updated 7/24/2008 12:27:31 PM ET 2008-07-24T16:27:31

Guest: Martin Fletcher, Chuck Todd, Rudolph Giuliani, Kevin Madden, Mike Feldman, Michelle Bernard, Tom DeFrank, Joan Wals

CHRIS MATTHEWS, HOST: Will Barack Obama's trip to the Promised Land deliver him votes at home?

Let's play HARDBALL.

Good evening. I'm Chris Matthews. Senator Barack Obama is in Israel today, trying to win over the Jewish vote here at home.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I'm here to say, as an American and a friend of Israel, that we stand with the stand with the people of Sderot and with all the people of Israel.

(END VIDEO CLIP)

MATTHEWS: But can Obama win enough of the Jewish vote? We'll talk to NBC News political director Chuck Todd about that and the new NBC News/"Wall Street Journal" poll.

And a big Mac attack. Senator John McCain has been on the warpath since Obama left for his overseas trip. His campaign released the first two negative ads of the general election, and yesterday, McCain slammed Obama for his stand on Iraq.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Senator Obama would rather lose a war in order to win a political campaign.

(END VIDEO CLIP)

MATTHEWS: Well, that's a rough line. And the McCain campaign released a Web video blasting the media for its coverage of Obama. Yet when asked by CBS's Katie Couric whether he believes he's getting unfair coverage, McCain said this.

(BEGIN VIDEO CLIP)

MCCAIN: I don't think so. I think it is what it is. I'm a big boy, and I'm enjoying every minute of the campaigning, and I'm certainly not complaining. In fact, I think it's fun to watch.

(END VIDEO CLIP)

MATTHEWS: So what's up? John McCain once called the press his political base. Later, we'll ask the former mayor of New York and McCain supporter Rudy Giuliani what he thinks.

And Obama and Hillary? And what about Bill? They say they support Obama, but have we seen Barack and Bill Clinton together recently, like in the last month or two?

Plus: Is the McCain campaign following Hillary Clinton's strategy to beat Obama? And if so, why would they do that? That's a question for our "Politics Fix."

And President Bush says Wall Street has been on a bender, but who was responsible for serving them the drinks? More on that in the HARDBALL "Sideshow."

But first, Barack Obama in Israel today. NBC's Martin Fletcher is in Jerusalem, and here with me is NBC News political director Chuck Todd. Martin, I haven't seen you since I've been over there in Tel Aviv. How well did Obama do in Israel with the Israelis?

MARTIN FLETCHER, NBC CORRESPONDENT: I think did he very well. You know, he went down to Sderot. He went to where the-the Israeli town which has been suffering from rocket attacks from Gaza. That wasn't expected. He went to Yad Vashem, the Holocaust memorial. And I think that the Israelis are understanding that although, you know, in general, they're very suspicious, indeed, of Barack Obama as a future president of the United States of America, he made a good impression today, I'm sure of that.

MATTHEWS: Well, there Barack Obama is with Ehud Barak. They share at least one name.

Here's Senator Obama today, asserting his strong support for the state of Israel.

(BEGIN VIDEO CLIP)

OBAMA: When Israel invaded Lebanon in response to the kidnapping of Israel's soldiers, I was one of the first people to state that Israel had an unequivocal right to defend itself and to rescue soldiers that had been captured, and that is what any country would do. On vote after vote, I have demonstrated my support of the state of Israel.

(END VIDEO CLIP)

MATTHEWS: Martin Fletcher, those kind of statements made in the state of Israel-do they strike Israelis as for American public opinion or for Israeli hearing?

FLETCHER: Oh, yes, the Israelis are not naive. They've been following the process very closely indeed. They know Barack Obama is here because of the American election, to get the Jewish vote in America. But they also know that they need very much to impress upon Barack Obama that they rely on him, if he is the future president of the United States, in particular about Iran.

The question of Iran came up time and again today. Israel's survival is at stake, they feel. That's why they took him, by the way, to the town of Sderot, so show him the town that's been under attack. They took him, as they do all leaders, to Yad Vashem, the Holocaust memorial, to show him what happened in the past, six million Jews killed in the Second World War.

MATTHEWS: Right.

FLETCHER: They're very concerned about Iran, and they tried to impress very strongly on Barack Obama that that is their main fear. But of course, they understand why he's here, and that's-it's because of the American elections. They're very-they know that very clearly.

MATTHEWS: I'm here with Chuck Todd. You know, it's interesting. There he is with Bibi Netanyahu, the opposition leader who may well be the next prime minister of Israel, as I've often said, the only world leader with a Philadelphia accent. He grew up in Cheltenham.

Here's Senator McCain today talking about Israel. He's the guy at home, same topic.

(BEGIN VIDEO CLIP)

MCCAIN: They have Hezbollah and Hamas, two terrorist organizations, on both their borders. We have some disruption within the Israeli political process itself. But most importantly, I fear-I am concerned about the Iranian nuclear build-up, particularly when you have a president who comes to the United Nations and says that his country is going to wipe Israel off the map. He calls Israel a, quote, "stinking corpse." But I look you in the eye, and I tell you that the United States once said and will say again and again that we will never allow a second Holocaust. Thank you.

(END VIDEO CLIP)

MATTHEWS: Is that too strong, too on the mark or what, with Barack over in Israel?

CHUCK TODD, NBC POLITICAL DIRECTOR: Look, John McCain would love a fight on international issues, would love a fight on foreign policy. And so would Barack Obama. What's been interesting about this week is to watch how easily the Obama campaign has thrown the McCain campaign off message. That event was supposed to about the economy in Wilkes-Barre in Pennsylvania, not about Israel's security.

Now, look, understand why McCain did it. They're chasing the news cycle. They want to get involved. They want to make sure that they're balancing out Obama's trip a little bit on international issues. But it was just fascinating to see him today not get off of the economic message because they want to somehow get into the story and get into the news, but you can chase a news cycle sometimes too much and where you've taken your eye off your own message ball.

