up.

You‘re watching HARDBALL, only on MSNBC.  


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

All red arrows today, amid some continuing concern over financial stocks once again, with the Dow Jones industrial average finishing Monday‘s session down 45 points.  The S&P 500 saw an 11-point decline.  And 26 points were taken off the Nasdaq.

We initially saw a rally, though, in response to government plans to bail out those troubled mortgage lenders Fannie Mae and Freddie Mac.  But that ran out of steam on concern that that stress could spread to regional banks.  And that followed Friday‘s collapse of IndyMac.  Concern, today, focused on Washington Mutual and National City. 

Meantime, energy stocks rose as President Bush lifted the executive ban on offshore drilling.  Oil inched up 10 cents, closing at $145.18. 

And, after the closing bell, biotech Genentech reported quarterly earnings that were 4 cents short of analyst estimates.  But Genentech raised its earnings outlook.  In the after-hours trading session, shares are trading up fractionally.

And we are getting word that General Motors will announced a major restructuring in the morning that includes more cuts in white-collar jobs.  That‘s it from CNBC, America‘s business channel—now back to Chris and HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

And it is an exciting time.  It‘s time to bring back the HARDBALL “Power Rankings,” this time for the veepstakes.  The decision facing both men, Barack Obama and John McCain, is a big one.  But Obama may have more to lose.  This decision he has to make in the next couple weeks constitutes his first real executive decision of his career. 

He can‘t afford a mistake.  He can‘t afford to pick someone with an unforeseen downside, someone, at worst, he might have to withdraw later on in the campaign. 

McCain doesn‘t face the same degree of risk, of course.  He is a veteran, but he would love to avoid a mistake, like any candidate would. 

Let‘s bring in the strategists now to oversee our list.  Todd Harris is a Republican.  He‘s a consultant who was John McCain‘s spokesman back in the first race.  Steve McMahon is a Democratic consultant who worked in the Howard Dean campaign last time around.

Gentlemen, let‘s take a look at the Republican side, you first.

I want you, first, Todd, to start.  And, then, in each case, I would like Steve, my friend, to jump in and say what you think of this. 

Here‘s the number three pick, we think, number three possibility, Rob Portman.  He was in the House for seven terms, 14 years, a Congressman from Ohio.  He has a good-sounding name, just simply in terms of the sound of it, McCain/Portman, 52 years old, younger than McCain, younger, but not too young. 

Is he too close to Bush?  Let‘s take a question about that.

TODD HARRIS, REPUBLICAN STRATEGIST:  Well, that—if he—that would be his number one liability. 

But, on the plus side, he‘s young.  He‘s very well liked by conservatives.  He is very well liked by Bush donors.  He‘s from a critical state, Ohio, and, probably, most importantly, if McCain were to win, Rob Portman knows the White House inside and out, and he would be a very effective operator as vice president for John McCain. 

MATTHEWS:  Is he credible, Steve, as a president, if it has to come to that? 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Well, I think he‘s got the right kind of balance of experience.  He‘s been in Congress.  He‘s been a budget director.  He‘s been in the White House.  So, yes, I think he is competent and qualified to be president. 

I think he‘s ideologically out of touch with the country.  And I think he would probably advance the argument that a McCain election is a Bush third term.  But, if that‘s where they want to go, more power to them.

MATTHEWS:  OK, more Bush connection there.  And that‘s not good.

Here‘s number two, we think the second best bet right now, Minnesota Governor Tim Pawlenty.  I have made the joke, Todd, that it sounds like good and Pawlenty would be a nickname for the ticket, not that that‘s a serious critique.  What do you think of Pawlenty?  Minnesota, is it a gettable state, first of all? 

HARRIS:  Well, that‘s probably his number one liability, is that a lot of people think, even with Pawlenty on the ticket, that Minnesota is a real uphill climb for McCain. 

But, you know, on the pro side, great working-class, blue-collar background.  His dad was a truck driver.  He‘s very well liked in Minnesota by fiscal conservatives and social conservatives alike.  He places a flag in the Upper Midwest, which I think is going to be a key battleground in this election.

So, there‘s a lot going for him.  You know, of course, the number one liability, though, I‘m not sure that he could actually carry—or help McCain carry Minnesota. 

MATTHEWS:  What do you think, Steve? 