MATTHEWS: Let's go back to Martin Fletcher over there in Jerusalem. Martin, we have a new poll out here, a recent poll by the Tel Aviv-based Keevoon Research Strategy and Communications company, shows that McCain is favored in Israel-of course, the people over there can't vote -- 43 percent to 20 percent. That's really a roundhouse, more than 2 to 1. That's about Iraq. It's about Iran. What's it mostly about, do you think?

FLETCHER: I think it's mostly actually-because I think it's mostly being more of the same. You know, the Israeli public in general has been very-were great supporters of President-of George W. Bush. The last several presidents of the United States have been seen as strong supporters of Israel, and they're worried about Obama.

And clearly, here. McCain is seen as more of the same, a man who will support the Israelis regardless, and not only in terms of the peace process with the Palestinians but also in terms of a very firm stance against Iraq against Iran. Excuse me.

Now, the Israelis, I think they see McCain-one of the analysts said they see McCain as another Rabin, another Sharon. He's an army man. They can identify with McCain much more easily than they can identify with Obama. So those numbers are pretty clear. But of course, I think if you add up the numbers you just mentioned, that leaves about another 45 or 47 percent unaccounted for, doesn't it? I'm not sure who they support.

MATTHEWS: Yes, it does. It does leave a lot-it leaves 39 percent undecided. Of course, it's a foreign election, as far as they're concerned.

Let's take a look at this tracking poll here in America, just so we (INAUDIBLE) Historically, Jewish voters have been Democrats going way back to the time they came to the country, in many cases, back 100 years, for all I know. But look at this -- 61 percent for Obama, 32 percent for McCain. That is not high.

TODD: For Obama.

MATTHEWS: For the Democrat, right.

TODD: That is a low number. That is a number-look, if he ends up at a 65-35 split in the Jewish vote, that is problems in Florida. That is potentially problems in the suburbs of Philadelphia.

MATTHEWS: Yes, look at...

(CROSSTALK)

TODD: Exactly. I mean, when you look at this and you see that, regularly, Democrats get 70 percent, 80 percent-I mean, only Michael Dukakis, who was the first sort of ethnic Democratic nominee, somebody that was not like the others in a while-you know, here's this second generation Greek immigrant...

MATTHEWS: A newcomer, really.

TODD: ... a newcomer, and the Republican Party did a good job of painting Dukakis sort of not-you know, not one of-not one of us. And we're almost seeing the exact-I've always thought if Republican-if John McCain wins, it will mean that he was able to do to Obama what George H.W. Bush was able to do to Michael Dukakis.

MATTHEWS: Let me ask you, Martin, for a final question there. As Barack Obama leaves the Middle East, what's the general assessment of the people over there in terms of news coverage? Has he shown himself to be a commander-in-chief, potentially?

FLETCHER: I think so, very much so, Chris. I mean, he's been-he's been-he's been seen really much as a rock star as a leader, and people are surprised. By the way, when he visited the president, Shimon Peres's, office today, one of Peres's female assistants came out and said in Hebrew, Hey, what a hunk.

(LAUGHTER)

FLETCHER: That was the quote that went rushing around the media here. I think he's seen very much as-it's been a successful trip for him not only with Israelis, but also with the Palestinians, who were very happy that he went to see them in Ramallah, even if it was only a short visit to the president, which, of course, McCain, when he was here in March, he didn't do. So I think Obama scored strongly both with Israelis and with the Palestinians on this trip.

MATTHEWS: OK, thank you very much, Martin Fletcher over there in Jerusalem.

You know, Chuck, it's interesting to see how they play it (ph). I was watching McCain today in Wilkes-Barre, Pennsylvania. He was a statesman on the issue of the capital of Israel, which we've always seen, for 50 years, since the beginning of the state of Israel's existence-we are argue about where the capital should be. It seems like an odd argument, but over there, it is important.

And he-and Barack Obama, who people are skeptical about who are pro-Israeli, said, Oh, make the capital Jerusalem, don't let the Arabs have an inch-a square inch, whereas McCain said, That's got to be negotiated by the Palestinians-he took the statesman's view.

TODD: He did. But you know, I want to go back to something that you were asking Martin about, whether Obama had successfully shown himself to be a commander-in-chief. This is what made this trip so shrewd by Obama because what did the Israelis want to do and the Palestinians, and frankly, the folks in Iraq, even a General Petraeus, and the folks in Afghanistan and in Germany and (INAUDIBLE) they're all-they're all going, Wait, what if we're dealing with this guy? They're trying to impress him. They're trying desperately to win his approval.

MATTHEWS: Right.

TODD: You heard Martin. He was saying Israel was trying to, you know, basically campaign for Obama's support in their fight with Iran. So when you look at it in hindsight, it was almost impossible for Obama to mess up this trip because you had...

MATTHEWS: But you knew that-did you see that ahead of time?

TODD: No. You're right.

MATTHEWS: In the beginning...

TODD: It's easy to...

MATTHEWS: ... it looked like he was going to be the kid wet behind the ears...

TODD: No question.

MATTHEWS: ... meeting his uncle-you know, Uncle Petraeus...

TODD: But we underestimated...

(CROSSTALK)

TODD: I think we underestimated...

MATTHEWS: They want their jobs.

TODD: That's right. Or they want the support...

MATTHEWS: H.L. Mencken once-H.L. Mencken once said, Never argue with someone whose job depends on not being convinced. I mean, you have to be careful about keeping your-I love this guy, Shimon Peres, the president of Israel. What a great guy.

TODD: What is Israel without the support of the United States these days?

MATTHEWS: Yes.

TODD: So of course, they're going to have nothing but great things to say, and they're going to roll out the red carpet for Obama because they might to have to deal with this guy.

MATTHEWS: There's one vote for Obama right there.

TODD: It could very well be.

MATTHEWS: Ehud Barak I'm not sure-Ehud Barak, where's he voting, do you think? Bibi's, of course, voting for McCain.

(LAUGHTER)

MATTHEWS: I love figuring this stuff out!

TODD: I don't know. But I'll tell you, the Israelis have got this down. They know how to put out the red carpet for politicians, whether they're liberals, conservatives or somewhere in between.

MATTHEWS: They also understand democracy as few other countries in the world do. They get it that we in this country want to make our own decision. I'm worried about Barack going to Germany. I'm worrying about the significance of his-Jon Stewart said the other day he acts like he's already on the coin, you know, he's already a historic figure.

TODD: The better Jon Stewart joke was the fact that he went to Israel to go visit his birthplace, but...

MATTHEWS: Oh! He's tough!

(CROSSTALK)

MATTHEWS: Well, he was tough with me, too. Anyway, thank you, Chuck Todd.

At 7:00 Eastern tonight, we'll have all the new numbers from the NBC News/"Wall Street Journal" poll. That's our 7:00 o'clock East Coast edition of HARDBALL tonight, all the new numbers. They're quite fascinating, by the way. Can't tell what you they are right now.

Coming up: Is John McCain getting close to picking his VP running mate? And who does Rudy Giuliani think McCain ought to choose? Rudy's coming here. The former mayor, his honor, is coming. There's the Yankees hat. And we'll get his take on the presidential race and whether they can pick a pro-choicer like him.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Former New York City mayor and one of-one-time president-in fact, not long ago presidential candidate Rudy Giuliani joins us in our studio tonight. Just to prove that I'm honest and just to prove I do have a good memory, I thought you'd win this thing.

(LAUGHTER)

MATTHEWS: And I thought it for months. I said...

RUDOLPH GIULIANI ®, FMR NYC MAYOR, FMR PRES. CANDIDATE: I thought Hillary-I would if Hillary would.

MATTHEWS: Me, too. So what happened?

GIULIANI: See how smart I am. I thought that a year ago at this time. I would have told you...

MATTHEWS: You didn't go to Iowa? Was that it?

GIULIANI: Oh, who knows? Iowa, New Hampshire. John McCain ran a great campaign.

MATTHEWS: Yes.

GIULIANI: John winning all of those...

MATTHEWS: But he was dead!

GIULIANI: ... primaries. Well, he-but nobody told John that.

(LAUGHTER)

MATTHEWS: Really?

GIULIANI: Nobody told John in June, July of last year that he was finished. And he went off to New Hampshire. He ran a great campaign. That's why I-you know, I've had-I went to the Yankee game with John...

MATTHEWS: I saw you.

GIULIANI: ... this Sunday. And I told him the way to win this election is just to be him, the way he beat us, the way he beat me, beat Romney, beat Huckabee, beat all of us.

MATTHEWS: Well, how come Barack Obama beat Hillary Clinton as the change candidate and John McCain won as the candidate who's probably the most familiar face running for office now?

GIULIANI: I think his authenticity, the way he convinced the people of New Hampshire, you know, that he was the right guy, the leader. Then he won in South Carolina, Florida. I mean, he really, unlike Obama...

MATTHEWS: But you (INAUDIBLE) you never chased (ph).

GIULIANI: Obama-Obama...

MATTHEWS: You never chased (INAUDIBLE) issues.

GIULIANI: Obama won close.

MATTHEWS: Yes.

GIULIANI: John wiped us all out. I mean, he...

MATTHEWS: I have a theory. I'll run it by you. Despite your best efforts as a security guy, as the hero of America, the Abraham-I'm sorry the Winston Churchill of 9/11 and all that stuff, did the Republican Party, just like the Democrats are basically anti-Iraq war and that's why Hillary lost and she was sort of on that war-your party's basically anti-abortion rights, not anti-abortion, just-they're against the rights to make a decision, and that you had that position and you were unacceptable to them.

GIULIANI: That was (INAUDIBLE)

MATTHEWS: That was your killer.

GIULIANI: I think we could have run a better campaign, and I think John McCain being the person that emerged also hurt me because John and I share a lot of the same vote. I think it was going to be John McCain or me. And when John was down, I was getting a lot of his vote. And as soon as John started to come up again, sure, he took votes from Romney, he took votes from Huckabee, but he took a lot more votes from me.

MATTHEWS: And he also carried the pro-choicers in Florida against you.

GIULIANI: Well, yes...

MATTHEWS: Did you notice?

GIULIANI: ... because John is not a Republican you can easily categorize. I mean, he appeals to the middle, as well as he does to the right.

MATTHEWS: I found out from a very high authority in the Republican Party, which is off the record, so I guess it means I can't say who the high authority was, but I do know what I heard-and what I heard was that your party, the Republicans, figure you probably lost Iowa. You won't get that this time because it's very anti-Iraq war. You might pick up New Hampshire because it's very pro-very pro-McCain, obviously. Your next target's going to be Michigan, and the target after that is Pennsylvania. You're going to try to run inside on the Democrats, poach away their usual states, like...

GIULIANI: Right.

MATTHEWS: ... Michigan and Pennsylvania, hold Ohio and Florida from last time, and win this damn thing.

GIULIANI: I think...

MATTHEWS: Win it even though...

GIULIANI: Pennsylvania, your home state...

MATTHEWS: Right.

GIULIANI: ... is critical to all this. I think that's a state...

MATTHEWS: John McCain said today you need it.

GIULIANI: I think it's the Ohio of this election, with the-you know, the Florida...

MATTHEWS: They're on the same page, that's right.

GIULIANI: And I think John...

MATTHEWS: Can you do it without putting Tom Ridge on the ticket?

GIULIANI: I think Tom Ridge would be a real good candidate. And I personally...

MATTHEWS: But how do you win it without Tom Ridge? How do you win with two pro-lifers?

GIULIANI: He's got-John's got two or three really good choices. But I think John can carry Pennsylvania on his own. I think, if you take Tom Ridge, you give yourself a better chance of carrying Pennsylvania.

MATTHEWS: Would he pick somebody he doesn't like, like Mitt Romney? How do you pick somebody you don't like as your running mate and spend eight years with him?

GIULIANI: I think you pick somebody that-well, first of all, you come to know somebody better, maybe, after-look, we were all in an election together. That's a bad time to develop a relationship. The election's over. It depends on the kind of relationship they develop now. And the reality is, John is going to pick somebody that he thinks would be a good president and then somebody that can help him win...