MCMAHON:  I think Todd has analyzed it very well.  He wouldn‘t help McCain carry Minnesota.  He didn‘t carry Minnesota for McCain in the primary against Romney.  He doesn‘t have any real experience.  No one knows what he‘s done.  He‘s neither fish nor foul among the evangelicals and the fiscal conservatives. 

MATTHEWS:  I‘m sorry, gentlemen.  Here‘s my pick.  Todd, I think it‘s this guy, Romney.  Let me tell you why I think so.  I think so because I think they need Michigan and Pennsylvania, hopefully, to actually win this in a close race.  Romney‘s good on the economy, good on geography.  What do you think? 

HARRIS:  I think right now Romney is the front-runner, not just because of places like Michigan.  But remember, Chris, another critical swing state, Nevada, more than seven percent of all registered voters in Nevada are Mormon.  If Romney can help McCain sow up places like Michigan, like Nevada, then there‘s a very, very compelling argument to put him on the ticket. 

Also, Romney has experience running a national campaign.  I don‘t think he‘s been completely vetted, but he‘s been largely vetted.  There wouldn‘t be a lot of surprises in terms of what you get with Mitt Romney. 

MATTHEWS:  Good front runner material, Steve?

MCMAHON:  On paper, he‘s the best qualified of the bunch.  He makes the most sense.  The Mormon thing might help him in Nevada.  But I suspect it will hurt him with evangelical.  If he‘s not on the ticket, that will be why. 

MATTHEWS:  Would he cost him any state because of LDS background?  Any state you can see the Republicans losing because of his religion?  That‘s why ask the question.  I don‘t think there is. 

MCMAHON:  It‘s hard to say.  There probably isn‘t, Chris, but, you know, anything can happen and the evangelicals really do not seem to have very much regard for the Mormon religion.  I think it‘s unfortunate, but I think it‘s a fact. 

MATTHEWS:  You start here.  Here are the Democrat side, Steve McMahon.  You lead off.  Here‘s a name that‘s getting a lot of ink lately.  In fact, he had to play it down himself, today, Rhode Island Senator Jack Reed.  He‘s a combat veteran.  He‘s a ranger.  He‘s got all the military background in the world.  What do you make of possibility?   

MCMAHON:  I think he‘d be a great choice.  He‘s one of these people who some Washington chops, national security experience.  He‘s tough.  He‘s got military experience and he‘s a sleeper because he‘s not a house hold name.  I think he‘d be a real good choice. 

HARRIS:  I agree with Steve.  I think he‘d be a great choice if—for one reason alone, which is that Rhode Island has a Republican governor.  This is not an election year where Republicans are looking to pick up many Senate seats.  That would be a great way for us to pick one up. 

MATTHEWS:  I‘ve just been advised, he‘s never been in combat, but he‘s a veteran with the military background. 

MCMAHON:  West Point.

MATTHEWS:  Let‘s go to another—let‘s go to number two.  This is a name we‘ve grown up with, Bayh, B-A-Y-H, son of Burch Bayh, lot of family roots.  The Howard Fineman argument would be that he bring roots to the ticket.  What do you make of it, Steve McMahon? 

MCMAHON:  Three things; number one, he makes the Clintons very happy. 

He was a big Clinton supporter.  Number two, he maybe puts Indiana in play.  Three is something you mentioned a moment ago, Chris, and that is Ohio and Pennsylvania.  Even Bayh fits well there and he‘s somebody who could really help Barack Obama win Ohio and make sure he wins Pennsylvania.  

MATTHEWS:  Does he have enough juice, Todd?  Does he have enough juice?  Would he take on John McCain in a debate?  I mean, would he—not a debate, but in terms of the campaign; would he be the voice out there that would do the job of the VP candidate, taking on the opponent? 

HARRIS:  Well, you know, he‘s not known as a real aggressive bomb thrower, but in a running mate you don‘t want someone who‘s going to over shadow you.  I think Bayh meets the absolute number one criteria of all running mates, which is that he does no harm.  I think he‘s been in the Senate for a long time.  He‘s very cautious, some might say boring.  That probably means he‘s not going to make a lot of mistakes. 

MATTHEWS:  I am completely with you on that whole point, Todd, because I think the number one goal here is don‘t blow this first executive decision of your career, Senator Barack Obama.  Now, let‘s go the name that‘s gotten the most attention, Joe Biden.  He ran for president, didn‘t do well.  Everybody likes him.  He‘s from Pennsylvania, ultimately, Roman Catholic, a Scranton guy.  Steve McMahon, your assessment, is he a front-runner? 