MATTHEWS: Yes.

GIULIANI: ... in that order. And...

MATTHEWS: When you were campaigning behind the scenes, I was struck -

I get very emotional about watching politics, and I do-I was at Tim's funeral, and I watched the two presidential candidates sit together, chatting away, and I was moved. I get often moved, in trouble for it, but I do feel this thing about this country. I was moved by the fact that when I-when I debated with Maria Bartiromo, we did that Republican debate...

GIULIANI: Right.

MATTHEWS: ... in Detroit, that during the breaks, every time we went to commercial, you guys would all hang out. You were hanging out with each other.

You were saying hello to each other's wives. You were going around and really spending time with each other.

GIULIANI: Right.

MATTHEWS: It was a-well, tell me about that story we don't see.

GIULIANI: John is a very-John and I were very good friends before we started running against each other. And a couple of times at those debates-I don't remember exactly that one-we reminded each other that we were...

MATTHEWS: That's the one with Fred Thompson in it.

GIULIANI: Right.

MATTHEWS: But he did know the prime minister of Canada, ruining my...

(CROSSTALK)

MATTHEWS: ... ruining my night.

GIULIANI: You tried to get him. You tried to get him.

(LAUGHTER)

GIULIANI: I think-I remember, in the first debate, they tried to get me on the difference between Shia and Sunni.

MATTHEWS: Well, McCain had problems with that one.

GIULIANI: And my campaign was sitting with their-holding their breath that I would get it wrong.

Then, when I got it right...

MATTHEWS: They were ready to yell Shiite.

GIULIANI: But I got it right.

MATTHEWS: Yes.

Let's look at these numbers. Sixty percent of voters in the NBC poll think Senator McCain needs an economic expert as his running mate, that he's got the foreign policy nailed down. Look at that, 60-25. They think he needs somebody who has got some chops for economics. Do you agree?

GIULIANI: No. I think it has to come out of John's mouth. In other words, I think the economic message...

MATTHEWS: But he's already said he doesn't understand economics very well.

GIULIANI: Oh, he-I think he was just contrasting that with his tremendous mastery of foreign policy.

I think John-John is the one who has got to set forth the economic policies. I think he's done it. I think he needs a vice presidential candidate that helps you generally. I think two good choices that you could use as an example...

MATTHEWS: Right.

GIULIANI: ... is the Cheney choice or the Gore choice. Cheney really helped Bush.

MATTHEWS: Yes.

GIULIANI: Right? I mean, Bush didn't have...

MATTHEWS: Did he help the country?

GIULIANI: Well, I think he did. You probably think he didn't. But he certainly helped as a candidate.

MATTHEWS: Yes.

GIULIANI: And I think Gore helped Clinton, to give Clinton a sort of gravitas that maybe he didn't have up until then.

MATTHEWS: So-so, you're looking for an equal. You pick somebody who is at least your equal.

(CROSSTALK)

GIULIANI: Nowadays...

MATTHEWS: You don't go for Quayle.

GIULIANI: Right. Nowadays, I think you're talking about somebody that can step in on a moment's notice to be president of the United States. You can't take a risk at a Roosevelt-Truman situation, where Truman didn't know about the Manhattan Project. You need someone who can step right in.

MATTHEWS: Yes. Roosevelt told uncle Joe Stalin about that atom bomb and never told his running mate.

(LAUGHTER)

GIULIANI: That can't happen, not with the possibility of a terrorist attack and everything else we're facing.

MATTHEWS: Yes.

GIULIANI: You have to have a person that can step right in.

MATTHEWS: When are we going to have a new building at the World Trade Center? When is that going to get done?

GIULIANI: It is going to take a while. And I always thought it would.

This-it took Oklahoma City, I think, 10 years. I mean, this is an enormously emotional, difficult thing, with a lot of people with different views. Maybe it could have been handled a little bit differently, but I'm not sure you still could have gotten there.

MATTHEWS: OK.

Let's take a look at your candidate, Senator John McCain, in Pennsylvania talking about the surge, which has become an amazingly positive thing for Barack, ironically. We got the surge. We can come home.

Let's watch.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Now, Senator Obama said that the strategy of the surge would not succeed. He said it was doomed to failure. He said that there would be an increase in sectarian violence.

He still, to this day, has said that-that the surge has not succeeded. It is a remarkable, remarkable failure to understand the facts on the ground. So, apparently, Senator Obama would rather lose a war in order to win a campaign.

(END VIDEO CLIP)

MATTHEWS: Pretty strong stuff. You would rather lose a war to win a campaign?

GIULIANI: Well, remember, it was...

(CROSSTALK)

MATTHEWS: Isn't that challenging his patriotism, to say this guy would rather win a campaign than protect his country?

GIULIANI: I think that Senator Obama took the position last year at this time that we should just get out. And if we had followed his advice, if we had followed his judgment, which is, after all, what we're electing - trying to elect as a president, we would have lost in Iraq by now, and the surge never would have happened. And now, in retrospect, he says he would have taken the same position. So, I don't understand what exactly he's saying.

MATTHEWS: Well, you're right. A lot of the people who were the hawks said, let's give it one more college try. Let's go with the surge.

GIULIANI: And John McCain was...

MATTHEWS: Was one of those.

GIULIANI: I agreed with it, but John McCain was the leader of that effort.

MATTHEWS: Yes. But now why does John McCain not-Senator McCain say, OK, we won, it's time to come home? Why does he still want to stick it out?

GIULIANI: During the primaries, when you were having a Democratic debate, Senator Obama made the point that Hillary Clinton' lack of judgment in voting for the war was an issue that should be weighed by the American people.

MATTHEWS: Right.

GIULIANI: Well, his lack of judgment in opposing the surge, and his being wrong on that, and his unwillingness to admit that he was wrong, which he really required Hillary to do, is just as important an issue now. It doesn't change because the shoe is on the other foot.

MATTHEWS: He doesn't get any points for being-for recognizing that Afghanistan is the real scary point right now, that we could lose Afghanistan?

GIULIANI: Well, I think we have all recognized that. I was saying that a year ago, two years ago.

(CROSSTALK)

MATTHEWS: Does it bother you that McCain thinks that Iraq borders Afghanistan, that those countries are next to each other?

GIULIANI: I think that John McCain has...

MATTHEWS: Does it bother you he doesn't know the geography of that part of the world?

GIULIANI: Oh, you mean you make a mistake?

MATTHEWS: Do you think it was a mistake?

GIULIANI: Of course it's a mistake. It is like when people transpose I think somebody on your show just did it-Iran and Iraq, and then you make a big deal out of it. Somebody says Iran when they mean Iraq, or Iraq when they mean Iran.

MATTHEWS: Well, no, he said there's a common border between Afghanistan and Afghanistan.

GIULIANI: So, it is a geographic error.

(CROSSTALK)

GIULIANI: Those mistakes are made all the time.

MATTHEWS: You're very supportive.

If your enemy had ever done it, you would have croaked him.

GIULIANI: I don't know.

(CROSSTALK)

MATTHEWS: Anyway, Rudy Giuliani, the former mayor of New York, from New York, New York, the town so nice, they named it twice.

Up next: the HARDBALL "Sideshow" and what President Bush said about the economy when he didn't know the cameras were on. This is pretty interesting stuff. It is not bad.

Plus, a "Big Number" that shows big problems between Obama and the Clinton family. You're watching HARDBALL, only on MSNBC. Look at that hair. Look at that hair.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

Time now for the HARDBALL "Sideshow."

First up, Bush unfiltered. In public, the president credits the tough housing market and high gas prices for the economic crisis. In private, Bush puts in it street corner language. Here he is in a closed-to-the-media fund-raiser in Texas last week.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Wall Street got drunk. That's one reason I asked you to turn off your TV cameras.

(LAUGHTER)

BUSH: It got drunk, and now it's got a hangover

(LAUGHTER)

BUSH: The question is, how long will it sober up and not try to do all these fancy financial instruments?

(END VIDEO CLIP)

MATTHEWS: Now, that video was obtained from somebody in the room by affiliate KTRK in Houston and posted on YouTube.

President Bush should know by now that, when it comes to politics and the media, someone is always watching.

Next, stay with us, that's what the McCain camp is telling its press pack, as Obama continues his glitzy trip overseas. Take a look at the luggage tags that John McCain aides have handed out to reporters just yesterday, "McCain Press Corps, J.V. Squad, left behind to report in America."

But, from what I hear, Senator McCain has excellent, even warm relations with the traveling press corps. He asks about people. He is friendly with the press corps. He cares about them. That's a fact I think people should know about.

And, this morning, syndicated columnist Robert Novak was cited for a moving vehicle violation right here in Washington, D.C. A bystander told the "Politico" newspaper that he saw a pedestrian get hit, roll off the windshield of Novak's black Corvette, and he then saw Novak's car-quote "speeding away."

Well, reporters caught up with him Novak after he talked to the police.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Can you tell us what happened this morning?

ROBERT NOVAK, SYNDICATED COLUMNIST: I don't really know.

UNIDENTIFIED FEMALE: Did you hit a pedestrian?

NOVAK: That's what they said, yes. I didn't-I didn't know I hit him.

UNIDENTIFIED FEMALE: So, you were saying you were driving down K Street and didn't even hear-see someone?

NOVAK: That's correct.

(END VIDEO CLIP)

MATTHEWS: That's Bob Novak this morning.

Thankfully-thankfully, "The Politico" reports that the pedestrian suffered only minor injury. As Novak himself put it, only the way he could, he's not dead. That's the main thing.

Now for "Name That Veep."

This young first-term senator won his seat by defeating a big-time Democratic incumbent, Majority Leader Tom Daschle, out in South Dakota back in 2004. He serves with McCain on the Armed Services Committee, and made a point of sticking by him throughout the presidential primaries. Well, this Midwestern-or, actually, Rocky Mountain State senator hails from a solid Republican state. His strong opposition to abortion could help McCain out with the conservative people in the party.

So, who is it? South Dakota Senator John Thune. At just 47 years old, he's been my admittedly long-shot pick for V.P.. I have been thinking about him for a while, and saying so.

Time now for tonight's "Big Number."

Barack and Hillary may have publicly buried the hatchet, but there is one big sign that the deal has not been closed, and that's-that the two Democratic factions have not really put things together yet for the election. That big sign-and I have notice it-is that Bill Clinton is not there in the picture.

Have you, have I, has anyone seen a picture of Obama along with Bill Clinton in months? So, since Senator Clinton ended her presidential campaign bid, how long have we gone with no joint appearances, no pictures together, or no being together of Bill Clinton and Barack Obama?

Forty-six days, these guys haven't been together. That's right. We have gone 46 days with no two-shot, as we call it in this business, of Barack and Bill -- 46 days and counting. We will see if this report changes things-tonight's "Big Number."

Up next, so, can Barack Obama win over Clinton supporters? And will President Bush help or hurt John McCain when he speaks on the first night, as he plans to now, of the Republican Convention in Saint Paul, Minnesota? We will ask the strategists, one Republican, one Democrat.

You're watching it, HARDBALL, on MSNBC.

(COMMERCIAL BREAK)

BILL KARINS, NBC METEOROLOGIST: Well, thanks for joining us. I'm WeatherPlus.com meteorologist Bill Karins with the latest on Hurricane Dolly.

Quite-it packed quite a punch when it moved onshore earlier this afternoon. Now it is beginning that downward spiral as it weakens over land, still some dangerous winds out there and a ton of rain.

We have got some current wind gusts out there that have been reported, about 60 to 70 miles an hour from Brownsville to Harlingen, and even still out on South Padre. You will notice 56 in Brownsville.

As the storm weakens, the winds will come down, but the rain is going to continue. These were the peak wind gusts that were measured at some of the airports in the area. We had a couple of gusts above hurricane strength, but we had some unofficial reports from people on South Padre of 100-mile-per-hour gusts.