MCMAHON:  I think is a front-runner because of his foreign policy experience, because of his knowledge of foreign affairs and the world leaders that are out there, and because Barack Obama seems to be very comfortable with him.  One thing you‘ve got to remember about the VP pick, it‘s fundamentally about who do you want down the hallway from you.  Joe Biden fits.


HARRIS:  They would have to put a real muzzle on him, because everyone knows the guy can talk and talk.  So they would have to have him on a very short leash.  There‘s no question he‘s got the foreign policy experience and acumen to bring some heft to an Obama ticket. 

MATTHEWS:  You guys both think I‘ve got the front runners right.  Is it Biden?  Is it Romney?  You first, Steve; is it Romney, is it Biden? 

MCMAHON:  I think it‘s Romney.  I think on the Democratic side, a front runner could be Dick Gephardt, and a sleeper could be the other man on the Iraq trip with Barack Obama, Chuck Hagel.  

MATTHEWS:  OK.  What do you think, Todd?  Who‘s the front-runner on both sides? 

HARRIS:  I certainly think Romney or Pawlenty for McCain.  I think Biden a front-runner for Obama.  I might also add Tim Kaine, the governor of Virginia.  A southern conservative Democratic governor I think could go a long way for Barack Obama. 

MATTHEWS:  OK, HARDBALL says Romney, McCain/Romney will be the ticket.  Barack Obama/Joe Biden will be the Democratic ticket.  Next week we‘ll give you an update.  Todd Harris, thank you.  Thank you, Steve McMahon.  You‘re both great strategists.  Up next, the politics fix.  The “New Yorker” cover, it was supposed to be a satire.  Will it reinforce the misconception that Barack Obama is a Muslim?  Is there anything Barack Obama can do to counter the lingering misconceptions about his religious background?  We‘ll get to that and that is a tough one.  This is HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL and the politics fix.  Our round table tonight, MSNBC political analyst Michelle Bernard, John Heilemann of “New York Magazine,” who has a story out this week, “McCain‘s Hillary problem,” and Chrystia Freeland of the “Financial Times.”  I want you all to give me your personal reaction to the cover of the “New Yorker Magazine” this week, which is going to be talked about for days.  I believe, eventually, the “New Yorker Magazine” is going to offer a different attitude than the one they‘ve been offering so far.  The your thought, Michelle? 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  Chris, I think the cover of this magazine is absolutely revolting.  The only thing that could have been much worse for them to do would have been to depict Barack Obama as Sambo and his wife as Aunt Jemima.  I don‘t understand it, particularly given what happened in New York on 9/11, the fact that so many questions have been raised about their patriotism, whether or not he‘s a Muslim; it all fits in this caricature and stereotype that we have seen, that I really think borders on racism.  It borders on being prejudicial religiously.  I don‘t see the satire in it.  I don‘t think the rest of the country that looks at it will see any satire.  I don‘t think there‘s anything funny about it at all. 

MATTHEWS:  John Heilemann, your thoughts on your rival magazine. 

JOHN HEILEMANN, “NEW YORK MAGAZINE”:  I think it‘s brilliant.  It‘s right down the middle of the plate for “The New Yorker‘s” audience.  I think everybody who looks at the magazine and reads it understand that it is, in fact, satire.  The only way in which these kinds of cartoons work is when they play to an existing perception that‘s out there in the world.  That is, in fact, as the “New Yorker” has been arguing all day long—that‘s what they are making fun of. 

I can‘t possibly see the racism in this whatsoever.  I think Michelle is just completely wrong that there is any kind of racist overtone to this.  I think it‘s a political commentary and satire that the magazine has long done really well.  Of course, it‘s provocative and it‘s going to sell magazines. 

BERNARD:  But it only works when people get it.  You seem to be one of the only people I‘ve heard all day long that actually gets it and sees the satire in it.  Maybe if you were in a different skin, you could see the problem with being depicted as this women with this huge Afro and AK-47, doing the fist pump and wearing this Muslim garb.  There‘s a problem when you depict people in that type of fashion.  And also, saying—I guess they say in a satirical way that there‘s something that‘s wrong with being a Muslim, if he were to be a Muslim, or his wife were a black panther. 

MATTHEWS:  John, let me stay on this.  Suppose you‘re walking down the street in New York or any big city, an inner city kid, African American kid, white kid, whatever, Hispanic kid.  You just look at the magazine covers because a lot of people do that.  You see that cover, just look at it.  What is your reaction?  You‘re a kid.  You‘re 18 years old.  What‘s your reaction when you see that cover. 