Now, here's a look at the latest radar. The northern half of the storm has weakened. The bottom half is a huge super-soaker, a ton of rain out there, from South Padre, to Brownsville, to McAllen. We have flash flood warnings for much of the region.

And that area in white, it's already estimated that over a foot of rain has fallen just this afternoon. And that is what is creating all the problems. The track over the next 24 hours does continue it to the west. It should be only a tropical storm early tomorrow morning. And then it is going to be a big rain event heading into Mexico as we go throughout tomorrow night.

That's an update on Hurricane Dolly-now back to HARDBALL with Chris Matthews.

MATTHEWS: Welcome back to HARDBALL.

While Barack Obama is overseas, trying to burnish his foreign policy credentials, John McCain has been hammering Obama's judgment on the Iraq war. So, whose strategy will work best with voters?

I'm joined right now by the strategists. Kevin Madden was Mitt Romney's spokesman-and an effective one-during the '08 race. And Mike Feldman, a former adviser to Al Gore.

Let me-let's get into this thing a little bit. Then I want to get to the V.P. thing.

This trip for Barack Obama, Middle East trip, stops in Israel today, is this going to firm up his chops? Has he shown himself to be a leader?

MIKE FELDMAN, DEMOCRATIC STRATEGIST: Yes, I think you see him passing the commander in chief test on this trip.

And for a lot of voters who haven't had a lot of time with Barack Obama in that kind of setting, that's really important. And everybody is focused on the optics of this trip, the pictures and how good it looks and how well it is scripted.

But, really, what is happening here-and this was not all Barack Obama's doing-is he has reframed the debate about the war. He has completely turned the tables and reframed the debate about the war. And I think that's a huge benefit.

KEVIN MADDEN, FORMER ROMNEY CAMPAIGN NATIONAL PRESS SECRETARY: Well,

I agree.

I think it has taken two parallel tracks. And there is the style and the substance. On style, he has done very well. You're right. We have all been obsessed with the great pictures that have come back, I think, where he looks very presidential.

But I do think, on the substance, that he has provided a lot of openings for Republicans. I do believe that they're going to try and hammer home the flip-flops, whether it was on the surge, whether it was on Iran and how he would engage them, where there are opportunities there.

MATTHEWS: What are the flip-flops? Nail them down.

MADDEN: Well, I think, if you're looking at Iran, where he said that he was going to meet with the leader of Iran unconditionally, and now he is trying to change that.

On the year anniversary of it, he is saying that he-well, he does have conditions, and that there is not a resolve to his foreign policy or his national security posture, but, instead, a lot of it is driven by politics. A lot of it is driven by his positioning with the electorate.

MATTHEWS: Yes. I think his bigger problem-Mike, you didn't raise it-is really that surge thing. And I want to dramatize that.

If we hadn't had the surge, if we had pulled out a year or so ago, as he wanted us to do, we wouldn't have a political situation in Iraq right now that allowed us to leave peacefully.

FELDMAN: Sure. But I think...

(CROSSTALK)

MATTHEWS: No.

(CROSSTALK)

MATTHEWS: I want to stick you on this.

(CROSSTALK)

MATTHEWS: Isn't it important to admit that Barack is really not telling the story straight here-straight here?

FELDMAN: No.

I think, first of all, you have to take the long view on this. It's impossible to know...

MATTHEWS: How about the short view? Is he consistent?

FELDMAN: Yes, he's been consistent.

And, by the way, if he hadn't-if he hadn't-if-if the U.S. foreign policy had followed Barack Obama in 2002, we wouldn't be in this situation. And he's been a leader on each of these issues, and not just on Iraq.

On Iran right now, and North Korea, you see slowly the world community moving towards engagement and the U.S. leading the way on engagement. He has determined that the central front on the war on terror in now Afghanistan. You see that happening.

And, by the way, we took our eye off the ball in Afghanistan. And that's why we have this problem now. So, you see, if you take the long view, he's been very thoughtful on these issues. And I think that's what you see coming out of this trip.

MATTHEWS: Kevin, let's go. Let's talk turkey here, right? Let's talk ethnic and gender politics. There are three groups of people, I'm sure there are tons of them, but I can think of three that have a problem, who are Democrats supporting Barack Obama. There are women voters, who feel that Hillary Clinton was the best bet for a woman president ever and that she didn't get the shot she should have gotten. There are people who are very pro-Israeli, Jewish voters, right-wing Christian voters, some of them, who feel that Obama is not their guy on the Middle East, right?

MADDEN: Right.

MATTHEWS: There are also a lot of rich Clinton supporters who built careers investing in the Clintons who aren't too thrilled about having the wrong guy become next Democratic president.

Aren't you guys out there trying to get all three of those groups?

MADDEN: Absolutely.

MATTHEWS: Aren't you working those groups?

MADDEN: Absolutely. Lunch pail Democrats. That's essentially where your representative of the big middle.

And you see McCain, whether he is talking about healthcare or whether he is talking about the environment or he's talking about what he really likes about Hillary Clinton, how he has worked well with her, he is trying to hug those voters because he believes that his calculus for victory is right in the middle. It's not playing to the-

(CROSSTALK)

MATTHEWS: ... today about the Holocaust, the second Holocaust. I think-and saying that Barack Obama is willing to lose a war so he can win an election. That's pretty raw stuff.

FELDMAN: It was a little over the top. I was actually very surprised to hear him say it. And look, you have to look at all the-

MATTHEWS: Is he going to be able to walk back from that and say, I really didn't mean to say you're willing to lose a war so you can win an election. How do you walk back from that?

MADDEN: I think he stays with that.

MATTHEWS: Do you believe that's true?

MADDEN: I do believe it because I --

MATTHEWS: Do you believe Barack Obama is willing to lose a war to win an election?

MADDEN: Well I think that Barack Obama is willing to make political judgments before he makes judgments on principle. I do believe that, and I think that is probably his greatest vulnerability. I do think, as a tactic, that the McCain campaign sees this as an opportunity to draw the most important contrast, that John McCain is somebody who will rise above politics and do what he thinks is right, whether or not it is popular.