HEILEMANN:  I think, if I‘m a kid, I‘m not likely to be studying that cover, Chris, but I think it‘s the kind of thing I would pick up and might want to look at it and try to figure out what it‘s about.  I‘d probably open up the magazine and start reading the articles inside, which is really what the cover is trying to do. 

MATTHEWS:  Chrystia Freeland, your thoughts. 

CHRYSTIA FREELAND, “THE FINANCIAL TIMES”:  Chris, my reaction is very tempered by the view that I think all editors should have, which is, but, for the grace of god, there go I.  As a human being, my initial reaction was very much John‘s, but I have to say, I agree with you, that I think over the next few days, the “New Yorker” is going to pull back.  I think the issues are just too hot.  And the satire is a little bit too—it‘s two steps, right?  It‘s a satire of a misperception, and I think they are going to find it‘s a little bit too much. 

MATTHEWS:  Well let‘s stay with this.  We‘re going to come right back.  I want to show you the latest “Newsweek Magazine” poll numbers, which will shock you.  Catch this one, a good number of people think Barack Obama took his oath as a U.S. senator over the Koran.  We‘ll be right back with more on this topic. 


MATTHEWS:  Despite giving speeches on his background and his religion, the latest “Newsweek” poll finds that 26 percent of voters believe Barack Obama was raised a Muslim; 39 percent say he attended an Islamic school as a child; 12 percent say he‘s a practicing Muslim today; and the same number say he used a Koran when he was sworn into the Senate.  The reality is that all of these facts, as they‘re presented here, are false.  They are not true.  John Heilemann, I bring you back to the cover of the “New Yorker Magazine.”  I argue that reinforces all the misinformation. 

HEILEMANN:  Yes.  What‘s the question, Chris? 

MATTHEWS:  The question is, what do you think? 

HEILEMANN:  I think that, as I said before, this is parody and it‘s satire and it‘s so far over the top that no really obviously thinking person could come to the conclusion that the “New Yorker” is trying to say that Barack Obama is any of these things, or that Michelle Obama is as she‘s portrayed on the magazine.  I think it‘s sort of ludicrous that we should presume that the obligation of every magazine in the country is to presume that the people who are going to look at it are people silly enough to believe all of these mistruths and half truths—actually all mistruths that are being propagated about Obama.  I don‘t think we have a responsibility to play to the lowest common denominator in all of our publications. 

MATTHEWS:  Let‘s go through what caricature is.  You and I know what caricature is.  It‘s when you take a guy with ears that stick out a little bit and make them stick out five feet.  If the guy‘s a larger nose than normal, you make it even bigger.  Caricature is elongating and enhancing what‘s already true.  How is this, in any way, enhancing our knowledge of the truth, by inversion?  Michelle, take over. 

BERNARD:  Chris, I don‘t get it.  When I look at those numbers, I keep thinking about all the demographics that we talked about all throughout the primary process, and what people in certain states thought about Barack Obama.  These are not people, necessarily, that live in New York and that are going to look at this cover, or the cover of this magazine and say, wow, I really want to read this and see what‘s inside.  They are going to take a look at it and say, I knew it; that Barack Obama is a Muslim.  You know, he swore on the Koran.  He‘s not patriotic.  He doesn‘t love his country.  It just reinforces stereotypes.

I know that this is a slippery slope that we walk on.  I believe in artistic freedom and the first amendment and all that, but I do think they just really crossed the line, because the satire is lost on so many people.  If that many people don‘t get it, then the whole point is lost. 

MATTHEWS:  Go ahead Chrystia. 

FREELAND:  I disagree with Michelle.  I think it‘s very easy to look at that illustration and understand the point.  But I think your point about caricature is precisely what‘s complicated about it.  I don‘t think the intent of that illustration—I‘m not the illustrator.  I‘m not in his mind.  But as I read it, the intent of the illustrator was not to take something which was a little bit true and exaggerate it.  The intent was to make a satirize false portrait of the Obamas. 

Maybe that‘s a little too hot for the current political climate.  What I do think is interesting about this whole perception of Barack Obama as Muslim is I think that it speaks to a bigger point about him, which is he has to find a way to talk to Americans who don‘t have a background as unconventional as his own. 

MATTHEWS:  We got to go.  Got to go.  Out of time.  We‘re out of time. 

Thank you very much.


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