MATTHEWS: McCain has flipped all over the place. McCain was against the fiscal policy of this administration 100 percent. Now he is 100 percent behind it. He wants to support the president's whole tax program, continue it, where he once said it was terrible. He used to say that the religious right were agents of intolerance. Now he is in bed with them, taking their honorary degrees, hanging out with the late (INAUDIBLE), hanging out with Robertson. You're smiling because he's flipped 180 degrees on the big stuff.

Where is he on the flag pole in South Carolina, by the way? Up, down, across the lawn, up on the hill? Where is he on that?

MADDEN: Well look, I think McCain has made a case when he has changed that he has done, again, on principle. And that he-

MATTHEWS: What was the principle to let-

MADDEN: And also, if you look at-

MATTHEWS: What is the principle that led him to switch and go over and hang out with the religious right? What principle led him to do that?

MADDEN: Well I think he believes he was wrong.

MATTHEWS: To say agents of intolerance are good guys-

MADDEN: I believe he made the case that he was wrong.

Now look, I'm not saying I agree with this. I'm talking about the argument that he's making, Chris. He's making the argument that he has evolved on those issues and he doesn't believe that he should be talking-

MATTHEWS: I agree (ph) that Barack has flipped on the surge. I agree he was against the war in the beginning. I was critical of the war too. But he was against the surge, and now he is taking advantage of the surge and saying that means we can get out.

FELDMAN: What he is demonstrating in each step of this is that he is forward leaning, he is looking over the horizon on foreign policy --

MATTHEWS: I love the way you guys smile when-

(CROSSTALK)

MATTHEWS: Your smiles are your lie detectors.

FELDMAN: He would not have gotten us into this war. He would not have taken our eye off the ball on Afghanistan and that gives him a lot of credibility. And that's the judgment argument he can make.

MATTHEWS: Right now-

MADDEN: I don't think that's going to be-

MATTHEWS: Why do we see a lack of enthusiasm for the Republican candidate for president on your side of the aisle?

MADDEN: Look, here is why and I've seen this a lot with a lot of Republican leaders right now. Everybody keeps saying, and you hear this time and time again, Chris. Every Republican comes out there and says, our brand is bad, boy it's a tough year for Republicans. We have to make sure that we have run-don't run with an R next to your name. That is political malpractice.

As a Republican, you have to stand up and say what you're for. You have to make the case-

MATTHEWS: And Tom Davis, who ran your campaign committee last time said if it was dog food, the Republican Party would be taken off the shelf.

MADDEN: Guess what? We don't need our leaders in the party to be analysts. What we need them to be is-

MATTHEWS: We'll get elected to be a leader and you can talk to them.

And anyway, thank you Kevin Madden. Thank you, Mike Feldman.

Up next, is Barack Obama's presidential tour in the Middle East helping convince Jewish voters here at home that he would make a good defender of Israel?

That is a hot question tonight of all nights. The Politics Fix is next. This is HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE: On vote after vote, I have demonstrated my support of the state of Israel. So, the way you know where somebody is going is where they've been. And I have been with Israel for many, many years now.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

In the Politics Fix, tonight's roundtable, MSNBC political analyst Michelle Bernard, the great Tom DeFrank of the "New York Daily News," and Joan Walsh.

You're all great.

Tom DeFrank is not here as often as you two ladies. Let me talk-I know, Joan Walsh, you and I being Irish are not used to ethnic discussions, but this is an ethnic discussion for many here.

We're talking good old American politics, factions, ethnic groups, religions, whatever, backgrounds, whatever way to parse it. He didn't go to Israel for no reason. He went over there to get some votes.

Tom DeFrank, you first. You're in New York. A huge Jewish population, a huge voting factor there. Is Barack Obama facing a problem with the Jewish community that other Democratic candidates have not faced?

TOM DEFRANK, "NEW YORK DAILY NEWS": A little bit more of a problem. But I think in the end it's going to be fine, Chris. He got the Democratic nomination and ultimately, you can parse the demographics, you can parse his statements and his policies, but I think that will carry him through.

I don't think most Jewish Americans are going to vote for John McCain.

I think they're going to stick with the Democratic nominee.

MATTHEWS: You think he'll get B.B Netanyahu's vote over there? He's still got I think dual citizenship. What do you think?

Jo, not to kid about this, because it is important in the country. We know how the country votes. Oftentimes along the way people vote the way their parents vote in many cases. Is this going to be a profoundly important event for him to get over there and say the right things about the state of Israel and its future?

JOAN WALSH, "SALON": Yes. I think it has been very important and I think he's done all the right things. As Tom said, he hit a real grand slam, at least so far. Things can still go wrong.

But today was crucial, and I think he finessed, he clarified his answer on the undivided capital of Jerusalem. That is the toughest one perhaps.

MATTHEWS: Where is he on that now?

WALSH: Well, he said that it is the final status question. That's where we all go. It's a final status question, Chris.

MATTHEWS: Well that's not what he said before. Before he said Israel will not be divided. Now he is saying what American policy has been for 50 years, that the sides have to negotiate. Well-ever since '67, they have to negotiate the future of greater Jerusalem.

WALSH: Absolutely.

MATTHEWS: It's a pretty big city now.

WALSH: Absolutely. He also said he-what he meant in clarifying his statement was that he didn't want to see barbed wire going down the center of Jerusalem.

MICHELLE BERNARD, MSNBC POLITICAL ANALYST: Right. So I mean-

WALSH: That is the toughest question. But I think he was reassuring.

DEFRANK: I think it was also very reassuring to Israelis and to Jewish American voters talking about if his daughters were having missiles reign down on their bedroom, he would do everything he could. I just thought that was a very visual and smart thing to say and an empathetic thing to say. And I think that worked for him.

MATTHEWS: Let me ask you about the-

WALSH: The decision to go to that city-

MATTHEWS: Keep going.

WALSH: The decision to go to Sderot, which has been a target of the rockets and is a visible symbol, I think was also, again, smart stagecraft on the part of the Obama people.

MATTHEWS: I think the Republicans are targeting this guy. I think they are thinking ethnic voting, the way Democrats have always thought.

Here's John McCain, the Republican nominee, going after Barack Obama's military judgment at a town meeting in Pennsylvania today.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN ®, PRESIDENTIAL CANDIDATE: I said I would rather lose a campaign than lose a war. And I meant that then and I mean that now.

(APPLAUSE)

Now, Senator Obama said that the strategy of the surge would not succeed. He said it was doomed to failure. He still, to this day, has said that the surge has not succeeded. It's a remarkable, remarkable failure to understand the facts on the ground. So, apparently, Senator Obama would rather lose a war in order to win a campaign.

(END VIDEO CLIP)

MATTHEWS: What do you think of that comment?

DEFRANK: Well Chris, I was-in February of '73, I was on the tarmac at Clark Air Base (ph) in the Philippines when John McCain and those P.O.W.s came home. I've always admired McCain's grit and spunk and heroism. But when he said that yesterday, and he's been repeating it all day today, what popped into my head was vice presidential candidate Bob Dole saying, we all have to remember, Democrats start wars and Republicans end wars.

Which is to say-I think Senator McCain was a little bit over the top on that and I think that's going to hurt him.

MATTHEWS: Joe Klein of "TIME" magazine, a respected columnist, is very provocative sometimes and a great writer, said he thinks that that brings into question whether McCain has the right temperament to be president.

Michelle, to make a comment that harsh-that harsh a comment about the motive of the other guy.

BERNARD: It's a very strong statement for Senator McCain to make. If you sit back and you look at what he is saying, at least with regard to the surge, that is a bit of a problem for Barack Obama. He's really holding tight to his statements that the surge has not worked. But-it's almost as if, given all the publicity that Senator Obama has been getting over the last week, that McCain really didn't know what to do. He almost appears as if he's floundering.

MATTHEWS: Was it trash talk?

BERNARD: Well-I think it was trash talk.

(CROSSTALK)

MATTHEWS: Let me-Joan, you know what? I think Barack is wrong on the surge. I think he is benefiting from the surge.

Those of us who have been very skeptical of the war, including the surge, now find ourselves where maybe that it has created enough stability in that country that we can begin-or in fact, begin the final pull out of our combat troops.

Can you have it both ways like Obama seems to want it? Pull our troops out, as he said we should, and not acknowledge the effectiveness of the surge? Can he have it both ways?

BERNARD: I think-he has acknowledged the effectiveness of the surge. He has said two things, Chris, and they are important to remember.

One is, he will not say that he made a mistake. And I admire him for that. And second, he said the surge didn't accomplish everything. And it didn't. There's still a lot to be done. So I think-I am parsing, but you have to parse because I think the exactly what he said is important. And now, yes, he's going to take advantage of it, you can say, because this is what he will inherit as commander-in-chief and he has to make the best of it.

MATTHEWS: Well I have to correct myself occasionally, let me tell you. Joan, as you know. And let me tell you, I will continue to do so. Edward R. Murrow, our hero, once said an error does not become a mistake unless it is not corrected. We'll be right back with the roundtable with more of the Politics Fix.

You're watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with the roundtable for more of the Politics Fix.

Here's the question. A new poll just came out tonight, as they said on NBC News. We'll have more in the 7:00 edition of HARDBALL.

But here's today's NBC News/"Wall Street Journal" poll item on vice presidential qualities. Fifty percent, half the voters, believe Barack Obama needs to pick a running mate, a VP, with expertise in military and foreign affairs. Only 42 percent think he needs to be backed up on the economy.

Michelle, that's a statement of weakness. That means he has got a weakness on the foreign policy despite-this is of course taken before the trip. That means he's got to shore up his foreign policy.

BERNARD: Absolutely. Absolutely. And not only-

MATTHEWS: So that means Joe Biden? What does it mean?

BERNARD: It could mean Joe Biden, it could mean Sam Nunn. But it also means someone who is not so much older than him that he looks like he needs dad to tell him how to do his job.

MATTHEWS: Where did you find that?

Let me go to Joan Walsh. Joan, does that mean he has got a weakness on the economy? Is this Rorschach test? What he needs is what he doesn't have?

WALSH: Yes. I think it is a little bit of a Rorschach test. He's got that commander-in-chief gap with McCain, but I believe that he's closed it this week. So it will be interesting to see what the polls say next week.

MATTHEWS: Next month.

WALSH: I think-

MATTHEWS: Here's the same question. Joan, answer the same question on-here is John McCain's running mate. The poll says that people need - well this is a strong number here -- 60 percent say he needs an economic man or woman next to him as a running mate.

What do you make of that?

WALSH: That is a much bigger deficit if you really look at those two numbers side by side.

Obviously, Obama is doing better on foreign policy than McCain is doing on the economy. But yes, this is a big weakness for McCain. And-it's contributing-we;re having a little Mitt Romney miniboom this week. It seems like people are looking at him again, and I think that's one reason.

MATTHEWS: Well, if you're not with the one you love, love the one you're with.

WALSH: I guess.

DEFRANK: Love the one you need.

MATTHEWS: Love the one you need.

WALSH: Love the one you need. Good point.

DEFRANK: And I agree with Joan. I think that's why Romney is suddenly rising in the polls.

MATTHEWS: Well the other thing is that the route to greatest, they think, is Michigan-Pennsylvania. Pick up those inside states.

DEFRANK: And I do believe that Romney, for all the obvious reasons, will help McCain in Michigan. And I think-one of the things I keep hearing is that Ann Romney and Cindy McCain have become really good pals.

MATTHEWS: I think Ann Romney is the big plus. I said it last night, they want someone like her up there on the ticket.

Thank you, Michelle Bernard.

Thank you, Tom DeFrank.

Thank you Joan Walsh.

And in closing tonight, President Bush signed that bill tonight honoring our late colleague, Tim Russert, by naming a portion of a highway close to his hometown of Buffalo, New York. It will be called the Timothy J. Russert Highway. And it runs near Ralph Wilson Stadium, home of the Bills.

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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